UAE real estate surge: Demand up for prime office and retail space

The UAE’s prime commercial property and office market have shown remarkable performance this year due to strong demand and supply constraints in business hubs such as Dubai and Abu Dhabi, experts said. 

Referring to recent JLL’s Office Market Dynamics report, analysts and leading executives said commercial real estate also experienced notable growth as a shift in consumer behaviour alongside a growing focus on value and convenience in retail formats is shaping the 8.24 million square metres retail inventory in Abu Dhabi and Dubai.

Recommended For You

Dubai: International DJs, UAE-based content creators come together for football showdown

Chile wildfires kill 19 as extreme heat triggers mass evacuations

Prince Harry targeted for standing up to UK newspaper, reveals lawyer

India to withdraw diplomats' families from Bangladesh, official says

This Week in Golf: Rory returns, the stars align and the 'Classic' takes centre stage

 

Backed by strong demand for prime retail spaces, landlords are negotiating higher rental rates. In Abu Dhabi, prime super regional malls maintained premium over other categories with a 3.4% rental increase in the year to third quarter of 2025 while Dubai experienced a substantial 13.5% rise in the same period. This landlord-favoured environment is evident across prime retail properties and successful shopping centres that draw strong footfall and turnover for tenants, according to the report.

The real estate consultancy ValuStrat said Abu Dhabi’s office market, with an estimated stock of 3.9 million square metres, saw office asking rents rise by 22.7% year-on-year basis and 3.6% quarter-on-quarter basis, with occupancy rates above 90% in central business districts. Further supply additions are expected from Masdar City’s new office building.

“Retail space totalled nearly 2 million square metres of gross leasable area, with expansion projects underway, including the redevelopment of Al Jimi Mall. Aldar’s retail portfolio revenue rose 12% year-on-year basis, supported by strong anchor assets like Yas Mall with 98% occupancy. The growth of UAE’s e-commerce market, projected to exceed Dh48.5 billion by 2028, also underscores evolving retail dynamics,” according to the report.

Demand shifts in office market

JLL’s report said Dubai and Abu Dhabi’s 13.4 million square metres office inventory is witnessing a sharp shift in demand composition, with leasing inquiries from regional companies increasing at a faster rate compared to large international corporates. This transition is favourable for landlords, as regional occupiers often demonstrate greater rental rate flexibility and willingness than international occupiers to accept premium pricing structures.

The report also discloses that the rate of rental growth in the two emirates may be reaching its cyclical peak, particularly for Prime and Grade A spaces. Reflecting a flight-to-quality trend, Prime rents in Abu Dhabi surged 31.3% year-on-year basis, while Dubai experienced a 16.8% rise in the year to third quarter of 2025. Occupiers are increasingly viewing these prices as unsustainable within their operational budgets.

“As the UAE’s prime commercial real estate sectors evolve, we anticipate a period of sustained resilience. For investors and developers, achieving success hinges on a deep understanding of the evolving occupier and consumer behaviours, and the ability to implement innovative adaptation strategies in a fast-maturing market,” Dana Williamson, Head of Offices, Business Space & Retail – MEA, JLL, said.

“While facing a constrained supply environment across both prime retail and office segments, market sentiment remains positive, offering stakeholders significant opportunities to capitalise on new potent growth avenues for value creation that directly respond to fundamental behavioural shifts.”

Premium Developments demand

Husein Salem, CEO of Ohana Developments, said 2025 has been a strong year for Abu Dhabi’s real estate sector overall, underpinned by investor confidence, long-term economic planning, and an increasingly lifestyle-driven market.

“We’ve seen sustained demand for premium developments, especially in emerging destinations that offer a balance of connectivity, natural surroundings, and long-term value, trends that mirror the strength observed across the capital’s wider property landscape,” Salem told BTR.

“This shift is reflected in the performance of our own developments. Jacob & Co. Beachfront Living by Ohana at Al Jurf, introduced to the market earlier this year as an Dh4.7 billion beachfront community, has resonated strongly with buyers prioritising space, privacy, and beachfront living. Its momentum highlights the growing demand for branded, design-led destinations that offer both exclusivity and long-term value in the UAE,” he said.

Looking ahead to 2026 and beyond, he said the fundamentals remain positive as Abu Dhabi continues to invest in master-planned districts, infrastructure, and mixed-use communities, elements that naturally support the commercial sector.

“As the population grows and more international residents and investors commit to long-term living because of initiatives like expanded freehold zones, golden visas, and stable tax regulations, demand for integrated commercial spaces will continue to rise. The outlook is one of steady, sustainable expansion anchored by a maturing market with a clear long-term vision,” he said.

Manal Fraiwat, CEO of Relaam, said 2025 was a strong year for Abu Dhabi’s commercial real estate market, marked by high occupancy levels and sustained investor confidence.

“The market continued to demonstrate healthy absorption across commercial assets, supported by stable rental performance and rising demand from both local and international tenants,” Fraiwat told BTR.

Looking ahead to 2026 and beyond, she said the outlook remains positive, driven by the emirate’s steady economic growth, improving business sentiment, and continued investment in high-quality real estate. “With plans for further portfolio expansion across the UAE, the commercial sector is well-positioned for long-term, fundamentals-led growth.”

Growth Catalysts for Commercial Realty

Key growth drivers include the emirate’s strong economic fundamentals, consistent demand for professionally managed assets, and a maturing investment environment that prioritises long-term value, according to Fraiwat. “High occupancy rates across commercial properties reflect a stable market reinforced by government-backed development plans, infrastructure enhancements, and investor-friendly regulations. Together, these factors continue to attract both institutional investors and regional tenants seeking stable, well-managed commercial spaces.”

Salem said several structural catalysts are shaping Abu Dhabi’s real estate momentum. First is the government’s long-term economic strategy, which encourages investment, cultural expansion, and diversification factors that directly increase the need for high-quality commercial and mixed-use spaces. Initiatives such as long-term residency programs and expanded freehold zones are bringing more international capital into the UAE, encouraging multi-year commitments instead of short-term transactional demand.  The second major catalyst is the rapid rise of master-planned and branded residential communities. Developments like ELIE SAAB Waterfront by Ohana, with its curated design, EV-ready infrastructure, landscaped gardens, and premium amenities, elevate expectations for surrounding commercial offerings from wellness retail to experiential dining. Meanwhile, Jacob & Co. Beachfront Living by Ohana is redefining what integrated luxury can look like, combining branded living with lifestyle amenities, wellness, and leisure components.

“Mixed-use environments are also becoming the UAE’s dominant urban blueprint, with recent market studies noting that they make up over 85% of new urban development and deliver higher rental yields than single-use zones. These districts draw both residents and businesses seeking convenience, community, and long-term value.

“Finally, sustainability remains one of the strongest catalysts. Developers across Abu Dhabi are adopting energy-efficient systems, and nature-inspired designs,” Salem said.

Strong Demand for Retail, Office Space

Salem of Ohana Developments said demand for retail and office space is increasingly tied to the evolution of the capital’s mixed-use and lifestyle-led communities.

“As Abu Dhabi shifts toward integrated neighbourhoods where people live, work, and experience leisure in one place, thoughtfully planned commercial components are becoming more essential. This is especially visible around high-end communities, where residents expect curated retail, wellness concepts, and flexible workspace environments that reflect the design sophistication and service culture of the surrounding residential projects,” he said.

“Next year, we anticipate continued demand for neighbourhood retail, experiential wellness, and flexible office concepts that integrate seamlessly into the lifestyle of surrounding communities. With Abu Dhabi continuing to attract global talent, long-term residents, and high-net-worth individuals, the supporting commercial ecosystem will remain a vital part of the city’s growth,” he said.

Fraiwat of Relaam said demand for retail and office assets is expected to remain healthy next year, supported by ongoing population growth, rising business activity, and the shift toward higher-quality, efficiently managed commercial spaces. “Retail continues to benefit from Abu Dhabi’s expanding consumer base, while the office segment is seeing steady interest from companies seeking modern, well-located premises. With occupancy levels remaining strong, both segments are set to maintain solid performance,” she said.

Challenges for the Commercial, Office Market

As Abu Dhabi continues to expand, Salem said the key priority will be ensuring that commercial offerings evolve in line with resident and business expectations.

“Buyers today whether seeking residential or commercial spaces are increasingly selective, placing greater emphasis on design consistency, service-led experiences, and long-term value. Commercial zones that continue relying on traditional formats without integrating lifestyle, wellness features, sustainability, or curated experiences risk falling out of step with the way the market is progressing.” 

Another important consideration is preserving authenticity in mixed-use districts. As branded communities become more prevalent, commercial components must feel like a natural extension of the community’s identity. This is something we embed deeply into our projects.

Finally, he said coastal and nature-integrated locations, one of Abu Dhabi’s strongest differentiators, require sensitive planning, durable materials, and long-term operational frameworks. Ensuring that commercial structures remain resilient while harmonising with the natural environment is a continuous responsibility for developers.

“Overall, the trajectory for Abu Dhabi’s commercial market remains exceptionally positive, supported by strong governance, investor confidence, and rising demand for high-quality lifestyle-driven communities,” he said.

“While the market outlook is largely positive, natural market dynamics may introduce challenges over time, including increased competition, evolving tenant expectations, and the need for continuous upgrades to maintain asset quality,” according to Fraiwat.

“Ensuring operational efficiency, enhancing service standards, and maintaining high-quality management practices will be essential to sustaining strong occupancy and rental performance. With proactive planning and strategic portfolio growth, these challenges can be navigated effectively,” she said.

Muzaffar Rizvi

muzaffarrizvi@khaleejtimes.com

Muzaffar Rizvi is an accomplished financial journalist with more than 25 years of experience in the UAE and Pakistan. He has good writing skills, strong grip on production and an excellent news sense.