Are you handling traumatic situations when locating an affordable warehouse area in Dubai? You’re not alone in this case. The demand for warehousing and industrial regions is surging,  leading to a 13% boom in rental rates in Dubai compared to last year. This article highlights the industrial region’s fast growth driven by different factors.

Dubai Real Estate: Warehouse Rents Up 13% As Industrial Sector Demand Leaps

Warehouse Rental Rates Increase

The increase in warehouse rental rates reflects the strong demand from businesses across Dubai and Abu Dhabi. Key industrial hubs like Dubai South, Jebel Ali Free Zone (JAFZA), and Abu Dhabi’s KEZAD Al Ma’Mourah are seeing notable growth. Areas such as Dubai Investment Park (DIP) and Dubai Industrial City have recorded impressive rental increases of 25% and 21%, respectively. This surge in demand highlights a significant imbalance between the available supply and the growing needs of businesses.

Factors Driving Demand

Several factors are contributing to this heightened demand for industrial spaces. The growth of e-commerce has been a major catalyst, as more companies seek efficient logistics and warehousing solutions to support their operations. Additionally, the expansion of oil and gas companies has further fueled the need for industrial facilities. New companies entering the market are also increasing the competition for available spaces, leading to a steady absorption rate of properties and pushing rental rates higher.

The Imbalance Between Supply And Demand

A critical issue in the market is the significant imbalance between demand and supply. Demand for warehousing and industrial facilities consistently outstrips the available supply. This situation is causing rental rates to rise steadily. The report indicates that the demand for high-quality industrial spaces is especially strong, which is driving developers and investors to enter the market.

The industrial sector is becoming increasingly attractive to institutional investors and non-industrial developers. The potential for strong returns is drawing interest as more companies recognize the value of investing in warehousing and industrial facilities. As the market evolves, it presents opportunities for those looking to diversify their portfolios.

Technological Advancements And Sustainability

The UAE is also focusing on transforming its industrial landscape to align with its vision of becoming a leader in smart cities. There is a noticeable trend toward incorporating cutting-edge technologies such as automation, artificial intelligence (AI), and the Internet of Things (IoT) in warehousing and logistics centers. This shift is aimed at enhancing operational efficiency and meeting the increasing demand for modern facilities. Sustainability is another key focus. 

The demand for energy-efficient and environmentally friendly buildings is on the rise, reflecting the broader goals of reducing carbon footprints and promoting sustainable development in the region.

Also Read: Interest Rates Drop In UAE: More Dubai Buyers Choose Mortgages Over Cash

Key Developments In Industrial Real Estate

Several significant developments are shaping the UAE’s industrial real estate market in 2024. For instance, a major investment is set to deliver 1.55 million square feet of logistics space in Dubai and Abu Dhabi. This new development will cater to both single and multi-tenant needs, offering flexible modular units to meet the rising demand for warehousing and industrial space. Dubai Industrial City is undergoing a major expansion of 13.9 million square feet. 

This expansion is driven by the UAE’s strategic industrial initiatives, highlighting the commitment to fostering innovation in the manufacturing sector. In terms of space, the most sought-after warehouses are typically between 5,000 to 15,000 square feet. There is also frequent demand for warehouses around 30,000 square feet, while the largest spaces can reach up to 200,000 square feet. This indicates that businesses are looking for varied sizes to suit their operational needs, highlighting the diverse requirements within the industrial sector.

Logistics And Supply Chain Demand

Logistics and supply chain needs represent a significant portion of the demand for industrial real estate, making up about 40% of the demand in Dubai. This growth is fueled by the expansion of e-commerce, which is increasingly becoming a vital part of the economy. The region’s strategic location as a global logistics hub further enhances its appeal to businesses seeking to establish a presence in the area. The demand from small and medium-sized enterprises (SMEs) and large-scale industries also plays a crucial role in the market. 

In Dubai, manufacturers account for 20% of the demand. These businesses are actively seeking modern industrial facilities that can support advanced manufacturing operations, which is essential for their growth and competitiveness. The oil and gas sector remains a strong player. This sector continues to grow, driving the need for industrial facilities that can accommodate its requirements.

Future Outlook

The UAE’s industrial and warehousing market is currently in a transformative phase. The convergence of technology, sustainability, and strategic expansion is reshaping the landscape. As demand continues to outstrip supply, particularly for high-quality facilities, rental growth is expected to continue. There is heightened interest from investors in the sector, which is likely to persist through 2025 and beyond.

Looking ahead, continued growth in the UAE’s industrial market is anticipated. This growth will be driven by infrastructure developments such as the Etihad Railway and the ongoing expansion of Al Maktoum International Airport. These projects will enhance connectivity, further increasing the demand for warehousing and logistics spaces.

Arshad Darbar’s Thoughts 

Arshad Darbar, a seasoned real estate expert with years of experience, views the rise in warehouse rents in Dubai as a clear reflection of the city’s booming industrial sector. According to Darbar, the 13% increase in rental rates is driven by the surge in demand for warehousing and industrial spaces, particularly from sectors like e-commerce, logistics, and manufacturing. He highlights that key industrial hubs such as Dubai South and Jebel Ali Free Zone (JAFZA) are seeing strong activity as companies seek modern, well-located spaces to meet their growing operational needs. Darbar also points out that the imbalance between supply and demand is pushing rents higher, especially for Grade A facilities, which are in high demand. 

He believes that the ongoing expansion of logistics infrastructure, including projects like Al Maktoum International Airport, will further stimulate demand and potentially drive rental rates even higher in the coming years. From an investment perspective, Darbar sees the industrial real estate sector as increasingly attractive, particularly due to its stable yields and growing market demand. He emphasizes that the sector offers significant opportunities for investors looking to diversify their portfolios, as the industrial landscape in Dubai continues to evolve and grow stronger.

Conclusion

The Dubai real estate market is experiencing significant changes, particularly in the warehousing and industrial sectors. The 13% increase in rental rates is a clear indication of the strong demand for these spaces. As businesses seek to adapt to the growing needs of e-commerce and logistics, the market is evolving rapidly. The opportunities for investment and development in this sector are expanding. 

With technological advancements and a focus on sustainability, the future looks promising for the industrial real estate market in Dubai. As businesses continue to grow and adapt, the demand for quality warehousing and industrial spaces will remain strong. This trend is likely to lead to further increases in rental rates and continued investment in the industrial sector.