New supply remains limited across the UAE’s office and retail markets, pushing both demand and rents up in 3Q 2025, according to JLL. The good news for tenants? The cycle may be hitting its peak soon.

On the residential front, prices continue to climb across the board, though rents are beginning to stabilize in Dubai.

THE OFFICE MARKET-

Vacancy continues to shrink in both Abu Dhabi and Dubai, according to JLL’s 3Q Office Market Dynamics report (pdf). Abu Dhabi citywide vacancy stood at 1.5%, down from 4.1% in 3Q 2024, with prime and Grade A space extremely tight, with the former at 0.1% vacancy and the latter at 1%. Dubai’s overall vacancy fell to 7.1%, down from 9.7% in the same quarter last year, with prime availability at just 0.3% and Grade A at 3.4%.

Landlords are capitalizing on the imbalance, with prime rents in Abu Dhabi prime surging 31.3% y-o-y to almost AED 3k per sqm, while Grade A rents rose 3.9% y-o-y and Grade B rents increased by 10% y-o-y. In Dubai, prime offices reached AED 359 per sq ft, up 16.8%. Grade A spaces’ rents were up 22.5% and Grade B rents rose 18.6% y-o-y.

Rental contract registrations dropped 16% y-o-y in Dubai and 5.6% in Abu Dhabi, with the capital also seeing a 4% decline in new contracts and a sharper 9.4% drop in renewals. Meanwhile, Dubai registered 4.4% growth in renewals but a 23.4% fall in new contracts. The downturns stem from supply constraints rather than weak demand, JLL noted. Regional companies are driving more leasing inquiries than multinational firms.

Supply additions remain modest: Abu Dhabi’s office stock stands at 4.1 mn sqm, with 39k sqm expected to come online in 4Q and a larger 124.6k sqm expansion set for 2027. Dubai’s stock remains around 100.1 mn sq ft, with 355k sq ft expected in 4Q and 1.5 mn sq ft slated for next year, and 1.4 mn sqm in 2027. Secondary locations will continue to see new project launches as developers look beyond central business districts, with Dubai particularly seeing an emerging trend of residential developers expanding into the commercial sector on strong demand.

Rents could start cooling soon, JLL says, as tenants push back against further increases. Still, the landlord-favorable environment is expected to persist in the short to medium term, with strong occupier demand and limited inventory giving property owners leverage in lease negotiations.

THE RETAIL MARKET-

Vacancy is falling at a similar pace on the retail front: Abu Dhabi citywide retail vacancy dropped to 9% in 3Q, down 5% y-o-y, while Dubai’s fell to 6.8%, a 2.2% annual decline, according to JLL’s 3Q Retail Market Dynamics report (pdf). Occupiers are increasingly securing space in well-positioned centers, driving competition for high-footfall locations.

Leasing activity was mixed, with Abu Dhabi’s total retail contract volumes falling 11.1% y-o-y, new leases down 6.8%, and renewals declining 14.7%. In Dubai, renewals rose 3.5% y-o-y, supporting an overall 2.1% increase in registrations.

Rents are also climbing, though at a softer pace than commercial: Rental values for prime super-regional malls in Abu Dhabi grew 3.4% y-o-y to AED 5.5k per sqm, while other mall types rose 5.9%. In Dubai, prime super-regional malls saw rents jump 13.5% to AED 836 per sq ft, with super-regional centers up 9.7% and regional centers up 12.8%. Landlords are using the strong demand to increase rates, particularly in top-performing centers.

Supply expansion remains modest with Abu Dhabi adding 27k sqm in retail space in 3Q, bringing total stock to 3 mn sqm, with another 11k sqm expected by year-end. Over 2026 and 2027, 98.4k sqm of stock is set to come online, mainly in regional and community malls. Dubai’s stock held steady at 55.9 mn sq ft, with 415.4k sq ft due in 4Q and 2.2 mn sq ft anticipated in 2026, mostly super-regional and regional malls.

Evolving retail trends: Convenience and supermarket formats are shifting to smaller, more cost-efficient stores that allow rapid deployment across neighbourhoods. Other segments like electronics and fashion may also shift towards smaller, more compact models.

THE RESIDENTIAL MARKET-

On the residential side, both Abu Dhabi and Dubai recorded strong sales and price growth in 3Q 2025, according to JLL’s 3Q UAE Living Market Dynamics report (pdf). Abu Dhabi’s sales volumes rose 76.2% y-o-y, driven by a 113% jump in off-plan transactions, which make up 76.1% of total. Dubai’s sales grew 16.5% y-o-y, with off-plan sales up 24.8% and accounting for 75.4% of activity, while secondary sales fell 3.3% on a yearly basis.

Prices continue to climb: Abu Dhabi villa prices rose 14.7% to AED 16.9k per sqm, while apartments saw prices increase by 7.8% to AED 19.1 per sqm, and townhouses saw a 6.7% uptick. Dubai villas reached AED 2.3k per sq ft, up 14.9% y-o-y, and apartments reached AED 1.8k per sq ft, up 12.6% y-o-y.

Abu Dhabi rents posted solid gains, with villas up 15.6% y-o-, apartments up 14.8% y-o-y, and townhouses rising 5.7%. Contract registrations were up 11.8% y-o-y, mainly on the back of a 15% uptick in renewals which accounted for 62.4% of the overall share.

Dubai rents were steadier, with apartments up 6.2% y-o-y to AED 123 per sq ft and villas rising 2.9% to AED 105.7 per sq ft. Rents also stabilized on a q-o-q basis. Overall registrations saw a 9.4% increase, with renewals making up 58.7% of the total.

Supply expands: Abu Dhabi added 800 units in 3Q, bringing total stock to 293k. The capital expects to see 6.6k more in 4Q, 12.9k in 2026, and 10.4k in 2027. Dubai delivered 7.1k units, with 12k due in 4Q, though delivery delays are expected; new supply remains apartment-led across both cities.

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