E-commerce Powerhouse: How Dubai’s Logistics & Warehouse Real Estate Keeps Outperforming

1 | Executive snapshot

• Demand spike: new requirements for industrial / logistics space leapt 225 % in 2024 to ≈ 40.6 m sq ft and a further 11.5 m sq ft was logged in H1 2025.

• Vacancy crunch: Grade-A vacancy is ≈ 3 %, while city-wide commercial vacancy hit a record-low 8.6 %.

• Rents on a tear: Al Quoz Grade-A sheds reached AED 85 psf (+31 % y-o-y); Dubai Investments Park averaged AED 60 psf (+33 %).

• E-commerce engine: UAE online GMV forecast to climb from AED 27.5 bn (2023) → AED 48.8 bn (2028) – an ≈ 8 % CAGR.

• Supply bottleneck: just 780 k sq ft of true speculative space completes in 2025, yet 7.2 m sq ft is in the pipeline for 2026-28 (65 % already pre-let).

2 | Structural demand drivers

3 | Occupier trends (H1 2025)

• Unit-size pivot: most enquiries now in the 25-50 k sq ft band, reflecting scarcity of mega-boxes and tighter inventory strategies.

• Sector mix: logistics providers, manufacturers and retailers still account for > 50 % of all new requirements.

• Cold-chain build-out: temperature-controlled stock in Dubai South fully pre-leased on delivery; F&B and pharma drive the queue.

4 | Supply map & rental benchmarks

Sources: Knight Frank H1 2025 Review & developer releases

5 | Capital-markets pulse

• Investors closed AED 530 m worth of light-industrial assets in Abu Dhabi’s Al Markaz (Aldar ↔ Waha Capital) in Q2 2025 – signal of capital shifting up the risk curve.

• Knight Frank notes rising bid depth for forward-funded cold-storage projects; prime yields edging below 8 % amid rental-growth outperformance.

6 | Risks & what to watch

7 | Outlook to 2027

1. Rent trajectory: moderates to +7-9 % p.a. once 2026 bulk completions hit.

2. Cold-chain share: expected to exceed 25 % of new take-up by 2027.

3. Capital flows: anticipate entry of APAC REITs and GCC pension funds; first UAE logistics-focused REIT IPO widely rumoured for 2026.

4. Occupier strategy: dual-hub models (Dubai South + Northern Emirates) and urban micro-fulfilment centres become mainstream.

References

1. Knight Frank, Dubai & Abu Dhabi Industrial Markets Review 2024-25 (5 Feb 2025)

2. Knight Frank, Industrial Market Review H1 2025 (29 Jul 2025)

3. Khaleej Times, Commercial Vacancy at 8.6 % (17 Jul 2025)

4. WAM / EZDubai, UAE E-commerce to AED 48.8 bn by 2028 (17 May 2024)

5. Dubai South Media Office (3 Feb 2025)

6. KEZAD Group release (30 Jan 2024)

7. Knight Frank press brief, Rents to rise 2 % per month (5 Feb 2025)