UAE: Why office, retail leases spiked 50% in Q1 2025

Dubai: The UAE’s commercial real estate sector is off to a strong start in 2025, with leasing activity jumping 50.4% year-on-year, according to a new report by Chestertons MENA.

Office and retail demand are leading the way as business confidence soars, driven by favourable legal reforms and a wave of new investors entering the market.

The data, published in Chestertons’ Q1 2025 Market Report, highlights a major rise in commercial leasing across the Emirates. Office transactions saw a 62.7% increase, surpassing 101,000 deals, while retail leasing reached 36,000 transactions worth Dh3.4 billion.

“Commercial real estate is now at the heart of the UAE’s next economic chapter,” said Mohamed Mussa, Executive Director at Chestertons. “This is more than a rebound — it’s a redefinition of the investment landscape, backed by strong demand and forward-thinking regulation.”

The growth comes as 100% foreign ownership laws, long-term visas, and tax incentives continue to attract international companies. Legal updates around property ownership and business setup are also helping unlock investor confidence.

Speaking at a recent Chestertons Commercial Conference, legal expert Michael Kortbawi noted: “Investors now have clarity on ownership, tax, and dispute resolution. The legal framework in the UAE is built for global capital and long-term planning.”

The momentum wasn’t limited to commercial space. The report also showed strong growth in villa and townhouse sales, which rose 51.9% in volume, reaching Dh 76.5 billion. Apartment transactions also increased, rising 16.25% in value to Dh75.1 billion.

Communities like Jumeirah Village Circle (JVC), Business Bay, and Dubai Marina saw the highest levels of buyer interest, as residents continued to prioritise location, lifestyle, and rental returns.

Rental activity followed suit, with apartment leasing up 21.4% (Dh11.3 billion across 151,000 transactions) and villa leasing up 21% in value. Demand for larger homes has remained elevated post-COVID, as families seek space and long-term stability.

“Across every property segment — from residential to commercial — the UAE is showing signs of structured and sustainable growth,” said Mania Merrikhi, Chief Operating Officer at Chestertons MENA. “The macroeconomic vision and legal infrastructure are working together to make the UAE one of the world’s most investible real estate markets.”

Chestertons, established in London in 1805 and active in the UAE since 2008, reported a 155% year-on-year increase in MENA-wide transactions in Q1 2025 and is targeting 220% growth by 2026.