- May 27, 2020
- Posted by: Waqas Siddiqui
- Category: Business & Economy
Dubai to build Commercity to promote E-Commerce Sector
The government has announced Dubai to build Commercity which will be first of-its-kind free trade zone dedicated to the e-commerce sector 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 sector by providing numerous benefits and exemptions to the e-commerce players.
E-Commerce Sector Growth in the UAE
Driven by the strong growth in online shoppers, the UAE’s e-commerce sector leads the Gulf region with an estimated value of Dh 59 billion ($16 billion) in 2019 and a CAGR of 13 percent between the next few years. However, due to the COVID-19 pandemic which has influenced online shopping behavior, the e-commerce growth rate is likely to increase significantly as more consumers opt to buy products and services online.
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 to the growth of the e-commerce marketplace in the country. As of 2019 and before the COVID-19 pandemic, 62 percent of UAE residents were actively engaged in online shopping while e-commerce sales constituted 10 percent of total sales in UAE.
Furthermore, the Dubai government has introduced several strategies to attract foreign investors to the e-commerce sector. One such strategy is the announcement of Dubai Commercity, a dedicated free zone for the e-commerce sector.
Dubai Commercity
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 COVID-19 has been a major factor that led to the conceptualization of Commercity in Dubai. The ongoing Coronavirus pandemic is expected to further fuel the growth and further investment in the e-commerce sector. These investments will pay off as the Dubai and UAE market is set for explosive growth amid a rapidly changing online consumer buying landscape. Market research companies in Dubai who have expertise in the e-commerce sector can provide insights into the market for investors who are looking to establish their business in the UAE.
Read: UAE Economic Strategy & Response Plan 2020 (COVID-19)
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