Transactions in commercial real estate in Dubai led to a total valuation of AED 1.8 billion ($490 million) for warehouses in the first half of the year, which is a rise of 10 percent compared to the previous year. According to the report from the real estate advisory firm Cavendish Maxwell, the industrial sector is characterized by increasing average rental prices and a new peak of lease renewals.
The growth in the value of transactions has been facilitated mainly by a rise in average rental prices by about 12.5 percent. Despite the decline in contract volume by 4.5 percent to about 10,000 contracts, existing business tenants aimed at operational continuity. Record levels of lease extensions were recorded, climbing 22 percent year-on-year to hit 8,200 transactions. Conversely, agreements for new industrial space plummeted by over 50 percent, reflecting a strategic shift toward cost mitigation amid wider macroeconomic considerations.
Vidhi Shah, Director and Head of Commercial Valuation at Cavendish Maxwell, noted that the sharp drop in new lease commitments alongside record renewals indicates high tenant retention paired with a cautious approach to business expansion. Shah explained that occupiers are increasingly choosing to preserve existing footprints rather than taking on additional capital commitments.
Compact industrial units dominated overall market activity. Properties measuring under 5,000 square feet accounted for nearly 70 percent of all signed leases, with spaces sized between 2,000 and 5,000 square feet comprising more than half of total demand. Units exceeding 10,000 square feet secured nearly 20 percent of transactions, while mid-sized units ranging between 5,000 and 10,000 square feet recorded the lowest demand at 12 percent.
Price growth varied across key logistics hubs in the emirate. Jebel Ali recorded the steepest rental gain at 15.5 percent, followed closely by Dubai Industrial City at 15 percent and Ras Al Khor at nearly 14 percent. Industry experts expect market behavior in the second half of the year to remain highly selective, with well-positioned, high-grade assets maintaining strong interest while general expansion timelines lengthen.
