ARAB NEWS: RIYADH: Dubai and Abu Dhabi office markets posted double-digit rental growth in the second quarter of 2026, even as residential and hospitality sectors softened sharply, according to CBRE Middle East. 

In its latest UAE Real Estate Market Review for the second quarter, CBRE said Dubai’s average office rents rose 13 percent year on year, with prime leases up 16 percent and occupancy near 94 percent. 

Abu Dhabi recorded nearly 16 percent rental growth, while occupancy stood at around 96 percent, as both markets remained constrained by a shortage of Grade A office space. 

The divergence reflects a broader trend across Gulf property markets. Saudi Arabia’s Real Estate Price Index rose 1.3 percent year on year in the second quarter of 2026, as gains in residential and agricultural properties offset weaker commercial values.

Qatar’s market remained stronger, with its property price index climbing 8.7 percent to a record 244.56 points in May, supported by robust transaction activity and mortgage lending. 

Matthew Green, head of research at CBRE MENA, said: “The second quarter marked a notable shift in the UAE’s economic and real estate landscape, as regional geopolitical developments began to weigh on business activity, tourism flows and broader market sentiment.”  

He added: “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.” 

Residential divergence 

Dubai’s residential market cooled, with transactions down 29 percent year on year to fewer than 37,000 and total values falling to 88 billion Emirati dirhams ($23.9 billion) from nearly 154 billion dirhams a year earlier.

Residential rents dropped 2.6 percent year on year, even as sales prices edged up 1.9 percent. 

The residential market slowdown reflected broader trends across the UAE property sector.

A separate Living Market Dynamics report from JLL found the UAE’s residential sector experienced a simultaneous moderation in sales prices and rental rates in the second quarter, following a period of strong growth, with the softening attributed to cooling demand and rising supply amid regional uncertainty. 

Abu Dhabi moved in the opposite direction, with residential values up 21.6 percent year on year, sales values up about 150 percent to 32 billion dirhams, and transaction volumes up roughly 80 percent. 

This comes as authorities also introduced measures aimed at easing pressure on tenants, including Abu Dhabi’s decision to freeze rental increases in June and Dubai’s expansion of its Flexi Rent initiative, allowing tenants to pay rent in instalments rather than a lump sum.

Hospitality and retail under pressure 

UAE hotel occupancy fell 27.7 percentage points year on year through June, and revenue per available room dropped 31.8 percent, with Dubai hit hardest while Abu Dhabi was cushioned by domestic- and event-led tourism. 

Retail occupancy held firm at around 98 percent in Dubai and 95 percent in Abu Dhabi, with Dubai rents still rising by about 3 percent year on year.