Dubai’s warehousing and retail property market turns more selective as rents rise and new leasing falls

Dubai’s retail and warehouse markets are rewarding anyone already in the right place: New retail leases fell 26.3% y-o-y in 1H 2026, while new warehouse contracts sank 51.8%, even as rents and renewals kept rising, according to Cavendish Maxwell’s new Dubai Retail and Warehouse Market Performance report (pdf). Retail renewals edged up 1.5%, warehouse renewals jumped a record 21.6%, retail rents rose 4.4%, and warehouse rents climbed 12.4%.

The split is straightforward: Investors are still buying, landlords with good stock still have pricing power, and existing occupiers are hanging onto locations that already work. What has weakened is the appetite to relocate or expand, with higher operating and occupancy costs and regional uncertainty pushing the market into what Cavendish Maxwell calls a “more selective phase.”

Retail buyers are still shopping — tenants, less so

The investment side had a very strong first half: Around 850 retail property sales were recorded in 1H, up 56% y-o-y, while transaction value jumped 176.7% to AED 3.8 bn. The much faster rise in value pushed the average transaction ticket up 77.3% y-o-y to AED 4.4 mn.

Off-plan did most of the lifting: Sales rose 109.6% y-o-y to around 500 transactions, accounting for 58.8% of transaction volume and 68.3% of value, while ready transactions grew a more modest 14.3%. The report cautions that registration lags can affect the timing of off-plan data.

But the headline growth is flattering the second quarter. Retail sales fell 25.4% q-o-q in 2Q to around 360 transactions from roughly 490 — still 61.1% above 2Q 2025, but a clear step down from the pace that made 1H look so strong.

Leasing tells the more cautious story: Around 33.3k retail contracts were signed in 1H, down 5.8% y-o-y, as renewals rose 1.5% even as new leases kept falling. Rents were up 4.4% y-o-y but slipped 0.8% q-o-q in 2Q — an early sign rental growth is losing momentum.

Prime malls have one big advantage: there’s barely any room left. “Occupancy at Dubai’s flagship malls and some community retail hubs is averaging around 98%,” Cavendish Maxwell commercial valuation head Vidhi Shah said. Shah expects those established destinations to remain relatively resilient as wider leasing becomes more selective.

Warehouses have the same split — only sharper

Tenants are holding onto what they have: Roughly 10k rental contracts were recorded in 1H, down 4.5% y-o-y. New contracts dropped 51.8% y-o-y to around 1.8k, while renewals rose 21.6% to roughly 8.2k, their highest level in the report’s series. However, total rental value still increased 9.9% y-o-y to AED 1.8 bn.

Scarcity is keeping rents climbing everywhere Cavendish Maxwell tracks. Warehouse rents rose 12.4% y-o-y — every monitored location was higher than a year earlier — though quarterly momentum is beginning to soften.

Emirates NBD’s tracking points the same way: Established tenants are staying put while reassessing expansion plans, the bank says, as new-entrant take-up slows amid geopolitical uncertainty — even as inquiry levels hold stable. It still expects logistics growth, manufacturing, and supply-chain localization to support demand, with institutional investors continuing to chase warehouse transactions — several are already under due diligence.

More selective, not suddenly weak

REMEMBER- This squeeze predates the latest disruption. In January, we reported from earlier Cavendish Maxwell data that new retail leasing fell 32.2% y-o-y in 3Q 2025 and new warehouse leasing dropped 60.2%, while renewals were rising as quality space became harder to replace. The latest uncertainty looks more like an accelerant than the original cause.

What's next: Cavendish Maxwell expects occupier interest to hold up in the best-located retail destinations and warehouses even as the wider market stays cautious about relocating or expanding. The clearer test: whether the several warehouse transactions Emirates NBD says are under due diligence actually close in 2H and whether 2Q’s retail deceleration — the 25.4% q-o-q drop in sales and the 0.8% dip in rents — extends into 3Q or proves a one-quarter wobble within an otherwise strong year.