Dubai property market sees softer residential sales as commercial sectors stay resilient.
Dubai: Tenants in Dubai received some relief in the second quarter of 2026, with average residential rents declining 6.2 per cent compared with the previous three months. However, property prices continued to remain above last year’s levels.
Average rents were also 2.6 per cent lower compared with the same period last year, according to CBRE Middle East’s latest UAE Real Estate Market Review.
Home sales prices remained 1.9 per cent higher year on year, indicating that the market has entered a period of moderation after several years of strong growth.
Around 18,000 residential units were completed across Dubai in the first half of the year, increasing supply for tenants and buyers and helping ease some pressure on prices.
Home sales slow from last year
Fewer than 37,000 residential transactions were recorded in Dubai during the second quarter, marking a 29 per cent decline from more than 51,000 sales during the same period in 2025.
The total value of transactions stood at Dh88 billion, compared with nearly Dh154 billion a year earlier.
CBRE attributed the slowdown to softer demand, fewer new project launches and increased housing supply during the first half of the year.
The figures suggest that buyers are facing less competition than during the stronger market conditions seen last year.
Office rents continue to rise
Dubai’s office market continued to see strong demand, particularly for high-quality spaces in key commercial districts and free zones.
Average office rents increased 13 per cent in the year to the end of the second quarter, while prime office rents recorded a sharper rise of 16 per cent.
Occupancy levels remained around 94 per cent, reflecting limited availability of Grade A office spaces across the city.
Demand remained concentrated in areas such as DIFC, TECOM and DMCC, where companies continued to secure space in upcoming developments even before construction was completed.
Abu Dhabi recorded similar market conditions, with average office rents rising nearly 16 per cent and occupancy levels reaching around 96 per cent.
Demand was strongest in Abu Dhabi Global Market, driven by expansion among financial services companies, hedge funds and investment firms.
Less than 300,000 square metres of new office space is expected to be delivered in Abu Dhabi between 2026 and 2027, which CBRE said is likely to keep supply constrained.
While some sectors have experienced a moderation in activity, the impact has been uneven. Office and industrial markets continue to benefit from limited availability and sustained demand from occupiers, according to Matthew Green, Head of Research at CBRE MENA.
Abu Dhabi homes record strong growth
Abu Dhabi’s residential market continued to attract buyers in the second quarter, with property values rising 21.6 per cent compared with the same period last year.
Apartment prices recorded a stronger increase of 24.4 per cent, while average rents remained 3.6 per cent higher year on year despite some moderation during the quarter.
Residential sales reached Dh32 billion, representing a 150 per cent increase from the same period in 2025, while transaction volumes rose by around 80 per cent.
Off-plan properties accounted for approximately 83 per cent of all transactions and 85 per cent of total sales value.
Shopping centres retain high occupancy
Retail properties continued to maintain high occupancy levels despite softer tourist spending and shifting consumer behaviour.
Occupancy remained around 98 per cent in Dubai and 95 per cent in Abu Dhabi, largely unchanged from the previous year.
Dubai retail rents increased by approximately 3 per cent, while rates in Abu Dhabi remained broadly stable.
Upcoming retail developments include Al Khail Avenue in Dubai and the first phase of retail space at Saadiyat Grove in Abu Dhabi.
Warehouses and logistics sites perform well
Industrial and logistics properties remained among the strongest-performing segments of the UAE real estate market, supported by manufacturing investment, supply chain localisation and foreign direct investment.
Rental growth continued across key locations including Dubai Industrial City, Dubai Investments Park and National Industries Park.
Abu Dhabi’s industrial sector benefited from Dh48.5 billion in investment commitments announced through the Make it in the Emirates initiative, along with new logistics agreements within KEZAD.
Industrial exports reached Dh262 billion in 2025, while government programmes such as Operation 300bn continued to support growth in manufacturing and logistics activity.
CBRE expects the UAE economy to record a marginal contraction of 0.04 per cent in 2026, following disruptions affecting trade, tourism, aviation and other consumer-focused sectors.
“What remains particularly noteworthy is the speed and scale of the UAE’s policy response, from supporting business continuity and trade flows to advancing economic partnerships and diversification initiatives,” Green said.
“Although near-term conditions are likely to remain challenging, the country’s long-term growth outlook remains supported by structural reforms, strategic investment and its position as a leading hub for trade, capital and talent.”
