The UAE’s commercial real estate sector posted record gains in Q2 2025. Office rents in Abu Dhabi surged 31.5 per cent year-on-year, reaching AED2,905 ($791) per sqm annually. Grade A and B rents rose 7.8 per cent and 10.9 per cent, reinforcing landlord-favourable conditions. Dubai followed with increases across all office segments: prime rents up 17.3 per cent, Grade A and B climbing 19.5 per cent and 16 per cent, and Grade C soaring 22.9 per cent.
Vacancies hit historic lows in both cities. Abu Dhabi recorded just 1.5 per cent citywide, with prime availability nearly nonexistent at 0.1 per cent. Dubai’s prime vacancy rate stood at 0.3 per cent, while overall citywide availability reached 7.7 per cent. This supply-demand imbalance is driving tenants to secure renewals quickly, with renewal activity rising 0.8 per cent in Abu Dhabi and 8.3 per cent in Dubai.
Dana Williamson, Head of Offices, Business Space and Retail, MEA at JLL, said: “The UAE’s commercial market is undergoing dynamic shifts, fuelled by changing consumer and end-user expectations, which are driving growth and unlocking new avenues for investment.”
Retail Market Expansion
Retail trends highlighted a contrasting picture between Abu Dhabi and Dubai. Abu Dhabi saw a 12.1 per cent decline in new rental registrations, while Dubai recorded a 9 per cent increase, supported by an 11.9 per cent rise in renewals. Vacancy rates narrowed to 9 per cent in Abu Dhabi and 7.5 per cent in Dubai. Prime super regional retail rents climbed 3.4 per cent in Abu Dhabi to AED5,524 ($1,505) per sqm, while Dubai posted a sharper 15.1 per cent increase to AED826 ($225) per sqft.
Retailers are reshaping strategies to meet evolving consumer preferences. Data-driven insights and technology integration are enhancing personalisation, while physical stores are becoming immersive destinations. Food and beverage operators are expanding footprints, with many landlords converting food courts into entertainment and dining zones. E-commerce players are also moving into physical spaces, using showrooms as micro-fulfilment hubs for rapid delivery and in-store pickup.
Outlook for Commercial Real Estate
Despite declining lease activity — down 19.1 per cent in Dubai and 1.9 per cent in Abu Dhabi — demand for prime, strategically located spaces remains strong. Williamson noted: “While supply-demand imbalances in the Offices sector continue to exert downward pressure on rental values, demand for prime, strategically located office spaces remains strong, underscoring the ongoing ‘flight to quality.’”
With total retail inventory across Abu Dhabi and Dubai standing at 8.13 million sqm and 98,000 sqm of new supply expected by year-end, both markets are projected to remain favourable to landlords in the short to medium term.
