UAE Real Estate Market First Quarter Of 2025 Review
UAE Real Estate Market Remains Strong Despite Global Headwinds – Q1 2025 Review
Dubai, UAE – The UAE real estate market continues to demonstrate remarkable resilience in Q1 2025, according to CBRE Middle East’s latest UAE Real Estate Market Review. Despite global economic challenges, including declining oil prices and rising trade tensions, the country’s property sector has maintained strong momentum, bolstered by diversified economic strategies and robust international trade.
UAE’s Economic Resilience Boosts Property Sector
The International Monetary Fund (IMF) recently downgraded global growth forecasts from 3.3% to 2.8%, but the UAE has weathered the storm thanks to its AED 3.0 trillion foreign trade volume—a 15% year-on-year increase. Proactive diversification of trade partners and expanding trade flows continue to act as stabilizing forces.
A key regulatory change has also added to investor confidence. Dubai’s Executive Council passed Resolution No. 11 of 2025, permitting free zone companies to operate on the mainland with Dubai Economic Department (DET) approval—excluding DIFC. This policy unlocks significant new opportunities and aligns with Dubai’s ambitious AED 32 trillion economic growth target over the next decade.
Dubai Office Market: Soaring Demand, Tight Supply
The Dubai office rental market has seen sharp year-on-year rental increases of over 20% amid high occupancy levels averaging 94%. With limited new supply—only 100,000 sqm projected for 2025, much of it already pre-leased—tenants face challenges during lease renewals. The demand for prime commercial space is expected to outstrip supply until at least 2027.
Abu Dhabi Office Sector: Powered by Non-Oil Growth
Abu Dhabi’s office rental market is thriving, driven by non-oil economic expansion and substantial government investments. Occupancy rates have surged to 96%, with rents climbing 13% on average, and prime locations seeing nearly 15% growth. Renewals are up 9%, highlighting strong tenant retention in a low-supply market.
Dubai Residential Market: Strong Off-Plan Sales Drive Growth
The Dubai residential property market continues to break records, with over 43,000 transactions in Q1 2025—up 23% year-on-year. Off-plan property sales grew 33%, while ready property transactions rose by 5%. Total transaction value reached AED 115 billion, with off-plan sales contributing AED 79 billion.
Apartment rents rose by nearly 11%
Villa rents increased by 9%
Sales prices surged over 16% year-on-year
Despite a high number of project launches (25,000+ new units), delayed deliveries are fueling rental inflation. This remains a challenge for residents amidst broader cost-of-living increases.
Abu Dhabi Residential Market: Rising Prices and End-User Demand
Abu Dhabi also experienced continued price growth, with a 10% rise in ready residential transactions, driven by end-user buyers and yield-focused investors. Off-plan activity slowed slightly but demand remains robust.
Tourism & Hospitality: Sustained Visitor Growth
Both Dubai and Abu Dhabi’s hospitality sectors posted solid performance. Visitor numbers increased by around 4% in both cities year-on-year. Dubai’s average occupancy stood at 82%, while Abu Dhabi saw wider improvements in RevPAR and guest satisfaction metrics.
Retail Market Outlook: Limited Pipeline, Rising Value
Dubai’s retail market will add approximately 250,000 sqm GLA between 2025–2026, while Abu Dhabi will contribute 150,000 sqm, indicating a relatively limited supply pipeline. This constraint could support stable or rising retail rental values over the medium term.
Industrial and Logistics: Warehousing Rents Climb
The UAE industrial market saw double-digit rent increases in Q1 2025:
Dubai warehousing rents rose over 20% YoY
Abu Dhabi industrial rents jumped 14%, led by demand in KEZAD
Favorable macroeconomic policies and strategic industrial zones are fueling sustained demand for logistics and warehousing spaces.
Market Outlook 2025: Undersupply Fuels Value Growth
Matthew Green, Head of Research at CBRE MENA, stated:
“Undersupply remains a key challenge across all real estate sectors in the UAE. This dynamic continues to drive up rental and capital values. Despite macroeconomic concerns, strong fundamentals and sectoral diversification are positioning the UAE real estate market for sustained growth in 2025.”