DP World to invest up to AED1-billion in JAFZA despite ‘challenging’ outlook for 2019

DP World to invest up to AED1-billion in JAFZA despite ‘challenging’ outlook for 2019
According to the property broker Knight Frank, rents for the best warehouses in JAFZA have fallen from Dh44 per sq ft at the peak of the market in 2014 to Dh35 per sq ft at the end of 2016.
Published: 4 February 2019 - 7:31 a.m.
By: Logistics Middle East Staff

The chairman of Dubai’s DP World on Sunday said the port operator was facing a challenging 2019, particularly at its flagship Jebel Ali Port, but would still be investing in expanding the JAFZA freezone.

Sultan Ahmed Bin Sulayem, chairman and CEO of DP World, told Reuters that the U.S.-China trade dispute had created uncertainty in the market, while the UK’s imminent departure from the EU would create a lot of confusion.

Sultan Ahmed Bin Sulayem said he expected both sides to reach an agreement and that the company would be able to cope, whatever happened with U.S.-China trade negotiations.

Improving regional economic growth and the forthcoming Expo 2020 Dubai will boost business transactions in the year ahead, but due to the factors globally, DP World will take a “cautious approach with regard to our supply chain and investments,” he said.

DP World reported a 0.5 per cent annual decline in shipping container volumes in the third quarter of 2018, attributed to a tougher macro-environment, loss of lower margin cargo and softer volumes in the UAE – where Dubai container volumes declined 6.7 per cent year-on-year.

But that cautious outlook has not dampened the port operator’s appetite for ongoing expansion of Jebel Ali Freezone (JAFZA).

JAFZA is Dubai’s oldest port and free zone and houses around 7,500 companies, which accounted for 33.4 per cent of the emirate’s gross domestic product and 10.7 per cent of the UAE’s GDP in 2017, according to an Oxford Economics analysis published by DP World on Sunday.

“AED 500-million is what the free zone and board is committing to expansion in 2019 – this could be more equipment, warehousing, accommodation, land development or more roads,” Sulayem said on Sunday in comments reported by The National.

“However, if [the board] comes to us in June and says, we think that AED 500-million is going to be AED 1-billion, we have a flexible budget,” he added.

These comments come after DP World spend several hundred million dollars on a deal to buy a Chilean ports operator last month. According to Sulayem, the port operator is actively seeking new acquisitions in the US, India and Asia.

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