Dynamic duo will work and grow in tandem

The shiny new cranes at Abu Dhabi's Khalifa Port have been in motion since it opened on September 1, establishing itself as the main sea port for Abu Dhabi, taking over from the smaller city-based Port Zayed facility. Equipped with some of the largest sea-to-shore cranes in the world, the port will be capable of handling 2.5 million 20ft equivalent units (TEUs) a year, a figure that could rise to 15 million by 2030.

The development is less than 50km from Jebel Ali, the UAE's largest sea port and the gateway for much of the country's non-oil trade. The same month as Khalifa Port's opening, DP World, the operator of Jebel Ali, signed a deal for 19 new ship-to-shore cranes and 50 rail-mounted gantry cranes. It will take Jebel Ali's capacity up from 14 million TEUs to 19 million by 2014. Having two ports and industrial parks so close to one another has led to some observers wondering about their respective market positions within the sector.

Officials say the two facilities will complement each other as the regional economy continues to expand. "We congratulate Abu Dhabi on the opening of their new terminal today," said Mohammed Al Muallem, the senior vice president and managing director of DP World in the UAE region.

"Port Khalifa and Jebel Ali together will support the continued growth of the UAE. More efficient infrastructure benefits everyone."

Such a view is echoed by Redwan Ahmad, an equity research analyst at EFG Hermes in Dubai, who covers DP World. "There's huge demand in the UAE, and size-wise the ports are not comparable," said Mr Ahmad, "Anything that specifically needs to go to Abu Dhabi will go to Khalifa Port, while Jebel Ali is a transhipment hub for the region, so containers come in and are shipped onwards." The different size markets reflect the importance of Dubai to the country's non-oil trade. Dubai's non-oil foreign trade accelerated 13 per cent to a record Dh1.29 trillion (US$351.18bn) in the first 10 months of the year, according to data released yesterday by Dubai Media Office.

Khalifa Port is serving a smaller market but a strategic one that the Abu Dhabi Government is keen to develop in line with its 2030 Vision for the diversification of its economy.

The future of Khalifa Port will rest on how Khalifa Industrial Zone Abu Dhabi (Kizad) develops. Khalifa Port is just one element for Kizad, the overall vision of which is to create a 417 square kilometre industrial and manufacturing hub that equates to two thirds the size of the island of Singapore. Emirates Aluminium is currently Kizad's anchor tenant. But officials at Abu Dhabi Ports Company, which is overseeing Kizad, are fielding calls from interested companies across several different industries.

"We have seen unprecedented levels of interest in Kizad," said Edward Batten, a commercial leasing manager at Knight Frank, appointed to lease 220,000 square metres of logistics accommodation at the Kizad's pre-built warehousing development. "We have already leased the majority of the first phase. Potential tenants visiting the scheme have been impressed with the infrastructure in place."

Dubai already has several logistics and industrial hubs, including Jebel Ali Free Zone, which is home to 6,800 multinational companies.

But there was sufficient demand for both Kizad and Dubai's free zones to flourish, said Mr Batten.

"I do not believe the opening of Kizad will have a detrimental effect on the property market around Dubai's Jafza port as the two developments supply very different markets," said Mr Batten.

"Kizad is focused on improving Abu Dhabi's non-oil GDP with manufacturing and production and will attract international firms to the UAE for the first time. We anticipate a fall in occupancy could be witnessed in the lower quality warehouses in the Musaffah area of Abu Dhabi, where rents here currently stand at around Dh400-500 (per sq metre annually)."

tarnold@thenational.ae

lbarnard@thenational.ae