‘UAE warehouse rents set to rise up to 10% in 2025 amid supply shortage'

Zawya

14-02-2025

Warehouse rents in the UAE are expected to further increase by up to 10 percent in 2025, driven by strong demand, low vacancy rates and shortage of industrial land, according to Kunal Lahori, Director of Manrre REIT Logistics Fund, which specialises in institutional-grade logistics and industrial assets across the UAE and GCC.
'Rents have risen 25-30 percent in the past year, with a projected 5-10 percent increase this year,' he told Zawya Projects.
Lahori underlined that demand for logistics space remains strong in the UAE, fueled by e-commerce and multinational tenants. However, supply constraints persist due to a shortage of warehouses and industrial land.
'We see shortages in all industrial areas. The demand for Grade A assets is high, with vacancy rates as low as 3 percent,' he said on the sidelines of an event held to announce 'strategic investment' by DIFC-based GFH Partners in the REIT fund.
The executive noted that the market is witnessing diverse interest from local and international logistics players, manufacturing firms, and e-commerce giants. For example, UAE's e-commerce sector is growing 20 percent annually, outpacing global trends.
'Growth potential in the UAE, particularly in Jebel Ali, is high as there is a requirement of 40 million square feet (sq ft),' he said.
A report by Knight Frank last year underscored the shortage of high-quality industrial and logistics space in the UAE, especially in Dubai. Al Quoz (Grade A) led the way with rents surging 45 percent over the year to AED72-100 per sq ft, while Dubai Investments Park (DIP) saw the highest growth at 48 percent, reaching AED50-70 per sq ft. Strong gains were also recorded in Dubai Industrial City and Dubai South with 38 percent and 26 percent growth.
'We expect some ease in supply in the next 12 to 18 months, and the market to stabilise at a 10 percent increase, driven by continuous demand for high quality assets and expansion of e-commerce,' said Lahori.
As property developers cater to growing demand, a strong pipeline for asset acquisitions is emerging. The Knight Frank report highlighted that international investors from the USA, China, and Europe are showing increasing interest in Dubai's industrial sector, attracted by yields of approximately 8.25 percent.
Lahori said they are looking at Jebel Ali Free Zone (JAFZA), DIP and National Industries Park in Dubai for further growth.
He described GFH Partners' investment as a 'pivotal moment' for the fund, which, he claimed, has consistently delivered a 7-8 percent annual dividend.
'With GFH Partners on board, we are well-positioned to expand our specialist asset class and further elevate Manrre's market presence,' he said. The investment value wasn't disclosed.
Founded in 2018 by Palmon Group FZCO, a local logistics developer and owner, Manrre's portfolio is valued at approximately AED 500 million ($136.1 million). It comprises 26 high-quality properties that are 96 percent leased and spans over 1.5 million square feet. These also include last-mile logistics hubs in various locations.
(Reporting by Bhaskar Raj; Editing by Anoop Menon)