UAE Logistics: Trade Hub Economics Meet Structural Demand
The UAE’s geographic position between Europe, Asia, and Africa has produced one of the world’s most concentrated logistics ecosystems. Jebel Ali Port handles over 13 million TEU annually, Al Maktoum International Airport is designed to become the world’s largest cargo hub, and Khalifa Port in Abu Dhabi continues expanding capacity. This infrastructure foundation generates persistent demand for warehousing, distribution, and fulfilment capacity.
UAE logistics real estate has emerged as the highest-yielding property segment, with gross yields of 8-12 percent for institutional-grade facilities and structural demand growth driven by e-commerce, cold chain requirements, and supply chain restructuring.
Warehousing Market
Grade A Logistics Facilities
| Location | Rent (AED/sqft) | Gross Yield | Vacancy | Key Tenants |
|---|---|---|---|---|
| Jebel Ali Free Zone | 40-55 | 8.5-10.5% | 3-5% | Multinationals, 3PLs |
| Dubai South | 35-50 | 9.0-11.0% | 5-8% | E-commerce, aviation logistics |
| KIZAD | 25-40 | 9.5-12.0% | 8-12% | Industrial, manufacturing |
| National Industries Park | 30-45 | 8.0-10.0% | 4-7% | Manufacturing, distribution |
| Dubai Industrial City | 28-42 | 9.0-11.0% | 6-10% | Food, construction materials |
Facility Specifications
Modern logistics tenants demand clear heights of 10-12 metres, floor loading capacity of 5 tonnes per square metre, dock-high loading doors, fire suppression systems, and temperature control capability. Grade A facilities meeting these specifications command significant premiums over older warehouse stock.
Cold Chain Infrastructure
The UAE’s position as a food re-export hub serving the Middle East, Africa, and South Asia drives substantial cold chain investment. Temperature-controlled logistics capacity has expanded by 15 percent annually, yet demand continues to outstrip supply.
| Cold Chain Segment | Temperature Range | Market Driver | Investment Premium |
|---|---|---|---|
| Frozen storage | -25 to -18 C | Food imports, seafood | 40-60% over dry |
| Chilled storage | 2-8 C | Fresh produce, dairy | 30-50% over dry |
| Pharmaceutical cold chain | 2-8 C / -20 C | Drug distribution | 50-80% over dry |
| Ambient controlled | 15-25 C | Electronics, cosmetics | 15-25% over dry |
Dubai’s Jebel Ali and Abu Dhabi’s KIZAD host the largest cold chain clusters. DP World’s refrigerated container handling capacity at Jebel Ali provides seamless integration between maritime and landside cold chain operations.
E-Commerce Fulfilment
UAE e-commerce penetration is projected to exceed 12 percent of total retail by 2028, generating approximately USD 10 billion in annual online sales. This growth drives demand for dedicated e-fulfilment centres with automated picking systems, returns processing capability, and last-mile sortation capacity.
Amazon (via Souq.com), Noon, and Carrefour Online operate the largest fulfilment networks. Third-party logistics providers including Aramex, Fetchr, and international entrants are expanding warehouse footprints. Last-mile delivery hubs in urban locations achieve occupancy above 95 percent and command premium rents.
Investment Structures
Build-to-suit: Pre-leased development for specific tenants offers construction-stage income certainty. Typical lease terms of 10-15 years provide long-duration cash flows. Development yields range from 10-14 percent on cost.
Speculative development: Building without pre-leasing commitment captures market rental growth but carries absorption risk. Suitable for locations with demonstrated low vacancy and strong demand pipelines.
Logistics fund platforms: Institutional investors access UAE logistics through regional fund structures managed by specialist operators. GLP, Agility Logistics Parks, and Dubai-based platforms offer pooled exposure across multiple assets.
Cold chain development: Higher capital intensity and operational complexity command return premiums. Joint ventures between real estate investors and cold chain operators combine capital with operational expertise.
Market Outlook
Supply constraints in prime logistics locations, combined with accelerating demand from e-commerce and cold chain requirements, support continued rental growth and yield compression from current levels. Dubai South’s proximity to Al Maktoum International Airport positions it as the primary expansion area for next-generation logistics facilities.
The UAE logistics sector offers investors a rare combination of high current yields, structural demand growth, and global trade corridor positioning. Risk factors include economic cycle sensitivity, oversupply in secondary locations, and tenant concentration in specific facilities.