UAE warehouse rents are projected to rise between 5% to 10% in 2025, director of logistics and industrial assets fund Manrre REIT Kunal Lahori told Zawya Projects.

The drivers: The projected rise in rent prices comes on the heels of heightened demand from local and global logistics giants, manufacturing companies, and e-commerce firms. Shortages in vacant warehouses and industrial land are also major drivers for the projected rent hike.

The good news: Supply issues are set to improve within 12 to 18 months as new warehouses become available and developers adapt to the heightened demand and build more units in response to the steady returns that the logistics sector offers in the UAE, Lahori predicted. Kezad, for example, is expected to add 250k sqm of warehouses by the end of 2025, according to a 2024 report (pdf) by the consultancy firm Knight Frank.

The trend is familiar: Warehouse facilities in the UAE — as well as Saudi Arabia — saw robustdemand earlier last year on the back of booming non-oil industries, which led to major surges in industrial leasing prices over the last few years. For example, Grade B warehouses saw over 38% y-o-y surge in rents in 1H 2024. In the KSA, warehouse rents grew by an average of 20% y-o-y in Riyadh and Jeddah by 15% y-o-y in 1H 2023—with occupancy rates at around 96%.

Warehouses are big in the UAE: The Jebel Ali Free Zone (Jafza) has seen recent expansions on the storage and warehouses front, with Chinese vehicle manufacturer Omoda & Jaecoo launching a distribution center back in December as well as Bahrain’s Arcapita and Denmark-based logistics firm DSV building a 30k sqm warehouse in January.

REMEMBER- Logistical warehouses in the UAE recorded annual capital gains of 15% last year, with Dubai Investment Park and Al Quoz seeing the best performance. Demand is expected to continue to outpace supply, especially with the prospect of lower interest rates this year.

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