posted on 23/08/2012: 617 views
It may be just a building site in the desert but there is something very special about the 500,000 square metres of land in Dubai Investments Park (Dip) the park's general manager Omar Mesmar is about to start selling.
The two plots being developed as two enormous warehouses are set to become the first industrial land in the UAE outside a free zone to be available for foreign investment.
"There are three options: either you buy the facility and the land; you buy the facility itself and pay the rent for the land; or you pay the rent for the facility," said Mr Mesmar, pointing to the place on the map where the two buildings form the final phase of the 23 square kilometre development. The park is a self-contained mixed-use industrial, commercial and residential complex operated by Dubai Investments Park Development Company.
"It is very successful, converting a piece of desert into a city where at the current time almost 75,000 people are living and we receive 15,000 people visiting every single morning, to work or going to the schools," said Mr Mesmar.
While offering nothing like the sort of freehold investment companies and individuals can get in the UAE's free zones, Dip provides a chance for foreigners to get their hands on industrial property at the park, which on current management estimates could produce returns of between 12 and 14 per cent a year on an 85-year lease - a much longer term than previously available. Dip management said there had been discussions with about 20 interested parties keen to invest in the plots.
Local estate agents estimate the land will fetch between Dh300 (US$81.67) and Dh600 per sq metre, depending on the size of the plot and payment terms.
Sitting in the new Dip headquarters building, Mr Mesmar described the deal on the table for the two plots, one of which has been developed as a light industrial facility suitable for uses including food and drink production, transport, and pharmaceuticals, while the other is under construction.
"We are not a free zone. So whoever was coming here to develop and own a facility must have a local partner or sponsor. However, after the new regulations came in, foreigners can own a warehouse and then lease it out to a third party."
Although foreign investors may only be able to buy land at the two final phases of the park, management said office and industrial buildings across the park were also now eligible to be sold on long leaseholds to overseas investors. "Even existing facilities can be acquired after the decree," Mr Mesmar said.
"We have received a lot of requests from their existing partners. We expect interest to come from private families, investment banks, even individuals who are living here. "For logistic facilities and light industrial, there is not much availability," he said.
"That's why we are anticipating that there will be good demand."
Dip and its property adviser, Cluttons, are putting together a pricing structure for the different properties available, including offices, showrooms, staff accommodation, housing and warehousing, which it hopes to also sell off on long leases.
And with Dip now 98.5 per cent leased, the park's management said it was in the process of attempting to roll out the idea elsewhere.
'We are in the process to take this idea elsewhere: to Saudi Arabia; Qatar; Bahrain. We are evaluating but it is just in the early stages.
"It's not like building up a small company or a small factory for Dh2 million or Dh3m . You are developing a city," Mr Mesmar said.
"It takes a huge investment. You are investing in infrastructure." – The National
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