UAE bulks up on industrial space to ease rising rents

• Supply crunch dampening growth
• Abu Dhabi rates up 50% in two years
• Dubai to deliver 2.8 million sq ft in 2026

Abu Dhabi and Dubai are gearing up to release a significant pipeline of industrial space as both emirates move to cool a supply crunch that has pushed rents sharply higher.

The new supply is crucial to easing a shortage straining capacity across logistics, manufacturing and ecommerce. 

Officials see the buildout as essential to meeting the UAE’s industrial-policy targets, with the two emirates needing more space to support the next phase of growth.

Industrial lease rates in Dubai have risen around 30 percent over the past two years, while Abu Dhabi has logged increases of more than 50 percent during the same period, according to a new report from real estate consultancy CBRE.

Demand is broad, driven by logistics players, manufacturers and ecommerce companies building regional distribution hubs.

CBRE expects rents in Abu Dhabi to keep rising until new stock reaches the market, while Dubai continues to face what the consultancy describes as an “undersupply of quality warehousing accommodation”.

Data from Dubai-based Creation Business Consultants shows a steady rise in corporate interest. Over 69 percent of enquiries made to the company this year were linked to business setup, with more than 70 percent of those focused on Dubai.

“The industrial sector, including oil and gas, accounts for 52 percent of related enquiries, alongside growing demand for computer requisites, chips and industrial wire manufacturing,” managing director Scott Cairns told AGBI. He added that heavy-equipment supply enquiries were up about 50 percent.

Cairns said more than a quarter of enquiries were coming from Europe and a fifth from the Asia Pacific region, with increased activity from China following US tariffs announced by President Donald Trump and ongoing trade tensions. 

“Several large manufacturers from China are either assessing manufacturing footprints here or have already begun the process,” he said.

Nearly 2.8 million square feet of new industrial and logistics space is expected to be delivered in Dubai in 2026, according to fellow consultancy Knight Frank, the largest annual addition in recent years.

The push for more space comes as the UAE advances some of its most ambitious industrial-policy goals. At the federal level, a strategy known as Operation 300bn aims to boost the industrial sector’s GDP contribution to AED300 billion ($82 billion) by 2031, from AED133 billion when it launched in 2021.

Dubai’s D33 Agenda seeks to double the size of the emirate’s economy by 2033, while Abu Dhabi aims to double manufacturing output by 2030.

Foreign investors appear to be responding. The UAE attracted 613 greenfield FDI projects worth $5.4 billion in the first half of 2025, according to government-owned bank Emirates NBD.

• UAE warehousing attracts new institutional investors
• Canada’s Brookfield invests in UAE warehouse sector
• Aldar’s new Dubai logistics park to break ground in Q4

Meanwhile, global capital is converging on the logistics sector: last month, alternative investment managers Blackstone and Abu Dhabi’s Lunate launched the $5 billion Glide platform targeting warehouse and logistics assets across the Gulf.

This week it was announced that a 23,000 square metre facility established by INDU Kishore Logistics at the Logistics District in Dubai South had been inaugurated.

According to a report from estate agency Savills, London had the world’s most expensive warehousing market in the six months to March 2025, with annual occupancy cost reaching nearly $49 per square foot. 

Sydney came second, at $31.60 per square foot, while Dubai recorded one of the sharpest rises to $26.43 per square foot. Abu Dhabi came in at just under $15.