Dubai’s commercial market will continue to boom this year, while residential price growth is set for a potential slowdown, according to Deloitte’s Middle East Real Estate Predictions 2025 report (pdf). The retail and hospitality sectors are also expected to expand, supported by tourism and increased consumer spending.

THE RESIDENTIAL MARKET-

In 2024, residential sales prices rose 20% y-o-y, reaching an average of AED 1.6k per sqft by December. Villa prices outpaced apartment prices, with Dubailand, Jumeirah Lakes Towers, and Dubai South recording the highest price increases. Secondary market transactions accounted for 44% of total sales, up from 41% in 2023, reflecting strong demand for existing properties.

How rentals fared: Rents increased 19% y-o-y to AED 110 per sqft, with affordable villa and townhouse communities seeing the sharpest hikes. Rents in Dubailand, Meydan, and International City rose between 39% and 46% y-o-y, while Dubai Creek Harbour recorded the lowest increase at 3%. Overall rental transactions rose 1.3% y-o-y in 2024.

Looking ahead: The market is expected to continue its upward trajectory in early 2025, though price and rent growth may slow by year-end as new supply enters the market, Deloitte said. This aligns with Knight Frank’s projection of an 8% price increase in 2025.

THE OFFICE MARKET-

Office rents increased 12% y-o-y in 2024, surpassing pre-pandemic levels by 40%. DIFC offices averaged AED 284 per sqft, while Downtown Dubai reached AED 316 per sqft. Dubai remained a preferred hub for multinational corporations, supported by government-backed economic initiatives and business-friendly policies, despite growing competition from Abu Dhabi and Riyadh.

Looking ahead:The office market is expected to see further rental increases in 2025, driven by strong demand for Grade A office space in DIFC, Downtown Dubai, and Business Bay, alongside a limited supply pipeline. However, while rents in premium locations are likely to rise, secondary markets may see flat or slower growth as companies seek cost-effective alternatives.

RETAIL AND HOSPITALITY-

Retail and hospitality posted strong performance in 2024: Retail sales grew, supported by higher consumer spending, increased mall foot traffic, and strong demand for premium retail spaces. In hospitality, a 9% y-o-y rise in overnight visitors to 18.7 mn pushed hotel occupancy to 78%, with ADR reaching AED 690 per night. New hotel openings, including Marsa Al Arab and Atlantis The Royal, contributed to higher demand.

Outlook: The retail sector is projected to grow 6% between 2025 and 2027, driven by population growth, tourism, and investment in retail infrastructure under the Dubai 2040 Urban Master Plan. Community-focused retail hubs remain a priority. The hospitality sector is also expected to maintain strong demand in 2025, fueled by major events and rising visitor numbers, alongside new developments and higher ADRs supporting revenue growth.

THE INDUSTRIAL MARKET-

Dubai’s industrial sector saw continued rental growth in 2024, driven by strong demand from manufacturing, e-commerce, and third-party logistics. JAFZA led the market with a 28% y-o-y increase, followed by Dubai South and DIP. Rising trade has further strengthened demand for logistics infrastructure, with high occupancy levels and limited supply supporting rental growth.

Outlook: The industrial and logistics sector is expected to expand in 2025, as manufacturing, e-commerce, and third-party logistics drive warehouse demand. Constrained supply and high occupancy in major hubs are likely to sustain rental growth in the near to mid-term.

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