Dubai’s real estate market is showing signs of entering a more mature phase, with performance increasingly varying by property type, location and underlying demand, according to a new report from Chestertons Global.
The company’s Q2 2026 Dubai Real Estate Market Report found that industrial and retail properties continued to post strong year-over-year gains, while office leasing became more focused on smaller spaces and residential activity moderated following several years of rapid growth.
Industrial property remained the strongest-performing sector during the quarter. Rents across key logistics corridors increased 23.3% year over year as demand for Grade A warehouse space continued to exceed available supply. Logistics operators, manufacturers and traders contributed to demand, while established logistics areas continued to face supply constraints.
Retail property also recorded significant growth. Average rents reached AED 273 per square foot, representing an 18.3% increase from a year earlier. Prime destination malls remained close to full occupancy, supported by Dubai’s population growth, tourism and demand for high-quality retail space.
Dubai’s office market, meanwhile, moved into a more balanced period. Nearly 39,000 rental contracts were registered during the second quarter, a 15.2% year-over-year increase. However, businesses increasingly favored smaller and more flexible workspaces. Regional geopolitical uncertainty also contributed to delays in some larger corporate expansion decisions.
Limited availability of Grade A office space continued to support rental values in prime locations. Government measures, including an AED 1 billion package designed to support corporate liquidity, also helped sustain the office sector during the quarter.
Residential activity slowed as buyers took longer to make purchasing decisions and additional supply entered the market. Villas and townhouses continued to outperform apartments, however, with limited low-density housing supporting further price appreciation.
“Dubai’s property market continues to demonstrate resilience, but we’re now seeing a nuanced shift towards a more mature market where performance varies significantly between sectors,” John Stevens, CEO of Chestertons MENA, said.
Stevens said investors and occupiers are increasingly focused on asset quality, location and long-term demand rather than broad market appreciation.
Chestertons expects Dubai’s real estate market to remain supported by population growth, international investment, tourism and economic diversification. However, the report said future performance will increasingly depend on individual properties’ ability to meet changing investor and occupier needs.