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Retail rents in Dubai and Abu Dhabi have jumped in double digits in recent months on the back of strong demand and limited availability of quality stock.
During the first quarter of the year, rents in the UAE capital rose by 14.7% and in Dubai by 10.5%, according to CBRE Middle East.
Part of the demand is coming from several foreign retail brands looking to enter the local market, particularly Dubai, the real estate services firm noted. There is also a significant demand from the food and beverage sector.
“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.”
In both the emirates, tenants are looking for quality assets, particularly within core locations. However, there is not enough available stock within the segment, CBRE said.
“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
Within the industrial market, CBRE also noticed “robust levels of demand” in the first quarter of the year.
Average rents in Abu Dhabi and Dubai went up 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.
(Writing by Cleofe Maceda; editing by Seban Scaria)
