The retail market in Abu Dhabi and Dubai experienced a surge in rental performance in the first quarter of 2024, with average retail rents in Abu Dhabi rising by 14.7% and in Dubai by 10.5%. However, Abu Dhabi saw a slowdown in the retail market as rental contracts declined by 8.1% compared to the previous year. This decline was primarily driven by a decrease in renewed rental registrations and new contracts. In contrast, Dubai’s retail market saw an increase in rental contracts by 0.2%, with new rental registrations rising by 1.6% while renewed rental registrations declined by 3.4%.
The demand for retail space in Dubai is being driven by the food and beverage sector, as well as an increase in global and international retail brands looking to establish or expand in core locations. However, the limited availability of stock and high occupancy levels remain challenges in the market. The strong demand in the UAE’s retail market has led to a lack of quality assets, which is expected to continue to drive rental growth but may slow new market activity due to the scarcity of upcoming developments.
In Abu Dhabi and Dubai, demand remains centered on quality assets in core locations, but the availability of such stock remains a challenge. In the industrial market, demand remained robust in the first quarter, with Abu Dhabi’s industrial and logistics market seeing a 4.7% increase in total rental registrations compared to the previous year. In Dubai, there was a 3.2% increase in rental registrations in the industrial market, supported by growth in both new and renewed rental registrations.
Average rents in Abu Dhabi and Dubai increased by 5.1% and 14.3% respectively in the first quarter of 2024. While several new developments are expected to be delivered throughout the year, it is unlikely to exert downward pressure on rental rates. Institutional-grade assets are expected to continue their upward trajectory in terms of rents, while older stock may experience more subdued performance.Overall, the industrial and retail markets in Abu Dhabi and Dubai are experiencing strong rental performance and demand, driven by various sectors and the overall economic competitiveness of the cities.
