Dubai: Dubai's retail property market maintained strong occupancy levels and demand during the first half of 2026, with average retail rents rising by 5.9% year-on-year, according to data from Engel & Völkers Middle East.
Data showed that average retail rents increased from AED238 to AED252 per square foot during the first six months of the year.
The company said occupancy levels and underlying demand remained strong, while the limited availability of prime retail space continued to support rental growth. It expects the market to remain resilient during the second half of 2026, with continued upward pressure on rents in prime locations.
Rent growth
According to the data, average rents for new retail lease contracts increased by 2.2% to AED234 per square foot, while renewal rents rose by 6.6% to AED257 per square foot.
The figures indicate that existing tenants continue to compete to retain established locations, while limited supply of premium retail units has helped support rental values.
Limited supply supports growth
Daniel Hadi, Chief Executive Officer of Engel & Völkers Middle East, said the decline in rental transactions should not be interpreted as weaker demand, noting that long-term leases have slowed the rate at which retail units return to the market.
He said the limited supply of prime retail space continues to support rental growth, as tenants compete for high-quality units in established locations experiencing strong demand.
Prime locations command higher rents
Hadi said retail rental rates varied significantly across Dubai during the first half of 2026, reflecting differences in location, footfall, customer demographics and business environment.
According to the company, Downtown Dubai remained among the highest-value retail markets, with average rents of approximately AED817 per square foot.
Luxury residential and leisure destinations also recorded strong rents, including:
The Meadows: AED414 per sq ft
Bluewaters Island: AED369 per sq ft
The Springs: AED301 per sq ft
Among high-demand retail areas, average rents reached:
Al Barsha: AED337 per sq ft
Mirdif: AED298 per sq ft
Deira: AED241 per sq ft
Business Bay: AED221 per sq ft
At the more affordable end of the market, average rents stood at around AED95 per square foot in International City and AED100 per square foot in Ras Al Khor.
Hadi added that retail space at Dubai International Airport averaged approximately AED1,389 per square foot, although he noted that airport retail cannot be directly compared with conventional retail locations because of its unique operating model and passenger traffic levels.
Outlook remains positive
Hadi said rental performance remained positive across most of Dubai's retail market during the first half of the year, although growth varied depending on location, footfall and individual unit characteristics.
He noted that strategically located retail units with strong visibility, easy access and proximity to established residential communities continued to attract strong tenant interest.
According to Hadi, food and beverage operators remain one of the largest sources of demand for retail real estate across Dubai.
Looking ahead, he expects the market to remain strong throughout the second half of 2026, supported by population growth, tourism activity, consumer spending and continued demand for high-quality retail space.
"As market confidence and decision-making processes continue to return to normal during the second half of the year, we expect leasing activity to become stronger," he said.
He added that prime locations and established residential communities are likely to continue recording the strongest rental performance.