• Dubai’s retail sector shows strong momentum in Q2 2025, with overall contract registrations rising by 9.0% compared to the same period last year
  • Prime office rents command significant premiums, highlighting a flight to quality across both cities

Dubai, United Arab Emirates – The UAE’s commercial real estate sector experienced a dynamic Q2 2025, with its office market facing increasingly tight conditions due to limited availability and increasing rental rates, and its retail sector evolving strategically amidst shifting consumer preferences, according to JLL’s latest Office and Retail Market Dynamics reports.

Dana Williamson, Head of Offices, Business Space & Retail, MEA at JLL, said: “The UAE’s commercial market is undergoing dynamic shifts, fuelled by changing consumer and end-user expectations, which are driving growth and unlocking new avenues for investment. While supply-demand imbalances in the Offices sector continue to exert downward pressure on rental values, demand for prime, strategically located office spaces remains strong, underscoring the ongoing “flight to quality.” In the Retail sector, the rising emphasis on immersive and differentiated consumer experiences is creating fertile ground for the emergence of innovative concepts and evolving trends”

The office markets in both Abu Dhabi and Dubai are projected to maintain landlord-favorable conditions throughout the short to medium term horizon, with strong rental performance in Q2. In Abu Dhabi, prime rents reached AED 2,905 per sq. m. per annum, a 31.5% year-on-year growth, while Grade A and B rents increased by 7.8% and 10.9% respectively. Dubai's office rental rates also increased across all segments: prime rents by 17.3%, Grade A and B rents by 19.5% and 16% respectively, and Grade C rents by 22.9%. The persistent imbalance between supply and demand fundamentals is widening rental gaps, with prime office rents significantly higher than Grade A spaces, 73.3% more in Abu Dhabi and 50.8% more in Dubai.

This widening price gap is a direct result of the pressure on vacancy rates, which declined to 1.5% citywide in Abu Dhabi and 7.7% in Dubai. Prime and Grade A vacancies in Abu Dhabi reached an ultra-low 0.1% and 1.7% respectively, while in Dubai, prime market vacancies remained extremely tight at just 0.3%.

Due to limited available stock, both Dubai (19.1%) and Abu Dhabi (1.9%) saw a year-on-year dip in activity in the total volume of registered leases. This is driving earlier lease renewals, which grew by 0.8% in Abu Dhabi compared to 8.3% in Dubai, during Q2.

With high rents and limited availability in prime retail locations, the UAE’s retail market is projected to continue favoring landlords in the short to medium term, pressing new market entrants to seek opportunities in secondary locations and leading to a 12.1% decrease in Abu Dhabi's rental contract registrations. In contrast, Dubai's retail sector showed strong momentum, with overall contract registrations rising by 9% year-on-year, driven by an 11.9% increase in renewals and a 2.3% increase in new contracts.

In Abu Dhabi, which is seeing strong demand for convenience-centered retail assets in residential communities, the citywide vacancy rate is down to around 9% in Q2 2025. In Dubai, the performance varied by asset type, with the citywide vacancy rate at 7.5%. Prime super regional rents in Abu Dhabi climbed by 3.4% to AED 5,524 per sq. m, while in Dubai, prime super regional rents saw substantial growth of 15.1%, reaching AED 826 per sq. ft. The total existing retail inventory is 8.13 million sq. m. across Dubai and Abu Dhabi, with 98,000 sq. m. of future stock anticipated by the year-end.

JLL's Q2 Retail Market report reveals that UAE retailers are increasingly leveraging data analytics and technological innovation to deliver highly personalized shopping experiences. Physical retail spaces are being reimagined as experiential destinations, and the F&B sector is expanding space allocations to meet growing demand for homegrown concepts. In line with consumer preferences for casual and upper casual dining experiences, developers are converting former food courts into family entertainment zones with improved dining options.

A key trend is the expansion of E-commerce brands into physical stores that serve dual purposes. At these showrooms, customers can experience products hands-on, while as a micro-fulfilment center, it enables fast local deliveries and pickup options.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500 company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 111,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com

About JLL MEA

Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 2000 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Cape Town, Johannesburg and Nairobi. For further information, visit jll-mena.com

Media Contact:
Medha Sandrasagara
JLL MEA
Medha.Sandrasagara@jll.com

Janine Alamir
Burson
jll-mena@bursonglobal.com