Abu Dhabi to host UAE's largest fulfilment centre to serve growing e-commerce industry

The Abu Dhabi Investment Office and Dubai-based online marketplace Noon have signed an agreement to build the UAE's biggest fulfilment centre to cater to the nation's fast-growing e-commerce industry.

The 252,000-square-metre complex, which will be built at Khalifa Economic Zones Abu Dhabi (Kezad), is scheduled to open in 2024. It is set to create 6,000 jobs, which in turn, will support the Emirates' digital economy programme, Adio said in a statement on Thursday.

The mega fulfilment centre, which will comply with Estidama 2 Pearl sustainability standards, will also reinforce Abu Dhabi’s position as an emerging major player in e-commerce and logistics.

The UAE capital already hosts the largest delivery centre of Amazon, the world's largest e-commerce platform, which was opened in June.

However, Noon's hub will top Amazon's in terms of size. Amazon's fulfilment centre is being built on a 175,000-square-metre site.

“Abu Dhabi is delivering for the global e-commerce sector by creating an environment where innovative, ambitious companies can thrive,” said Abdulla Alshamsi, acting director general of Adio.

“Noon’s partnerships with Adio and Kezad Group are significant in both scale and impact, creating thousands of jobs and new opportunities for the private sector to plug into an e-commerce platform and the emirate’s innovation ecosystem.”

Adjacent industries such as transportation and warehousing, both key to the e-commerce supply chain, also stand to benefit from the Adio-Noon partnership, Mr Alshamsi said.

The UAE presents a big opportunity for e-commerce companies. The sector in the country is projected to grow by 60 per cent from 2021 to more than $8 billion by 2025, as consumers across the region continue to shift towards online retail, according to Euromonitor International.

Noon, the portal backed by Emaar founder Mohamed Alabbar and Saudi Arabia's Public Investment Fund, was the third biggest e-commerce player in the UAE last year, with net sales of about $169 million last year, data from ecommerceDB shows.

Amazon — which is also building the Middle East's most technologically advanced fulfilment centre in Abu Dhabi, also planned for a 2024 opening — was the largest, with net sales of $500m last year, while Namshi, the e-commerce unit of Dubai's Emaar Malls that was bought by Noon in August for $335.2m, was second with $249m.

Fulfilment centres have been central to the operations of e-commerce companies. Unlike ordinary warehouses that simply store products that will be distributed at a later time, fulfilment centres temporarily hold items that are meant to be packed and delivered to customers faster.

The global e-commerce fulfilment services market is projected to grow at a compound annual rate of 9.5 per cent to hit around $195bn by 2030, from $86.4bn in 2021, according to Grand View Research.

Noon's fulfilment centre, which will feature new automation technology for storage, material movement and sorting, aims to speed up the delivery of products across the UAE, and will also act as a hub to service Noon's other smaller units, the statement said.

“The new e-commerce hub in Abu Dhabi will unite millions of customers and thousands of businesses to fuel the UAE's digital economy's next phase of growth. As a local technology company, it is our duty to innovate, invent and provide the optimal infrastructure for a digital-first future,” Mr Alabbar said.

The centre will accelerate the development of the Middle East's e-commerce infrastructure by introducing new automation technologies, Noon said.

The centre also aims to enable entrepreneurs, start-ups and small and medium enterprises to capitalise on Noon’s platform.

“The Noon fulfilment centre will enable businesses, both home-grown and international, to reach new customers across the Middle East, Africa, Asia and Europe,” said Abdullah Al Hameli, chief executive of economic cities and free zones at AD Ports Group, the operator of Kezad.

Four reasons global stock markets are falling right now

There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:

1. Rising US interest rates

The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.

Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”

At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.

2. Stronger dollar

High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”

3. Global trade war

Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”

4. Eurozone uncertainty

Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.

Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”

The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”

On Women's Day

Dr Nawal Al-Hosany: Why more women should be on the frontlines of climate action

Shelina Janmohamed: Why shouldn't a spouse be compensated fairly for housework?

Samar Elmnhrawy: How companies in the Middle East can catch up on gender equality

The National Editorial: Is there much to celebrate on International Women's Day 2021?

Temple numbers

Expected completion: 2022

Height: 24 meters

Ground floor banquet hall: 370 square metres to accommodate about 750 people

Ground floor multipurpose hall: 92 square metres for up to 200 people

First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time

First floor terrace areas: 2,30 square metres

Temple will be spread over 6,900 square metres

Structure includes two basements, ground and first floor

Comment on Coronavirus

Coronavirus: are governments panicking or being cautious?

Coronavirus-stricken communities need solidarity

Can you tell fake news from real information?Middle East countries 'need to act quickly'

Coronavirus: how do you launch your career in the age of Covid?

While you're here

Gavin Esler: A no-deal Brexit looks imminent to mark the end of a four-year-long 'fairy tale'

David Frum: What President-elect Biden needs to fix – and preserve – from the Trump era

Damien McElroy: Post-Brexit, the UK should be more pragmatic in dealing with the world