As Dubai’s real estate sector continues to grow, offices continue to see incredibly strong demand from both existing and inbound occupiers, but chronic undersupply of quality accommodation across prime freezones and central areas, continues to assert significant pressure on rental rates, resulting in rising rental growth and occupancy rates.
In its latest UAE Real Estate Market Review, CBRE Middle East revealed that as of the end of March 2025, average occupancy rates across assets in Dubai were around 94 percent, up from 90 percent in 2023. This upward trend is set to continue with limited new supply and strong prevailing demand.
Office rents in Dubai have also remained firmly on an upward track, with average leasing rates increasing by more than 20 percent year-on-year, with most occupiers now facing significant growth in their leasing contracts upon renewal as landlords remain heavily bullish given the lack of available accommodation.
Supply constraints unlikely to be resolved until 2027
CBRE Middle East added that supply is now visibly tight across most prime and secondary office locations in Dubai, a scenario which appears unlikely to be resolved until 2027 at least, considering the current pipeline of completions and the volume of latent demand.
Anticipated office deliveries during 2025 include properties at Dubai CommerCity and TECOM. However, in total, more than 100,000 sqm of new accommodation will be handed over, with pre-leasing activities across these assets likely to mean minimal if any space will be available to lease upon completion.
“Undersupply remains a key challenge for the UAE market across all real estate sectors, as reflected in the continuation of rental growth and rising occupancy rates. This has also continued to support strong price growth, with higher sales values recorded across the residential markets in Dubai and Abu Dhabi. Despite some macroeconomic uncertainty from recent tariff and trade tensions, the outlook for the UAE remains very bright, supported by an increasingly diversified non-oil sector and a diverse set of global trading partners,” stated Matthew Green, Head of Research MENA.
In Abu Dhabi, the office market is thriving, fueled by a robust non-oil sector and government investments that have stimulated demand for commercial spaces. Average occupancy rates have reached 96 percent, with office rental rates increasing by approximately 13 percent year-on-year, while prime rents have risen nearly 15 percent. Lease renewals have also grown by 9 percent, although new leases have declined due to limited availability.
Residential rent rates rise
Turning to Dubai’s residential real estate market, the first quarter of 2025 showcased robust growth, with rental rates and sales values rising compared to the previous year. An active development pipeline, particularly in waterfront areas and affordable communities, has contributed to this growth, with over 25,000 new units launched.
Despite the increase in launches, slower project deliveries have led to higher rental rates, averaging nearly 11 percent for apartments and 9 percent for villas. Transactional property values have also risen by over 16 percent, reflecting consistent quarter-on-quarter increases. While rental growth has moderated from earlier highs, it remains a pressing concern for residents facing rising living costs.
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Dubai’s residential transaction volumes surge 23 percent
In Q1, Dubai’s residential real estate transaction volumes surged by 23 percent year-on-year, with off-plan transactions increasing by 33 percent and ready properties up nearly 5 percent. The total of 43,000 transactions recorded marks one of the highest figures ever, excluding Q3 and Q4 of 2024.
The total sales value reached AED115 billion, with off-plan transactions accounting for AED79 billion (69 percent) and ready properties for AED36 billion (31 percent). Overall transaction values have risen by 29 percent year-on-year, with off-plan values increasing by nearly 35 percent and ready values by almost 19 percent.
For the Abu Dhabi residential market, price levels have continued to rise with momentum remaining despite a slowdown in registered off-plan sales. However, there was a 10 percent increase in the number of ready residential unit transactions, underling the growing demand from end-users and yield focused investors.
