Dubai, UAE – The UAE’s commercial real estate sector posted a robust performance in Q2 2025, driven by tightening office supply, rising rental rates, and an evolving retail landscape shaped by shifting consumer behavior, according to JLL’s latest Office and Retail Market Dynamics reports.
Dana Williamson, Head of Offices, Business Space & Retail, MEA at JLL, commented:
“The UAE’s commercial market is undergoing a transformative phase, with changing consumer expectations and end-user demands fueling growth and creating new investment opportunities. Despite supply-demand imbalances in the office sector, demand for high-quality, well-located office spaces remains strong, reinforcing the ongoing ‘flight to quality.’ Similarly, the retail sector is focusing on delivering unique, experiential offerings that align with evolving consumer preferences.”
Office Market Highlights
Both Abu Dhabi and Dubai remained landlord-favored markets through Q2, with prime rents climbing significantly.
- Abu Dhabi: Prime office rents surged 31.5% year-on-year to AED 2,905 per sq. m annually, while Grade A and B rents rose by 7.8% and 10.9%, respectively.
- Dubai: Prime rents increased 17.3%, with Grade A and B rates up 19.5% and 16%, and Grade C rents climbing 22.9%.
Vacancy rates continued to tighten, dropping to just 1.5% in Abu Dhabi and 7.7% in Dubai. Prime vacancies were exceptionally low — 0.1% in Abu Dhabi and 0.3% in Dubai — leading to earlier lease renewals and heightened competition for available space.
Retail Market Insights
The retail sector also showed strong performance, particularly in Dubai, where contract registrations rose 9% year-on-year, supported by a double-digit increase in renewals. Conversely, Abu Dhabi saw a 12.1% drop in registrations due to limited prime stock, though demand for community-focused retail assets remained robust, bringing citywide vacancy rates down to around 9%.
Prime super-regional retail rents climbed 3.4% in Abu Dhabi and 15.1% in Dubai, reflecting strong demand. Developers are increasingly repurposing spaces to enhance the consumer experience, such as converting food courts into entertainment and dining zones.
JLL reports that retailers are investing heavily in data analytics, omnichannel strategies, and hybrid showroom-micro-fulfillment concepts that bridge online and offline shopping experiences.
Looking Ahead
With supply remaining constrained and demand resilient, both the office and retail segments are expected to remain landlord-friendly in the near term. Innovation, experiential retail formats, and the “flight to quality” in office spaces will continue to shape the market’s trajectory.
