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Sun 12 Dec 2010 03:39 PM

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Gulf industry, logistics to see rise in private investors

High investor demand could see moves away from government ownership – JLL

Gulf industry, logistics to see rise in private investors
Ownership of major logistics hubs such as Dubai’s Jebel Ali Free Zone (Jafza) and Abu Dhabi’s KIZAD has typically been the preserve of government-backed entities

Private investors are likely to have greater access to the Gulf’s lucrative logistics and industrial sectors in the future, according to research from Jones Lang LaSalle (JLL).

While ownership of major logistics hubs – such as Dubai’s Jebel Ali Free Zone (Jafza) and Abu Dhabi’s KIZAD – has typically been the preserve of government-backed entities, a high level of interest from investors could force a sea-change in the issue, the real estate consultancy said.

“Going forward, we see plenty of opportunities for countries in the MENA region to open up their markets further and capture the inherent demand for industrial property, although this may require some change in the regulations,” the report said.

“Changes to the legal framework and strategies of existing industrial zones….and the creation of product aimed at fulfilling demand from the institutional investor segment will provide significant potential to generate increased sales activity in this market over the next few years.”

JLL said that the globalised nature of the logistics industry had led to interest from local investment groups and funds that are looking for income-generating assets to provide long-term stable revenue and solid prospects for future capital gains.

The consultancy said it was also seeing increased interest from international logistics players seeking to diversify away from their home regions.

“Some of these international groups will be looking to buy existing assets and some development opportunities either solely or on a [joint venture] basis with a local partner,” the report said, citing the JV relationship between Jafza and British logistics outfit Gazeley.

“Such groups offer longer-term prospects, providing the local partner with access to similar deals in mature markets.”

Dubai currently has the most advanced logistics infrastructure in the region, which is a key driver in the emirate’s economy.

Abu Dhabi’s KIZAD is planned to contribute 15 percent of Abu Dhabi’s non-oil GDP by 2030. Saudi Arabia will double the contribution of its industrial sector to GDP to 20 percent by 2020.

 

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