Dubai takes the e-route

Dubai CommerCity is divided into three clusters and spans a total area of 427,000 sqm inclusive of office spaces and logistics units covering 207,000 sqm.

The e-commerce industry in the region is set to get a fillip with the launch of a Dh2.7 billion free zone in Dubai. Startups from IT-related sectors would also benefit from it, with the region's e-commerce industry set to hit Dh73.4 billion by 2020.
Dubai CommerCity - the first of its kind in the Mena region - is divided into three clusters and spans a total area of 427,000 sqm inclusive of office spaces and logistics units covering 207,000 sqm. It will have a total leasable area of 176,000 sqm and 220,000 sqm for infrastructure and parking areas. The free zone will have 4,000 parking slots.
Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Airport Free Zone Authority (Dafza), said the free zone will help attract more foreign investment into the emirate.
The project is aimed at establishing a unique and sustainable economy based on growth, innovation, diversification and competitiveness. These are features of the post-oil stage that are in line with Dubai Plan 2021's goal of making the emirate first globally in ease of doing business as well as a preferred investment destination by 2021, added Sheikh Ahmed, who is also President of the Dubai Civil Aviation Authority, Chairman of Emirates airline and Chief Executive of the Emirates Group.
Dubai CommerCity's Business Cluster includes 13 office buildings with a total leasable area of 108,000 sqm and a total built-up area of 136,000 sqm with all buildings Leed-certified. The Logistics Cluster consists of 84 units with a total building-up area of 71,000 sqm and a leasable area of 68,000 sqm with PVC solar panels installed at 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 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 Dh16.882 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 with bringing all the different parts of the eco-system together - including the logistics and warehousing - 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 as 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 really challenge though so maybe something the free zone can include in their offering. This could take the form of training or bringing in experts of international major 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 e-commerce'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.
 
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 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 the 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 hub in the entire Middle East. In view of the political stability and conducive business environment many multinationals - both e-commerce and otherwise - are finding Dubai attractive.
"E-commerce is the future of business. Conventional and new business are more and more trying to be or are in the process of converting to e-commerce 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 home grown 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