Abu Dhabi – Mubasher: JLL, the real estate consulting and investment firm, revealed in a report the factors expected to support the performance of the UAE's real estate market in 2025.

According to the report, these factors include limited supply, the implementation of a number of infrastructure development projects, and alternative assets, including logistics services for the last stages of supply chain operations, transportation, and data centers .

The report indicated that despite the slowdown in the construction projects market in the Middle East and Africa region in 2024, the UAE recorded the highest construction project award rates during the year, accounting for 47 percent of the total projects in the Middle East, with a value reaching $34 billion .

At the sector level, the UAE excelled in the residential and mixed-use sectors, with projects worth $28.3 billion and $4.6 billion awarded, accounting for 20 percent of the construction projects underway in the region .

Gary Tracy, Head of Projects and Development Services at JLL UAE, expects the UAE real estate market to continue its upward trajectory in 2025, as evidenced by strong demand records and strong performance in the residential and mixed-use sectors, despite rising construction costs.

The UAE's bid price inflation rate for 2024 is projected at 3.0% per annum, closely mirroring the market's trajectory in 2023.

In 2025, the company expects bid price inflation to reach 2.5 percent, with a potential variance of 2 percent. Forecasts for 2025 indicate improved market conditions, driven by expected lower interest rates, stabilizing commodity prices, and a return to normal supply chain conditions .

The residential sector in Dubai witnessed a remarkable recovery by the end of 2024, with sales transactions increasing by 32 percent compared to last year, reaching AED 367 billion.

Investor interest in off-plan real estate units remained strong, accounting for the majority of transactions, valued at approximately AED 223 billion, or 60.7 percent of total transactions .

Thanks to strong demand, developers are expected to launch approximately 157,000 residential units in 2024, the highest number ever launched in a single year, according to data from real estate analytics company Reden.

On the other hand, the rental market recorded an annual growth in rental prices of 15.7%, but at a slower pace, indicating the possibility of rental prices stabilizing in the short to medium term .

Abu Dhabi's office space market continued to register strong demand levels in 2024, with 47,615 office space leases registered, a 30.8 percent increase compared to last year.

With demand expected to remain steady and new supply limited to 172,940 square meters, JLL expects rental rates to continue rising through 2025, particularly for the market's premium and Class A office space in prime and central locations across the city .

The Dubai real estate market is expected to witness the addition of approximately 122,000 square meters of new office space by 2025, most of which will be Class A office space, distributed across areas such as the Dubai International Financial Centre, Dubai Internet City, Dubai Silicon Oasis, and Sheikh Zayed Road .

As Abu Dhabi continues to establish itself as a major cultural and entertainment destination, the significant increase in visitor numbers has contributed to the improvement in hotel KPIs for 2024 .

Dubai's retail sector also witnessed resilience in demand in prime locations over the last quarter of 2024, resulting in average rental rates for super-regional malls increasing by 13.6 percent to an average of AED 2,235 ($609) per square meter, while rental rates for regional malls increased by 3.8 percent, reaching AED 1,224 ($334) per square meter .

The total supply of retail outlets in the market stabilized at 4.8 million square meters of gross leasable area, and the market is expected to witness the delivery of an additional 100,000 square meters of retail space in 2019 .

“With stable inflation and a strong labor market, the real estate market is witnessing strong demand across key sectors in both Dubai and Abu Dhabi,” said Taimur Khan, Head of Research for the Middle East and Africa at JLL. “The country’s GDP growth was the strongest compared to other GCC countries, demonstrating the government’s ongoing strategic efforts to attract investment.”

In 2025, enabling the conversion of eligible non-freehold properties into residential properties will increase demand across various submarkets, while new infrastructure projects and alternative assets are expected to drive real estate development in the UAE.