Shortage of Grade A Warehouses and Tax Incentives in JAFZA Drive Growth, Says Palmon Group CEO
Rents for top logistics and industrial facilities in Dubai are climbing by 7 to 15 percent each year as rising demand and limited land create a supply crunch, according to Kunal Lahori, CEO of Palmon Group and board member of Manrre REIT.
Palmon Group develops and manages warehouses and industrial properties, while Manrre — also called GFH Partners Manrre REIT — focuses on institutional-grade logistics and industrial assets. Lahori explained that older facilities see slower rental growth, while modern, higher-specification warehouses are in high demand. “Grade A facilities are very limited, so they get taken up quickly,” he said.
Shifting to Modern Warehouses
Multinational companies are leaving outdated warehouses — some 10 to 20 years old with low ceilings and poor layouts — for newer, efficient spaces. The strongest rental growth is being seen in Dubai Investments Park (DIP), followed by Jebel Ali Free Zone (JAFZA) and Technopark. JAFZA, in particular, has become more attractive thanks to corporate tax benefits, offering qualifying companies a 0 percent tax rate on certain income.
New High-Bay Warehouse in JAFZA
Manrre has started work on one of the UAE’s first high-bay, temperature-controlled warehouses in JAFZA. The project, scheduled to finish in early 2027, will sit on a 214,000 sq ft site with a direct link to Al Maktoum International Airport, which is undergoing a massive AED 128 billion expansion. The facility will feature 144,000 sq ft of built-up area, 32,000 pallet positions, 16 loading bays, a super-flat floor, and 15,000 sq ft of offices.
Designed for flexibility, the warehouse will serve sectors like food, pharmaceuticals, and e-commerce. Discussions are already underway with potential tenants, including one international and one local firm. Lahori noted they have up to 18 months to decide on the right tenants and tailor the facility to their needs.
Growing Portfolio and Green Focus
As of July 2025, Manrre REIT’s portfolio was valued at $155 million, with most assets in JAFZA (60%), followed by DIP (15%) and Dubai South (10–12%). Lahori said the REIT’s strategy is tenant-driven, adding that if a client needed space in KEZAD or even Saudi Arabia, they would expand accordingly.
He also highlighted growing interest in eco-friendly features. Many tenants request LEED certification and solar panel installations to reduce costs. “We connect them with providers to make that happen,” Lahori said.
Expansion Plans and Saudi Interest
The fund, which became Sharia-compliant earlier this year, is looking to scale further with support from Bahrain’s GFH, which acquired Manrre in 2024. While Lahori did not confirm expansion into Saudi Arabia, he said Sharia compliance opens new fundraising opportunities across the GCC, including the Kingdom.
Financial Position
Manrre REIT is keeping leverage low, with a loan-to-value ratio below 50 percent, even after recent acquisitions. Lahori said they do not plan to exceed that level and noted that falling U.S. interest rates will benefit investors.
Dubai’s Logistics Growth Story
Lahori believes Dubai’s logistics sector has strong momentum, supported by global shifts in manufacturing. With tariff pressures elsewhere, more companies are moving production to the UAE. “The industrial and logistics market is only set to grow, backed by Dubai’s long-term plans to expand manufacturing and build new industries,” he said.
He concluded that Dubai’s stability and forward-looking economic agenda make it a global magnet for companies — and a growth engine for the logistics and industrial real estate sector.
Source: zawya.com
