Retail rents in Dubai and Abu Dhabi have risen by double digits in recent months due to high demand and limited availability of quality stock.
According to CBRE Middle East, rents in the UAE capital rose 14.7% in the first quarter of the year, while in Dubai they rose 10.5%.
According to the real estate services firm, some of the demand is coming from foreign retail brands looking to enter the local market, particularly in Dubai. There is also strong demand from the food and beverage industry.
“The supply-and-demand imbalance in both Abu Dhabi and Dubai continues to drive rental performance,” CBRE said.
“We are seeing an increase in the number of global and international retail brands looking to establish or expand in Dubai’s core locations despite the limited availability of stock and elevated occupancy levels.”
Tenants in both emirates seek high-quality assets, particularly those in prime locations. However, CBRE stated that the segment does not have enough available stock.
“The strong levels of demand seen in the UAE’s retail market have resulted in a discernible lack of quality assets,” said Taimur Khan, Head of Research MENA in Dubai.
“Although this is expected to continue to drive rental growth, it will likely put some pressure on new market activity, particularly given the scarcity of upcoming developments.”
Industrial market
In the industrial market, CBRE reported “robust levels of demand” in the first quarter of the year.
Average rents in Abu Dhabi and Dubai increased by 5.1% and 14.3%, respectively.
“A number of new developments are scheduled for delivery over the remainder of the year; however, this is unlikely to exert downward pressure on rental rates,” CBRE noted.
