Demand for Industrial and Logistics Assets in Dubai, Abu Dhabi Surges 185%

Industrial and logistics asset demand in Dubai and Abu Dhabi surged 185% year-on-year to 18 million sq. feet in the first half of 2024, a new report showed.

In its industrial market review, Knight Frank noted that the sector’s performance is reflected in the Jebel Ali Industrial Area Second Category, where rents surged 38.5% to US$9.80 per sq. foot.

Key sectors driving this surge in demand include manufacturing at 11.7%, construction at 11.1%, and logistics at 10.2%, which collectively account for one-third of total demand.

This growth aligns with Dubai’s Commercial and Logistics Land Transport Strategy 2030, which aims to double the sector’s direct contribution to the emirate’s economy to US$ 4.5 billion.

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The strategy also targets a 75% increase in technology adoption within infrastructure, a 30% reduction in carbon emissions, and a 10% improvement in operational efficiency.

Maxim Talmatchi, associate partner and co-head of Industrial & Logistics, UAE, at Knight Frank, said: “The industrial and logistics market demonstrates robust fundamentals, characterized by strong demand, minimal vacancies, and a promising pipeline of upcoming projects as developers respond to the rising level of demand.”

The property consultant also highlighted increasing interest from institutional investors in the US, China, and Europe, with the sector’s global appeal bolstered by attractive yields of around 8.25%.

“There’s a noticeable shortage of high-quality industrial and logistics space in the UAE, especially in Dubai. As the Dubai Industrial Strategy 2023 aims to make Dubai a global industrial hub, there is an urgent need to develop new high-quality stock,” said Mikhail Vereshchagin, Knight Frank’s associate partner, Industrial & Logistics, UAE.

The London-headquartered firm projected new supply in the UAE’s commercial capital to total 660,000 sq. feet in 2024, with 360,000 sq. feet in the Jebel Ali Free Zone and 300,000 sq. feet in Dubai Industrial City. An additional 1.3 million sq. feet is expected in 2025 across the National Industries Complex, Dubai South, and Dubai Investments Park 2.

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