Dubai retail and warehouse markets surge amid tight supply and rising demand

Dubai’s retail and warehouse sectors posted a stellar performance in the third quarter of 2025, buoyed by resilient demand, constrained supply, and growing investor confidence.

According to Cavendish Maxwell’s latest market report, retail sales transactions soared past Dh1 billion for the first time in a single quarter, underscoring the strength of the emirate’s consumer economy.

Retail sales activity accelerated sharply, with transaction volumes jumping 78.7 per cent quarter-on-quarter and 27.2 per cent year-on-year. Off-plan deals were the standout driver, surging 133 per cent compared to the previous quarter and 64.7 per cent from a year earlier. In total, around 400 retail sales transactions were recorded in Q3, signaling robust appetite for retail assets amid Dubai’s population growth and record-breaking tourism figures.

On the leasing front, the story was one of scarcity. Limited availability of prime, high-footfall retail space pushed tenants to renew existing leases rather than relocate. Renewal contracts rose 6.1 per cent year-on-year, while new rental agreements fell by 32.2 per cent, reflecting the strategic value of established locations. This imbalance fueled rental growth across the city, with rates climbing between 7 per cent and 15 per cent in key districts such as Downtown Dubai, Dubai Marina, and Business Bay. At the citywide level, rents advanced 7.7 per cent year-on-year.

“Dubai’s retail sector is marked by strong demand and limited prime space, driving tenants to secure established locations as experiential destinations and community-focused assets continue to mature,” said Siraj Ahmed, Head of Strategy and Consulting at Cavendish Maxwell.

The warehouse market mirrored this trend of tight supply and rising costs. While overall rental transactions dipped 8.3 per cent year-on-year to about 4,200 deals, renewal activity surged 62.2 per cent, highlighting occupiers’ preference for operational continuity over relocation. New contracts, by contrast, fell sharply as businesses scrambled to retain existing facilities in an increasingly competitive environment.

Vidhi Shah, Director, Head of Commercial Valuation at Cavendish Maxwell, said: “Dubai’s retail and warehouse markets continue to perform strongly, supported by high demand, constrained supply and sustained investor confidence. Population growth, record tourism levels and rising occupancy continue to push up rents, which are likely to see more growth in the near to medium term. In the retail sector, we expect to see growth among smaller, community shopping centres that focus on daily needs and convenience, as well as ongoing investment in flagship malls, such as the Dh5 billion expansion at Mall of the Emirates. Meanwhile, Dubai’s warehousing shows no sign of slowing down. As the city further reinforces its position as an ever-expanding regional logistics hub, tenants are prepared to absorb double digit rent increases to secure premises in a market where alternatives are limited.” 

Rental rates in the industrial segment posted double-digit gains, averaging 16.8 per cent year-on-year across major hubs such as Jebel Ali, Dubai Investment Park, and Ras Al Khor. Growth ranged from 12 per cent to 21 per cent, driven by structural demand from e-commerce and Dubai’s expanding role as a regional logistics powerhouse.

Looking ahead, the outlook remains bullish. Mall operators Emaar and Majid Al Futtaim reported average occupancies of 98 per cent across their portfolios, with flagship destinations like Dubai Mall continuing to attract strong footfall. Future development will focus on smaller community malls catering to daily needs, alongside mega-expansions such as the Dh5 billion upgrade at Mall of the Emirates, which aims to deliver dining, entertainment, and wellness experiences that e-commerce cannot replicate.

Meanwhile, the warehouse sector shows no signs of cooling. Persistent supply constraints and surging demand from logistics and online retail are expected to keep rents on an upward trajectory. “Location security and long-term stability carry greater strategic value than ever,” Ahmed noted, as businesses absorb higher costs to secure scarce space.

With both sectors riding a wave of growth, Dubai’s retail and logistics landscape is evolving rapidly — where convenience meets experience, and operational resilience trumps cost.

This article was originally published in Khaleej Times.