Image credit: Damac Properties/ Website
The UAE’s real estate sector is maintaining a powerful growth trajectory into the final quarter of 2025, building on strong momentum from both oil and non-oil economic sectors. Surging foreign investment inflows, improved economic forecasts, and expanding business confidence have all combined to create a fertile environment for real estate growth, particularly in Dubai and Abu Dhabi.
According to a WAM report, the entire property spectrum, residential, commercial, and industrial, is experiencing consistent growth, spurred by ambitious new developments and a steady stream of foreign capital.
Read more-Dubai renters are rushing to buy: What it means for the market
Ismail Al Hammadi, Founder and CEO of Al Ruwad Real Estate, attributes the sustained boom to both domestic stability and investor trust. “Transaction activity across all emirates has seen significant growth. What we are witnessing is a reflection of long-term confidence in the UAE as a global investment destination,” he said. Remarkably, projects with a three-year completion horizon are now being sold out within weeks, a phenomenon rarely matched globally.
Saeed Abdulkareem Al Fahim, CEO of Stratum Owners Association Management, underscored that while Dubai leads in volume, Abu Dhabi is also seeing increased traction. The growing appetite ranges from ultra-luxury homes to affordable housing, indicating the breadth of demand across income segments.
Lifestyle for less: Communities where rent still offers value
While rents have increased in prime locations, Dubai still offers excellent value-for-money options for residents seeking better lifestyle experiences within budget.
Daniel Hadi, CEO of Engel & Völkers Middle East, pointed to areas like Town Square, Damac Hills, Dubai Hills Estate, and Dubai Creek Harbour as delivering the best rent-to-lifestyle ratios for apartment seekers in 2025.
- Town Square remains a standout for affordable rents with full community facilities, including parks, sports courts, and retail, ideal for families and working professionals.
- Damac Hills appeals to those seeking resort-style living at lower price points, offering golf course views and ample green spaces.
- Dubai Hills Estate and Dubai Creek Harbour provide upscale amenities with schools, malls, and waterfront living, while still delivering more space and value than inner-city districts.
For villas and townhouses, emerging areas on Dubai’s outskirts like The Valley, Damac Hills 2, and Arabian Ranches 3 are proving popular:
- The Valley offers large layouts, green areas, and child-friendly amenities at competitive prices.
- Damac Hills 2 targets families with swimming pools, sports courts, and a waterpark, all for lower-than-average rents.
- Arabian Ranches 3 is drawing buyers and renters looking for more modern, competitively priced homes.
Yet, Hadi cautioned that finding perceived “value” is becoming harder. In H1 2025, villa and townhouse rents surged 10–25 per cent year-on-year, making affordability a concern even in these outlying districts. In contrast, apartment rents rose more modestly, for example, JBR (+2.8 per cent), Bluewaters (+2.9 per cent), and Palm Jumeirah (+5.4 per cent) saw slower gains, possibly due to congestion, high pricing, or limited availability.
From tenants to owners: Rising prices shift preferences
Escalating rents have triggered a significant shift in how residents perceive long-term housing solutions. A growing number of tenants are now exploring homeownership as a viable alternative.
Savills reports that many expatriates are now actively considering buying over renting due to:
- The tax-free nature of Dubai’s property market
- The ease of obtaining mortgages
- Relatively lower property prices compared to other global cities
- Continued property value appreciation
This trend is particularly visible among high-income renters who are looking to lock in long-term value amid a rising rental market. For many, buying is no longer just an investment strategy, but a lifestyle decision, especially as homeownership offers greater stability and protection from rent hikes.
Dubai sets the pace with record transactions and global appeal
The emirate of Dubai continues to set the pace for the wider region, boasting not only record-breaking property sales but also a sharp rise in investor-driven demand. According to the UAE Real Estate Market Review Q2 2025 by CBRE, residential and commercial segments are benefiting from a resurgence in oil output, strong macroeconomic conditions, and global investor interest.
Dubai’s residential market was especially active in July 2025, according to Betterhomes, with both off-plan and secondary transactions climbing steadily. Property Monitor data confirmed that momentum in both rentals and sales has been resilient across multiple asset classes. W Capital Real Estate, citing Dubai Land Department data, reported that Dhs100bn in property sales was recorded by March 4, significantly earlier than the same milestone in 2024 (March 22) and 2023 (April 11).
By the end of H1 2025, total property sales reached Dhs326.64bn, a stunning 40 per cent increase compared to the Dhs233bn registered during the same period in 2024.
Knight Frank, an independent consultancy, further highlighted that Dubai remains the busiest global market for homes priced over $10m, clocking 435 transactions in this ultra-luxury bracket in 2024, nearly matching the combined total of London and New York.
This underscores not only the emirate’s high-end appeal but also the increasing demand for exclusivity and luxury, which is influencing the surrounding rental markets through ripple effects.
Rental market resilient amid surging demand
The rise in property transactions is mirrored by a significant increase in rental activity across Dubai and Abu Dhabi. Demand for rental homes remains strong, despite escalating costs and changing tenant preferences.
Cherif Sleiman, Chief Revenue Officer at Property Finder, explained that the rental market is stabilising, not softening. “Strong global interest from potential residents and investors continues to fuel healthy demand. Although the steep increases of past years are easing, we’re seeing no signs of a major correction,” he said.
Unlike previous cycles, this rental resilience is rooted in a more balanced supply-demand dynamic, supported by better community offerings and evolving tenant expectations. While rents continue to inch upward, the increase is now more measured, which suggests maturing fundamentals rather than volatility.
Savills’ Q2 2025 Dubai Residential Market Report also indicated that the emirate’s residential sector continues to benefit from inflows of wealthy individuals and investors, driven by Dubai’s political stability, regulatory competitiveness, and attractive tax framework.
Policies and infrastructure shape the rental future
Government policy continues to be a strong pillar in shaping Dubai’s property trajectory, and by extension, its rental dynamics.
In May 2025, construction began on the Dhs20.6bn Dubai Metro Blue Line, which is set to add 14 new stations by 2029. This line will enhance access to areas like Mirdif, Dubai Silicon Oasis, Dubai Creek Harbour, and Dubai Festival City, locations that are already seeing growing rental demand in anticipation of improved connectivity.
Additionally, the Dubai Land Department’s First Time Buyer Scheme, launched in late Q2 2025, aims to make property ownership more accessible. It offers:
- First-time buyer access to new projects
- Special pricing and developer incentives
- Flexible payment plans
- Reduced DLD fees
- Preferential mortgage terms via partner banks
These initiatives are expected to nudge more residents, especially long-term renters, toward ownership, thereby easing pressure on the rental market over time.
Supply struggles to catch up with soaring demand
Despite these efforts, the imbalance between demand and supply persists. The first half of 2025 saw a 66 per cent year-on-year increase in residential unit launches, with nearly 20,000 new units coming to market in Q2 alone. Developers are racing to meet surging demand, and apartments made up 91 per cent of these new launches.
While this influx will help, it may still fall short in addressing the full scale of demand, especially for villas and larger family homes, where supply remains limited.
Masterplan announcements like Phase 2 of Jumeirah Golf Estates and the Jebel Ali Racecourse redevelopment signal future inventory pipelines, but immediate availability remains constrained. With Dubai’s population expected to cross four million by year-end, pressure on rents is likely to remain unless supply can keep pace.
The UAE’s real estate sector, especially in Dubai, is in the midst of a significant transformation. While transaction activity and price growth dominate headlines, it’s the changing dynamics in the rental market that could shape the next phase of development.
Rising rents, high demand, and a maturing investor landscape are prompting more tenants to reconsider their long-term plans, with many turning toward ownership in the face of limited rental affordability.
From government-backed schemes to megaprojects like the Dubai Metro expansion, the ecosystem is being reshaped to accommodate both investors and end-users. But with demand still outpacing supply, and lifestyle expectations rising, the race to deliver value, whether for rent or ownership, is far from over.
