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- Abu Dhabi’s market has also seen a steady yet moderate rise in rental rates
- Growth of e-commerce and logistics sectors, the expansion of oil and gas companies, and the entry of new firms into the market have fueled demand
RIYADH: Dubai’s warehousing and industrial rental rates have increased by 13 percent year on year, underpinned by strong demand, a new report revealed.
According to the latest UAE Industrial Market 2024 analysis by commercial property estate agent Cushman and Wakefield Core, areas including Dubai Investments Park and Dubai Industrial City witnessed the highest rental increases of 25 percent and 21 percent, respectively.
Abu Dhabi’s market has also seen a steady yet moderate rise in rental rates, particularly in areas such as Mussafah and the Industrial City of Abu Dhabi, averaging a 5 percent year-on-year surge across the city.
This comes as a significant imbalance exists between demand and supply as the requirement for warehousing and industrial facilities has consistently outstripped availability, leading to a steady absorption level and higher rental rates.
Various factors, including the growth of e-commerce and logistics sectors, the expansion of oil and gas companies, and the entry of new firms into the market, have fueled demand.
This also aligns with the projection that the UAE residential real estate market will register a compound annual growth rate of more than 8 percent during the forecast period, 2022-2027, according to market research firm Mordor Intelligence.
“The potential for strong returns and the opportunity to meet the increasing demand for high-quality warehousing and industrial spaces are key factors attracting institutional investors and non-industrial developers to the industrial sector,” said Prathyusha Gurrapu , head of research and consultancy at Cushman and Wakefield Core.
“As warehousing and industrial assets continue to offer attractive yields and stable demand, more developers and investors are recognizing the value in diversifying their portfolios to include warehousing and industrial facilities,” Gurrapu added.
The report further said that Dubai and Abu Dhabi are seeing significant industrial development, with rental rates rising and strong demand in key hubs such as Dubai South, Jebel Ali Free Zone, and Abu Dhabi’s KEZAD Al-Mamourah.
Gurrapu said the UAE’s industrial and warehousing market is witnessing a transformative phase, with the convergence of technology, sustainability, and strategic expansion reshaping the landscape.
“As demand continues to outstrip supply, particularly for Grade A facilities, we anticipate sustained rental growth and heightened investor interest in the sector through 2025 and beyond,” Gurrapu said.
“Looking ahead, we see continued growth in the UAE’s industrial market, driven by the expansion of infrastructure such as Etihad Railway and the ongoing development of Al Maktoum International Airport. These infrastructure projects will enhance connectivity and increase the demand for warehousing and logistics spaces,” she added.
The UAE’s vision of becoming a smart city leader is transforming its industrial landscape.
Warehousing and logistics centers increasingly incorporate cutting-edge technologies like automation, artificial intelligence, and the Internet of Things for enhanced operational efficiency.
The demand for sustainable, energy-efficient facilities is also growing. Green buildings and eco-friendly warehousing solutions align with the UAE’s broader goals of reducing carbon footprints and promoting sustainable development.