Abu Dhabi’s industrial property market saw sharp rental increases in 2024, with supply still trailing demand from e-commerce, logistics, and third-party logistics operators, according to the Savills Abu Dhabi Residential Market report (pdf). Growth in the non-oil economy — which rose 5.9% in 9M 2024 — is translating into more demand for warehousing and logistics space, Savills noted, particularly from large-format occupiers needing fulfilment and last-mile delivery facilities.

Rents were on the rise: Key industrial hubs — including Mussafah, ICAD, and Kezad — saw average rents climb 25% y-o-y, with Kezad posting the highest surge at 38%. All three have now crossed the AED 500 per sqm mark.

REMEMBER- Abu Dhabi aims to double the size of its industrial sector to AED 172 bn by 2031, with infrastructure investments like Etihad Rail and CMA Terminals at Khalifa Port being key to that plan.

Developers are responding with new projects: In Al Falah, near Zayed International Airport, two major projects were announced in 2H 2024 — an AED 5 bn industrial and logistics park from Mubadala and Aldar and a 90k sqm facility from Abu Dhabi Airports Freezone and Radius, due by late 2026.

Outlook: While more warehouse space is coming in 2025, demand is expected to keep rents elevated, especially for high-spec single-tenanted assets, Savills said.

THE OFFICE MARKET-

Office rents are also climbing: Demand from banks, consultancies, and tech firms is driving rental growth across Abu Dhabi. Prime towers like Capital Gate Tower saw an increase of up to 14% y-o-y in 4Q 2024, followed by Addax Tower at 13% and ADGM at 12%. Grade A rents in the CBD and Outer CBD submarkets rose 8%.

ICYMI- Abu Dhabi’s office market hit record occupancy in 2024, with city-wide rates at 89% and Grade A at 95%, according to a Cushman & Wakefield report. Prime business hubs like ADGM were at full capacity. The report pegged demand as the driver behind an 11% y-o-y rise in office rents, with gains recorded across all office grades.

New supply won’t outpace demand: Developers plan to deliver over 100k sqm of new office space in 2025, including Masdar City Square and Yas Place. Still, high occupancy is likely to keep upward pressure on rents, Savills said. Cushman & Wakefield echoed this outlook, saying supply constraints will continue, with most upcoming stock already pre-leased — pushing some firms toward secondary market options until at least 2026/2027.

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