Demand for industrial & logistics space in Dubai increased by 225% in 2024
Industry News Demand for industrial & logistics space in Dubai increased by 225% in 2024
By
Rents are projected to rise by 2% per month throughout 2025 in both Abu Dhabi and Dubai, driven by tight supply and strong demand, reflecting market confidence
The UAE's industrial and logistics sector experienced an unprecedented 225% surge in demand in 2024, with Dubai's new industrial space requirements reaching 40.6m sqft, according to Knight Frank's Dubai and Abu Dhabi Industrial Markets Review 2024/2025.
The surging demand levels come hot on the heels of the UAE government's announcement of plans to grow the size of the nation's logistics sector from US $34.8bn to $54bn in the next seven years, through the establishment of the UAE Logistics Integration Council.
Faisal Durrani, Partner, Head of Research, MENA said, 'In 2024, the UAE achieved significant economic milestones, reinforcing its position as a global trade and investment hub. The non-oil PMI reading rose to 55.4 in December from 54.2 in November, marking 48 consecutive months above 50, signaling sustained business expansion, which is translating into escalating levels of demand for industrial and logistics space. Separately, foreign direct investment and international trade also recorded substantial growth last year, further catalysing new space requirements.'
Demand peaked in Q4 2024, accounting for 34% of total requirements during 2024, Knight Frank says, for 2024 as a whole, the manufacturing (19%) and logistics (18%) sectors led demand in Dubai. Retailers & traders (13%), business services (11%), and construction & real estate (11%) then followed. The sharp increase in demand is underpinning a market-wide supply shortage, with new market entrants and expansion efforts continuing to fuel rental growth.
Adam Wynne, Partner – Head of Commercial Agency, Dubai explained, 'Rents and capital values have maintained an upward trajectory. Industrial & logistics rents in Dubai surged by 33% year-on-year, with vacancy rates at just 3%. While developers are working quickly to respond to the rising level of requirements, the city's 2040 Urban Master Plan promises to deliver a new wave of industrial and logistics demand. The 2040 masterplan emphasises the development of a world-class logistics network, for instance. This includes the expansion of existing ports and airports, the creation of new transport corridors, and the implementation of cutting-edge logistics technologies.'
Dubai's industrial areas recorded significant rental growth in 2024, Al Quoz (Grade A): +45%, Dubai Investments Park (DIP): +48%, Dubai Industrial City: +38%, Dubai South: +26%. In Abu Dhabi, KEZAD Mussafah (ICAD) led rental growth, with rates surging 57% while Abu Dhabi Airports Free Zone (ADAFZ) recorded the highest rents.
During H2 2024, new large-scale industrial and logistics projects were announced in the Al Falah area, east of Zayed International Airport. Spanning 8.3sqkm, Al Falah is emerging as a key logistics hub for the capital. The new rail network will enhance supply chain efficiency, lower transportation costs, and offer a sustainable alternative to road freight, further boosting the appeal of underutilised industrial areas, as per Knight Frank.
One of the key milestones in 2024 was the completion of the Etihad Rail network, first announced in 2008. The rail network has established a cargo link between the emirates, driving increased demand around rail hubs. Knight Frank expects Etihad Rail to enhance the UAE's industrial landscape by creating connectivity between industrial zones nationwide. This infrastructure is likely to increase demand in lower-rent areas, reducing price disparities across various industrial zones.
Wynne added, 'Another game-changer will be the planned relocation of the city's primary airport to Al Maktoum International in Dubai South by 2034. This includes the expected transfer of all Emirates Airlines operations which is already impacting on the availability of land for industrial and logistics use. This move, while hugely positive for the future of the city and its economy, will put further upward pressure on rents and values as Dubai continues to grapple with a shortage of prime land and high-quality warehousing.'
Maxim Talmatchi, Associate Partner, Head of Industrial & Logistics, UAE, said, 'Land availability remains critically constrained, with most industrial parks operating at full capacity. The limited remaining plots are prioritising end-users, restricting speculative development opportunities. New supply is anticipated in late 2025 and beyond but is unlikely to disrupt the supply-demand balance. We expect rapid absorption of the 3.65m sqft of new space currently being developed across Dubai and Abu Dhabi which is due for delivery over the next two years.'
Rents are projected to rise by 2% per month throughout 2025 in both Abu Dhabi and Dubai, driven by tight supply and strong demand, reflecting market confidence. In the investment market, further yield compression is likely, Knight Frank says, with prime net initial yields projected to fall below 8%, signalling sustained investor confidence in the sector.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hi Dubai
44 minutes ago
- Hi Dubai
UAE and Serbia Activate Economic Partnership Agreement to Boost Trade and Investment
The Comprehensive Economic Partnership Agreement (CEPA) between the United Arab Emirates and the Republic of Serbia has officially come into force, marking a key step in strengthening economic cooperation between the two nations. The agreement is designed to increase trade and investment flows, opening new opportunities across multiple sectors. Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, highlighted the CEPA's potential, saying it 'creates new avenues for collaboration, investment, and trade that will benefit both our nations.' He emphasized that the pact will help generate jobs, reinforce supply chains, and foster a business-friendly environment. Bilateral non-oil trade between the UAE and Serbia reached about US$121.4 million in 2024—double the level seen in 2021. The agreement is expected to significantly increase this trade, contributing an estimated US$351 million to the UAE's GDP by 2031. This growth is supported by the elimination or reduction of customs duties on over 96% of tariff lines, enhancing market access. Serbia's strategic location and diverse economy position it as a vital gateway into Eastern Europe and the Balkans. The CEPA aims to deepen private sector collaboration and encourage investments in key areas such as renewable energy, agriculture, logistics, and technology. As Serbia's largest trading partner in the Gulf Cooperation Council region, the UAE accounted for 55% of Serbia's trade with the GCC in 2023. The CEPA will further strengthen this relationship through increased foreign direct investment in high-growth sectors. This agreement is the UAE's 10th CEPA to come into force, part of a broader strategy to grow non-oil trade to US$1.1 trillion and double the economy's size by 2031. News Source: Emirates News Agency
Fintech News ME
an hour ago
- Fintech News ME
Papara Founder Among 13 Detained in Turkish Fintech Crackdown
Turkish authorities have detained 13 individuals as part of an ongoing investigation into fintech company Papara, over allegations of money laundering, illegal betting activities, and the formation of a criminal organisation, Interior Minister Ali Yerlikaya announced on Tuesday (May 27) . According to Reuters, authorities suspect that Papara, an online platform providing money transfers, foreign exchange, and bill payment services to its 21 million users, was facilitating the transfer of illegal betting revenues by allowing users to open accounts for this purpose. State broadcaster TRT Haber reported that those detained include Papara's founder and chairman, Ahmet Faruk Karslı. In response to the investigation, the Savings Deposit Insurance Fund (TMSF) was appointed as trustee to oversee Papara by court order, following reports from the Central Bank of the Republic of Turkey, the Financial Crimes Investigation Board (MASAK), and other relevant bodies. The central bank, which regulates payment service providers, stated on Tuesday that temporary daily transaction limits would be imposed on the platform. 'In this process, which will be carried out in coordination with the relevant institutions, temporary daily limits will be applied to payment transactions at the institution,' the central bank noted. The central bank also sought to reassure users, emphasising that, 'within the scope of the law, the funds of payment service users in payment and electronic money institutions are secured in protection accounts at banks.' Yerlikaya added that the authorities have seized 10 companies, bank accounts, and the assets of the detained individuals. A financial crimes investigation revealed that over 26,000 accounts had been used for illegal online betting activities, with transactions amounting to 12.9 billion lira (approximately US$330 million). Papara, considered one of Turkey's leading fintech firms, has yet to issue a statement regarding the matter. Founded in 2015, the company received its electronic money institution license from Turkey's banking regulator, BDDK, in 2016. It expanded internationally in 2023 through the acquisitions of Pakistan-based SadaPay and Spain-based Rebellion Pay.
Fintech News ME
2 hours ago
- Fintech News ME
Stitch Raises $10M to Improve Financial Infrastructure in MENA
Stitch, a Saudi Arabia-based platform for launching and scaling financial products, has announced the close of a US$10 million seed funding round. The round was led by Arbor Ventures, COTU Ventures, Raed Ventures, and SVC, with participation from family offices and industry figures including Marqeta founder Jason Gardner and Abdulmalik AlSheikh, known for his role in establishing the mada and Sadad payment networks in Saudi Arabia. The funding will support Stitch's efforts to expand its team and enhance its technology platform, which aims to simplify the development and launch of financial services. Demand for integrated financial infrastructure is increasing across both the Middle East and global markets. The global banking and financial services industry is projected to grow from US$91.42 billion in 2024 to US$221.39 billion by 2033, at a compound annual growth rate of 10.3 percent. In Saudi Arabia, banking sector assets have reached US$1.12 trillion (SAR 4.22 trillion), while digital payments grew by 75 percent between 2019 and 2021. Point-of-sale transactions in the country totalled US$177.69 billion (SAR 667 billion) in the 2024 financial year. Despite this growth, many businesses in the region continue to face challenges in building financial products due to outdated systems and complex regulations. Stitch aims to address this with a unified, API-driven platform. Currently serving clients in Saudi Arabia and the UAE, the company has also expanded into East Africa, beginning with Kenya. Mohamed Oueida, Founder and Chief Executive Officer of Stitch, said: 'Businesses are forced to navigate outdated legacy systems and complex regulatory frameworks, making things slow, expensive, and mostly painful. It does not have to be this way. Stitch exists to change this. Institutions should be able to focus on what matters and have a platform that can mould around their creativity. We are generally looking to make this process a lot more enjoyable for our partners.' Stitch's platform enables clients to develop and launch financial services more efficiently, with the company claiming product deployment times can be reduced by up to 80 percent. Clients include Lulu Exchange, Alamoudi Exchange, Foodics, Dar Al Tamleek, Raya Financing, and Tanmeya Capital, all of whom are using the platform to offer customised financial solutions. Founded in 2022, Stitch has brought together talent from institutions such as FIS, Geidea, Rain Financial, NPCI India, and Al Rajhi Bank, with a focus on long-term innovation in banking and payments.
