Dubai set to host exclusive free zone for e-commerce
Dubai CommerCity’s Business Cluster includes 13 office buildings with a total leasable area of 108,000sqm and a total built-up area of 136,000sqm with all buildings Leed-certified.
The Logistics Cluster consists of 84 units with a total built-up area of 71,000sqm and a leasable area of 68,000sqm with PVC solar panels installed on the rooftop of the building for generating clean energy.
The Social Cluster of the free zone will house art galleries, luxury restaurants and cafes to cater to the needs of the staff of the companies establishing regional headquarters in Dubai CommerCity.
There are 45 free zones in the UAE — 20 of them in Dubai — to cater to specific business categories and 100 per cent ownership of the company.
According to Euromonitor International figures, the UAE and GCC’s e-commerce market is projected to grow 38 per cent and 29 per cent year on year to reach Dh6.6 billion and Dh16.88 billion, respectively. An AT Kearney report had predicted the GCC’s e-commerce market touching $20 billion (Dh73.4 billion) by 2020.
Ambareen Musa, founder of Souqalmal.com, said a free zone just for e-commerce shows how important this sector is to the country.
“I think if done correctly and at the right price by bringing all the different parts of the eco-system together — including the logistics and warehousing — it could really boost the startup of many e-commerce companies in the country. E-commerce companies have quite a bit of logistics involved, so the more flexible the free zone is the more attractive it will become,” she noted.
She explained that mostly international companies coming into the region are either investors or through acquisitions such as Amazon and Gocompare which recently invested in Souqalmal.
“The market becomes obviously more attractive as it becomes easier to run an e-commerce company out of the UAE. Talent, I think, still remains a challenge. So, that maybe something the free zone can include in its offering. This could take the form of training or bringing in experts of international major
Founder of Souqalmal.com
e-commerce firms have a bit of logistics involved, so the more flexible the free zone is, the more attractive it will become
Ambareen Musa,
research analyst at Euromonitor International
e-commerce has gained ground over conventional businesses in the last decade and this trend will continue
Atik Munshi, Senior partner at Crowe Horwath
ecommerce sites to transfer knowledge to our local talent,” Musa added.
Rabia Yasmeen, research analyst at Euromonitor International, agreed with Musa on the challenge of availability of talent in the local market. Yasmeen said the sector’s development in the GCC is hampered by the “lack of local talent and expertise in establishing e-commerce startups and sophisticated local venture capitalists that can drive bigger investments in the segment to create a more dynamic product and service for the consumer”.
The growing size of the e-commerce market and competition for the market share is reflected in the fact that there have been a number of mergers and acquisitions as well as the launch of the new billion-dollar e-commerce platform, Noon.com.
the development of e-commerce is hampered by the lack of local talent and expertise in establishing startups
Rabia Yasmeen, Two phases
A joint venture between Dafza and wasl Asset Management Group, the project will be completed in two phases where 50 per cent will be completed at each stage to meet the current and future needs of logistics, electronic payments, IT solutions, customer services and other related businesses.
The project will cater to major regional and international manufacturers to store their goods, products and spare parts in state-of-the-art, fully-equipped and technology-enabled warehouses, to be shipped later to local markets in record time via e-commerce.
Atik Munshi, senior partner at Crowe Horwath, said Dubai is eyed as one of the major business hubs in the Middle East. In view of the political stability and conducive business environment, many multinationals — both ecommerce and otherwise — are finding Dubai attractive.
“E-commerce is the future of business. Conventional and new business are trying to be or are in the process of converting to ecommerce which increases the market footprint to several multiples in addition to the ease of business. Souq.com and Careem are just a few examples of homegrown e-commerce successes and many more will follow,” he said, adding that e-commerce has gained ground over conventional businesses in the last decade and this trend will continue for the foreseeable future and UAE will not be an exception.
— waheedabbas@khaleejtimes.com