Dubai’s residential sector entered a phase of measured normalisation following several years of rapid expansion, though activity levels remained historically strong.
A new review by CBRE Middle East shows that while regional tensions weighed on sentiment in March, structural undersupply across key segments — especially Grade A offices and industrial facilities — continued to underpin rents, occupancy and investor confidence across Dubai and Abu Dhabi.
The broader macroeconomic backdrop remained supportive despite a downward revision in UAE GDP growth expectations for 2026 to 0.3 per cent. Analysts said contained inflation, strong liquidity buffers and proactive policy support helped stabilise financial markets, with GCC bond spreads tightening and risk appetite gradually recovering.
Office markets in both Dubai and Abu Dhabi remained among the strongest-performing segments of the property sector, reflecting persistent shortages of premium workspace.
Average office rents in Dubai rose 14 per cent year on year, while prime rents climbed 16 per cent as occupancy levels held near 95 per cent. Demand for Grade A space in core districts continued to exceed supply, even as some multinational companies temporarily delayed expansion plans amid regional uncertainty.
Abu Dhabi recorded even tighter conditions. Occupancy rates reached 98 per cent, while average rents rose 12 per cent year on year. With only limited new deliveries expected before 2027, analysts expect supply constraints to continue supporting rental growth in regulated business zones and financial districts.
“Recent geopolitical developments have influenced sentiment and short-term activity, but the UAE real estate market has showcased its inherent stability,” said Matthew Green, head of Research at CBRE Mena. “Structural undersupply, institutional strength and sustained international capital inflows continue to reinforce market
Residential growth
Dubai’s residential sector entered a phase of measured normalisation following several years of rapid expansion, though activity levels remained historically strong.
More than 45,000 residential transactions worth about Dh137 billion were recorded during the quarter, driven largely by off-plan sales in mid-market communities. Price growth slowed to around 9 per cent year on year, while rental increases eased to 4.1 per cent, signalling a shift toward more sustainable momentum rather than a correction.
Investor sentiment softened slightly in March as regional tensions escalated, but off-plan launches continued to attract strong demand, particularly from overseas buyers seeking long-term exposure to Dubai’s growth story.
Abu Dhabi’s residential market moved in the opposite direction, registering record transaction values supported by premium project launches and strong uptake of high-end developments. Apartment prices led gains, although rental increases began to stabilise after a period of sharp expansion.
Hospitality sector
The hospitality sector entered 2026 with strong momentum after a record tourism performance in 2025, reinforcing the UAE’s position as one of the world’s most dynamic travel destinations.
Dubai welcomed 19.6 million visitors last year, with hotel occupancy reaching 80.7 per cent and revenue per available room rising 11 per cent. Abu Dhabi recorded nearly six million visitors, while Ras Al Khaimah saw arrivals climb to 1.36 million.
That momentum extended into early 2026. Dubai alone welcomed about two million visitors in January, while nationwide occupancy averaged roughly 85 per cent in January and February.
Although travel patterns shifted in March due to regional developments, operators quickly pivoted toward domestic tourism and staycation campaigns to sustain occupancy and food-and-beverage revenues.
Retail remains stable
Retail real estate remained resilient despite softer international visitor flows and evolving consumer behaviour.
Prime mall occupancy stood at around 98 per cent in Dubai and 95 per cent in Abu Dhabi, underscoring continued tenant confidence in high-quality retail destinations. Landmark developments such as Primark’s UAE debut and Majid Al Futtaim’s Ma’an entrepreneurship initiative also reinforced the sector’s expansion pipeline.
While short-term sales growth may face pressure from changing tourism patterns, landlords remain optimistic about leasing activity supported by strong resident demand and population growth.
Logistics outperform
Industrial and logistics assets continued to outperform other segments, benefiting from supply shortages and sustained investment in supply-chain resilience.
Dubai recorded double-digit rental growth across logistics clusters, while Abu Dhabi’s industrial hubs posted steady increases amid expanding manufacturing activity and inventory localisation strategies by global firms.
Demand for Grade A warehousing remains particularly strong as companies adapt to shifting trade routes and geopolitical risks by strengthening regional distribution networks.
Looking ahead, analysts expect the UAE property market to remain supported by strong fiscal buffers, institutional stability and continued inflows of global capital. With growth projected to rebound sharply in 2027 as trade routes stabilise, the sector appears positioned not just to withstand near-term disruptions — but to extend its role as a regional safe haven for real estate investment.
News Source: https://www.khaleejtimes.com/business/property/uae-real-estate-stays-strong-on-tight-supply-off-plan-demand
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