UAE Real Estate Market Update Q1 2025: Growth and Key Trends

Riding the Wave of Growth

The United Arab Emirates (UAE) real estate market, particularly in its prime hubs of Dubai and Abu Dhabi, continued its dynamic performance into the first quarter of 2025. Demonstrating remarkable resilience and sustained momentum, the sector builds upon the record-breaking activity of previous years, solidifying its position as a leading global destination for property investment and homeownership. The prevailing sentiment among investors, developers, and end-users remains overwhelmingly positive, fueled by strong economic fundamentals and proactive government initiatives that continue to attract significant international interest. This sustained growth, even after several years of exceptional performance, points towards a market underpinned by genuine demand rather than fleeting trends, suggesting a maturing and fundamentally strong sector.

Q1 2025 Overview – A Market Gaining Momentum

The first quarter of 2025 set new benchmarks, especially for Dubai. According to data sourced from the Dubai Land Department (DLD) and leading property portals like Property Finder, Dubai recorded 45,474 property transactions with a staggering total value of AED 142.7 billion (approximately $39 billion). This represents a significant year-on-year (YoY) increase of 22% in transaction volume and an even more impressive 30% surge in transaction value compared to Q1 2024. Notably, this transaction volume marks the highest ever recorded for a first quarter in Dubai’s history.

Abu Dhabi also showcased robust activity and steady growth. The capital registered approximately 2,496 transactions in Q1 2025, amounting to a total value of AED 9.6 billion. While the overall volume increase was more moderate compared to Dubai, the existing (ready) property segment in Abu Dhabi saw a remarkable 75% YoY increase in transaction value, alongside a 9% rise in volume.

This substantial growth in transaction value, outpacing volume increases in both emirates, strongly indicates rising property prices and potentially a heightened interest in premium and higher-value assets. The market’s upward trajectory is further evidenced by the positive sentiment echoed in global real estate surveys and sustained investor confidence.

Dubai Spotlight – Performance & Popular Areas

Dubai’s real estate engine fired on all cylinders in Q1 2025. The median price per square foot continued its ascent, reaching AED 1,563 (approximately $426), a significant climb from AED 1,497 in Q1 2024 and AED 889 back in Q1 2021. This consistent price appreciation reflects the strong and sustained demand across various market segments.

The market saw a fascinating interplay between off-plan and ready properties. Off-plan sales continued to dominate transaction volume, accounting for 56% of all deals (25,440 transactions) valued at AED 55.2 billion. This highlights ongoing investor confidence in Dubai’s future developments and the appeal of flexible payment plans. Simultaneously, the ready property market achieved its highest-ever quarterly performance in terms of value, with 20,034 transactions generating AED 87.5 billion. This surge in the ready market suggests a growing number of end-users entering the market, potentially driven by rising rental costs making ownership more appealing, and a desire for immediate occupancy. The demand is robust across different price points, indicating a healthy mix of buyers.

Several key areas stood out in Q1 2025:

• Jumeirah Village Circle (JVC): A consistent leader in transaction volume, JVC recorded 3,605 deals worth AED 4.56 billion. Its popularity stems from its relative affordability, well-developed community facilities, strong rental activity, and attractive rental yields often cited between 7-9%.

• Dubai Marina: A perennial favourite for luxury living, Dubai Marina saw 2,583 transactions valued at a significant AED 9.28 billion. Its waterfront appeal, high-rise towers, and established rental sector continue to attract upscale residents and investors, offering yields typically in the 6-8% range.

• Business Bay: This central district, blending residential and commercial properties, registered 2,782 transactions worth AED 7.27 billion. Its proximity to Downtown Dubai remains a key draw. Some reports noted a slight decrease in mid-tier apartment prices here, potentially due to an influx of smaller unit transactions altering the average.

• Dubai South: Driven by strategic developments like Expo City and the expansion of Al Maktoum International Airport, Dubai South saw 2,676 deals valued at AED 8.75 billion. It offers significant long-term growth potential and yields potentially reaching 7-10%.

• Wadi Al Safa: High transaction volume (3,596 deals, AED 7.64 billion) in this newer development area indicates strong buyer interest expanding beyond the traditional core areas.

Abu Dhabi Spotlight – Stability & Key Zones

Abu Dhabi’s real estate market demonstrated steady growth and increasing maturity in Q1 2025. The standout feature was the significant 75% YoY jump in the value of ready property transactions, suggesting a strong focus on acquiring completed, often premium, assets. This trend might be fueled by High-Net-Worth Individuals (HNWIs) and end-users prioritizing tangible, high-quality living spaces in established communities.

Key performing areas in Abu Dhabi included:

• Yas Island: Remained the top choice for luxury properties. Luxury apartments averaged AED 1.87 million in sales price with a strong ROI of 6.99%. Luxury villas averaged AED 4.68 million in sales price, with average annual rents around AED 229,000. The price per square foot for apartments saw a quarterly increase of 2.54% from Q4 2024.

• Al Reem Island: Solidified its position as the leader for affordable apartment purchases, averaging AED 1.54 million with an attractive ROI of 7.31%. The price per square foot here rose 3.57% compared to the previous quarter. It also remained popular for luxury apartment rentals.

• Al Reef: A favourite for investors seeking yield, Al Reef led the affordable villa sales market (average price AED 2.21 million, ROI 6.23%) and offered the highest ROI for affordable apartments at an impressive 10.08%.

• Saadiyat Island: Known for its cultural attractions and premium lifestyle, Saadiyat Island offered the highest ROI for luxury villas at 5.60% and remained a popular choice for luxury apartment buyers.

The consistent demand for these specific island and community developments underscores buyer confidence in locations known for their lifestyle offerings, amenities, and established quality.

What’s Driving the Growth?

The sustained momentum in the UAE real estate market isn’t accidental; it’s fueled by a powerful combination of factors creating a self-reinforcing cycle of growth:

• Economic Strength & Stability: The UAE’s robust non-oil sector performance, diversification efforts, and overall economic stability provide a secure foundation for investment.

• Proactive Government Initiatives: Policies like the Golden Visa program (offering long-term residency for property investments over AED 2 million), extensions of freehold ownership, and continuous investment in world-class infrastructure (including transport networks, Expo City, and airport expansions) actively encourage investment and enhance liveability. Recent regulatory enhancements also aim to improve transparency and long-term market sustainability.

• Population Growth & Migration: Ongoing population growth, driven by migration inflows and employment opportunities, creates consistent demand for housing across various segments.

• Foreign Investor Confidence: The UAE remains a magnet for international capital, with sustained inflows from global investors attracted by the growth potential, stability, and favourable tax environment.

• Favourable Tax Environment: The absence of personal income tax and capital gains tax significantly enhances the appeal for residents and investors alike.

This multi-faceted support system contributes to the market’s resilience and continued positive outlook, even amidst global economic uncertainties.

Conclusion & Your Next Step with AKD Real Estate

The first quarter of 2025 has unequivocally demonstrated the enduring strength and appeal of the UAE real estate market. Both Dubai and Abu Dhabi posted impressive results, driven by robust economic fundamentals, supportive government policies, and unwavering confidence from both international investors and increasingly active end-users. With rising prices, strong transaction volumes, and attractive yields, the outlook remains bright.

Navigating this dynamic landscape requires expertise and insight. Whether you are looking to buy your first home, expand your investment portfolio, or capitalize on the unique opportunities presented in Dubai or Abu Dhabi, partnering with a knowledgeable advisor is key.

Ready to explore the possibilities in the thriving UAE property market? Contact AKD Real Estate today for expert advice and personalized assistance in finding your ideal property in Dubai or Abu Dhabi.