Key sectors in the UAE’s real estate landscape exhibited strong performance and growth in Q2 2025, underpinned by significant investments, evolving demands, and government-led initiatives. As the market matures, the UAE’s residential, hospitality, and industrial sectors are collectively signaling a period of sustained, long-term growth, according to JLL’s latest Market Dynamics reports.
Taimur Khan, Head of Research MEA at JLL, said: “Strong activity across all sectors of the UAE’s dynamic real estate landscape in Q2 2025 has boosted healthy investor confidence in the prominent markets of Abu Dhabi and Dubai, reinforcing the country’s status as a global real estate powerhouse. This sustained momentum, driven by government policies and demand for high-quality developments, underscores the UAE’s ability to adapt to global shifts and create unparalleled opportunities for both regional and international investors.”
Off-plan activity drives momentum in residential market
The strong performance in the UAE’s residential market saw Dubai record a staggering 44.5% year-on-year increase in total sales value, reaching AED 153.7 billion in Q2. Off-plan sales led transaction volumes across both Dubai and Abu Dhabi, bolstered by robust new launches and a notable uptick in secondary market activity. In Abu Dhabi, apartment and villa prices rose by 14.4% and 11.1% respectively year-on-year, while in Dubai, apartment prices increased by 13.3% year-on-year to AED 1,769 per sq. ft. and villa prices grew by 16% annually to AED 2,200 per sq. ft. An approaching supply-demand equilibrium is anticipated to moderate growth in specific segments.
Rental markets are stabilizing, with tenant preference for renewals accounting for 65.7% of total rental contract registrations in the capital in Q2 2025. New supply, affordability considerations, and updated regulations are collectively contributing to more controlled rent increases. Rentals for apartments in Abu Dhabi and Dubai rose by 13.9% and 7.2% respectively, while villa rentals rose by 4.7% and 5.3%. Around 32,400 units are under construction in Abu Dhabi and Dubai in H2 2025.
In Abu Dhabi, a growing appetite for luxury branded living experiences is giving investors higher price points and stronger value retention. Dubai’s sales market is expected to sustain its strong momentum while its rental market transitions to a balanced state, with decelerating growth rates indicating a healthy progression towards long-term stability.
Strong performance sets hospitality sector on sustainable path
The UAE’s hospitality sector demonstrated strength and resilience in Q2, traditionally considered a low season. Healthy and diversified demand enabled strong performance across budget, midscale, and luxury segments, marking the shift to a more sustainable and inclusive growth model.
Abu Dhabi saw a strong occupancy rate of 80.3% (up 2.9 pp), with the Average Daily Rate (ADR) surging 22.7% to AED 693 and Revenue Per Available Room (RevPAR) up 26.3% to AED 557. Dubai’s hotel market maintained positive momentum, with occupancy increasing to 81.4% and ADR growing by 5.5% to AED 754, resulting in a 10.2% increase in RevPAR to AED 614.
Dubai welcomed 9.88 million overnight visitors in H1 2025, a 6.1% increase year-on-year. The influx of new, design-led, premium-quality properties in Dubai’s luxury and beachfront segments is enabling operators to set new benchmarks. Abu Dhabi’s hotel inventory increased to 33,300 keys during Q2, while Dubai maintained its stock at approximately 158,000 keys.
The announcement of the Disney-branded theme park is poised to significantly enhance Abu Dhabi’s hospitality market in the long term, boosting demand across all hotel segments and stimulating further investment in complementary infrastructure. Hotel property owners are increasingly shifting from traditional Hotel Management Agreements (HMAs) to franchise models, driven by financial considerations and a desire to maximise returns in a competitive market.
Landlord-favored industrial market in expansion mode
With limited available inventory and a strong preference for lease renewals, the UAE’s industrial real estate market strongly favors landlords. Warehouse rates saw significant growth in Q2, with Abu Dhabi experiencing a 22.4% rise to AED 469 per sq. m. and Dubai a 19.9% increase to AED 46 per sq. ft. Premium locations, such as KEZAD in Abu Dhabi and Al Quoz in Dubai, commanded top market rates of AED 500 per sq. m. and AED 65 per sq. ft., respectively, due to their strategic positioning and established infrastructure.
Dubai’s industrial leasing market demonstrated robust activity, with total registered lease contracts increasing by 13.0% year-on-year, driven by a 21.6% surge in new lease agreements and a 9.3% increase in renewals. The market registered 2,790 contracts in Dubai during the quarter.
The industrial real estate market is poised for long-term growth as government-led industrial initiatives accelerate warehouse and logistics development, driving up occupancy rates and prompting developers to launch quality facilities in industrial zones and free zones to address the sustained demand from both international and local businesses establishing or expanding operations in the UAE.
