Strong demand and strategic investments continue to drive UAE real estate market
Limited levels of available supply, infrastructure development delivery and alternative assets including last-mile logistics and data centres is driving the UAE's real estate performance in 2025, according to JLL's Middle East and Africa Market Review and Outlook 2025.
2024 ended on a strong note for Dubai's residential sector as sales transactions grew by 32 per cent compared to the previous year, totalling Dh367 billion. Investor appetite remained strong for off-plan properties, which accounted for the majority of transactions valued at approximately Dh223 billion, representing 60.7 per cent of the total. On the back of strong demand, developers launched around 157,000 units in 2024, the most in a single year, according to data from REIDIN. The rental market, on the other hand, recorded a 15.7 per cent y-o-y growth in lease rates at a slower pace of increase, indicating rents may be stabilising over the short-medium term.
In Dubai, following a strong January with more than 13,500 transactions, activity levels have remained robust with an additional 15,300 units transacted in February, data from Emirates NBD Research.
About eight per cent of the total units sold in February were concentrated in Jumeirah Village Circle (JVC) as the sub-market led demand for both ready and under-construction properties.
Transactions for apartment units saw a 14 per cent month-on-month increase, while demand for villa/townhouses grew by 10 per cent month on month. fter more than 6,500 new unit launches in January, an additional 7,190 units were launched in February 2025. Capital values have increased by an average two per cent month-on-month across both apartments and villas/townhouses.
As key global macroeconomic headwinds began to ease over the course of 2024, the UAE was the only GCC country to record growth in oil-GDP despite ongoing oil production cuts. Non-oil GDP growth has been particularly strong in the UAE, which recorded growth rates of 4.7 per cent in 2024, and is expected to accelerate to 4.8 per cent in 2025.
Taimur Khan, Head of Research MEA at JLL, said: '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.'
Although the MEA region's construction project market slowed in 2024, the UAE dominated construction project awards during the year, securing the largest share with 47 per cent, equivalent 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. In the region's pipeline, UAE accounts for 20 per cent of upcoming construction projects.
Gary Tracey, Head of Project & Development Services UAE at JLL, said: '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.'
The UAE's tender price inflation (TPI) for 2024 averaged 3 per cent 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 per cent, with a possible variance of +/- 2 per cent. The outlook for 2025 suggests improved market conditions, driven by expected 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.
In Abu Dhabi, the office market continued to record strong levels of demand in 2024 – the majority of which stemmed from government-related entities – with 47,615 office rental registrations, an increase of 30.8 per cent y-o-y. With demand expected to remain steadfast and new supply expected to be limited at 172,940 square metres, JLL expects the 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 favoured, around 122,000 square metres of new office space is expected to come online in 2025, the majority of which is of Grade A specification, spread across areas such as DIFC, Dubai Internet City, Dubai Silicon Oasis and Sheikh Zayed Road.
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