Today's Edition
MAYS IBRAHIM (ABU DHABI)
The UAE’s real estate market continued to expand across all major sectors in the final quarter of 2025, supported by strong non-oil economic activity, population growth, and sustained investment demand, according to new research by CBRE Middle East.
In its UAE Real Estate Market Review for the fourth quarter of 2025, CBRE said growth across commercial, residential, hospitality, retail, and industrial property remained robust despite a softening in macroeconomic forecasts linked to weaker-than-expected oil sector performance in the second half of the year.
The consultancy noted that economic growth in 2025 and 2026 is expected to be driven primarily by non-oil sectors, underpinned by foreign investment, labour market strength and an improving business environment.
“As the UAE advances its long‑term development strategies, the real estate sector is increasingly positioned as a key pillar of sustainable economic expansion,” Matthew Green, Head of Research at CBRE MENA, said.
Inflation remains contained, while anticipated interest rate cuts by the US Federal Reserve are expected to provide further support to real estate activity, the report noted.
Office markets in Dubai and Abu Dhabi were among the strongest performers.
The UAE capital’s office market recorded 12% annual rental growth, with average occupancy nearing 98%.
Demand was strongest within the Abu Dhabi Global Market free zone, where Grade A availability remains tight.
CBRE highlighted several new development initiatives, including projects on Al Maryah Island, as signs of growing developer confidence in the capital’s commercial sector.
In Dubai, average office rents rose 18% year on year as occupancy climbed to nearly 95%, reflecting limited new supply and rising demand from regional and international occupiers.
CBRE said supply constraints are likely to persist, with new strata office launches and free zone developments attracting strong pre-leasing interest.
Residential markets also maintained momentum, led by continued population growth and investor activity.
In Dubai, annual rental growth slowed on a quarterly basis but remained up around 6% year on year, while sales prices increased 13%.
Transaction volumes reached record levels, with more than 206,000 residential sales recorded in 2025, up 18% annually. Off-plan sales accounted for nearly three-quarters of all transactions.
Abu Dhabi recorded one of its strongest residential years on record, with transaction volumes rising 50% and values increasing 61% compared with 2024.
Overall residential prices climbed nearly 32% year on year, driven largely by off-plan apartment sales. Rental growth remained strong, with average rents up 22% amid tight supply conditions.
The hospitality sector delivered another year of strong performance, supported by rising tourism flows, according to the report.
Dubai welcomed 17.55 million international visitors during the first 11 months of 2025, while Abu Dhabi and Ras Al Khaimah also recorded year-on-year increases in visitor numbers.
Hotel occupancy in both Dubai and Abu Dhabi averaged around 80%, with growth in average daily rates and revenue per available room, particularly in the luxury segment.
Retail markets remained stable, with occupancy reaching 98% in Dubai and 95% in Abu Dhabi.
Limited new supply helped landlords maintain pricing power, with retail rents rising around 6% in Dubai and 2% in the capital.
Industrial and logistics assets saw rapid expansion, driven by e-commerce growth, non-oil exports and limited availability of quality space.
Dubai warehouse rents rose 13% year on year, while Abu Dhabi’s industrial market strengthened further under the Abu Dhabi Industrial Strategy 2031.
Rents in some areas of KEZAD have increased by more than 50% over the past two years, reflecting sustained demand.
