The UAE real estate market continues to evolve towards a more balanced phase following an extended period of exceptionally strong growth, supported by market fundamentals, ongoing investment and economic diversification initiatives, says a Colliers report.

The Colliers' UAE Real Estate Market Report for Q2 2026  provides insight into key real estate trends across Abu Dhabi, Dubai, the Northern Emirates and Al Ain, where performance is increasingly influenced by sector, location, product quality and pricing.

Abu Dhabi Residential and Office Market

Abu Dhabi’s real estate market demonstrated signs of normalisation during Q2 2026 following an extended period of exceptionally strong growth. On the supply side, approximately 2,200 residential units were delivered across established and emerging communities, with new handovers primarily concentrated in Al Shamkhah (Reeman Living), Yas Island, Bloom Living in Zayed City and Al Raha Beach. Looking ahead, an estimated 3,200 units are scheduled for delivery during the remainder of 2026, the report said. 

Following strong rental growth throughout 2025 and early 2026, Abu Dhabi's residential leasing market entered a softer phase during Q2. Average apartment rents declined by 2% quarter-on-quarter, while villa rents decreased by 3%, with larger unit types and developments that had experienced the strongest recent growth seeing the greatest adjustment. Annual rental performance remained positive, with apartment rents 7% above Q2 2025 levels and villa rents 5% higher year-on-year. A notable development during the quarter was the rental freeze introduced by the Abu Dhabi Real Estate Centre (ADREC) on residential and commercial lease renewals and new contracts. Lease renewals accounted for most leasing activity during Q2, reflecting lower tenant mobility.

After a period of rapid expansion, the residential sales market moderated in Q2 2026. Average apartment sale prices declined by 3% quarter-on-quarter, while villa prices softened by 1%. Despite the quarterly adjustment, annual price growth remained robust, with apartment sale prices increasing by 19% year-on-year and villa prices rising by 10%. Residential transaction volumes moderated during Q2 to approximately 7,200 transactions, representing an 8% decline quarter-on-quarter, but increased by 83% year-on-year, with off-plan sales accounting for approximately 84% of total transactions. 

Strong occupier demand, particularly from companies seeking a presence within the Abu Dhabi Global Market (ADGM) on Al Maryah Island, continued to underpin the office market during Q2. ADGM operates at full occupancy and maintains an active waiting list, demonstrating sustained demand for Grade A office space. In the commercial sector, Masdar City Square, The Link and the offices at Souq Al Jubail Island comprise the main near-term office supply pipeline and are expected to be delivered during Q3 2026.

Dubai Residential and Office Market

Dubai’s development pipeline remained active throughout Q2 2026, with approximately 11,650 residential units delivered, comprising 9,200 apartments and 2,450 villas. Looking ahead, approximately 56,600 additional residential units are scheduled for completion by year-end. Major infrastructure investment continues across Dubai, including metro expansions, road network upgrades, new interchanges, tunnel projects and stations on the Etihad Rail network.

Following several years of exceptional growth, Dubai's rental market showed signs of moderation during Q2 2026, with apartment and villa rents declining by 4% and 2%, respectively. Affordability constraints are increasingly influencing leasing decisions, while a continued shift from renting to homeownership is moderating tenant demand amid rising rental inventory. Leasing transactions were down a quarter during Q2 2026. In response to growing affordability concerns, the Dubai Land Department launched the Flexi Rent initiative, allowing participating landlords to offer monthly, quarterly and semi-annual payment plans.

Dubai's sales market became more nuanced during Q2 2026, with average residential prices softening by 3% for both apartments and villas, though values generally remained more resilient than many anticipated as the market moves towards a period of normalisation. The off-plan market has been particularly mixed, though demand remains present and targeted. The office sector remained a standout performer, with strong demand for off-plan Grade A developments continuing to support price growth across multiple submarkets. 

Northern Emirates and Al Ain Market

In the Northern Emirates, while prominent project handovers were limited to Il Teatro Residences in Aljada, Sharjah, and the final units of Danah Bay in Ras Al Khaimah, new launch activity accelerated markedly in Sharjah with approximately 4,600 residential units announced during Q2 2026. Looking ahead, the residential completion pipeline for the Northern Emirates has moderated to approximately 7,450 units in 2026, with Sharjah accounting for the largest share (5,450 units), followed by Ras Al Khaimah (1,400 units) and Ajman (600 units). Infrastructure investment remained supportive of the Emirates’ longer-term outlook, marked by the commencement of Etihad Rail passenger services between Fujairah and Abu Dhabi.

Following an extended period of rental growth, apartment rents declined by an average of approximately 2% across the Northern Emirates during Q2 2026, with Sharjah recording the largest adjustment at around minus 4%. Ajman, Fujairah and Umm Al Quwain have generally proven resilient, supported by affordability-driven demand. In the sales market, average apartment prices in Sharjah and Ras Al Khaimah declined by 3% and 2% quarter-on-quarter, respectively. 

The Al Ain real estate market remained stable throughout Q2 2026, with rental rates across the residential, office and retail sectors broadly unchanged quarter-on-quarter while continuing to record positive annual growth. The residential sector remained the strongest-performing sector, with average apartment rents increasing by 7% year-on-year and villa rents rising by 4%. In the commercial sector, annual office rental growth reached 3% year-on-year, while retail rents were 5% higher than Q2 2025 levels, the report said. – TradeArabia News Service