The UAE real estate sector is closing 2025 with record-breaking activity, surging demand and rising prices across key emirates — even as signs of an impending market rebalancing begins to surface.
According to comprehensive datasets from CBRE, Colliers, Cavendish Maxwell, Property Finder, and global ratings agencies such as Moody’s and Fitch, 2025 marked both a peak in transaction activity and the start of a long-awaited normalisation phase.
Looking ahead to 2026, analysts expect a dual-track market: still buoyant in prime and ultra-luxury segments, but increasingly competitive in mid-market apartment districts as an unprecedented volume of new homes enters the supply pipeline. The market remains fundamentally strong — supported by population growth, diversified economic expansion and investor inflows — but 2026 is likely to herald cooler price growth, greater buyer choice, and a more balanced negotiating environment.
Economic forces
The UAE’s macro performance in 2025 underpinned the property boom. CBRE reports the economy grew close to 4.9%, supported by robust non-oil activity, strong tourism and expanding FDI. The UAE PMI hovered around 54.2, reflecting healthy private sector expansion.
Dubai’s population surpassed 4 million, with ValuStrat noting roughly 1,000 new residents per day in first quarter alone. This demographic pressure sustained housing demand even as mortgage rates edged higher. Meanwhile, the UAE’s position as a global safe haven attracted more than 9,800 millionaires in 2025 (Henley & Partners), strengthening the luxury segment across Dubai and Abu Dhabi.
Dubai residential surge
According to Cavendish Maxwell, Dubai recorded around 55,300 residential transactions in third quarter of 2025, up 17.1% year-on-year, while Property Finder places the city’s Q3 total at 59,044, the highest in its history. Off-plan dominated with 76% of activity, fuelled by flexible payment plans and investor appetite for early-stage projects.
Sales prices rose 16% annually, with some hotspots crossing 20%. Yet the ready market showed mild softening, with Q3 ready transactions down 5.4% quarter-on-quarter basis. Cavendish Maxwell attributes this to price sensitivity and the emergence of more rational buying behaviour after two years of aggressive gains.
Deliveries accelerated but still lagged projections — 9,400 units were completed in Q3 versus the expected 22,800. Construction cycles shortened from 1,340 days in 2023 to about 880 days in 2025, signalling more efficient execution. However, the bigger story is the massive pipeline ahead: between 2025 and 2028, roughly 366,000 units are expected, with Moody’s and Fitch estimating 150,000–250,000 homes arriving between 2025 and 2027 alone.
Fitch warns the mismatch between 16% projected supply growth and only 5% population growth could cool the market, though any correction is expected to be orderly, capped at around 15%.
Dubai rental trends
Colliers reports apartment rents rose 2% quarter-on-quarter basis in Q3, while villas increased by 4% year-on-year basis. But rental growth has eased from peaks above 20% in 2024, stabilising closer to 8–12%. Tenants facing affordability challenges are increasingly turning to ownership: surveys show 55% of residents plan to buy within three years, double the figure in 2024. This shift is expected to intensify in 2026 as new supply tempers rental escalations.
Dubai office strength
CBRE and Cavendish Maxwell data point to one of Dubai’s strongest-ever commercial cycles. Office occupancy sits around 94%, with prime districts such as DIFC, d3 and DMCC remaining significantly undersupplied. Q3 office transactions rose nearly 40% year-on-year basis, with values climbing 87%, driven mostly by off-plan sales.
Prices increased 25% annually and rents 29%, supported by the addition of 53,000 new companies to the Dubai Chamber of Commerce in the first nine months alone. Although approximately 1.1 million sqm of office space is due between 2027–28, analysts expect 2026 to remain strongly landlord-favourable due to persistent shortages.
Abu Dhabi momentum
Abu Dhabi’s 2025 story is one of transformation. Property Finder records 7,154 transactions in Q3, a 76% annual surge — the highest in the emirate’s history. Off-plan accounted for 73% of activity, boosted by mega-projects at Fahid Island and Al Hidayriyyat. Off-plan apartment values leapt 276%, while duplexes surged 424%. Colliers reports strong rental growth: apartment rents up 13% year-on-year basis, villas up as much as 11%. Grade A offices in ADGM on Al Maryah Island approached full occupancy, with fitted space exceeding Dh3,000 per sqm.
The ready market also strengthened, with values rising 71% year-on-year basis. Al Reem Island, Saadiyat and Al Raha Beach maintained their positions as high-demand clusters for both investors and end users.
Northern Emirates rise
The Northern Emirates — particularly Ras Al Khaimah and Sharjah — recorded one of their most active years in a decade. According to Colliers, more than 13,000 units were launched in Q3 across the region. RAK’s coastal districts posted 5% quarterly rental growth, supported by relocations from Dubai and tourism-linked demand. RAK apartment prices rose 18% year-on-year basis, while Sharjah’s grew 12%. Investor sentiment continues to strengthen with developments along Al Marjan Island — helped by anticipation around the upcoming Wynn Resort —drawing strong global capital, particularly through projects such as Miraggio by Source of Fate.
Luxury market boom
High-net-worth migration continues to elevate the UAE’s luxury market. Ultra-prime villa and waterfront communities in Dubai, such as Palm Jumeirah and Dubai Hills Estate, saw 15–30% annual growth in 2025, according to Cavendish Maxwell.
Developers are responding with bold luxury launches: Sunteck Realty entered Dubai with a Dh5 billion Downtown project, while branded residences remain one of the fastest-growing categories across Dubai and Abu Dhabi. Ras Al Khaimah’s high-end coastal offerings are becoming increasingly competitive globally, evidenced by Miraggio’s 80% international buyer share.
Hospitality, retail gain
CBRE notes the UAE is on track for 27.6 million visitors in 2025. Occupancy rates in Dubai and Abu Dhabi averaged 79%, while UAE-wide RevPAR increased 12%. Abu Dhabi’s hotel revenues climbed nearly 19%. The hospitality boost continues to support residential and retail demand, particularly in short-stay and holiday-home segments.
Retail remained near capacity. CBRE reports occupancy at 97% in Dubai and 95% in Abu Dhabi, with rents rising 5.3% and 3.3%, respectively. New global brand openings reflect confidence in long-term spending power and sustained tourism.
The UAE’s industrial and logistics sector performed strongly in 2025. CBRE highlights rent growth of 18% in Dubai and 12% in Abu Dhabi, supported by data-centre expansion, manufacturing activity and strategic warehousing demand. New large-scale facilities are scheduled from 2026 onward, suggesting continued momentum.
Developer stability
One of the defining characteristics of this cycle is developer resilience. Fitch reports that leverage among major UAE developers dropped from nearly 5x equity to 1.4x, while combined profits among the top six exceeded Dh46 billion in 2024. Emaar’s order book alone reached Dh129 billion.
With escrow rules and phased launches now standard, project delivery risk is significantly lower than in past cycles — a foundation that strengthens the 2026 outlook.
Moderation Ahead
Prices are expected to stabilise as the new supply wave peaks. Fitch sees potential price softening of up to 15 per cent, though concentrated mostly in mid-market apartments.
Ultra-luxury villas, branded residences and waterfront assets are likely to outperform, backed by sustained HNW migration and limited supply.
More Choice for Buyers
With 2026–27 expected to deliver the largest batch of homes in two decades, end-users will gain negotiating power, easing affordability constraints.
Transaction transparency, digital platforms like DARI, and more stringent launch requirements will help create a more predictable and institutionally attractive market.
Continued Int’l Demand
Foreign and corporate relocations will keep Dubai and Abu Dhabi among the world’s most magnetising property destinations in 2026.
Redefining balance
The UAE enters 2026 from a position of strength. Dubai and Abu Dhabi continue to draw global capital, multinational businesses and skilled professionals, while the Northern Emirates expand their investment horizons through tourism, affordability and large-scale masterplans.
As most experts predict, the coming year will not mirror the hyper-growth of 2022–24. Analysts from Colliers, CBRE, Cavendish Maxwell, Property Finder, Moody’s and Fitch forecast a more mature cycle — characterised by better balance, improved affordability, and a deeper alignment between supply and demand. For investors, end-users and developers, the UAE remains one of the world’s most compelling real estate ecosystems — entering its next chapter with confidence, clarity and long-term potential.
issacjohn@khaleejtimes.com