Dubai’s real estate sector delivered a record-breaking performance in the second quarter of 2025, with surging transaction volumes and resilient investor appetite, even as price growth showed signs of deceleration and affordability constraints began to surface.
The market’s dynamism was underpinned by strong off-plan sales, sustained demand for office and logistics space, and proactive government initiatives to boost homeownership.
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According to ValuStrat’s Q2 research, property sales in Dubai hit new highs with nearly 37,000 off-plan transactions, averaging over Dh3.1 million per unit. Ready home sales also rose by 10.4 per cent from the previous quarter, registering 13,700 title deed transactions with an average price of Dh2.7 million. This momentum was particularly driven by robust activity in April and May.
The ValuStrat Price Index (VPI) reflected continued but moderated capital appreciation. Apartment prices rose 19.1 per cent year-on-year, compared to 23.4 per cent in the same period last year. Villas saw a 28.7 per cent annual gain, also slower than the 33.4 per cent growth recorded in 2024. The VPI for apartments reached 188 points, and for villas, it climbed to 220 points — more than double the Q1 2021 baseline.
Despite increasing supply, with 17,500 new homes completed in the first half and 66,596 units expected to be delivered in 2025, demand continues to outstrip supply in key segments. ValuStrat’s head of real estate research, Haider Tuaima, noted that the elevated transaction activity highlights strong market confidence, though the impact of upcoming supply on pricing dynamics warrants close monitoring in the second half of the year.
Rental growth, too, appears to be moderating. Apartment asking rents rose by 1.2 per cent quarterly and 7.2 per cent annually, with average annual rents at Dh95,500. Villa rents remained stable on a quarterly basis but were up 4.8 per cent year-on-year, averaging Dh428,000 annually. The overall VPI for residential rents rose by 1 per cent quarter-on-quarter and 6.2 per cent annually to reach 200.3 points.
The office segment continued to show remarkable strength amid a supply-constrained environment. Capital values for office space rose 4.9 per cent quarter-on-quarter and 23.7 per cent year-on-year, compared to a 31.7 per cent annual rise in 2024. The banking, finance, and tech sectors are the major demand drivers.
CBRE noted that average office rents in Dubai jumped more than 20 per cent year-on-year, with occupancy nearing full capacity in prime business districts.
CBRE also reported a surge in residential transaction volumes, which climbed 23 per cent year-on-year in H1 2025. The total value of residential sales reached Dh270 billion. The launch of Dubai’s First-Time Home Buyer Programme, which offers incentives such as flexible payment plans and preferential pricing, is expected to further encourage end-user demand and widen homeownership in the emirate.
In terms of economic context, the UAE’s GDP is forecast to grow 5.1 per cent in 2025, up from 3.8 per cent in 2024. This economic expansion is backed by recovering oil output, strong non-oil sector performance, and a resilient tourism sector. Dubai saw a 7 per cent year-on-year rise in international visitors between January and May, reinforcing the strength of the hospitality and retail segments.
The industrial and logistics market is also flourishing. ValuStrat reported 16.2 per cent annual and 4.1 per cent quarterly capital gains for logistics warehouses, driven by sustained demand and high occupancy rates. CBRE added that strong rental growth and landlord-favorable market conditions are attracting heightened investor interest in Grade A industrial assets, signaling potential for more liquidity and development in the sector.
In Abu Dhabi, the property market is showing parallel momentum. Apartment values rose by 18 per cent year-on-year, while villa prices gained nearly 14 per cent. The capital’s office market is also seeing increased traction from international corporates, with occupancy and rents on the rise.
Matthew Green, head of research for Mena at CBRE, attributed the UAE’s real estate resilience to its diversified economy and progressive policy frameworks. “The country continues to attract high-net-worth individuals, bolster foreign direct investment, and lead in innovation — all of which reinforce demand across residential, commercial, and industrial segments,” he said.
Real estate market experts believe that with strategic government initiatives, strong demographic and investor fundamentals, and a proactive approach to urban development, Dubai’s real estate market is poised to sustain its momentum through the remainder of 2025 — even as it gradually transitions from breakneck growth to more sustainable long-term expansion.
issacjohn@khaleejtimes.comis Managing Editor at media and has over 45 years of experience in top-tier newspapers across UAE. A seasoned business writer and economic analyst, he brings unmatched insight into the geopolitics and geoeconomics shaping the Gulf and India.
