Despite persistent global economic uncertainty, the UAE’s property market particularly in Dubai and Abu Dhabi has maintained strong momentum through the first quarter of 2025, as highlighted in CBRE Middle East’s Q1 UAE Real Estate Market Review.
While factors such as declining oil prices and ongoing trade tensions have pressured the global economy prompting the IMF to lower its global growth projection from 3.3% to 2.8%. the UAE’s diversified economic base and strategic trade relationships continue to buffer the country from external shocks.
Trade Expansion and Policy Shifts Fuel Market Confidence
A key contributor to this resilience is the UAE’s robust foreign trade performance, which reached AED 3 trillion ($817 billion) in 2025 a 15% year-on-year increase. This growth is attributed to proactive trade diversification and enhanced cross-border commerce.
Dubai has also introduced significant policy reforms. Under Resolution No. 11 of 2025 issued by the Executive Council, free zone companies are now permitted to operate in onshore markets with the Dubai Economic Department’s (DET) approval excluding entities based in the DIFC. This change is expected to enhance competitiveness, encourage new market entries, and support the broader ambition of doubling Dubai’s economy to AED 32 trillion ($8.7 trillion) within the next ten years.
Residential Sector: Growth in Supply, Surge in Demand
Dubai’s residential market has experienced strong activity in early 2025, with both rental rates and property sales values registering year-on-year increases. More than 25,000 new units have been introduced to the market, primarily within waterfront and affordable housing developments.
Despite the surge in new project launches, construction delays have tightened supply, contributing to average rental increases of nearly 11% for apartments and 9% for villas. Sales values have climbed by over 16%, supported by consistent quarterly gains.
Though the pace of rental inflation has eased slightly, affordability remains a pressing issue for residents.
Dubai recorded approximately 43,000 property transactions in Q1 2025, up 23% year-on-year, making it one of the busiest quarters on record, trailing only Q3 and Q4 of 2024. Off-plan transactions rose 33%, while sales of ready units saw a modest increase of nearly 5%.
The total value of these transactions reached AED 115 billion ($31.3 billion), with off-plan deals accounting for AED 79 billion ($21.5 billion) and ready properties contributing AED 36 billion ($9.8 billion). This reflects a 29% annual increase in total transaction value, with off-plan and ready properties rising nearly 35% and 19%, respectively.
Although off-plan sales have slightly decelerated on a quarterly basis, the ready market remains robust, sustaining near-record levels of activity. A weaker dollar could further bolster international interest in Dubai’s property sector, even as potential tariff implications remain uncertain.
Abu Dhabi Sees Steady Demand Despite Off-Plan Slowdown
In Abu Dhabi, residential price growth has continued in Q1, despite a dip in off-plan registrations. Demand for completed units has increased, with ready transactions rising by 10% driven by both end-users and investors focused on rental yields.
Supply constraints persist across the UAE, contributing to sustained rental growth and rising occupancy rates. These factors have underpinned continued appreciation in sales values across both Dubai and Abu Dhabi.
Despite broader macroeconomic challenges, including trade disruptions and tariffs, the UAE’s outlook remains strong underwritten by a dynamic non-oil sector and a broad base of international trade partners.
Commercial Office Market: Demand Outpaces Supply
Dubai: The city’s office sector is facing limited availability of quality space, especially in prime areas. This imbalance has driven rental rates up by over 20% year-on-year and pushed average occupancy rates to 94%. New supply in 2025 is expected to add just 100,000 sqm, much of which has already been pre-leased further tightening availability.
Abu Dhabi: The capital’s office market has benefited from non-oil sector expansion and government-led initiatives. Occupancy rates have reached 96%, with rental rates growing approximately 13% year-on-year. Prime office spaces have seen rents climb by almost 15%. Lease renewals increased by 9%, although new lease signings have slowed due to supply limitations.
Hospitality Sector: Visitor Growth Supports Hotel Performance
Across the Emirates, the tourism and hospitality sector remains on an upward trajectory. Dubai recorded a 4% increase in total visitor numbers compared to Q1 2024, with average hotel occupancy softening slightly to 82% as of March year-to-date.
Abu Dhabi mirrored this growth, also witnessing a 4% rise in overnight guests. The capital’s hotel sector has shown strong performance, particularly in revenue per available room (RevPAR), indicating a healthy recovery in hospitality demand.
Retail and Industrial Markets
Retail: Dubai’s near-term retail pipeline remains limited, with approximately 250,000 sqm of gross leasable area (GLA) expected between 2025 and 2026. Abu Dhabi’s upcoming supply is even more constrained, at around 150,000 sqm.
Industrial: The industrial sector continues to attract investment, supported by favorable macroeconomic conditions. Dubai’s warehouse rental rates have surged over 20% year-on-year, while Abu Dhabi posted a 14% rise, mainly driven by increasing demand within the Khalifa Economic Zones (KEZAD).
