By: Zawya

Rents for Dubai’s prime logistics and industrial facilities are rising 7 percent to 15 percent annually as land scarcity and demand from multinationals drive a supply crunch, according to Kunal Lahori, CEO of Palmon Group and board member of Manrre.

Palmon Group is a leading logistics developer, owner and operator while Manrre (also known as GFH Partners Manrre REIT (CEIC) PLC or GFHP Logistics Fund), is a real estate investment trust (REIT) focussed on institutional-grade logistics and industrial assets.

“Older assets might not have that much growth while newer assets have higher rates,” Lahori told Zawya Projects. “It depends on the facility type, age but there is always growth with minimum increases occurring regularly.”

Migration to higher-specification warehouses by multinationals is a key demand driver with many firms moving out of older facilities – 10, 15 or 20 years old, with lower ceiling heights and outdated layouts – and upgrading to newer, more efficient facilities.

“Grade A facilities are very few, so they get snapped up easily,” said Lahori.

Dubai Investments Park (DIP) and other industrial zones are seeing the sharpest rental growth, he noted, followed by Jebel Ali Free Zone (JAFZA) and Technopark. 

Corporate tax incentives are further boosting JAFZA’s appeal, where Manrre recently broke ground on one of the UAE’s first high-bay, temperature-controlled warehouses.

JAFZA is a ‘qualified Free Zone’ under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022), which allows companies operating in the Free Zone satisfying certain requirements to benefit from a 0 percent Corporate Tax rate on qualifying income.

“We are seeing growing demand as more businesses from Dubai relocate to JAFZA to benefit from these advantages,” said Lahori.

High-Bay warehouse

The new Grade A warehouse in JAFZA, scheduled for completion in the first quarter of 2027, spans a 214,000 sq ft plot located on a direct corridor to Al Maktoum International Airport – currently undergoing a AED 128 billion expansion.

With 144,000 sq ft of built-up area, the warehouse will offer 32,000 pallet positions, 16 loading bays, an FM1 super-flat floor slab, and 15,000 sq ft of offices.

Lahori said the facility is designed for maximum flexibility and scalability to cater to diverse sectors from pharmaceuticals and food to e-commerce. He further disclosed that preliminary discussions are underway with two potential logistics tenants – one international and one local.

 “As things shape up, we have a good 12 to 18 months to strategically think about who we want as tenants, what facilities we can offer them, and how we can grow,” he said, noting that stronger market conditions could further boost rental prospects.

Portfolio and ESG

As of July 2025, Manrre REIT’s portfolio size stood at $155 million, with a primary focus on logistics and industrial assets. Approximately 60 percent of these assets are in JAFZA, 15 percent in Dubai Investments Park (DIP) and 10–12 percent in Dubai South.

Lahori stressed the REIT’s tenant-driven strategy: “Tomorrow, if a tenant requests space in KEZAD or even Saudi Arabia, we will go, acquire and build for them.” 

In Dubai, he continued, the strongest demand clusters are in DIP, Dubai Industrial City (DIC), JAFZA, and Dubai South.

Lahori said Manrre’s logistics tenants span multiple sub-sectors ranging from pharma and chemicals to garments, electronics, home appliances, to specialised temperature-controlled warehousing.

Manufacturing and light industry are emerging growth segments, he underlined.

On the ESG front, he noted that most tenants focus basic green building standards such as LEED certification, while many manufacturers are requesting solar installations to reduce energy costs.

“We sit down with them and bring in a provider to cater to that need,” he said.

Expansion

The Fund remains firmly in the growth mode. “We have always had a clear plan to scale the fund," said Lahori. "GFH is a great partner and we share a common vision to scale and grow the logistics market. As the only REIT specialising in logistics and industrial assets in the market, we see a strong growth story unfolding, where that leads to is still to be seen.”

He did not say whether the partnership with Bahrain-based GFH – which acquired Manrre in 2024 and has a significant asset base in Saudi Arabia – would translate into an expansion into the Kingdom. 

However, he emphasised that achieving Sharia-compliant status earlier this year has opened new fundraising opportunities in Saudi Arabia and other GCC markets, positioning Manrre to tap into a wider pool of investors.

Leverage

Meanwhile, the REIT remains conservatively leveraged, with a loan-to-value ratio (LTV) below 50 percent.

“Currently, our leverage is below 50 percent, even after the acquisition of two new assets, and we don't intend to take any more than 50 percent LTV,” Lahori said.

He said investors stand to benefit from the recent lowering of rates by the U.S. Federal Reserve.

The Dubai logistics growth story is still playing out, according to Lahori.

“Global tariff issues are drawing manufacturing firms to the UAE, which aligns perfectly with our portfolio as a logistics and industrial REIT that invests across logistics, industrial, manufacturing, and e-commerce assets.”

On a macro level, companies are increasingly establishing operations in Dubai and the wider UAE, drawn by the country’s stability amid global uncertainty.

“The real estate sector is still very strong, and the industrial and logistics space, in particular, is only set for growth, supported by Dubai’s long-term economic agendas which emphasise expanding manufacturing and developing new industries,” he concluded.