- Innovation, stability, and FDI lead regional economic leadership
Researchers analysed that UAE has been famous among all comity of the world because of its generous humanitarian assistance, stability, tolerance, innovation, vision for better health and education. As per the Institution of International Finance (IIF) projected that the UAE economy will grow 4.0 per cent in 2024 and 5.1 per cent in 2025, the highest among all GCC countries.
In 2023, the Emirates’ GDP grew by 3.6 per cent, the fastest among Gulf countries. The country’s non-oil GDP growth will moderate in 2024 and 2025 following a growth of 6.2 per cent in 2023, but will remain the fastest in the region.
Economists revealed that UAE’s current macroeconomic performance and near-term outlook remain favourable with risks well-contained. The economy will continue to enjoy robust growth in 2024 and 2025 of around 4 per cent, supported by continued strong domestic demand. Dubai’s strong growth continues to be driven by tourism and hospitability. The inflation rate will fall further to 2 per cent in 2025, supported by lower global commodity prices and manufacturing unit value. UAE continues to pursue a modest expansionary fiscal policy stance, given its large financial buffers and spare capacity. The continued improvement in non-oil government revenues, combined with a rise in volume of oil exports, will assist to lower the fiscal breakeven oil price to below $65 a barrel in 2025. The general government debt-to-GDP ratio continued its fall to 16 per cent of GDP in 2024. The UAE has set clear goals for encouraging diversified and knowledge-based growth to achieve a competitive knowledge-driven economy. It is implementing a broad range of policies to achieve its goals. Such reforms will increase productivity growth and boost the supply of highly qualified labour, which would raise potential growth.
Statistics showed that the UAE remains the main regional destination of FDI inflows, attracting about $30 billion in 2023 – accounting for 6 per cent of GDP, the highest among emerging economies. It is also important to note that UAE consumers maintained robust spending patterns during the third quarter of 2024, collectively investing $3.7 billion in fast-moving consumer goods (FMCG), technology, and durable goods, marking a 4.8 per cent raise compared to the same period last year.
UAE shoppers spent $2.1 billion on FMCG products in Q3 2024, attaining a 6.4 per cent increase compared to the same period last year. Sources recorded that the FMCG sector showed a significant boost in growth, climbing from 3.2 per cent in Q3 2023 to 6.4 per cent in Q3 2024. This positive trend was also observed in Q2 2024, although Q1 saw a decline, with growth dropping from 9.4 per cent in 2023 to 3.5 per cent in 2024.
Similarly, Tech & Durables faced a slower growth trajectory, with the rate decreasing from 7.7 per cent in Q3 2023 to 2.5 per cent in Q3 2024, reflecting a shift in consumer dynamics within the sector. No doubt, the UAE’s vision for becoming a leader in smart cities is transforming its industrial landscape. Warehousing and logistics centers are increasingly incorporating cutting-edge technologies like automation, AI, and IoT for improved operational efficiency. The demand for sustainable, energy-efficient facilities is also growing. Green buildings and eco-friendly warehousing solutions are aligning with the UAE’s broader goals of reducing carbon footprints and promoting sustainable development.
Different sources noted that key developments in 2024 are recorded such as:
Aldar’s investment in Dubai and Abu Dhabi logistics: Aldar Properties is set to deliver 1.55 million sq. ft. of logistics space in DP World’s National Industries Park (NIP), as part of its broader AED 1 billion investment in logistics real estate.
Dubai Industrial City expansion: A major 13.9 million sq. ft. expansion is underway in Dubai Industrial City, driven by the UAE’s strategic industrial initiatives, counting Operation 300bn and Dubai Economic Agenda D33.
KEZAD Group’s expansion in Abu Dhabi: Abu Dhabi’s industrial market is benefiting from the expansion of KEZAD Group, particularly in KEZAD Al Ma’Mourah, with multiple new warehousing developments set to be handed over by 2025.
Sector-specific demand in 2024
- Logistics and Supply Chain: Representing 40 per cent of the demand in Dubai and 20 per cent in Abu Dhabi, supply chain and logistics remains the dominant driver of industrial real estate activity, fuelled by the expansion of e-commerce and the region’s strategic location as a global logistics hub.
- Manufacturing: SME manufacturers and large-scale industries, accounting for 20 per cent of the demand in Dubai and 15 per cent in Abu Dhabi, are actively seeking modern industrial facilities that can support advanced manufacturing operations.
- Oil & Gas: Accounting for 20 per cent of demand in Abu Dhabi, the oil and gas sector remains a strong sector for warehousing and industrial demand in the capital.
- Sizes: In terms of size, the most sought-after spaces are between 5,000 to 15,000 sq. ft., with frequent demand for warehouses around 30,000 sq. ft. The largest spaces observed in demand reach up to 200,000 sq. ft.