The UAE’s commercial real estate market held up through a difficult second quarter, even as residential sales volumes slumped and the hospitality sector absorbed some of the steepest declines in recent memory, according to CBRE’s UAE Real Estate Market Review for Q2 2026.
The broader economic backdrop was strained. CBRE forecasts a marginal GDP contraction of 0.04 per cent for the UAE in 2026, with trade, tourism, aviation and other consumer-facing sectors all feeling the pressure of ongoing regional disruption. The firm expects a strong recovery in 2027 as conditions stabilise.
“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,” Matthew Green, Head of Research at CBRE MENA said in a statement.
Office markets held firm on both sides of the country. In Dubai, average office rents rose 13 per cent year-on-year through Q2, with prime rents up 16 per cent.
Occupancy sat at approximately 94 per cent, with pre-leasing activity in DIFC, TECOM and DMCC absorbing much of the supply pipeline before buildings open.
Abu Dhabi’s numbers were stronger still: average rents climbed nearly 16 per cent year-on-year and occupancy reached approximately 96 per cent, driven largely by demand in ADGM from financial services firms including hedge funds. With fewer than 300,000 square metres of new office space expected to complete between 2026 and 2027, that pressure on supply is unlikely to ease soon.
Dubai’s residential market told a different story. Transaction volumes fell 29 per cent year-on-year in Q2, with fewer than 37,000 sales recorded compared with more than 51,000 in the same period last year.
Total transaction values dropped to AED 88 billion from nearly AED 154 billion in Q2 2025. Average rents fell 2.6 per cent year-on-year and 6.2 per cent quarter-on-quarter.
Sales prices are still 1.9 per cent higher than a year ago, but with around 18,000 units completing in the first half of the year and launches slowing, the direction of travel is clear.
Abu Dhabi’s residential sector moved in the opposite direction. Residential values rose 21.6 per cent year-on-year, led by apartment price growth of 24.4 per cent. Sales values hit AED 32 billion in Q2, a 150 per cent increase on Q2 2025, while transaction volumes grew roughly 80 per cent year-on-year. Off-plan deals accounted for about 83 per cent of all residential transactions and 85 per cent of total sales value.
Hospitality was the quarter’s weakest point. UAE hotel occupancy rates declined 27.7 percentage points year-on-year through June, according to CoStar data, and revenue per available room fell 31.8 per cent. Dubai saw the sharpest declines.
Abu Dhabi fared better, supported by domestic demand and events-driven visitors. Operators have responded with staycation campaigns and refurbishment programmes.
Retail held its ground structurally even as consumer spending softened. Occupancy in major centres remains around 98% in Dubai and 95% in Abu Dhabi.
Dubai rents grew about 3 per cent year-on-year; Abu Dhabi rents were broadly flat. Both markets are preparing for a significant wave of completions, including Al Khail Avenue in Dubai and the first retail phase of Saadiyat Grove in Abu Dhabi.
Industrial and logistics remained the standout sector. Industrial exports reached AED 262 billion in 2025, and government programmes including Operation 300bn and Make It In The Emirates continue to draw manufacturing and logistics investment.
Strong leasing activity was recorded across Dubai Industrial City, Dubai Investments Park and National Industries Park. Abu Dhabi’s market was bolstered by AED 48.5 billion in commitments through the MIITE initiative and new logistics deals within KEZAD.
