Chestertons: UAE Commercial Leasing Soars 50% on Legal Reforms

Chestertons MENA, a longstanding global real estate advisory firm, has unveiled fresh insights revealing a significant upswing in commercial real estate activity throughout the UAE. According to the firm’s Q1 2025 Market Report, commercial leasing soared by 50.4% compared to the same period last year. This growth, combined with rising villa and townhouse transactions, reflects strong market momentum fuelled by investor confidence, regulatory evolution, and sustained demand.

Office and Retail Sectors Lead the Charge

Among the commercial sectors, office leasing saw the most remarkable expansion, with over 101,000 recorded transactions - a 62.7% jump from Q1 2024. Retail leasing followed suit, with 36,000 deals generating AED 3.4 billion in value. Land leasing also experienced steady upward movement. These developments signal heightened corporate activity, increased business setups, and enduring demand for commercial real estate across vital UAE regions.

Commercial real estate is no longer a peripheral category — it’s at the centre of the UAE’s next economic chapter,” said Mohamed Mussa, Executive Director of Chestertons. “What we’re seeing is not a temporary rebound but a redefinition of the region’s investment profile. From the performance of off-plan markets in Ras Al Khaimah to the legal reforms enabling long-term ownership, this is an ecosystem ready for scale.”

Industry Experts Convene to Analyze Market Drivers

In May 2025, Chestertons hosted its Commercial Conference, bringing together key figures from the valuation, advisory, and legal sectors to discuss market dynamics. Panelists included Andrew Elliott, Benjamin Cullum, Conor Henry, Jake Wright, and legal expert Michael Kortbawi of BSA Ahmad Bin Hezeem & Associates LLP. Their insights provided a deeper understanding of the structural shifts supporting the market’s expansion.

Policy and Structural Reforms Fuel Growth

Several pivotal regulatory reforms were highlighted during the conference as foundational to the sector’s progress. These include the widespread implementation of 100% foreign ownership rights on the mainland, the introduction of a 9% federal corporate tax (with exemptions for qualifying free zone income), and the growth of zones like RAKEZ, which is on track to surpass JAFZA in activity. Additional enablers include flexible long-term leases, streamlined digital business registration platforms, and efficient dispute resolution mechanisms via RERA, DIFC, and specialized courts.

Investor Demand Shifts Toward Advanced Asset Models

The market is also seeing increased interest in real estate investment structures such as REITs and sale-and-leaseback agreements. With supply for Grade A commercial assets under pressure, institutional investors are turning toward these models for stable returns and long-term value.

“Recent legal reforms have shifted the UAE from being merely attractive to being strategically compelling,” said Lawyer: Michael Kortbawi, Corporate & Finance Law Expert and Panelist at the Chestertons Commercial Conference. “Investors now have clarity on ownership, tax, and dispute resolution, along with access to digital tools and long-term visas. This is a legal framework built for global capital and long-term business planning.”

Residential Market Maintains Upward Momentum

Residential transactions also saw a surge in Q1 2025. Villas and townhouses experienced a 51.93% year-on-year rise in volume, amounting to AED 76.5 billion in value. Apartment sales rose by 16.25%, reaching AED 75.1 billion. Buyer demand was concentrated in popular areas such as Jumeirah Village Circle, Business Bay, and Dubai Marina, where location appeal, lifestyle offerings, and robust rental yields continue to attract investors.

Rental Activity Reflects Shifting Housing Preferences

The rental segment mirrored the broader market's strength. Apartment leasing volumes climbed 21.4% year-on-year, with 151,000 transactions totalling AED 11.3 billion. Villa and townhouse rentals followed closely, up 21% in value to AED 3.4 billion. These patterns are attributed to population growth, the introduction of long-term residency pathways, and a growing preference for larger living spaces in the wake of the pandemic.

“Across every segment — commercial, residential, leasing, and investment — the UAE is showing clear signs of structured, sustainable growth,” added Mania Merrikhi, Chief Operating Officer and Managing Director at Chestertons MENA. “The legal infrastructure, investor protections, and macroeconomic vision are all working in tandem to create one of the world’s most investible property markets.”