Dubai’s residential rental market recorded a 6.2% decline between the first and second quarters of 2026, according to CBRE Middle East’s latest UAE Real Estate Market Review, as approximately 18,000 newly completed units reshaped the available housing stock across the city. Year-over-year, rents fell 2.6%, a meaningful reversal from the sustained price growth that defined the preceding years.
The delivery of that new supply is the clearest driver of the shift. With more units entering the market, tenants now face less competition and hold more negotiating power than they did through 2025. The intensity that had pushed rents steadily upward has eased.
The sales market decelerated sharply over the same period. Fewer than 37,000 residential transactions were recorded in Dubai during the second quarter, down 29% from more than 51,000 in the same quarter of 2025. Transaction value fell even more steeply, reaching Dh88 billion against nearly Dh154 billion a year earlier. CBRE attributed the decline to softer demand, fewer new project launches and the expanded supply now available to buyers. Despite the slowdown, prices have not retreated; they remained 1.9% higher year on year, suggesting the market has stabilized at elevated valuations rather than correcting.
By contrast, the office sector has held firm. Average office rents across Dubai rose 13% in the year to the end of the second quarter, with prime rents climbing 16%. Occupancy sat at approximately 94%, reflecting a persistent shortage of Grade A space. Demand concentrated in DIFC, TECOM and DMCC, where companies continued to pre-lease space in buildings still under construction, a sign that occupiers are committing to future delivery pipelines rather than waiting for completed stock.
Abu Dhabi’s office market ran even tighter. Average rents rose nearly 16% and occupancy reached approximately 96%, with demand led by financial services firms, hedge funds and investment companies active in Abu Dhabi Global Market. CBRE noted that fewer than 300,000 square metres of new office space is expected to be completed in Abu Dhabi between 2026 and 2027, a supply constraint that will likely keep rents elevated through the near term.
Abu Dhabi’s residential market moved in the opposite direction from Dubai’s. Property values rose 21.6% from a year earlier, with apartment prices up 24.4%. Residential sales reached Dh32 billion, a 150% increase from the same period in 2025, while transaction volumes rose around 80%. Off-plan homes accounted for approximately 83% of transactions and 85% of total sales value, indicating that buyers are committing heavily to projects still in delivery.
Industrial and logistics property was among the strongest-performing segments in the UAE. Rental growth continued across Dubai Industrial City, Dubai Investments Park and National Industries Park. Abu Dhabi’s industrial sector drew support from Dh48.5 billion in investment commitments announced through the Make it in the Emirates initiative and new logistics agreements within KEZAD. Industrial exports reached Dh262 billion in 2025, with government programmes including Operation 300bn continuing to underpin manufacturing and logistics activity.
Retail held its ground despite softer tourist spending and shifting consumer patterns. Occupancy remained at approximately 98% in Dubai and 95% in Abu Dhabi, broadly unchanged from a year earlier. Dubai retail rents increased around 3%, while Abu Dhabi rates stayed largely stable. Upcoming retail completions include Al Khail Avenue in Dubai and the first phase of Saadiyat Grove in Abu Dhabi, both of which will test whether occupancy levels hold as new space comes online.
Matthew Green, Head of Research at CBRE MENA, described the divergence across sectors plainly. “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,” he said.
CBRE projects a marginal economic contraction of 0.04% for the UAE in 2026, following disruption to trade, tourism, aviation and other consumer-facing sectors. Green pointed to the policy response as a stabilizing factor. “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,” he said. “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.”
Whether the pipeline of new residential supply in Dubai continues to moderate rents, or whether demand absorbs it before the market rebalances, will be the central question heading into the second half of 2026.