Cushman & Wakefield Core’s market commentary highlights resilient fundamentals and sharper investor focus as the market matures
Dubai, UAE, 21 July, 2025: The UAE real estate market continued to outperform global benchmarks in H1 2025, delivering strong returns across core sectors despite tighter global conditions. According to Cushman & Wakefield Core’s mid-year commentary, scarcity remains a defining feature - but capital is now moving more selectively across the region’s maturing asset classes.
“Institutional capital still sees the UAE as one of the few global markets offering yield, visibility, and long-term upside - but underwriting assumptions are shifting,” said PP Varghese, Head of Professional Services at Cushman & Wakefield Core. “Scarcity remains, but pricing power now belongs to assets with the right ESG profile, location and covenant strength.”
Office: Prime Supply Under Pressure
Dubai’s office sector continues to tighten. Citywide occupancy stands at 92%, with Grade A assets at 95%. Rents have risen 22% year-on-year, averaging AED 190 per sqft, with DIFC commanding the highest premiums. Only 0.89 million sqft of new space is due in 2025, while 6.4 million sqft is scheduled from 2026 onwards. Many of these future assets are already seeing strong pre-leasing interest. In Abu Dhabi, Grade A occupancy stands at 97% and overall occupancy at 90%. Asking rents have climbed 11% year-on-year to AED 160 per sqft. Over 830,000 sqft of new supply is expected in H2 2025, largely concentrated in Masdar City and The Link, most of which is pre-committed.
Residential: Moderation in Dubai, Momentum in Abu Dhabi
Dubai’s residential market is showing signs of moderation. Q2 2025 sales prices averaged AED 1,822 per sqft, up 14% year-on-year, while rental growth slowed to 7%. Nearly 43,000 new units are expected to deliver this year - the highest total since 2019. Mid-market apartments are softening, while villa communities remain resilient.
Abu Dhabi continues to accelerate. Citywide sales prices rose 18% year-on-year, with Saadiyat Island up 30% to AED 4,172 per sqft. Rents are up 27% overall, with strong performance across apartment segments. More than 3,600 units are due for handover on Yas Island in 2025, supported by strong pre-sales and structural demand.
Retail: Tenant Strategy Becomes the Growth Driver
The retail market remains robust, with headline occupancy exceeding 95%. Rents at super-regional malls in Dubai, such as The Dubai Mall and Mall of the Emirates, have grown 12–15% year-on-year. Landlords are shifting focus from pure occupancy to destination curation - prioritising homegrown F&B anchors and global brands that localise effectively.
The market is becoming increasingly segmented by catchment, with distinct approaches required in Emirati neighbourhoods versus expat-driven areas. Community retail hubs and hybrid lease models are rising in importance, aligning with the Urban Master Plan 2040 and shifting consumer behaviour.
Logistics: Supply Shortage Meets ESG Pressure
Industrial rents continue to rise amid sustained demand and limited supply. Grade A warehouse vacancy remains low, with strong interest from e-commerce, manufacturing and chemical sectors. Sustainability is a core focus: climate-adaptive infrastructure and ESG-compliant stock are commanding pricing premiums.
The UAE’s high-reliability infrastructure, multimodal access, competitive energy costs and workforce depth continue to attract occupiers, even as rental baselines climb.
Data Centres: UAE Becomes Strategic Hub
Abu Dhabi and Dubai now rank first and second globally among emerging data centre markets. More than 750 MW is under development, with the UAE’s data centre market projected to reach $3.3 billion in value by 2030. Land availability, low-cost power, and sovereign-aligned infrastructure are fuelling rapid growth and institutional capital inflows.
Hospitality: Broad-Based Demand Signals Sustainable Upside
Dubai hosted 8.68 million visitors in the first five months of 2025 - up 7% year-on-year. Full-year visitation is projected to reach 20.8 million, a 21% increase over 2024. Occupancy stands at 83%, ADR is AED 620, and RevPAR has grown 7%.
Abu Dhabi recorded 1.52 million occupied guest nights, with occupancy at 87% and ADR at AED 614. Domestic demand accounts for nearly 20% of total volume, supported by new cultural and cruise infrastructure.
In Dubai, 78% of visitors are coming from the CIS, GCC, MENA, Western Europe and South Asia and both emirates are benefitting from longer stays and a global shift in leisure and business travel priorities.
“From tourism infrastructure to industrial zones, the UAE is showing that growth and resilience are increasingly tied to planning, execution, and tenant alignment,” added PP Varghese. “The market has matured, and that means performance will come down to asset-level detail.”
Looking Ahead
With over 43,000 residential units scheduled for delivery, 6.4 million sqft of upcoming office supply, and a growing data centre pipeline, the second half of 2025 will test how capital, developers and occupiers respond to deeper market segmentation. Capital remains engaged — but performance will hinge on asset-level discipline.
