Dubai’s first lease-to-own industrial warehouse project will break ground in the third quarter, the project’s developer announced on Tuesday.

Lootah Real Estate Development CEO Saleh Abdullah Lootah told a media round table that the first phase of Senaeyat project, located in Dubai Industrial Park, would break ground within the next two months.

Under the lease-to-own model, he continued, the client would get full ownership of their pre-built warehouse after 10 years.

During the project’s formal launch during the Gulf Food event in Dubai in February, the company had announced that entire development would span a total area of three million sq ft while the first phase would cover one million square feet. 

“The first phase, comprising of up to 20 units, is estimated to cost 300 million UAE dirhams,” said Lootah, adding company is in the process of finalizing deals for 50 percent of the first phase.

He said the total number of warehouses planned for the project is in the range of 50-55 units.

Director of Marketing and Sales Mustafa Jassem told the media that the second phase, comprising of 15 units, is expected to cost more than 500 million dirhams.

He said the average price for each warehouse starts at 10 million dirhams and upwards depending on the levels of customization required by the customer.

Lootah didn’t disclose the completion timelines for the first and second phases but said the project would be financed by mix of 60 percent debt and 40 percent equity.

He said the project is aligned with the Dubai Industrial Strategy 2030, which, according to the Dubai Plan 2021 website, aims to increase the total output and value-addition of Dubai’s manufacturing sector by focussing on the six sub-sectors of aviation, maritime, aluminium and fabricated metals, pharmaceuticals and medical equipment, food and beverages, and machinery and equipment.

In a related press statement on Tuesday, the company said the first phase would offer four different built-up areas – 20,000 sq ft, 24,000 sq ft, 30,000 sq ft and 36,000 sq ft while the second phase would offer additional options of 50,000 sq ft and 60,000 sq ft. 

Lootah told Thomson Reuters Projects that the company’s studies showed 70 percent of the warehousing spaces at traditional locations like Al Quoz, Jebel Ali, Um Ramool and Ras Al Khor to be leased with tenures averaging two years. 

 “We are aiming for companies that make up this 70 percent with our lease-to-own model,” he explained. “Since they are already incurring cost for the warehouse space, one way or the other, they can convert that cost into an asset and own the space at the end of 10 years.”

Lootah also pointed out that the building stock at traditional warehousing locations are old, and given their proximity to real estate hotspots, like Dubai Creek Harbour in the case of Ras Al Khor and Downtown Dubai in the case of Al Quoz, they are prime targets for future redevelopment.

Brendon Baker, Head of Corporate Sales, Range International Property Investment, which is the marketing agency for the project, told Thomson Reuters Projects that Senaeyat offers attractive property rights from a leasehold standpoint. 

He explained: “In Dubai Investments Park, for example, you have a 99-year lease, which is 33-years auto-renewable. In our project, we have Musataha (property rights) agreement, which is 49 years auto-renewable. This would be like a 98-year ownership agreement.”

He said the agency is targeting medium to large size companies involved in storage, light manufacturing and food and beverage sectors for the product. 

“We aren’t looking at investors but end-users with a long term investment horizon,” he explained.

Senaeyat’s location is customs-exempted due to its presence at Dubai Industrial Park and is close to Maktoum Airport, Jebel Ali port, Expo 2020 site, and major roads like Sheikh Mohammed Bin Zayed Road and Emirates Road, according to the press statement. 

Dubai Industrial Park currents hosts over 250 factories and more than 700 business partners in sector-specific zones, the statement added.

(Reporting by Anoop Menon; Editing by Michael Fahy)
(anoop.menon@refinitiv.com)


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