Dubai’s retail sector is undergoing a major transformation with the rise of e-commerce and evolving customer preferences shaping a new ‘retail logistics’ industry. A wave of innovative new real estate solutions in the logistics sector are creating alternative investment opportunities, reveals JLL’s new report, launched at Cityscape Global 2019.
As a global leader in both retail and logistics, Dubai is well placed to leverage the retail industry’s rapidly changing dynamics including rising e-commerce, new disruptive technologies and evolving consumer tastes. To take full advantage of these trends, retailers are addressing the challenge of fulfilling increasing demand for online delivery while balancing an oversupply of traditional retail space. The answer is neither brick-and-mortar nor e-commerce but a combination of both into ‘omni channel retailing’ which allows retailers to optimise their real estate portfolios and boost their performance.
“Portfolio optimisation is driving demand for more and better quality warehousing as retailers seek to satisfy changing business models to meet the needs of their growing consumer base. Many retailers are finding themselves with excess stock within stores but a shortage of quality warehousing. We estimate that at least 50% of recent demand for warehouse space across the UAE comes from the retail sector,” said Craig Plumb, Head of Research, JLL MENA.
The boom of online retail is increasing demand for warehousing space and logistics solutions that meet today’s fast paced customer demands. Retailers are now investing across the full supply chain, not just traditional physical spaces.
Commenting on the new research, Thierry Delvaux, EO of JLL MEA, notes, “Technology will be a game changer in supporting omni channel servicing in the emerging retail logistics sector. Private and public sector industry players will have to adopt and fast track a number of new innovations in the supply chain such as automated delivery, tech enabled personalisation, digitisation of addresses and investing in pick up locations.
“Dubai has traditionally adopted a ‘build it and they will come’ philosophy – a strategy that has grown the city into the modern metropolis it is today. In the current era of uncertainty a new strategy of ‘come and you can build it’ is emerging, creating an opportunity for these players. This is what is redefining the future of retail in Dubai. Retailers need to earn more from their real estate, to economise through embracing smart technology that boosts returns,” commented Delvaux.
According to JLL, increased private sector participation will be a key driver for success of the retail logistics industry. Greater flexibility allowing real estate players to build customised warehouse facilities is expected to attract global retail chains and optimise returns for traditional retailers entering the online delivery space.
“We expect to see more investment from the private sector in years to come as a number of recent relaxations to government regulations will allow greater flexibility on building bespoke logistics solutions. Another factor driving this growth is the creation of specialist funds seeking to invest in the logistics sector,” added Delvaux.