UAE and Saudi Arabia Real Estate Markets Surge with Record $622,000 Transactions and 18 Percent Annual Growth

DUBAI – The Gulf Cooperation Council real estate sector delivered extraordinary performance through 2024 and early 2025, with Saudi Arabia recording record transactions worth SAR 2.5 trillion across 622,000 deals while UAE residential prices surged 18 percent year-over-year in Abu Dhabi and 12 percent in Dubai, positioning both markets among the world's fastest-growing property sectors driven by economic diversification, infrastructure investment and favorable regulatory environments.

Dubai's residential market demonstrated remarkable momentum in the first quarter of 2025, with median asking prices showing a 12 percent year-over-year increase in the apartment segment, largely driven by gains in luxury communities including Bluewaters, Palm Jumeirah, Dubai Hills Estate and Arabian Ranches which outperformed other areas in terms of rent increases. Abu Dhabi City recorded average annual rent of AED 100,301 for a two-bedroom unit according to figures published by the Abu Dhabi Real Estate Centre.

The research conducted by Global Property Guide in June 2025 showed gross rental yields for residential properties in the UAE at an average level of 4.87 percent, down from 4.94 percent previously reported in November 2024 and 5.27 percent in May 2024. The highest potential performance among surveyed submarkets was estimated for rental properties in Dubai at 6.31 percent and Abu Dhabi at 5.39 percent, while the lowest yields were observed in Ras al Khaimah at 2.72 percent.

Abu Dhabi's market witnessed the Residential Market Sales Price Index rise by 18.16 percent year-over-year. Apartment prices grew by 18.17 percent annually, while villa prices increased by 17.19 percent. Cavendish Maxwell commented that while transactional volumes softened, demand remained strong, supported by both investor confidence and consistent end-user interest. This resilience is driven by a stable macroeconomic environment and competitive rental yields, particularly in prime locations.

Among key advantages for real estate investors in the UAE are eligibility for a 10-year Golden Visa through property ownership of at least AED 2 million, including off-plan and mortgaged properties that meet payment thresholds, minimal purchase and exit taxes, and a built-in currency hedge. According to Property Monitor's data compiled by Cavendish Maxwell, approximately 9,400 residential units were completed in Dubai in the first quarter of 2025, representing a 4.44 percent year-over-year increase and marking the second-highest quarterly completion volume in the past two years.

Apartments accounted for 79 percent of the total completions, with the remainder comprising villas and townhouses. The submarkets recording the highest number of completions in Q1 2025 included Jumeirah Village Circle with 2,433 units, Mohammed Bin Rashid City with 1,037 units, Business Bay with 743 units, Downtown Jebel Ali with 647 units, and Rukan with 636 units.

Lower interest rates, along with improved economic conditions and rising incomes, are driving demand for personal loans, and home credit in particular, across all Emirates, the CBUAE noted in their Q1 2025 Credit Sentiment Survey. Dubai registered 9,300 residential mortgage transactions in Q1 2025, a substantial 24 percent increase compared to the same period in 2024. In monetary terms, the value of these transactions reached AED 20.4 billion, also demonstrating strong 46.8 percent year-over-year growth.

Saudi Arabia's real estate transactions hit a record-high SAR 2.5 trillion in 2024, with over 622,000 deals covering approximately 5.8 billion square meters, according to the Saudi Ministry of Justice. Real estate expert Ahmed Al-Faqih called the 2024 market surge expected, citing investor incentives and Saudi Arabia's success in hosting major global events, making it a top investment destination. The housing market is projected to sustain its growth in 2025 and beyond, drawing more investment and large-scale projects.

In Riyadh, the average gross rental yield remains high at 8.89 percent, and around 7.89 percent in Jeddah, according to the STC Real Estate Index published by Stephane Tajick Consulting. Saudi Arabia's rental market has been recently growing strongly, amidst robust demand both from Saudis and expat workers. In Riyadh, residential rental rates rose strongly by 10 percent year-over-year in Q3 2024, according to JLL MENA. In Jeddah, residential rental rates also increased by 8 percent over the same period.

The Saudi Arabian Monetary Agency decided to cut its official repo rate by another 25 basis points to 5.0 percent in December 2024, following a 25 basis point rate cut in November and another 50 basis point cut in September, in a bid to boost economic activity. The International Monetary Fund has recently revised Saudi Arabia's 2025 growth forecast downward to 3.3 percent from its earlier projection of a 4.6 percent expansion, primarily due to prolonged oil production cuts.

On September 22, 2024, Saudi Arabia approved the Real Estate Transaction Tax Law through Royal Decree M/84. Effective from April 9, 2025, the law introduces clearer regulations, additional exemptions, and updates to tax calculations. It includes exemptions for mergers, acquisitions, public subscriptions, and investment fund units. Penalties for late payments have been reduced to 2 percent per month, capped at 50 percent of unpaid tax. The law aims to improve tax clarity, efficiency, and compliance in Saudi Arabia's real estate sector.

More than 11,300 new residential units were delivered in the first half of 2024 in Saudi Arabia. More modern luxury properties are entering the market, making older rentals less attractive. In Riyadh, occupancy rates dropped by 4.4 percentage points in early 2024, hinting at similar trends in Jeddah. However, this oversupply is likely temporary, as Saudi Arabia's population growth and urban expansion will continue to absorb new developments.

Major infrastructure projects, including the Jeddah Central Project and Murooj Jeddah, are expected to deliver over 17,000 new housing units by 2027, potentially stabilizing property prices. To qualify for foreign ownership privileges, foreign buyers must invest SAR 4 million in real estate, boosting luxury property sales in Riyadh and Jeddah. The real estate sector remains a primary beneficiary, with foreign buyers targeting high-end developments and mixed-use communities.

The government is focusing on closing the demand-supply gap in affordable housing. SAR 300 billion has been allocated to housing initiatives under Vision 2030. The Etmam program has streamlined the licensing process, making it easier for developers to launch new projects. The White Land program is encouraging landowners to develop vacant plots, increasing supply. The Sakani program offers mortgage loans and free land parcels to Saudi citizens.

Religious tourism is a key driver of short-term rental demand in Makkah. In 2023, Makkah welcomed 17.5 million religious tourists, with projections expecting 25-30 million visitors by 2025. Short-term rentals in Makkah continue to generate high yields, making it an attractive market segment for investors seeking consistent returns from the tourism sector.

Dubai delivered 8,100 apartments and 1,650 villas in Q3 2025, reflecting a moderation in villa handovers compared with Q2. Around 34,000 units were launched during the quarter, an easing from the highly active first half of the year but signaling a sustainable pipeline. Office activity strengthened, with more than 2 million square feet of new office space announced, led by Business Bay.

The rental market moved into a more balanced phase. Apartment rents rose 2 percent quarter-on-quarter and 5 percent annually. Villa rents increased 2 percent quarterly and 7 percent annually. Landlords in new developments remained competitive on pricing to support take-up. Off-plan sales dominated the market, supported by flexible payment plans, government initiatives and the First-Time Home Buyer Programme, launched in July 2025, which offers preferential pricing and tailored mortgages for units up to AED 5 million, along with instalment options for DLD fees.

Knight Frank's 2025 Destination Dubai report highlighted particularly strong demand from Saudi and Indian HNWIs surveyed, with 96 percent and 86 percent respectively expressing a desire to invest in the city. This reflects Dubai's continued appeal as a global lifestyle and investment hub, underpinned by its economic stability, high quality of life and safe environment.

The report noted that Dubai's real estate market recorded 169,000 property transactions in 2024, worth AED 367 billion, with global HNWIs settling in Dubai, drawn by safety, infrastructure, and a global lead in branded residences. Industrial and logistics yields have seen 33 percent rental growth on average across the sector in the last 12 months, reflecting strong demand for warehouse and distribution facilities.

Looking ahead, the GCC real estate outlook remains generally positive supported by favorable demographics, rising incomes, government infrastructure investment and increasing foreign investor interest. However, markets must navigate challenges including potential economic volatility from oil price fluctuations, oversupply concerns in certain segments, construction cost inflation and geopolitical tensions that periodically affect investor sentiment.

The Middle East real estate market size is expected to reach $799.46 billion by 2033 from $389.74 billion in 2024, with a compound annual growth rate of 8.31 percent. The extensive pipeline of government-backed urban development and mega-infrastructure projects is attributed to gear up growth, with initiatives aiming to accommodate rapid population growth, support economic diversification, and enhance living standards through modern, sustainable cities.