Dubai's residential sector experienced a 32% growth in sales in 2024, reaching a total of $99.9 billion, driven by strong investor interest.

Factors such as limited supply, infrastructure development, and rising demand for alternative assets, including last-mile logistics and data centers, are driving the UAE’s real estate market in 2025. These trends are outlined in JLL’s Middle East and Africa Market Review and Outlook 2025. The UAE dominated the 2024 project awards, capturing 45% of the total value, equivalent to $40.6 billion, with a focus on residential and mixed-use developments.

As global macroeconomic challenges began to ease in 2024, the UAE emerged as the only GCC country to see an increase in oil GDP despite ongoing production cuts. The non-oil GDP grew by 4.7% in 2024, with expectations to rise to 4.8% in 2025.

Construction Project Market Dynamics

Although the MEA region’s construction market slowed down in 2024, the UAE led the way in securing construction project awards, with a 47% share valued at $34 billion. Residential and mixed-use projects were the standout sectors, receiving $28.3 billion and $4.6 billion, respectively. The UAE also accounts for 20% of the region's upcoming construction pipeline.

Gary Tracey, Head of Project & Development Services UAE at JLL, stated: "Despite rising construction costs, the UAE's real estate market is set to continue its upward trajectory in 2025, driven by strong demand in residential and mixed-use sectors. This underscores the market's resilience and the need for effective cost control and innovative solutions to maintain sustainable growth."

Tender Price Inflation and Market Outlook

In 2024, the UAE’s tender price inflation (TPI) averaged 3% annually, mirroring the rate seen in 2023. JLL forecasts a TPI of 2.5% in 2025, with a potential variance of +/- 2%. Market conditions are expected to improve in 2025, driven by lower interest rates, stabilizing commodity prices, and a more normalized supply chain, though challenges such as market capacity constraints and sentiment in the contracting industry may still persist.

Residential Sector Performance

Dubai’s residential market ended 2024 on a strong note, with sales transactions surging 32% year-on-year to AED 367 billion. Investor interest remained strong in off-plan properties, which accounted for 60.7% of transactions, totaling AED 223 billion. Developers launched a record 157,000 new units in 2024, the highest number ever in a single year, according to REIDIN data. The rental market also saw a 15.7% growth in lease rates, though at a slower pace, suggesting that rents may stabilize in the short to medium term.

Office Market Trends in Abu Dhabi

Abu Dhabi's office market showed strong demand in 2024, primarily driven by government-related entities, with office rental registrations increasing by 30.8%. Rental rates for Prime and Grade A office spaces in central areas are expected to continue rising in 2025, as new supply is expected to be limited to 172,940 square meters. Dubai’s office market is also expected to remain landlord-favored, with around 122,000 square meters of new Grade A office space scheduled for delivery in 2025.

Hospitality Sector Growth

Abu Dhabi's tourism sector saw a significant boost in 2024, with 4.8 million visitors contributing to a 6.5 percentage point increase in the capital’s hotel occupancy rate, reaching 79%. The Average Daily Rate (ADR) rose by 14.1% to $166, and Revenue per Available Room (RevPAR) increased by 24.3%. In Dubai, the hotel market continued to grow, with around 155,800 hotel keys by the end of 2024 and an additional 7,200 keys set to open in 2025, predominantly in the 4- and 5-star categories.

Retail Market Insights

Dubai’s retail sector showed resilience, with prime locations seeing rental increases. Super-regional mall rents rose by 13.6%, reaching AED 2,235 ($609) per square meter, while regional malls saw a 3.8% increase to AED 1,224 ($334) per square meter. Retail stock in Dubai stood at 4.8 million square meters of GLA, with 100,000 square meters of new space expected in 2025. In Abu Dhabi, rental growth rates are anticipated to accelerate, despite the completion of 74,525 square meters of new space, with premium assets set to outperform the broader market.

Industrial and Logistics Sector Activity

The industrial and logistics market in 2024 saw strong leasing activity, with average lease rates increasing by 12.1% year-on-year. Demand has expanded beyond Dubai into Abu Dhabi and the Northern Emirates, where many zones are experiencing high occupancy rates.

Data Center Growth in the MEA Region

The MEA region's data center market is growing rapidly, fueled by 5G and AI. As of Q4 2024, the UAE led the region with 40.8% of the total IT load capacity in its primary markets, Dubai and Abu Dhabi. Demand for localized data center facilities is growing, driven by urbanization, a tech-savvy population, hyperconnectivity, and rapid digital infrastructure development. The MEA data center market is projected to expand at a CAGR of 9.5% to 11.7% from 2023 to 2029.