DUBAI: The UAE’s real estate market is gearing up for another high-performance year in 2025, driven by strong demand, infrastructure expansion, and strategic investments.
According to JLL’s Middle East and Africa Market Review and Outlook 2025, the country is outperforming its regional counterparts, securing major construction projects and recording growth across multiple sectors.
Despite global economic uncertainties, the UAE remains a magnet for investment, buoyed by stabilising inflation and a resilient labour market.
Record-breaking sales
Dubai’s residential sector saw a remarkable 32% increase in sales transactions in 2024, reaching Dh367 billion. Investor appetite for off-plan properties remained strong, accounting for Dh223 billion or 60.7 percent of total transactions. This surge was accompanied by the launch of approximately 157,000 new units – the highest in a single year – indicating a continued influx of development activity.
“The UAE’s real estate market continues to demonstrate resilience, driven by economic diversification, investment-friendly policies, and robust demand,” said Taimur Khan, Head of Research MEA at JLL. “Looking ahead, the conversion of non-freehold properties and strategic infrastructure projects will further strengthen demand in 2025.”
Abu Dhabi’s office sector also showed remarkable growth, with 47,615 rental registrations in 2024 – an increase of 30.8 percent year-on-year. Government-related entities accounted for the majority of leases, highlighting the capital’s role as a key administrative and business hub. Limited new supply, estimated at 172,940 square metres, is expected to keep rental prices on an upward trajectory, particularly in prime locations.
Construction and infrastructure boom
The UAE dominated regional construction project awards in 2024, securing 45 percent of total awards worth Dh149 billion (USD 40.6 billion). The country led in residential and mixed-use projects, with contracts valued at Dh104 billion (USD 28.3 billion) and Dh16.9 billion (USD 4.6 billion), respectively.
“Despite rising construction costs, the market’s resilience is evident in strong order books and ongoing development activity,” said Gary Tracey, Head of Project & Development Services UAE at JLL. “Efficient cost control and innovative solutions will be key to sustaining this momentum.”
The UAE’s tender price inflation (TPI) for 2024 stood at 3% annually, mirroring 2023 levels. Looking ahead, JLL anticipates a moderate decrease to 2.5 percent in 2025, influenced by lower interest rates, stabilising commodity prices, and improved supply chains. However, market capacity constraints and contractor sentiment may pose challenges.
Retail, hospitality, and industrial strength
Dubai’s retail sector saw robust demand in prime locations, with rental rates in super regional malls climbing 13.6 percent to an average of Dh2,235 per square metre. Regional malls experienced a more modest 3.8 percent increase, reaching Dh1,224 per square metre. An additional 100,000 square metres of retail space is set to be delivered in 2025, primarily in community and regional malls.
Abu Dhabi’s tourism sector also recorded significant growth, with 4.8 million visitors between January and October 2024. Hotel occupancy reached 79 percent, up 6.5 percentage points, while the average daily rate (ADR) climbed 14.1 percent to USD 166. RevPAR surged 24.3 percent, driven by increasing visitor numbers and high-profile events. Dubai’s hotel stock stood at 155,800 keys by the end of 2024, with 7,200 additional rooms expected in 2025, primarily in 4- and 5-star categories.
The industrial and logistics sector witnessed robust leasing activity, driving lease rates up 12.1 percent year-on-year in Q4 2024. While developers in Dubai expanded operations, demand overflowed into Abu Dhabi and the Northern Emirates, with key zones reporting high occupancy rates.
5G and AI fuel data centre expansion
The UAE continues to lead the Middle East and Africa’s data centre industry, with Abu Dhabi and Dubai accounting for 40.8% of total IT load capacity in Q4 2024. Key drivers include urbanisation, a growing tech-savvy population, enhanced connectivity through subsea cabling, and accelerated digital infrastructure investments. Market forecasts suggest the region’s data centre sector will grow at a compound annual growth rate (CAGR) of 9.5% to 11.7% between 2023 and 2029.
“The UAE’s digital transformation, powered by AI and 5G, is creating significant demand for localised data centre facilities,” noted JLL’s report. “With increasing investor interest and expanding infrastructure, the sector is set for remarkable expansion in the coming years.”