Dubai Retail Real Estate Sales Rise to $1.25bn, up nearly 50% - Report

DUBAI, UAE – Dubai’s retail real estate market recorded a sharp increase in activity in 2025, with total sales transactions reaching $1.25 billion (AED4.6 billion), marking an almost 50% year-on-year rise, according to Cavendish Maxwell.

Transaction volumes also showed steady growth, with approximately 1,450 deals completed during the year, reflecting a 7.6% increase in activity. The off-plan segment accounted for more than half of all transactions, highlighting strong investor appetite for future retail developments.

Off-plan segment drives long-term investor confidence

Off-plan retail transactions have experienced significant expansion over the past five years, increasing more than 830% from just 79 deals in 2021 to nearly 740 transactions in 2025.

This sustained growth underscores increasing confidence in Dubai’s long-term retail landscape, supported by population growth, tourism expansion, and evolving consumer demand patterns.

In the retail leasing market, tenant behaviour shifted toward retention rather than relocation. Lease renewals rose by 6.5% in 2025, while new lease agreements declined by 15.7%, indicating a preference among tenants to maintain existing premises amid limited availability in prime, high-footfall locations.

Rental costs increased by an average of 7.1%, with some areas experiencing rises of up to 15%, driven by strong demand for community retail formats and stable performance across major retail destinations.

Vidhi Shah, Director, Head of Commercial Valuation at Cavendish Maxwell, said: “Dubai’s retail sector showed sustained growth and resilience in 2025, backed by strong fundamentals including a record 19.6 million tourists and unprecedented population growth. Sales values rose sharply and off-plan purchases are now eight times as high as there were just five years ago, signalling strong long-term investor confidence in the retail market.

“With prime, high-footfall locations in short supply and rental rates on the rise, tenants are increasingly favouring renewing existing leases over moving to new premises to save costs and avoid the risk of relocating somewhere less established. Prices for renewals rose by 4% last year, whereas new contracts were, on average, 14% higher.

“Looking ahead, Dubai’s retail offering is expected to expand this year with raft of community-centric developments in the pipeline that reflect a broader shift towards localised retail that prioritises convenience and proximity over the more traditional, large-scale destination-led formats,” she added.

Community retail drives rental growth

Neighbourhood retail locations recorded some of the strongest rental increases, led by Jumeirah Village Circle with a 15.5% rise year-on-year. Business Bay and Palm Jumeirah followed with increases of 13.7%, while Downtown Dubai recorded a 13.1% increase.

Upcoming retail developments such as Dubai Square, Ghaf Woods Mall, Sobha Mall, Liwan Mall, Villa Square, and South Bay Mall are expected to further support the expansion of community-focused retail offerings across the emirate.

Warehousing sector remains robust

Dubai’s warehousing sector also delivered strong performance in 2025, supported by the continued growth of e-commerce and trade activity.

Total rental values in the segment increased by more than 14% to $871 million (AED3.2 billion), with rental rates rising by an average of 17.6%, and significantly higher in key industrial zones.

Jebel Ali recorded the highest rental growth at 22.1%, followed by Dubai Industrial City (18.9%), Dubai Investments Park (18.7%), and Umm Ramool (18.2%).

As seen in the retail sector, tenants in the warehousing market also showed a preference for renewals, with an 18% increase in renewed contracts, while new agreements declined by nearly 30%.

Warehouse activity was primarily concentrated in mid-sized units ranging from 2,001 to 5,000 sq ft, which accounted for more than half of total leases, driven by demand from SMEs, trading companies, and e-commerce operators.

Vidhi Shah said: “Domestic and international business continue to enter the warehousing market, prioritising modern, high-spec facilities that support automation, operational efficiency and specialised infrastructure. We expect this trend to continue this year, especially with government led-initiatives like the UAE Global Centre of Trade programme, which aims to attract leading international trading companies to set up in Dubai.”

The outlook for Dubai’s retail and warehousing sectors remains closely tied to broader economic conditions, including tourism flows, population growth, trade dynamics, and supply chain activity.

While regional factors may influence short-term demand, Dubai’s established track record of adaptability, combined with ongoing investments aligned with the D33 economic agenda, is expected to continue supporting long-term market resilience.