Dubai’s real estate market continues its impressive run in 2025, but a closer look at the latest report from Engel & Völkers Middle East reveals a nuanced picture. While the residential sector is experiencing robust growth, the commercial segment’s gains, though positive, present a slightly different narrative. What’s driving these diverging trends in the emirate’s property landscape?
The first quarter of 2025 has been exceptionally strong for Dubai’s residential real estate market. According to Engel & Völkers Middle East, residential property sales witnessed a significant year-on-year increase of 22.4%. This surge in transaction volume is further amplified by a 29.6% rise in the total value of residential properties sold during the same period. This robust performance underscores the continued strong investor confidence, the emirate’s growing population, and the consistent influx of global capital into its housing sector.
Both off-plan and secondary residential markets contributed to this growth. Off-plan sales saw a substantial uptick of 23.9%, indicating sustained investor appetite for new developments and future potential. Simultaneously, secondary market transactions also experienced a healthy rise of 20.3%, demonstrating continued demand across the existing property spectrum.
A standout performer within the residential sector was the villa segment, which recorded an impressive 80.6% year-on-year increase in transactions. This surge was primarily fueled by off-plan activity in emerging, master-planned communities such as The Valley, Emaar South, and Damac Islands, highlighting a growing preference for larger, independent living spaces.
The appetite for high-end properties also remained strong, with sales of properties above AED 10 million growing by 29% compared to Q1 2024 and a remarkable 185% since Q1 2022. Iconic locations like Palm Jumeirah and the rapidly developing Palm Jebel Ali accounted for 31% of these ultra-luxury sales, driven by demand for exclusive waterfront villas. Notable high-value transactions included the AED 425 million sale of the Marble Palace in Emirates Hills and an AED 115 million villa on Palm Jumeirah.
While the residential market experienced a significant boom, Dubai’s commercial real estate sector also demonstrated positive momentum in Q1 2025. The Engel & Völkers Middle East report indicates an 18.2% year-on-year increase in commercial real estate sales transactions, accompanied by a 29.5% rise in the total value of commercial deals.
Breaking down the commercial sector, office sales transactions saw a substantial increase of 40%, with the average price per square foot rising by 15% to AED 1,676. Key business hubs like Business Bay and Jumeirah Lakes Towers (JLT) remained dominant, recording 315 and 217 sales respectively. Off-plan interest in the Capital One project also positioned Motor City as a notable office investment destination during the quarter.
Retail sales, on the other hand, experienced a more modest year-on-year increase of 6%, concentrated in thriving residential and mixed-use communities like Business Bay, Arjan, and Jumeirah Village Circle (JVC). Leasing activity in the commercial sector also accelerated, showing a 17.6% quarter-on-quarter increase. Office rents grew by a significant 23% year-on-year to AED 112 per square foot, driven by demand in core business districts. While retail rents remained stable at AED 240 per square foot, increasing interest in Grade A space suggests potential upward pressure later in the year.
The contrasting growth rates between the residential and commercial sectors in Dubai during Q1 2025 could indicate a maturing real estate market with specific demand drivers influencing each segment. The strong residential growth reflects Dubai’s continued appeal as a desirable place to live and invest, attracting both end-users and high-net-worth individuals. The steady growth in the commercial sector, while not as explosive as residential, still points to a healthy business environment and increasing demand for office and retail spaces. Major commercial project announcements, such as the AED 5 billion redevelopment of Mall of the Emirates, further signal long-term confidence in Dubai’s retail and consumer sectors.
Summary:- Dubai’s residential property sales increased by 22.4% year-on-year in Q1 2025, with a 29.6% rise in total value.
- The villa segment was a key driver of residential growth, with an 80.6% increase in transactions.
- Commercial real estate sales saw an 18.2% year-on-year increase, with office sales up by 40%.
- Office rents in Dubai’s key business districts experienced a significant 23% year-on-year growth.