The UAE's real estate market is expected to continue its upward trajectory in 2025, with institutional investors playing an increasingly pivotal role in shaping its growth.

Industry analysts interviewed by Zawya Projects highlighted the structural shift in the types of investors drawn to the region.

Matthew Green, Head of Research at CBRE MENA, pointed to the heightened interest from institutional investors.

“Over the past 12 months, we have seen a significant increase in institutional investors looking at the UAE, Saudi Arabia, and the wider region, as they search for tangible new markets for capital deployment,” he said.

This influx is part of a broader trend of diversification, especially among private investors and family offices in Asia Pacific, who are seeking more stable alternatives in the wake of a slowdown in China’s real estate market.

According to Green, the influx of institutional capital into the UAE real estate market has been accompanied by a greater emphasis on structured project financing.

He noted that while regional banks remain the primary source of funding, international credit firms are increasingly entering the scene, signaling a potential long-term shift in regional exposure, and alternative financing methods.

“We are seeing alternative investment strategies being deployed, including several recent joint venture partnerships for speculative developments across both the office and industrial spaces,” said Green.

These partnerships, which are primarily focused on Grade A office and industrial properties, are seen as a way to increase the pool of institutional assets available for trade in the market.

He said amid persisting global challenges related to liquidity and high interest rates, the UAE’s relatively stable financial environment remains a draw for international capital.

“With a new tightening cycle underway, international investors are now back in the hunt for attractive yields, and the UAE certainly continues to offer that as compared to many other global markets,” Green noted.

Bas Kooijman, CEO of DHF Capital, observed that despite global economic pressures shaping investment flows, the UAE continues to stand out as an attractive destination attracting diverse set of investors.

“Recently, family offices have been more prominent, drawn by the region's tax efficiencies, stability, and solid returns in real estate and infrastructure,” he said.

The increasing interest from institutional investors, Sovereign Wealth Funds (SWF), and Real Estate Investment Trusts (REITs) has added a layer of stability to the market.

Kooijman pointed out that SWFs have focused on premium, income-generating real estate assets that offer long-term value. This shift reflects the UAE’s growing appeal not just as a safe haven, but as a regional hub for forward-looking investments.

Developer strategies

Farhad Azizi, CEO of Azizi Developments, highlighted strong demand across residential, commercial, and mixed-use sectors thanks to the UAE’s economic resilience and its position as a global business and tourism hub.

Citing the latest data from the Dubai Land Department, he said the UAE real estate sector is projected to see an 80 percent increase in delivered units by 2025 compared to 2024.

“This significant growth underscores Dubai’s robust commitment to expansion and innovation and its position as a global investment hub, and will help to satiate the surging demand,” Azizi said.

The private developer has been strategically adjusting its portfolio to meet the evolving needs of buyers and investors.  For example, the developer’s flagship ‘Riviera,’ project located in Mohammed Bin Rashid City, integrates residential spaces with retail and leisure amenities, creating a dynamic mixed-use community. Its luxury developments, such as Azizi Venice and Burj Azizi, has targets high-net-worth individuals looking for premium properties in Dubai.

"At Azizi Developments, we are aware of these trends and have tailored our portfolio to cater to the diverse needs of our buyers, offering projects that redefine urban living while setting new standards in quality and design,” Azizi explained.

Rising costs

However, the strong demand notwithstanding, challenges are also mounting in the form of rising construction costs and labour shortages.

Azizi Developments has adopted a proactive approach by securing construction materials directly from suppliers to take advantage of economies of scale.

“We procure all of our construction materials ourselves, directly, rather than letting third-party contractors do it on our behalf,” he said.

Ramjee Iyer, Chairman and Managing Director of Acube Developments, acknowledged that material shortages and labour shortages are significant challenges in the current market.

“The rapid growth of the real estate industry in Dubai has spurred significant construction activity, leading to a shortage of essential resources, particularly high-quality concrete, and trained labour,” Iyer said.

Acube has leveraged its longstanding relationships with suppliers to manage these shortages more effectively, ensuring access to materials and avoiding delays.

“These deep-rooted relationships allow us to navigate supply challenges effectively, especially in sourcing the required top-quality concrete,” Iyer said, emphasizing that this approach has allowed the company to meet project deadlines while maintaining high-quality standards.

Dubai-based KASCO Developments emphasised early planning to hedge against cost fluctuations.

“We finalise the design decisions early in our process, which allows us to place orders early and hedge away most of the risk associated with fluctuating construction costs,” the company’s Chairman Mustafa Al-Kaissi said.

Outlook for 2025

Kooijman said the UAE’s real estate market remains resilient despite uncertainty about interest rates.

"Higher interest rates have undoubtedly led investors to refine their strategies, but the UAE real estate market’s outlook remains promising as a standout performer," he said.

Citing data from the Government of Dubai, he noted that the city’s real estate transactions exceeded 544 billion UAE dirhams ($148 billion) in the first nine months of 2024, with investments surpassing AED 376 billion ($102 billion).

“This growth is no accident—it’s backed by strong regulatory policies, world-class infrastructure, and a market environment that prioritizes stability over speculation,” Kooijman said.

He also noted that property fluctuation-driven investments have now fallen below 20 percent, marking a shift toward stability and value creation.

While there has been talk about corrections in the market, Acube’s Iyer cited Dubai’s continued population growth as a strong indicator of demand.

“In Dubai alone, the population has grown to over 3.6 million, a 1.4 percent increase just this year,” he said. “That’s a lot of potential buyers or renters. So, I think we are in for more of the same for now across the UAE’s real estate landscape—a buoyant market.”

KASCO Developments’ Al Kaissi echoed the positive outlook for 2025, noting that while a minor correction is possible, it is unlikely to impact market confidence.

“The UAE’s real estate market is poised for continued growth in 2025, driven by a combination of demographic trends, government initiatives, and a strong commitment to sustainability,” he said.

He noted that strong private and sovereign wealth, combined with strategic government initiatives, continues to sustain investor confidence despite inflation and rising interest rates.

Azizi too expressed optimism about the sector's future. “The Dubai property market is known for its vigorous competitive environment, which is a major advantage for investors,” he observed. “We remain confident in our ability to meet this demand through our ongoing and upcoming projects.”

Yogesh Bulchandani, Founder and CEO of Sunrise Capital, said their outlook for 2025 remains positive, with continued demand across residential, commercial, and mixed-use developments.

“We are very optimistic about 2025 and predict balanced growth across various segments,” he said, adding that demand for projects catering to young professionals and families continue to rise.

KASCO’s Al-Kaissi added: “Notably, Gen Z buyers are emerging as a significant investor force. This demographic prioritises sustainable living and modern values, favouring smaller, centrally located apartments or co-living spaces.”

Green trends

Increasingly, sustainability and innovation are becoming defining features of new projects.

Bulchandani emphasised green practices and mixed-use developments tailored to evolving consumer preferences.

“Smart developers will prioritise sustainability and innovation in their projects, incorporating green building practices, creating flexible workspaces, and designing mixed-use developments to cater to a growing demand for holistic living,” he said.

Iyer, too, sees increasing demand for environmentally conscious and technology-driven developments.

“We will continue to see a focus towards genuinely green, sustainable, tech-integrated, and future-focused developments,” he said. “This may be somewhat niche now, but it won’t be for long.”

Al-Kaissi echoed this, highlighting their focus on biophilic designs that integrate natural materials, green spaces, and water features to promote serene living environments.

“This niche approach has become our signature,” he noted.

To conclude, the UAE’s real estate market is poised to continue its growth in 2025, thanks to its regulatory environment, economic stability, and ongoing expansion. With a mix of long-term projects, targeted developments, and sustainable innovation, the UAE is set to remain one of the region’s most attractive destinations for investors.

(Reporting by SA Kader; Editing by Anoop Menon)

(anoop.menon@lseg.com)

Subscribe to our Projects' PULSE newsletter that brings you trustworthy news, updates and insights on project activities, developments, and partnerships across sectors in the Middle East and Africa