The UAE’s logistics and industrial real estate market is experiencing a shift from rapid opportunistic growth to a more institutionalised, capital-driven phase.
What was once a fragmented landscape of warehouses and ad-hoc developments is now being reshaped by strategic investors such as Aldar, DP World, Sweid & Sweid, Agility, Radius Group, and JD.com. Each raising the bar for facility specifications and sustainability.
Occupancy rates across Grade A assets remain at an astonishing 95%, and rents have risen by 18% in Dubai and 13% in Abu Dhabi over the past year. Yet demand continues to outpace supply, with most new logistics parks pre-leased three to six months before delivery. That scarcity is now driving a new wave of institutional-grade projects designed to meet global occupier standards.
The rise of the institutional developer
More than 7 million sqft of new stock is currently under development, concentrated in Al Warsan and National Industries Park.
Flagship schemes include the Sweid & Sweid Terralogix Logistics Park (1.9 million sqft) and the Aldar–DP World Logistics Park (1.6 million sqft), both scheduled for completion between 2026 and 2027. Build-to-suit projects for blue-chip tenants such as dnata, DSV, and Transworld underline the market’s maturity, with facilities ranging from 323,000 to over 600,000 sqft.
This phase marks the UAE’s transition into a globally benchmarked industrial investment market, where speculative and purpose-built developments coexist, supported by rising institutional capital and deepening occupier sophistication.
Mid-sized is the new prime
Interestingly, the composition of demand is evolving. The most active size bracket in Dubai, 10,000 to 25,000 sqft (34%), reflects a shift away from the mega-warehouses that defined the 2024 surge.
Mid-sized and flexible units now dominate enquiries, driven by 3PLs, e-commerce, and last-mile delivery operators seeking scalability in a tight supply environment.
In Abu Dhabi, smaller footprints under 1,000 sqm represent over half of total demand, illustrating how the capital’s ecosystem is increasingly supporting SMEs, food logistics, and light manufacturers.
Even as global names such as Amazon and Noon commit to purpose-built fulfilment centres, the broader trend remains one of fragmentation, flexibility, and localisation.
Investors chase yield compression
The influx of capital into the industrial sector is creating a competitive investment environment.
Cushman & Wakefield Core expects continued yield compression as global funds compete for limited assets, driving down yields but reinforcing long-term confidence in the UAE’s logistics fundamentals.
With institutional developers controlling much of the upcoming pipeline, construction quality and sustainability standards are improving rapidly. Projects such as Aldar’s partnership with DP World demonstrate how ESG-aligned industrial assets are becoming mainstream investment products, combining economic returns with operational resilience.
The Abu Dhabi advantage
Abu Dhabi’s ecosystem provides an illustrative case study. Government-backed incentives, including rental rebates and subsidised utilities, are attracting new occupiers while keeping operating costs 10–15% below Dubai averages.
Major projects in KEZAD, Musaffah, and ADAFZ are set to add over 335,000 sqm of space by late 2025, though absorption rates suggest limited risk of oversupply.
Meanwhile, KEZAD’s 98% occupancy and 35% year-on-year growth in warehouse leasing confirm its position as the anchor of the UAE’s industrial base. By combining industrial clusters, logistics infrastructure, and support services—from metal fabrication hubs to food and agritech parks—KEZAD offers a template for how scale and specialisation can coexist in a single ecosystem.
Resilience through scarcity
Despite elevated rents, occupiers remain confident. Many are absorbing higher costs to retain prime locations, while others are migrating north to Sharjah, Ras Al Khaimah, and Umm Al Quwain for affordability. Yet even this decentralisation underlines the same reality: the UAE remains the location of choice for global and regional logistics operators.
As the next cycle of completions in 2026–2027 unfolds, analysts anticipate a gradual balancing of supply, but no significant correction. The depth of demand and pre-leasing momentum indicate that scarcity, rather than glut, will continue to define the market’s dynamics for years to come.
With multimodal infrastructure maturing, institutional developers leading new projects, and investors chasing high-quality assets, the UAE is evolving into one of the world’s most competitive industrial markets.
As 2026 approaches, the challenge for developers will be balancing growth with sustainability and affordability. For occupiers, the goal is clear: secure long-term space early, align with multimodal connectivity, and capitalise on the UAE’s growing status as the industrial heart of the Middle East.
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