Dubai’s retail and warehouse sectors demonstrated resilience and growth in 2025, supported by strong fundamentals including record tourism, population growth, and rising e-commerce activity. Both sectors, however, faced tightening supply conditions that shaped market dynamics throughout the year, according to leading property expert Cavendish Maxwell.
The retail sector experienced robust growth in 2025, with sales transaction values rising 48.4% year-on-year to AED 4.6 billion, significantly outpacing the 7.6% increase in transaction volumes, it stated.
Rental activity showed signs of supply constraint, with new leases declining 15.7% whilst renewals strengthened by 6.5%, as tenants prioritised retaining space in prime locations amid limited availability, pushing rental rates 7.1% higher year-on-year, it stated.
Dubai’s warehouse segment also maintained strong demand in 2025, though total leasing volumes declined 1.7% year-on-year to approximately 19,100 transactions, driven by a 29.4% drop in new leases.
Renewal activity, however, surged 18%, reflecting occupiers’ preference to retain existing space in a supply-constrained environment. Despite lower transaction volumes, total rental values increased 14.2% year-on-year to AED 3.2 billion, whilst rental rates climbed 17.6% on average, it added.
Looking ahead, the performance of both sectors will depend on the stability of key demand drivers, including tourism, population growth, e-commerce activity, and trade, all of which remain subject to evolving regional conditions and will require close monitoring in 2026.
Retail sales transactions growth
Retail sales transactions reached approximately 1,450 in 2025, marking a 7.6% year-on-year increase. While transaction volumes were split almost evenly between off-plan and ready properties, the off-plan segment gained significant momentum in recent years, with volumes surging 834.2% since 2021.
The true strength of the market, however, was reflected in transaction values. Total sales value rose sharply to approximately AED 4.6 billion, up 48.4% compared to 2024. This growth, which significantly outpaced volume growth, signalled that buyers were transacting at higher price points.
Off-plan properties led this trend, generating AED 2.9 billion in sales and capturing 63.4% of total value, compared to AED 1.7 billion or 36.6% for ready assets, it stated.
According to Cavendish Maxwell, the widening gap between volume and value growth revealed two key market dynamics: price appreciation and a clear shift towards higher ticket price transactions, rather than simply an increase in transaction volume, reflecting strong investor confidence in the retail sector.
"Dubai’s retail landscape remains fundamentally stable, yet the path forward is more nuanced. While occupancy levels remain healthy so far, the sector’s performance will ultimately depend on stability in key demand drivers, particularly tourism and consumer sentiment, which could be affected by broader regional developments," remarked Vidhi Shah, the
Director, Head of Commercial Valuation.
On the rental front, overall rental contracts declined slightly in 2025, driven primarily by a 15.7% drop in new leases amid limited availability of quality retail space. Renewals, however, strengthened considerably, rising 6.5% from 2024.
With prime, high-footfall locations in short supply and rental rates trending upwards, tenants increasingly opted to renew existing agreements rather than risk relocating to less competitive locations.
Jumeirah Village Circle (JVC) recorded the highest rental growth at 15.5% year-on-year, fuelled by rapid population inflows that strengthened retail demand. Business Bay, Palm Jumeirah, and Downtown Dubai also experienced notable increases, supported by high footfall and more affluent consumer catchments.
Supply-constrained environment
Warehouse leasing activity softened in 2025, with total contracts declining by 1.7% year-on-year to approximately 19,100 transactions, primarily driven by a 29.4% drop in new leases, according to Cavendish Maxwell.
In contrast, renewal activity strengthened, rising by 18% year-on-year, reflecting a clear preference among occupiers to retain existing space rather than relocate.
This trend highlighted a supply-constrained environment, where limited availability of suitable facilities made relocation increasingly challenging, prompting tenants to prioritise renewals even as rental rates continued to rise across the city. Despite the decline in overall leasing volumes, total rental value increased by 14.2% year-on-year to AED 3.2 billion, it added.
Warehouse rental activity in 2025 was largely concentrated in mid-sized units, with the 2,001–5,000 sq. ft. segment accounting for 51.8% of total transactions. This was driven by strong demand from SMEs, trading companies, and e-commerce businesses seeking functional storage space without committing to larger industrial footprints.
Larger units also represented a notable share of activity, with transactions above 10,000 sq. ft. accounting for 19.5% of the total, primarily driven by bigger occupiers such as logistics operators and manufacturers.
The warehouse sector has demonstrated continued strength, supported by robust e-commerce activity and sustained trade flows.
"Demand for modern logistics and warehouse facilities remains firm; however, forward visibility is relatively limited," remarked Pawan Agrawal, Associate, Commercial Valuation.
"Occupiers are increasingly adopting a strategic approach to space utilisation, reflecting broader economic uncertainties and the need for operational flexibility. We are closely monitoring these trends to assess their potential implications for the warehouse sector, particularly heading into 2026," he added.-TradeArabia News Service