UAE property market surge – it’s not just Dubai’s off-plan homes this time

Dubai: The UAE's real estate sector has had a roaring start to 2025 — and even halfway through the year, it's not just residential properties driving the momentum.

New data shows that the country’s commercial, industrial, retail, and hospitality segments are all unlocking fresh growth opportunities, driven by strong investor demand, new economic policies, and a continued appetite for prime space.

According to JLL’s Q1 2025 Market Dynamics report, office vacancy rates hit new lows — 8.6% in Dubai and just 2.3% in Abu Dhabi — signaling an unprecedented squeeze in quality office space. Prime areas in Dubai have a near-zero vacancy rate (0.2%), and Abu Dhabi’s Grade A stock is similarly tight. While rental volumes in Dubai dipped year-on-year, they saw a 9.3% rebound quarter-on-quarter, thanks in part to renewed confidence from landlords and tenants alike.

Developers are moving fast to meet demand, focusing heavily on premium office towers and refurbishing older assets. And with reforms in visa policies and easier business setup rules, the UAE’s commercial real estate outlook is poised to remain strong throughout the year.

Dubai’s residential market recorded a massive Dh115.6 billion in sales in Q1 2025, largely driven by investor enthusiasm for off-plan projects, which made up over two-thirds of transactions. New launches are flooding the market to meet demand, reflecting developers’ confidence in the long-term strength of the sector.

Meanwhile, May data from Property Finder showed the emirate clocked Dh66.8 billion in sales across 18,700 deals — a 44% rise in value from May 2024. Ready properties, both primary and secondary, saw explosive growth. Primary ready sales skyrocketed 314% year-on-year, while secondary market transactions rose 21% in value.

With high rents still a factor, many tenants opted to renew rather than relocate. However, as new supply enters the market, more cost-effective relocation opportunities could emerge later this year, potentially stabilising rent growth.

The UAE’s manufacturing and logistics sector is also heating up. Industrial tenants in Abu Dhabi and Dubai faced double-digit rent hikes in Q1, with warehouse rents rising by 10.9% and 12.5%, respectively. KEZAD (Abu Dhabi) and Al Quoz (Dubai) continue to command top-tier pricing thanks to location advantages and infrastructure.

In Abu Dhabi, the government’s push to expand its manufacturing base by 2031 is already impacting leasing trends, with renewals up and new supply lagging demand — a dynamic that continues to favour landlords.

Retail spaces, especially in prime locations, are seeing renewed demand. Dubai’s top-tier malls recorded a jaw-dropping 29.5% increase in rents, reaching Dh826 per sq. ft — proof that brands are willing to pay a premium for high-traffic zones. Super-regional and regional malls followed with 9% growth.

In Abu Dhabi, rental increases were noted across all mall categories, with prime spaces reaching Dh5,524 per sq. m — and even community malls saw modest gains. Though new contract activity dipped slightly, strong renewal rates kept the segment buoyant.

Dubai welcomed 5.31 million overnight visitors in Q1 — a 2.5% increase from last year — boosting the hospitality sector across all performance indicators. The city’s hotels maintained an average occupancy of 82.2%, with ADR climbing to Dh841 and RevPAR rising to Dh691.

Abu Dhabi also saw impressive gains. Though occupancy dipped slightly, ADR jumped 28.1% year-on-year to Dh757, lifting RevPAR to Dh606. The tourism boost is setting the stage for even more hotel openings: Dubai expects 4,700 new keys by year-end, mostly in the luxury segment.

From boardrooms and construction sites to shopping malls and beach resorts, the UAE’s real estate landscape is firing on all cylinders in 2025. Strong investor appetite, proactive government strategies, and a flight to quality are keeping momentum high — with no signs of slowing down. Whether you're a homebuyer, a business tenant, or a global investor, the market continues to offer compelling opportunities across every sector.