UAE Real Estate — Q2 2025

Executive summary

• Momentum held in Q2 despite a softer June: UAE non-oil activity stayed in expansion (PMI 53.5 in June). Dubai residential transaction volumes ~51–53k for the quarter and a record sales value by some datasets; Abu Dhabi volumes were broadly flat q/q with values up. Hospitality KPIs improved; Grade-A offices remained landlord-favourable; logistics rents rose double-digits.

• Policy catalysts: Dubai launched a First-Time Home Buyer Programme (FTHB) and advanced real-estate tokenisation, widening access and potentially rebalancing end-user vs investor demand.

• Outlook: Baseline is for continued growth in occupier and hospitality markets; residential remains split—prime and well-located stock resilient, but a swelling pipeline introduces two-sided risk (supportive demand vs. future absorption pressure).

1| Macro backdrop

• GDP: 2025 growth revised up to ~5.1%; inflation projected ~2.5%. PMI averaged in expansion; Dubai PMI dipped in June but remained >50 on the UAE print.

• Tourism & FDI: International visitation and RevPAR lifted hospitality performance YTD; all three major rating agencies maintained strong sovereign ratings with stable outlooks.

Implications: Macro supports occupier demand and tourism cashflows; geopolitics and global trade frictions are the principal downside risks flagged by consultants.

2| Residential markets

Dubai

• Transactions: Q2 volumes ~51,000–53,000; value AED 154–184bn depending on dataset/methodology (registration timing, asset mix and land inclusions differ). Off-plan continued to dominate activity (~70% share).

• Prices & rents: To June, values up ~14% y/y (apartments ~13%, villas ~16%); rents up ~7.2% y/y. Q/Q price growth moderated as the market digested heavy launch activity.

• Supply: Pipeline now ~300,000 units through end-2029 (avg ~60k/yr). 2025 completions guided ~44k units; 2026 ~68k. Concentrations: JVC, MBRC, Dubailand, Arjan, Business Bay.

• End-user policy: The FTHB Programme (cap AED 5m, 13 developers, 5 banks) aims to ease affordability and nudge renters into ownership—likely tempering rent inflation at the margin if scaled.

Read: Property Finder and REIDIN both report all-time quarterly highs in Q2; differences reflect coverage and categorisation—use a blended lens for strategy.

Abu Dhabi

• Activity: H1 transactions >6,000 (CBRE) with H1 value AED 51.7bn (official centre release). Q2 volumes ~3,200(-1.5% y/y) but value +23% y/y (AED 10.1bn), signalling larger ticket sizes and resilient ready demand.

• Prices & rents: Q2 y/y gains remained robust—apartments ~14–18%, villas ~11–14%; apartment rents ~+14% y/y, villa rents ~+5% y/y. Growth strongest in Saadiyat, Reem and Yas.

• Pipeline: ~70,000 units expected over five years; ~10,000 in 2025.

Regulation note: Dubai’s Smart Rental Index and existing rent-adjustment rules continue to anchor renewals; Abu Dhabi maintains a rent-cap framework. (Consult official calculators and tenancy channels case-by-case.)

3| Offices

Dubai

• Vacancy & rents: Average occupancy ~94% across tracked Grade-A assets; average leasing rates +23% y/y to end-June. New completions limited in Q2; ~1.3m sq ft expected in 2025—insufficient to loosen conditions meaningfully near-term.

Abu Dhabi

• Vacancy & rents: Average occupancy ~96%; average rents +11% y/y with prime >AED 1,800/sqm/yr. ADGM corporate ecosystem expansion and AUM growth underpin demand; meaningful new supply is scarce until ~2027+.

Takeaway: Landlord-favourable dynamics persist; renewal uplifts and pre-leasing interest remain elevated across finance/tech nodes.

4| Hospitality

• UAE YTD to June: Occupancy +4.0pp, ADR +7.9%, RevPAR +12.2%.
  Dubai (YTD May): Occ 82.9% (▲2pp), ADR AED 620 (▲5%), RevPAR AED 513 (▲7%).
  Abu Dhabi (YTD Apr): Emirate Occ 81.9%, city Occ 84% (▲2pp), RevPAR AED 499 (▲27%).

• Forecast lens: External trackers still see mid-single-digit RevPAR growth for 2025, with the UAE outperforming most regions.

5| Retail

• Occupancy & rents: Prime malls operate near full; rents up ~5% y/y in Dubai and ~8% in Abu Dhabi. New large-scale GLA is limited in the near term (e.g., Al Khail Avenues 2026; The Grove Abu Dhabi phasing), keeping leverage with landlords.

• Leasing trends: New entrants (e.g., Primark, Ulta Beauty) and experiential F&B/social concepts broaden demand; community-convenience formats remain highly sought after.

6| Industrial & logistics

• Rents: Dubai logistics/industrial +~22% y/y; Abu Dhabi +~15% y/y to H1, amid acute Grade-A supply scarcity and high land occupancies. Institutional interest is rising; speculative supply remains thin.

7| Capital flows & prime

• US$10m+ homes: Dubai hit a record US$2.6bn in Q2 sales, +63% y/y, underscoring persistent global HNWI demand.

8| Policy & innovation watch (Q2)

• First-Time Home Buyer Programme (Dubai): Priority access, preferential pricing and bank partnerships for properties ≤AED 5m—aimed at boosting end-user take-up and easing rental pressures at the margin.

• Real-Estate Tokenisation (Dubai): DLD’s initiative (with partners incl. Ctrl Alt/Ripple) recorded early cohorts of first-time investors; formal pathway live on DLD services. Strategic impact: fractional access, liquidity, and new product design (e.g., branded residences, income strips).

9| Risks and scenarios (H2 2025–2026)

• Base case: Moderating price growth, resilient volumes on sustained migration and pro-growth policy; landlord-favourable offices/logistics; hospitality ahead of 2019 baselines.

• Downside: Select agencies flag double-digit residential price corrections into 2026 on supply overhang and tighter global conditions (variance by location/grade).

• Upside: FTHB and tokenisation broaden end-user/investor bases; if oil and travel remain supportive, absorption of 2025–2026 deliveries could surprise to the upside.

10| Strategic takeaways

For investors

• Prefer delivery-proximate off-plan with strong developer cash-flow discipline; emphasise mid-market, end-userproduct benefiting from FTHB spillovers. Hedge exposure with logistics and hospitality plays.

For developers

• Pace launches to local absorption; prioritise build-to-quality and family-sized typologies in high-amenity corridors (JVC/MBRC/Arjan in Dubai; Saadiyat/Yas/Jubail in Abu Dhabi). Explore tokenised tranches for smaller cheque sizes and international reach.

For occupiers

• Office: Lock in longer terms or options now; scarcity persists through 2026.

• Industrial: Plan early; Grade-A is capacity-constrained—consider KEZAD/Dubai South and hybrid showroom/micro-fulfilment footprints.

Methodology & data notes

This synthesis draws on consultant quarterlies, official portals and marketplace analytics. Differences between Property Finder and REIDIN/consultants primarily reflect inclusions (e.g., land, B2B) and registration timing. Where ranges are shown, they denote multi-source triangulation for transparency.

Sources (key)

1. CBRE UAE Real Estate Market Review Q2 2025 (macro, offices, residential, retail, industrial, hospitality).

2. JLL UAE Living & Retail Market Dynamics, Q2 2025 (directional trends).

3. REIDIN Dubai Residential Q2 2025 Market Overview (transaction counts/values).

4. Property Finder Q2 2025 release (record quarter).

5. Knight Frank/Arabian Business (off-plan share, prime performance).

6. DMT/Abu Dhabi Real Estate Centre H1 2025 (values).

7. DLD/DET policy: First-Time Home Buyer Programme; DLD Tokenisation (service pages and coverage).

8. Hospitality outlook (STR/CoStar forecasts).

9. Contrarian risk marker (Fitch).