- May 27, 2020
- Posted by: Waqas Siddiqui
- Category: Business & Economy, Retail & Manufacturing
Dubai to build Commercity to promote e-Commerce Industry
Dubai – The government of Dubai has announced to build the first of its kind free trade zone dedicated for the e-Commerce industry in the region ‘Dubai Commercity’, located close to Dubai International Airport. The estimated value for the project is around AED 3.2 billion ($870 million) and covers an area of 2.1 million Sq.ft. The ‘Dubai Commercity’ aims to promote investment in the e-Commerce Industry by providing numerous benefits and exemptions to the e-Commerce players.
e-Commerce Industry – UAE
Driven by the strong growth in online shoppers, the UAE’s e-Commerce Industry leads the Gulf region with an estimated value of Dh 59 billion ($16 billion) in 2019 and CAGR of 13 per cent between the next few years. However, due to the COVID-19 pandemic which has influenced the online shopping behavior, the e-Commerce growth rate is likely to increase significantly as more number of consumers opt to buy products and services online.
e-Commerce Industry Growth – UAE
The young Internet-savvy population with high social media usage, high disposable income and the growth in Dubai’s mobile wallet market are among the key contributing factors towards the growth of the e-Commerce marketplace in the country. As of 2019 and before the COVID-19 pandemic, 62 per cent of UAE residents were actively engaged in online shopping while e-Commerce sales constituted 10 per cent of total sales in UAE.
Furthermore, the Dubai government has introduced several strategies to attract foreign investors in the e-Commerce Industry. One of such Strategies is the announcement of Dubai Commercity, a dedicated free-zone for the e-commerce Industry.
The Dubai Commercity is considered to be the first of its kind in the region. The site is a joint venture between Dubai Airport Freezone Authority (DAFZA) and Al Wasl Properties. The Dubai Commercity will have three major clusters namely; Business, Logistics and Social Cluster.
The Business cluster will accommodate 12 office buildings that promise modern facilities and sustainable design for companies of varying size while the Logistics cluster will consist of heavily automated AI (Artificial Intelligence) warehouses and storage facilities. The Social cluster will consist of restaurants and cafes. The e-Commerce businesses that will be registered with the free-zone will benefit from “one-stop shop” services inclusive of immigration, administration, banking and healthcare. The facilities are expected to be operational in November 2020, while the project will be fully functional by the end of 2023.
Dubai Commercity – Future Potential
The developers mentioned that the situation arising from the COVID-19 has been one of the major factors that has led to the conceptualization of Commercity in Dubai. The on-going Coronavirus pandemic is expected to further fuel the growth of the industry and the investment in the e-Commerce industry will pay off as the Dubai and UAE market is set for explosive growth amid rapidly changing online consumer buying landscape. Market research companies in Dubai who have expertise in e-commerce industry can provide insights on the market for investors who are looking to establish their business in UAE.
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