How eCommerce Growth is Shaping the Commercial Real Estate Market in Dubai

As an expert in the commercial real estate landscape of Dubai, I have observed significant transformations driven by the rapid growth of eCommerce. In this blog, we will explore how this evolution is reshaping the commercial real estate market, supported by relevant statistics and trends.

The UAE's eCommerce market is projected to reach $27.1 billion by 2025, growing at a CAGR of 23% from 2020. This exponential growth has been accelerated by shifts in consumer behavior, particularly during the pandemic, leading to increased online shopping adoption across various sectors.

One of the most substantial impacts of eCommerce on commercial real estate is the demand for logistics and warehousing space. According to a recent report by CBRE, the demand for industrial and logistics space in Dubai increased by 18% in 2023. Companies like Amazon are expanding their fulfillment centers, necessitating warehouses equipped with modern technology for efficient inventory management and distribution.

The demand for last-mile delivery solutions is also on the rise. Research indicates that last-mile logistics can account for up to 30% of total delivery costs. Consequently, the need for strategically located distribution centers has surged, leading to the conversion of traditional retail spaces into last-mile logistics hubs. This trend not only supports eCommerce giants but also creates opportunities for local businesses to enhance their distribution capabilities.

While traditional retail is facing challenges, it is evolving rather than disappearing. A recent survey showed that 63% of consumers prefer shopping at stores that offer unique experiences. As a result, retailers are focusing on creating experiential shopping environments. Commercial properties are adapting by providing flexible spaces that can accommodate pop-up shops and multi-purpose retail setups.

Flexibility is becoming increasingly important in commercial real estate. According to a study by JLL, 73% of companies surveyed indicated a preference for flexible lease terms to adapt to changing business needs. Landlords who can offer adaptable solutions—such as short-term leases or co-working spaces—will have a competitive advantage in this dynamic market.

Sustainability is a key consideration for eCommerce companies. A report from McKinsey shows that 60% of consumers are willing to pay more for sustainable products. This focus on sustainability is influencing property selection, with businesses favoring spaces that prioritize energy efficiency and environmentally friendly practices. As such, integrating sustainable features into commercial properties can enhance their appeal and long-term value.

The growth of eCommerce is significantly reshaping the commercial real estate market in Dubai, presenting both challenges and opportunities for investors, landlords, and businesses. With the UAE's eCommerce market projected to continue its upward trajectory, staying informed and adaptable will be crucial for success.

Investors and landlords should consider embracing technology, sustainability, and innovative space designs to remain competitive in this evolving landscape. By doing so, we can capitalize on the opportunities presented by the dynamic intersection of eCommerce and commercial real estate in Dubai.

Blog by : Jatiinder Singh Juss  | Managing Director - RedRock