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UAE logistics rents surge as supply crunch deepens
Al Quoz remained Dubai’s most expensive industrial submarket, with prime rents touching Dh100 per square foot due to its central location and proximity to major consumer markets
- PUBLISHED: Tue 10 Feb 2026, 10:43 PM
The UAE’s industrial and logistics real estate market is entering another year of rental growth and tight supply as strong trade flows, manufacturing expansion and e-commerce demand continue to outpace new warehouse deliveries, pushing up costs across key hubs in Dubai and Abu Dhabi.
Rents across the UAE’s industrial and logistics sector rose sharply in 2025 and are expected to remain firm through 2026 as space shortages persist, according to global property consultancy Knight Frank. High occupancy levels, steady expansion by domestic manufacturers and logistics firms, and an influx of overseas occupiers — particularly from mainland China — have combined to fuel demand for modern warehouse and distribution facilities.
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Dubai has emerged as the clear frontrunner in rental growth, led by sustained demand from logistics, trading and light manufacturing companies. Dubai Industrial City recorded the strongest annual increase, with rents surging 32 per cent year-on-year to around Dh58 per square foot, driven by large-scale manufacturing demand and a shortage of grade-A facilities. Dubai South followed with a 25 per cent rise, with rents averaging Dh45 to Dh55 per square foot amid growing requirements from logistics operators serving regional and global markets.
Al Quoz remained Dubai’s most expensive industrial submarket, with prime rents touching Dh100 per square foot due to its central location and proximity to major consumer markets. Grade-A assets in Jafza also recorded strong growth, with rents rising about 22 per cent to Dh40–45 per square foot across key zones, reflecting the free zone’s strategic position next to Jebel Ali Port and Al Maktoum International Airport.
Knight Frank estimates that around 6.6 million square feet of new industrial and logistics space is due to be delivered in Dubai during 2026, with additional supply of 2.2 million square feet expected in 2027 and nearly 5.9 million square feet in 2028. However, market analysts say the pipeline remains insufficient to fully ease current shortages, particularly for high-specification warehouses and distribution centres.
“Investor appetite remains firm and competition for institutional-grade stock continues to strengthen, placing further downward pressure on prime yields towards sub-8 per cent territory,” said Faisal Durrani, partner and head of research for the Middle East and North Africa at Knight Frank. “This should support capital values even as rental growth begins to moderate in parts of the market.”
The broader UAE economic expansion is reinforcing demand. The country’s non-oil economy grew strongly in 2025, supported by trade, manufacturing and re-export activity, with Dubai’s Economic Agenda D33 targeting a doubling of the emirate’s economy by 2033 and a major push to cement its status as one of the world’s top logistics hubs. According to Dubai Chambers, non-oil trade surpassed Dh2.8 trillion in 2025, underlining the scale of activity driving warehouse and distribution requirements.
Demand for space in 2025 was led by logistics and manufacturing occupiers, each accounting for about 21 per cent of total requirements, followed by retailers and traders at 14 per cent and technology-focused occupiers at 12 per cent. Mid-sized warehouses between 10,000 and 50,000 square feet accounted for more than 58 per cent of leasing demand, reflecting the needs of e-commerce operators and regional distributors.
Abu Dhabi’s industrial market also continued to expand, supported by the emirate’s diversification strategy and investment in manufacturing clusters such as Kezad and ICAD. Of the $5 billion worth of industrial contracts awarded across the UAE last year, around 33 per cent were in Abu Dhabi, highlighting its growing importance as a production and logistics hub. Industrial project completions in Abu Dhabi are forecast to exceed $1 billion in the first quarter of 2026 alone.
Prime rents in the Abu Dhabi Airports Free Zone remain the highest in the emirate, averaging about Dh625 per square metre, followed by Kezad Mussafah and Al Falah at roughly Dh550 per square metre. Analysts say a disciplined land-release strategy and strong government backing for manufacturing are helping maintain high occupancy and stable rental performance.
The Abu Dhabi Industrial Strategy aims to more than double the manufacturing sector’s contribution to Dh172 billion by 2031, focusing on sectors such as chemicals, machinery, electronics and pharmaceuticals while attracting foreign direct investment into advanced production facilities.
Industry experts say the UAE’s logistics property market is transitioning into a more mature phase, where asset quality, location and specification will increasingly determine performance. While new supply expected from late 2026 may begin to ease pressure in some submarkets, competition for well-located, grade-A facilities is likely to remain intense.
With trade volumes rising, e-commerce expanding and regional supply chains being reconfigured, the medium-term outlook for the UAE’s industrial and logistics real estate sector remains strongly positive, even as occupiers grapple with rising rental costs and limited availability of premium space.
Knight Frank estimates that around 6.6 million square feet of new industrial and logistics space is due to be delivered in Dubai during 2026, with additional supply of 2.2 million square feet expected in 2027 and nearly 5.9 million square feet in 2028. However, market analysts say the pipeline remains insufficient to fully ease current shortages, particularly for high-specification warehouses and distribution centres.
“Investor appetite remains firm and competition for institutional-grade stock continues to strengthen, placing further downward pressure on prime yields towards sub-8 per cent territory,” said Faisal Durrani, partner and head of research for the Middle East and North Africa at Knight Frank. “This should support capital values even as rental growth begins to moderate in parts of the market.”
The broader UAE economic expansion is reinforcing demand. The country’s non-oil economy grew strongly in 2025, supported by trade, manufacturing and re-export activity, with Dubai’s Economic Agenda D33 targeting a doubling of the emirate’s economy by 2033 and a major push to cement its status as one of the world’s top logistics hubs. According to Dubai Chambers, non-oil trade surpassed Dh2.8 trillion in 2025, underlining the scale of activity driving warehouse and distribution requirements.
Demand for space in 2025 was led by logistics and manufacturing occupiers, each accounting for about 21 per cent of total requirements, followed by retailers and traders at 14 per cent and technology-focused occupiers at 12 per cent. Mid-sized warehouses between 10,000 and 50,000 square feet accounted for more than 58 per cent of leasing demand, reflecting the needs of e-commerce operators and regional distributors.
Abu Dhabi’s industrial market also continued to expand, supported by the emirate’s diversification strategy and investment in manufacturing clusters such as Kezad and ICAD. Of the $5 billion worth of industrial contracts awarded across the UAE last year, around 33 per cent were in Abu Dhabi, highlighting its growing importance as a production and logistics hub. Industrial project completions in Abu Dhabi are forecast to exceed $1 billion in the first quarter of 2026 alone.
Prime rents in the Abu Dhabi Airports Free Zone remain the highest in the emirate, averaging about Dh625 per square metre, followed by Kezad Mussafah and Al Falah at roughly Dh550 per square metre. Analysts say a disciplined land-release strategy and strong government backing for manufacturing are helping maintain high occupancy and stable rental performance.
The Abu Dhabi Industrial Strategy aims to more than double the manufacturing sector’s contribution to Dh172 billion by 2031, focusing on sectors such as chemicals, machinery, electronics and pharmaceuticals while attracting foreign direct investment into advanced production facilities.
Industry experts say the UAE’s logistics property market is transitioning into a more mature phase, where asset quality, location and specification will increasingly determine performance. While new supply expected from late 2026 may begin to ease pressure in some submarkets, competition for well-located, grade-A facilities is likely to remain intense.
“With trade volumes rising, e-commerce expanding and regional supply chains being reconfigured, the medium-term outlook for the UAE’s industrial and logistics real estate sector remains strongly positive, even as occupiers grapple with rising rental costs and limited availability of premium space,” say logistics market analysts .
