Dubai office rents rise 13%, Abu Dhabi occupancy hits 96% as UAE property remains resilient: CBRE

CBRE says UAE real estate remained resilient in Q2 2026, with Dubai office rents up 13 per cent, Abu Dhabi occupancy at 96 per cent and strong industrial demand.

The UAE real estate market remained resilient during the second quarter of 2026 despite a challenging macroeconomic backdrop and ongoing regional disruptions, with commercial property continuing to outperform as strong occupier demand and limited supply supported office and industrial markets.

According to CBRE, Dubai office rents increased 13 per cent year-on-year while Abu Dhabi office occupancy reached approximately 96 per cent, even as softer demand weighed on tourism, retail and parts of the residential market.

CBRE Middle East, the global leader in commercial real estate services, said its UAE Real Estate Market Review for the second quarter of 2026 found that commercial real estate fundamentals remained resilient despite softer performance in non-oil sectors such as tourism and retail.

The consultancy said ongoing geopolitical tensions continue to weigh on domestic economic activity, prompting a downward revision to the UAE’s growth outlook for 2026.

CBRE forecasts a 0.04 per cent GDP contraction this year, reflecting disruption to trade, tourism, aviation and other consumer-facing sectors, before forecasting a strong recovery in 2027 as regional conditions stabilise.

Dubai and Abu Dhabi office markets remain strong

Dubai’s office market continued to benefit from strong occupier demand and constrained supply.

Average office rents increased 13 per cent year-on-year during the second quarter, while prime office rents rose 16 per cent.

Occupancy remained exceptionally high at approximately 94 per cent, reflecting continued shortages of Grade A office space.

Demand remained particularly strong across key commercial districts and free zones including DIFC, TECOM and DMCC, where pre-leasing activity continues to absorb a significant proportion of future supply before completion.

Abu Dhabi also maintained robust office market fundamentals.

Average office rents increased by nearly 16 per cent year-on-year, while occupancy reached approximately 96 per cent.

Demand remained particularly concentrated in the Abu Dhabi Global Market (ADGM) free zone, supported by continued growth across financial services, including hedge funds and other investment activities.

With less than 300,000 square metres of new office space expected between 2026 and 2027, CBRE said supply constraints are likely to persist over the medium term.

Dubai residential market moderates

Dubai’s residential market experienced noticeable moderation during the second quarter as demand softened and transaction activity declined amid a slowdown in new project launches.

Residential sales prices remained 1.9 per cent higher year-on-year, while average rents declined 2.6 per cent annually and 6.2 per cent quarter-on-quarter.

Transaction volumes fell 29 per cent year-on-year, with fewer than 37,000 residential sales recorded during the quarter compared with more than 51,000 in the same period last year.

Total transaction values declined to AED88bn ($24bn) from nearly AED154bn ($41.9bn) in the second quarter of 2025.

Approximately 18,000 residential units were completed during the first half of the year, increasing available inventory and helping moderate pricing pressures.

Abu Dhabi housing continues to outperform

Abu Dhabi’s residential market continued to outperform many regional markets, supported by strong domestic demand and sustained investor confidence.

Residential values increased 21.6 per cent year-on-year during the second quarter, driven primarily by apartment price growth of 24.4 per cent.

Rental growth remained positive at 3.6 per cent annually despite short-term moderation during the quarter.

Sales values reached AED32bn ($8.7bn), representing a 150 per cent increase compared with the second quarter of 2025, while transaction volumes grew by approximately 80 per cent year-on-year.

The off-plan market remained dominant, accounting for approximately 83 per cent of all residential transactions and 85 per cent of total sales value.

Hospitality and retail challenges

CBRE said the UAE hospitality market experienced a challenging first half of 2026 as regional disruptions affected international travel demand and airline operations.

According to Co-Star data, UAE hotel occupancy declined by 27.7 percentage points year-on-year through June, while revenue per available room (RevPAR) fell 31.8 per cent.

Dubai recorded the sharpest declines, while Abu Dhabi benefited from stronger domestic demand and events-led tourism activity.

The retail market also came under pressure from softer tourism flows and changing consumer spending patterns.

However, occupancy levels remained exceptionally strong at approximately 98 per cent across major retail centres in Dubai and 95 per cent in Abu Dhabi.

Rental growth in Dubai remained positive at around 3 per cent year-on-year, while Abu Dhabi retail rents were broadly stable.

Developers are also preparing for a significant pipeline of future retail supply, including Al Khail Avenue in Dubai and the first retail phase of Saadiyat Grove in Abu Dhabi.

Industrial and logistics real estate

CBRE identified industrial and logistics as the strongest-performing segment of the UAE property market.

Industrial exports reached AED262bn ($71.3bn) in 2025, while initiatives including Operation 300bn and Make it in the Emirates (MIITE) continued attracting manufacturing and logistics investment.

Strong rental growth was recorded across Dubai Industrial City, Dubai Investments Park and National Industries Park.

In Abu Dhabi, the sector benefited from AED48.5bn ($13.2bn) of investment commitments announced through MIITE alongside new logistics agreements within KEZAD.

Matthew Green, Head of Research at CBRE MENA, said: “The second quarter marked a notable shift in the UAE’s economic and real estate landscape, as regional geopolitical developments began to weigh on business activity, tourism flows and broader market sentiment.

“While several sectors have seen a moderation in performance, the impact has been uneven, with office and industrial markets continuing to benefit from limited supply and sustained occupier demand. 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.

“Although near-term conditions are likely to remain challenging, the country’s long-term growth trajectory remains supported by structural reforms, strategic investment and its position as a leading hub for trade, capital and talent.”