Logistics Facility
Synonyms: Distribution Centre، Logistics Warehouse، Fulfilment Centre، Logistics Hub
Last updated: 2026-09-25
Short Definition
A logistics facility is an industrial or commercial property used to receive, store, sort and distribute goods, such as large warehouses, distribution centres, freight hubs and cold stores; it is located near main roads, ports and airports to cut transport time and cost.
Overview
Legal Basis
The logistics drive rests on the National Transport and Logistics Strategy (2021) and the Logistics Centres Master Plan (August 2023). A facility lease is governed by the Civil Transactions Law issued by Royal Decree No. (M/191) dated 29/11/1444H and documented as a commercial contract on Ejar at SAR 200 for the first year and SAR 400 for each additional year, and the rent is subject to 15% VAT under Article 30 of the VAT Implementing Regulations, which limits the exemption to residential real estate. The Saudi Food and Drug Authority licenses drug warehouses under the Law of Pharmaceutical and Herbal Establishments and Products issued by Royal Decree No. (M/108) dated 22/8/1441H.
Practical Example
An e-commerce company leases a 10,000 m² warehouse in a logistics zone south of Riyadh at SAR 150 per square metre per year, SAR 1,500,000, for 5 years. Because the landlord is VAT-registered, 15% (SAR 225,000) is added, bringing the annual payment to SAR 1,725,000. Ejar documentation fees for the commercial contract are SAR 200 for the first year and SAR 400 for each of the next four years, SAR 1,800 in total. The contract specifies clear height (12 m), the number of loading docks (20), floor load capacity and who pays for racking and the fire suppression system. If the site lies within Riyadh's urban boundary, the total rent may not be increased during the freeze that began on 25 September 2025.
Common Mistakes
- ✗Choosing a site on land price or rent alone without counting transport costs and travel time to customers and highways.
- ✗Overlooking technical specifications such as clear height, floor load capacity and number of loading docks, which determine real operating capacity.
- ✗Storing hazardous or flammable goods without meeting civil defence requirements and the appropriate licence.
- ✗Not specifying who installs systems (racking, fire suppression, refrigeration) and what happens to them when the lease ends.
- ✗Leaving out 15% VAT and commercial contract documentation fees when calculating the total cost of the lease.
International Differences
Logistics facilities are among the fastest-growing property classes worldwide as e-commerce expands. In the UAE they cluster in free zones near ports and airports. In Turkey the sector benefits from the country's position between Europe and Asia. In Egypt they are linked to economic zones near the Suez Canal. The Saudi approach stands out for a comprehensive national master plan of 59 logistics centres with a 2030 target.
