JLL has released its latest report on the real estate market performance for the third quarter of 2025, highlighting a significant evolution in the residential, hospitality, and industrial sectors in the United Arab Emirates. The findings indicate strong demand and a shift in priorities among tenants and investors, which have effectively reshaped market dynamics during this period.
The report notes that limited supply, driven by changing demand patterns and operational needs, has led to rising prices and rents, prompting a reassessment of development strategies across these three sectors. Additionally, increased diversification, strategic adaptation, and enhanced value are boosting these sectors’ potential for sustainable long-term success.
With a record increase in sales transactions, off-plan sales have emerged as a clear driver of growth in the residential sector within the UAE during the third quarter of 2025, supported by stable market fundamentals and robust demand. Meanwhile, the hospitality sector has seen a strategic shift in investment patterns towards existing assets, while the industrial warehouse segment experienced an increasing need for specialized and flexible storage solutions.
Off-plan Sales
The residential market in the UAE continued its strong growth in the third quarter of 2025, with total sales in Dubai reaching AED 139.7 billion. This growth reflects strong investor confidence and rising demand from property owners and tenants, bolstered by the announcement of new project launches. Initiatives such as the “First Property Ownership Program” are enhancing market fundamentals, facilitating access to off-plan properties for middle-income residents, and driving active real estate transaction levels.
According to JLL’s report, off-plan sales have significantly contributed to market performance. From the beginning of 2025 to the third quarter, Abu Dhabi recorded an extraordinary growth rate of 76.2%, with off-plan sales transactions doubling to reach 113%. Dubai saw an overall growth rate of 16.5%, with off-plan sales accounting for 75.4% of total transactions in the third quarter. This resilient demand has resulted in price increases across all categories, with villa prices rising by approximately 15% across both Emirates, while apartment prices increased by 7.8% in Abu Dhabi and 12.6% in Dubai.
Rental dynamics varied during the third quarter, with Dubai experiencing increasing rental stability, yet limited growth is expected until the end of 2025. Abu Dhabi’s rental market, on the other hand, showed strong growth across all property types, with villa rents rising by 15.6% and apartments by 14.8%. Approximately 12,000 units are set to be completed in Dubai in the fourth quarter of 2025, and projections indicate significant expansion in completed projects in the coming years, including 47,200 units in 2026 and 72,500 units in 2027, mostly comprising residential apartments, positioning the market for continued growth.
Hospitality Sector Shifts to New Investment Patterns
Major investors are reevaluating their strategies in the hospitality sector due to land availability constraints and rising development costs, prompting a shift towards existing assets. JLL’s report on hospitality and hotel market dynamics for the third quarter of 2025 indicates that the sector’s maturity has made it an attractive choice for institutional investors.
The robust performance of Dubai’s mid-market reflects a reduced reliance on luxury hotel properties, demonstrating the emirate’s ability to cater to a diverse tourist base. Dubai attracted approximately 13.95 million tourists between January and September, marking a 5% increase from the previous year. Visitors from key markets, including the GCC, Western Europe, and South Asia, maintained a dominant market share, constituting over half of total visitors. Meanwhile, secondary markets such as Australia and the Americas saw increases of 13.3% and 11.5%, respectively, in the total number of visitors staying at least one night, thereby enhancing visitor diversity. With ongoing infrastructure development and improved offerings, the hospitality market is poised for strong and sustainable performance, with international visitors staying at least one night expected to reach 19.44 million by 2025, signifying a 5.2% increase.
Rising land prices and limited available space for development in both Dubai and Abu Dhabi are constraining prospective new supply, creating an environment conducive for investment in existing assets rather than new sites. This shift reflects a significant strategic transition for both investors and newcomers to the market. The constrained new inventory resulting from these changes offers shortened timelines for development projects, reduces regulatory risks, and provides predictable capital deployment timelines, which in turn supports occupancy sustainability and pricing strength across both emirates.
Transformation Marks the Industrial Warehouse Sector
The industrial warehouse sector in the UAE is experiencing dynamic growth, increasing demand for specialized and flexible solutions. The rising emphasis on customer delivery network efficiency has led to the emergence of small fulfillment centers and distribution hubs within city limits, while temperature-controlled storage facilities are meeting the need for more complex and specialized storage solutions. This development is further enhanced by the Roads and Transport Authority in Dubai and Dubai Ports World, which are fostering the adoption of smart logistics systems, linking property values increasingly to data-driven operational efficiency beyond mere location and space.
Continuous demand has resulted in an increase in average warehouse rental prices by 21.3% in Abu Dhabi and 17.8% in Dubai compared to the previous year. Due to limited prime space, tenants are shifting their focus to secondary locations, causing significant rental price increases in Dubai Industrial City (24.3%) and Dubai South (21.3%), while prices in secondary markets such as Khalifa Economic Zones (KIZAD) – Al Mamoura in Abu Dhabi saw a growth rate of 24.7%. The demand for free zones in Dubai far exceeds the available supply, encouraging the development of new facilities and the presence of numerous pre-lease offerings, which is driving the market towards better balance.