Indoor Farming in the UAE: Opportunities, Challenges, and Growth

Hi there!

For the past years, I’ve been travelling every winter to the UAE for conferences and trade shows. Exploring the local developments and changing landscape of farms opening up and closing down proving once again that it is not just about available capital for investments but the paramount importance of a well thought through business case for long-term success. Below, I have summarized some of the macro-economic I observed.

What We Are Covering Today:

• The Rise of Indoor Farming in the UAE

• Indoor Farming as a New Contributor to the UAE Economy

• Advancements Driving Efficiency in Indoor Farming

• Changing Preferences Driving Local Production

• Balancing Costs, Sustainability, and Growth

• Policy Frameworks Supporting Growth

• Where Is Indoor Farming Headed?

• CLOSING THOUGHTS

Special thanks to Nabeel Gnayem, VP of Technologies & Senior Agronomist at Grow-tec and Olav Scholte, Regional Director Middle East at TTA-ISO.

THE BIGGER PICTURE
The Rise of Indoor Farming in the UAE

In the UAE, where desert landscapes dominate, indoor farming is emerging as a key solution to longstanding challenges in food security and agricultural sustainability. Combining advanced technology, government support, and shifting consumer preferences, this sector is poised for substantial growth.

Here are some key numbers that highlight the potential:

• The UAE’s vertical farming market was valued at USD 92.4 million in 2024 and is projected to reach USD 358.9 million by 2031, growing at a CAGR of 20.90%.

• The broader UAE agriculture market is expected to expand from USD 3.6 billion in 2024 to USD 5.4 billion by 2033.

This newsletter delves into the economic drivers, technological advancements, policy initiatives, and industry challenges shaping the indoor farming market in the UAE.

A GROWING SECTOR
Indoor Farming as a New Contributor to the UAE Economy

Indoor farming is becoming essential to the UAE’s agricultural strategy, addressing the region’s dependence on imported food and the need for local, sustainable production.

According to market projections, the Middle East and Africa indoor farming sector is forecast to grow to USD 5 billion by 2029, reflecting a broader global trend. Globally, investments in agricultural technology are accelerating; in 2021 alone, USD 6.4 billion was raised for innovations in crop production and agri-tech solutions.

The UAE’s Food Tech Valley initiative, which aims to triple food production in Dubai, is one of several efforts to boost local food production and reduce reliance on imports. The government has set a target to produce 50% of its food locally by 2051, with indoor farming as a key driver in this transformation.

Industry Perspectives:

Experts highlight that policy support is crucial in helping indoor farming scale. Nabeel Gnayem, VP of Technologies & Senior Agronomist at GrowTec, notes that:
“By 2030, the UAE aims to locally produce 30% of its fresh food consumption, supported by grants like the Khalifa Fund and electricity subsidies reducing costs by 80-90% for agricultural use. These incentives are designed to make local production more feasible.”

Olav Scholte, Regional Director Middle East at TTA-ISO, adds that institutional support from organizations like Silal could also help modernize Controlled Environment Agriculture (CEA) in the region. “Independent advice for growers and focused R&D initiatives are key to driving innovation and ensuring the long-term success of the sector,” he explains.

TECHNOLOGY IN FOCUS
Advancements Driving Efficiency in Indoor Farming

The success of indoor farming in the UAE relies heavily on technological innovation. These advancements are enabling growers to maximize production while addressing challenges such as water scarcity and high energy costs.

Key technologies include:

• Hydroponics, Aeroponics, and Aquaponics: These systems optimize water use, delivering nutrients directly to plants without the need for soil.

• Energy-Efficient LED Lighting: LEDs simulate sunlight, allowing for controlled plant growth with lower energy consumption.

• IoT and AI Solutions: Smart technologies monitor and adjust environmental conditions in real time, minimizing waste and improving yields.

Real-world applications:

Several projects in the UAE showcase how technology is shaping indoor farming:

• AeroFarms launched a 65,000-square-foot R&D vertical farm in Abu Dhabi, which is the largest of its kind globally.

• Bustanica, a large-scale vertical farm in Dubai, produces over 3,500 kilograms of pesticide-free greens monthly.

• Local initiatives like Cosmo Vertical Farms in Sharjah grow over 550 kilograms of leafy greens daily, using 95% less water compared to traditional methods.

• ADQ Launches ZERO Vertical Farming Project in Abu Dhabi’s AgTech Park Ecosystem in 2023

Expert insights:

Nabeel Gnayem identifies advancements in LED lighting efficiency and robotics as areas that could further improve productivity. “Higher-efficiency LEDs that surpass 6 micromol/Joule and robots that automate planting and harvesting have the potential to reduce operational costs and improve scalability,” he explains.

Similarly, Olav Scholte emphasizes the role of automation across all farming systems in the GCC. “Automation improves not only efficiency but also quality and hygiene, which are critical factors in high-tech farming environments,” he says.

CONSUMER DEMAND & MARKET DYNAMICS
Changing Preferences Driving Local Production

Consumer preferences in the UAE are shifting toward fresher, more sustainable produce, with an increasing demand for locally grown fruits and vegetables. These changes align with broader global trends emphasizing transparency, sustainability, and food safety.

Drivers of change:

• Shoppers increasingly prioritize locally sourced, pesticide-free products.

• Supermarkets are collaborating with indoor farms to offer farm-to-table options, ensuring freshness while reducing food miles.

Challenges in the market:

While local produce is gaining traction, cheap imports continue to dominate due to their affordability. According to Olav Scholte, “Retailers are giving more space to local produce, but imported products still play a significant role in meeting demand. Striking the right balance between quality and cost remains a challenge.”

Nabeel Gnayem adds that strong branding around attributes like pesticide-free, sustainability, and local freshness has helped UAE-grown products gain consumer trust. Products labeled as “ready to use” or “high-quality local produce” are resonating with shoppers in leading supermarket chains.

OVERCOMING CHALLENGES
Balancing Costs, Sustainability, and Growth

Despite its potential, indoor farming in the UAE faces several challenges, including high operational costs, energy consumption, and regulatory hurdles.

Key issues and expert perspectives:

• Water Use: While water-saving solutions are a critical feature of indoor farming, Olav Scholte points out that water subsidies reduce the financial incentive to adopt advanced water-efficient systems.

• Energy Costs: Cooling requirements during the summer months drive up costs, especially for greenhouse operations.

• Solar Power Limitations: Regulatory complexities make implementing solar energy solutions challenging despite their potential to reduce energy costs.

“Upgrading infrastructure, including transitioning from low-tech to mid- or high-tech greenhouses, could help improve sustainability across the industry,” Olav explains.

Opportunities for innovation:

Robotics, energy-efficient LEDs, and AI-based irrigation systems are among the technologies that can address these challenges. In the long term, combining automation and government-supported renewable energy initiatives could help indoor farming become more cost-effective.

REGULATORY SUPPORT & SUSTAINABILITY
Policy Frameworks Supporting Growth

The UAE government has positioned indoor farming as a critical part of its National Food Security Strategy 2051, which aims to reduce reliance on food imports and build a resilient, sustainable agricultural sector.

Key initiatives include:

• Subsidies, grants, and tax benefits to offset high initial costs for indoor farming.

• Programs like Ag-Tech Parks foster research and development in hydroponics, vertical farming, and aquaponics.

• Standards for organic and pesticide-free agriculture that align with consumer demand for high-quality produce.

FUTURE OUTLOOK
Where Is Indoor Farming Headed?

The UAE’s indoor farming sector is on a trajectory for significant growth, backed by government investment, technological advancements, and changing market dynamics.

• By 2033, the sector is expected to grow to USD 1,235.85 million, with a CAGR of 10.43%.

• Innovations like hydroponics, vertical farms, and high-tech greenhouses will play a central role in this expansion.

Looking ahead, the UAE’s Food Tech Valley initiative is poised to transform Dubai into a global agritech hub, with plans to triple local food production. However, achieving this vision will require balancing sustainability with economic and regulatory challenges.

CLOSING THOUGHTS

Indoor farming in the UAE highlights how technology and policy can address global challenges like food security and climate change. While the industry faces hurdles, it also presents a blueprint for innovation in agriculture. The high capital density and interest in expert knowledge and innovations present lower hurdles for market entry. However, false promises and unrealistic business plans have increased scepticism in the region. If you are interested in seeing some of the farms or have a question on local developments - don’t hesitate to reach out.

What’s your take?
How could indoor farming reshape agriculture in your region? Share your thoughts in the comment below or forward this newsletter to someone interested in the region.

🌱 Thank You to Grow-tec! 🌱

We’re thrilled to have Grow-tec as the sponsor of this edition of The Indoor Farmer! Their dedication to advancing indoor farming technology is helping growers everywhere achieve new heights.

👉 Discover their full range of services and innovative products today at grow-tec.com!