Rapid Increase in Demand Causes Industrial and Logistics Rent Spikes in Dubai
Rising Industrial Rents and Emerging Hotspots in Dubai and Abu Dhabi
A new report by global property consultancy Knight Frank reveals a surge in industrial and logistics rents across the UAE, particularly in Dubai and Abu Dhabi. The trends show a shift towards smaller industrial units and emerging hotspots beyond traditional industrial areas, driven by the growth of e-commerce and logistics sectors.
In Dubai, key emerging industrial hotspots include Dubai Investments Park (DIP) and Jebel Ali Free Zone (JAFZA). DIP is witnessing a surge in land acquisition and development due to strong demand for premium warehouses, with average rents up 33% over the year to AED 60 per sqft. JAFZA continues to be a core logistics hub offering duty-free benefits and port access, attracting high-volume trade businesses. However, competition for premium, high-tech warehouses is intensifying.
Meanwhile, the most sought-after industrial units in Dubai are now mid-sized, with the 25,000-50,000 sqft band being particularly popular. Grade-B stock in Al Quoz commands AED 58 psf, up 21% year-on-year, making it the highest-priced location in Dubai, with grade-A rents of AED 85 psf in Q2 2025, marking a 31% year-on-year increase.
Regarding unit size demand, while the office sector in Dubai is seeing a shift towards larger office spaces, the industrial sector—influenced by e-commerce—shows strong interest in smaller, flexible industrial units for agile logistics and last-mile delivery purposes. This matches with reports of a 38% increase in tenant demand for industrial warehouses as of early 2025, reflecting growth in smaller unit demand to accommodate evolving business models.
Beyond the traditional hotspots like JAFZA, DIP, Al Quoz, and Dubai South are emerging as key industrial hubs. These areas benefit from strategic locations near ports and airports, infrastructure upgrades, and government incentives, making them attractive for new warehouse developments.
For Abu Dhabi, although the provided results focus mainly on Dubai, the broader market trend in the UAE includes growing demand for industrial spaces tied to logistics and manufacturing expansions. Abu Dhabi is also promoting industrial growth around Khalifa Industrial Zone (KIZAD), which aligns with national goals to diversify the economy.
In summary, the key industrial rent trends are:
| Aspect | Dubai | Abu Dhabi | |-------------------------------|----------------------------------|---------------------------------| | Demand for unit size | Increasing demand for smaller, flexible industrial units to support e-commerce and logistics | Growing interest in industrial units in areas like KIZAD (inferred from broader market trends) | | Emerging hotspots | Dubai Investments Park, JAFZA, Al Quoz, Dubai South | Khalifa Industrial Zone (inferred) | | Rent growth | ~12.9% YoY increase (Q3 2024), rising rents in DIP and JAFZA | Likely rising, linked to industrial expansion programs (less detailed data) | | Market drivers | E-commerce boom, trade route expansion, government incentives | Economic diversification, logistics and industrial development (inferred) |
These trends highlight a shift beyond traditional large-scale warehouses to more diverse, smaller industrial spaces in strategically located emerging areas, with an upward pressure on rents due to demand outpacing supply in prime locations.
The report titled "H1 2025 Dubai and Abu Dhabi Industrial Markets Review" by Knight Frank indicates continued intense competition for limited new supply driving up rents. Industrial and logistics space requirements in Dubai reached 40.6 million sqft in 2024, and in H1, industrial and logistics space requirements rose by 225%. The rise in industrial rents follows a record-breaking 2024.
Industrial and logistics rents in the Northern Emirates have risen rapidly, up by 40% year-on-year, from around AED 25 psf to AED 40 psf. KEZAD Musaffah (ICAD) and Musaffah were standout performers in Abu Dhabi, recording year-on-year rent increases of 57% and 52%, respectively. The upward rental pressure remains high, especially in well-established submarkets, according to Faisal Durrani, Partner - Head of Research, MENA.
The article is published by Middle East Staff, an international franchise of Media. The rise in industrial rents across the emirates in H1 indicates a robust market, with no signs of slowing down anytime soon.
- In Dubai, the growth of e-commerce and logistics sectors has led to a surge in demand for smaller, flexible industrial units, such as those in Dubai Investments Park (DIP) and Jebel Ali Free Zone (JAFZA), where average rents have risen by 33% over the year.
- Finance and real-estate industries in Abu Dhabi are also seeing increased interest in industrial spaces, with the Khalifa Industrial Zone (KIZAD) becoming a key industrial hub, aligning with the nation's goals to diversify the economy.
- Investing in industrial properties in Dubai is currently driven by the rising rents in emerging hotspots like DIP, JAFZA, Al Quoz, and Dubai South, as well as the growth in demand for smaller, flexible units to accommodate evolving business models.
