Overview of the UAE Property Market in Q2 2025

The UAE property market has displayed resilience and dynamic growth in the second quarter of 2025. Strong activity across residential, office, retail, industrial, and hospitality sectors showcases its robustness, as highlighted in a recent JLL report. Dubai and Abu Dhabi continue to attract global investors, tenants, and developers, adapting seamlessly to evolving consumer and business trends while balancing demand with an influx of supply.

Residential Market: A Surge in Investor Confidence

The residential real estate sector in Dubai and Abu Dhabi has set a vibrant tone for Q2 2025. Dubai’s total sales transaction value surged to AED 153.7 billion, marking a significant 44.5% increase year-on-year. This strong performance is largely attributed to a flurry of off-plan launches. The sales volume increased by 22.8%, showcasing an unyielding investor appetite. Even secondary market sales expanded by 17.1%, demonstrating confidence that extends beyond new developments.

In Abu Dhabi, the trend echoed positively, with overall transaction volumes rising by 9.1% compared to the same quarter in 2024. The secondary sales in the city rocketed by an impressive 32.6%, offsetting a slight dip in off-plan activity. Price-wise, both cities witnessed substantial gains: Dubai’s apartments averaged AED 1,769 per sq. ft (+13.3% YoY), and villas escalated to AED 2,200 per sq. ft (+16% YoY). Similarly, Abu Dhabi’s apartments and villas appreciated by 14.4% and 11.1%, respectively.

This promissory residential performance extends its positive influence on the wider UAE property market. A growing population coupled with increased investor interest creates a ripple effect, boosting demand for office, retail, and industrial assets.

The Office Market: Scarcity Fuels Demand

Shifting focus to commercial real estate, the UAE’s office sector remains favorable for landlords, attributed to limited Grade A availability and robust occupier demand. In Abu Dhabi, vacancy rates dipped to just 1.5%, with prime office spaces nearly fully occupied at a staggering 0.1%. In Dubai, the citywide vacancy sits at 7.7%, with the prime segment showing an ultra-tight 0.3% vacancy rate.

This scarcity has inevitably led to rising rents in both emirates. In Abu Dhabi, prime office rents skyrocketed 31.5% year-on-year to AED 2,905 per sq. m., while Dubai’s prime rents rose by 17.3% to AED 359 per sq. ft. The widening rent gap between premium and secondary stock highlights the premium put on top-tier spaces, especially in prominent financial hubs like the Dubai International Financial Centre (DIFC).

With a limited supply of Grade A stock anticipated until 2026 in Abu Dhabi and 2027 in Dubai, landlords are in a strong position, making the office sector one of the fiercest competition areas in the UAE property market.

Retail Sector: Evolving Consumer Behavior

Moving on to the retail landscape, activity has remained vibrant, especially in Dubai, where rental contract registrations increased by 9% compared to the previous year. This growth is mainly driven by renewals, which surged by 11.9%, reflecting tenants’ inclination to remain in established high-footfall locations. Conversely, Abu Dhabi noted a 12.1% decline in new registrations, with retailers favoring renewals amid limited available supply.

Prime malls in Dubai have thrived, showcasing vacancy rates as low as 3.1%. In contrast, secondary malls struggle with higher vacancies exceeding 9%. Rental rates at premier malls jumped 15.1% year-on-year to AED 826 per sq. ft., underscoring the robust consumer demand and the allure of Dubai as a global retail destination.

New retail dynamics are reshaping the market, with e-commerce brands launching physical stores for experiential shopping and fulfilment. Additionally, the food and beverage (F&B) sector is evolving, with many outlets gravitating toward casual and upper-casual dining experiences. These trends signify the adaptability of the UAE property market to ever-changing consumer expectations.

Industrial Market: High Demand for Logistics

The industrial segment stands out as one of the strongest pillars in the UAE’s property landscape. Both Dubai and Abu Dhabi saw significant rental growth in Q2 2025. In Abu Dhabi, warehouse rents leaped by 22.4% to AED 470 per sq. m., with top-tier KEZAD facilities fetching AED 500. Dubai mirrored this trend, where warehouse rents climbed 19.2% to AED 46 per sq. ft, with Al Quoz commanding AED 65 per sq. ft.

The demand for industrial space has outstripped supply, particularly in key industrial zones such as JAFZA, Dubai South, and DIP, leading to tenant waitlists. Developers are responding enthusiastically with new projects, bolstered by government strategies that enhance infrastructure and attract international enterprises. As occupancy approaches full capacity in essential regions, the industrial real estate market is likely to sustain growth and yield strong returns.

Hospitality Sector: Resilience Amid Seasonal Trends

Despite being traditionally slower, Q2 2025 revealed resilience for the UAE’s hospitality sector. Dubai recorded nearly 9.88 million visitors in the first half of the year, a promising 6.1% increase from the prior year. Hotel occupancy in Dubai surged to 81.4%, with the average daily rate (ADR) rising 5.5% to AED 754—the highest rate in the UAE. Similarly, Abu Dhabi’s ADR saw an impressive uptick of 22.7%, driven by diversification among visitor markets and improved service quality.

New luxury and beachfront developments allowed operators to charge premium rates, while older properties faced challenges. Notably, the announcement of a Disney-branded theme park in Abu Dhabi is set to further elevate long-term demand, bolstering the emirate’s status as a premier leisure destination.

Outlook for the Future: A Sustainable and Balanced Growth

As we move forward, the UAE Property Market appears poised for continued growth while gradually moving toward a more balanced state. In the residential sector, a moderation in prices is expected as supply aligns with demand. The office sector will maintain its landlord-favored stance due to ongoing scarcity of Grade A stock. Retail will increasingly embrace the dynamics associated with consumer experiences, while the industrial market remains attractive as logistics demand persists.

The hospitality sector seems well-positioned to benefit from ongoing tourism diversification efforts and major projects, affirming the UAE’s status as one of the world’s most resilient and dynamic property markets. This environment presents a multitude of diverse investment opportunities across various asset classes.