Limited availability of supply, infrastructure development, and alternative assets, including last-mile logistics and data centers, are propelling the UAE’s real estate performance in 2025, as highlighted in JLL’s Middle East and Africa Market Review and Outlook 2025. According to the report, the UAE dominated the 2024 project awards, securing 45.0 percent ($40.6 billion); excelled in residential and mixed-use projects.
As key global macroeconomic challenges began to subside throughout 2024, the UAE emerged as the only GCC nation to record an increase in oil-GDP, despite ongoing oil production cuts. The nation’s non-oil GDP growth has been particularly robust, registering growth rates of 4.7 percent in 2024, with expectations to rise to 4.8 percent in 2025.
Taimur Khan, head of research MEA at JLL, stated: “With inflation rates stabilising and a robust labour market, the real estate sector is witnessing robust demand across key sectors in both Dubai and Abu Dhabi. GDP growth has been amongst the strongest in the UAE as compared to other GCC countries, which is a testament to the government’s continued strategic efforts to attract investment. In 2025, enabling the conversion of qualified non-freehold properties will drive demand across submarkets while new infrastructure projects and alternative assets is expected to propel real estate development in the UAE.”
Construction project market dynamics
Although the MEA region’s construction project market experienced a slowdown in 2024, the UAE dominated construction project awards during the year, securing the largest share with 47 percent, amounting to $34 billion. In terms of sectors, the UAE excelled in residential and mixed-use projects, awarding $28.3 billion and $4.6 billion, respectively. The UAE accounts for 20 percent of the upcoming construction projects in the region’s pipeline.
Gary Tracey, Head of Project & Development Services UAE at JLL, remarked: “Despite rising construction costs, the UAE’s real estate market is expected to continue its upward trajectory in 2025, as evidenced by robust order books and strong performance across the residential and mixed-use project sectors. This demonstrates the market’s resilience and underlying strength but also underscores the need for diligent cost control and innovative solutions to ensure sustainable growth.”
Tender price inflation and market outlook
The UAE’s tender price inflation (TPI) for 2024 averaged 3 percent annually, closely mirroring the trajectory observed in 2023. This outcome was grounded in consistently high rates reflected in tender return data for 2024. Looking ahead to 2025, JLL anticipates a TPI of 2.5 percent, with a possible variance of +/- 2 percent. The outlook for 2025 suggests improved market conditions, driven by anticipated lower interest rates, stabilising commodity prices, and a more normalised supply chain. However, these positive factors are likely to be counterbalanced by market capacity constraints and prevailing sentiment within the contracting industry.
Read more: UAE real estate market continues to flourish in Q3
Residential sector performance
2024 concluded on a strong note for Dubai’s residential sector as sales transactions surged by 32 percent compared to the previous year, totaling AED367 billion. Investor interest remained robust for off-plan properties, which made up the majority of transactions, valued at approximately AED223 billion, representing 60.7 percent of the total. Following this strong demand, developers launched around 157,000 units in 2024, marking the highest number in a single year, according to data from REIDIN. The rental market, on the other hand, experienced a 15.7 percent year-on-year growth in lease rates at a slower pace of increase, indicating that rents may be stabilising in the short to medium term.
Office market trends in Abu Dhabi
In the emirate of Abu Dhabi, the office market continued to show strong demand levels in 2024, with the majority of demand driven by government-related entities—47,615 office rental registrations marked an increase of 30.8 percent year-on-year. With demand expected to remain consistent and new supply anticipated to be limited at 172,940 square metres, JLL predicts that growth in rental rates will likely continue to strengthen in 2025, particularly in Prime and Grade A stock in core and central locations of the city. In Dubai, which has remained firmly landlord-favored, around 122,000 square metres of new office space is expected to come online in 2025, predominantly of Grade A specification, spread across areas such as DIFC, Dubai Internet City, Dubai Silicon Oasis, and Sheikh Zayed Road.
Hospitality sector growth
As Abu Dhabi continues to establish itself as a major cultural and leisure destination, a significant increase in visitation has positively impacted hotel key performance indicators in 2024. According to The Department of Culture and Tourism, a total of 4.8 million visitors in the year leading up to October 2024 resulted in the capital’s occupancy rate rising by 6.5 percentage points to reach 79.0 percent, and its ADR increasing by 14.1 percent to reach $166, with RevPAR growing by 24.3 percent. Conversely, Dubai’s hotel stock stood at around 155,800 keys at the end of 2024, with an additional 7,200 keys scheduled for delivery in 2025, primarily composed of 4- and 5-star properties.
Retail market insights
Dubai’s retail landscape witnessed resilient demand across prime locations throughout the last quarter of 2024, leading to average rental rates for super regional malls increasing by 13.6 percent, averaging AED2,235 ($609) per square metre, while regional malls saw a rise of 3.8 percent, reaching AED1,224 ($334) per square metre. In terms of supply, retail stock stood at 4.8 million square metres of retail GLA, with an additional 100,000 square metres of space expected to be delivered in 2025, primarily comprising regional and community malls. In the capital, rental growth rates are anticipated to accelerate across all market segments, despite the expected completion of 74,525 square metres of new space. High-quality assets with diverse demand drivers are projected to significantly outperform the broader market, attracting premium rates and occupancy levels.
Industrial and logistics sector activity
In 2024, healthy leasing activity within the industrial and logistics sector drove average lease rates up by 12.1 percent compared to the fourth quarter of the previous year. While industrial developers in Dubai are actively pursuing expansion plans, demand is beginning to spill over into Abu Dhabi and the Northern Emirates, with many zones reporting high occupancy rates.
Read more :UAE real estate market booms with over $243 billion in transactions in 2024
Data center growth in the MEA region
5G and AI are fueling rapid growth in the MEA region’s data center landscape. As of Q4 2024, the UAE led the industry in terms of live colocation data center facilities, with its primary markets, Abu Dhabi and Dubai, both accounting for around 40.8 percent of the total IT load capacity. Looking forward, key demand drivers necessitate a growing need for localised data center facilities and increasing investor interest in the region. These factors include urbanisation, a growing tech-savvy population, hyperconnectivity through enhanced subsea cabling, and rapid digital infrastructure development. These fundamentals suggest that the industry is poised for remarkable expansion, with forecasts from Research and Markets predicting the MEA market size thriving at a CAGR of 9.5 percent and 11.7 percent, respectively, between 2023 and 2029.
