Dubai's Retail and Warehouse Markets Enter Selective Phase Amid Rising Rents and Slower New Leasing

Dubai's retail and warehouse property sectors are experiencing a shift towards selectivity, as outlined in Cavendish Maxwell's latest Dubai Retail and Warehouse Market Performance report. While rents continue to climb, new leasing activity has seen a notable decline, indicating a more cautious approach from tenants and occupiers.

Retail Market Trends

In the first half of 2026, new retail leases plummeted by 26.3% year-on-year (y-o-y). However, retail lease renewals saw a slight increase of 1.5%, and overall retail rents rose by 4.4% y-o-y. The investment side of the retail market remained strong, with approximately 850 retail property sales recorded, a 56% y-o-y increase, and transaction value surging by 176.7% to AED 3.8 billion. The average transaction ticket price climbed 77.3% y-o-y to AED 4.4 million.

Off-plan retail sales were a primary driver, growing by 109.6% y-o-y to about 500 transactions, accounting for 58.8% of the volume and 68.3% of the value. Ready retail transactions increased by a more modest 14.3%. Despite the strong first half, retail sales in Q2 2026 saw a quarter-on-quarter (q-o-q) decline of 25.4%, indicating a potential slowdown in momentum.

Vidhi Shah, Commercial Valuation Head at Cavendish Maxwell, noted that occupancy rates at Dubai's flagship malls and some community retail hubs average around 98%, suggesting resilience in established prime locations.

Warehouse Market Dynamics

The warehouse sector mirrored the retail market's selective trend, albeit more sharply. New warehouse contracts fell by 51.8% y-o-y in H1 2026, reaching approximately 1,800 contracts. In contrast, warehouse lease renewals surged by 21.6%, hitting their highest level in the report's series. Total warehouse rental value increased by 9.9% y-o-y to AED 1.8 billion.

Warehouse rents across all monitored locations rose by 12.4% y-o-y. Emirates NBD's tracking also supports these findings, observing that established tenants are remaining in place, reassessing expansion plans, and new-entrant take-up is slowing amidst geopolitical uncertainties. Despite this, inquiry levels remain stable, and institutional investors are still pursuing warehouse transactions.

Outlook

Cavendish Maxwell anticipates that occupier interest will continue for prime retail destinations and well-located warehouses. The market will be watching whether the retail market's Q2 deceleration extends into Q3 or proves to be a temporary fluctuation within an otherwise robust year.