UAE Economy Grows to AED 455B in Q1 as Non-Oil Sectors Rise
- Stephen James Mitchell MBA
- Sep 17
- 7 min read
Updated: Sep 22
The UAE economy is moving into a new phase of growth. In the first quarter of 2025, gross domestic product (GDP) reached AED 455 billion, according to preliminary data from the Federal Competitiveness and Statistics Centre. That represents a 3.9% expansion in real terms compared with the same period last year.
What stands out even more is the role of the non-oil economy. Non-oil activities contributed 77.3% of total output, their highest share in the nation’s history. By comparison, oil-related activities made up just 22.7%. This shift reflects years of deliberate policy aimed at diversifying away from hydrocarbons and building a more resilient economic base.
For real estate investors, these numbers are more than macroeconomic statistics. They are evidence that demand for property in the UAE — and particularly Dubai — is being driven by deeper structural changes that go beyond short-term cycles.
Non-Oil Growth Fuels Real Estate Demand
The non-oil economy grew by 5.3% year-on-year, reaching AED 352 billion.
Within this, several sectors posted strong gains:
Manufacturing grew 7.7%, making it the fastest-expanding sector.
Finance and insurance and construction each grew 7%.
Real estate activities rose 6.6%.
Trade advanced by 3%.
Trade remains the largest contributor to non-oil GDP at 15.6%, followed by finance and insurance (14.6%), manufacturing (13.4%), construction (12%), and real estate (7.4%).
For real estate markets, these figures point to several demand drivers:
More offices and financial centers are needed as finance and insurance expand.
Warehousing and logistics facilities are supported by trade growth.
Residential and mixed-use projects are fueled by gains in manufacturing, which attracts workers and businesses.
Commercial property demand rises alongside new corporate activity.
The 6.6% growth in real estate activities itself underscores how closely property markets are tied to the wider economic base.
👉 The UAE’s record non-oil growth is fueling real estate demand.
📞 Let’s explore how you can position yourself in this evolving market.
Why Real Estate Remains a Standout in the UAE Economy
While all non-oil sectors contribute to the story, real estate has a unique position. It is both a beneficiary of economic growth and a foundation that supports it. Every new company that sets up in Dubai needs space — for offices, for employees to live, for retail to serve them, and for logistics to move goods.
This makes real estate an anchor for the non-oil economy. Unlike oil revenues, which can fluctuate with global prices, property demand is rooted in the steady inflows of people, capital, and businesses.
In Q2 2025, commercial real estate sales across Dubai reached AED 31 billion, a 50% increase compared to the same period in 2024. Within this, the office segment alone generated AED 2.62 billion in sales, representing a 93% year-on-year jump. This sharp rise shows how economic diversification is translating directly into property transactions.
Policy Backing and Vision 2031
The UAE’s leadership has been vocal about its long-term targets. The “We the UAE 2031” vision sets out a goal of reaching a GDP of AED 3 trillion within the next decade. To get there, the government is focusing on building a knowledge- and innovation-based economy, with real estate playing a supporting role in providing the infrastructure for that transformation.
Abdulla bin Touq Al Marri, Minister of Economy and Tourism, recently described the country’s business environment as a “global benchmark” for policies and regulatory frameworks. The record contribution of non-oil activities to GDP is a sign that this approach is working.
For investors, the key takeaway is that real estate demand is not speculative. It is anchored in a government-backed growth model that prioritizes sustainable sectors like manufacturing, finance, and technology. Each of these sectors needs space — and that is where property investors find opportunity.
A More Resilient Growth Story
Taken together, these figures highlight three important points for real estate investors:
Diversification is real: With over three-quarters of GDP now coming from non-oil sectors, property demand is tied to a broad and resilient base.
Real estate is expanding in step with the economy: The 6.6% growth in real estate activities and the surge in transactions in Q2 show clear alignment.
Government strategy supports stability: Vision 2031 and related policies are designed to sustain long-term growth, reducing reliance on volatile oil revenues.
For investors weighing Dubai or Abu Dhabi against other global hubs, these fundamentals are hard to ignore.
How Economic Growth is Reshaping UAE Real Estate Opportunities
The UAE’s economic performance in the first quarter of 2025 tells a clear story: the country is no longer defined only by oil. With 77.3% of GDP now coming from non-oil sectors, the landscape for real estate investors is broadening in new and meaningful ways. The numbers — AED 455 billion in GDP for Q1, with AED 352 billion from non-oil activities — are not just impressive on paper. They translate directly into tangible demand across different parts of the property market.
Let’s break down how this growth is influencing real estate opportunities and why Dubai and the wider UAE stand out against the backdrop of more uncertain conditions elsewhere in the world.
Commercial Real Estate: Offices and Business Hubs
One of the clearest beneficiaries of non-oil growth is commercial property. Finance and insurance expanded by 7% year-on-year, confirming Dubai’s role as a regional financial hub. Every new financial firm or multinational expanding into the emirate needs office space — ideally Grade A properties in districts like DIFC, Business Bay, and Dubai Marina.
The impact is already visible. In Q2 2025, office sales alone generated AED 2.62 billion, a 93% increase compared with the same period in 2024. Vacancy rates for high-quality office buildings are at historic lows, with some landlords reporting long waiting lists for prime spaces.
This is a structural shift. In other markets — London, New York, even parts of Asia — demand for office space has been uneven due to hybrid work and higher borrowing costs. In Dubai, however, a combination of economic diversification, foreign direct investment inflows, and regulatory reforms is supporting consistent demand.
👉 Office demand in Dubai is rising faster than supply.
📞 Explore the available office listings to see what’s on the market now.
Residential Real Estate: Housing the Workforce and Executives
Growth in manufacturing, finance, construction, and trade is not only about GDP. It also brings people. The UAE has long been a magnet for expatriates, but the scale is increasing. According to the Henley Private Wealth Migration Report 2025, nearly 10,000 high-net-worth individuals are expected to relocate to the UAE this year, most of them to Dubai. Alongside them, thousands of mid- and senior-level professionals are arriving to staff expanding companies.
This creates a layered demand for housing:
Luxury villas and apartments for executives and wealthy migrants.
Mid-market housing for skilled professionals.
Community housing for the wider workforce.
The real estate sector recorded 6.6% growth in Q1, reflecting this demand. Importantly, it is not driven solely by speculation, but by real requirements linked to job creation and business expansion.
Logistics and Industrial Space: A Quiet Growth Story
Trade contributed 15.6% to non-oil GDP in Q1, making it the largest non-oil sector. This translates into steady demand for logistics facilities, warehousing, and distribution hubs. Dubai South, Jebel Ali Free Zone (JAFZA), and emerging corridors linked to the Etihad Rail project are all areas where logistics real estate is becoming more attractive to investors.
Globally, logistics is one of the most resilient asset classes, but Dubai adds a layer of strategic value. Its geographic location at the crossroads of Asia, Africa, and Europe, combined with two major airports and one of the busiest seaports in the world, ensures that demand for logistics facilities is both broad and long-term.
Construction and Development: A Sector in Sync with Growth
The construction sector grew 7% year-on-year, contributing 12% to non-oil GDP. This growth isn’t limited to residential projects; it includes commercial towers, infrastructure, and mixed-use developments.
For investors, the significance is twofold:
New stock creation: Continued development means there are ongoing opportunities to participate in projects at different stages — from off-plan acquisitions to built assets.
Infrastructure support: Roads, public transport, and utilities expansion ensure that property investments are supported by long-term connectivity and livability.
Why Dubai and the UAE Look Stronger than Other Global Hubs
Investors often weigh opportunities in Dubai against options in cities like London, Hong Kong, or New York.
Right now, the comparisons are favorable for the UAE:
Economic resilience: While many advanced economies are grappling with slow growth and high interest rates, the UAE posted a 3.9% GDP expansion in Q1.
Taxation: Dubai continues to offer a tax-friendly environment, with no personal income tax and competitive corporate rates, compared with higher and rising taxes in Europe and North America.
Business environment: Free zones and reforms allowing 100% foreign ownership make setup easier than in many rival hubs.
Currency stability: The dirham is pegged to the US dollar, reducing currency risk for international investors.
These fundamentals make Dubai’s property market not only attractive but also relatively insulated from the pressures facing other major markets.
A Balanced Outlook: Risks and Considerations
No market is without risks, and real estate investors should approach Dubai with a balanced view.
Key considerations include:
Supply dynamics: While commercial property is tight, some segments of the residential market could see oversupply if too many projects are launched at once.
Global factors: External shocks — from oil price volatility to global financial conditions — can still affect capital flows.
Regulatory evolution: As the UAE aligns with global standards, compliance requirements may increase.
That said, the country has shown agility in adapting policies to maintain competitiveness, which is why confidence remains strong.
The Bottom Line
The UAE’s Q1 2025 GDP performance is more than a headline statistic. It reflects a deeper transformation that is reshaping the country’s economy and, by extension, its real estate markets.
Commercial property is benefiting from financial sector growth and corporate expansion.
Residential demand is being driven by both wealth migration and workforce inflows.
Logistics facilities are supported by trade growth and strategic location.
Construction and real estate activities are expanding in step with broader GDP growth.
For investors, the message is clear: the UAE’s property market is not a speculative play. It is underpinned by one of the most diversified and resilient economic models in the region, with policy support and structural demand working in tandem.
As the “We the UAE 2031” vision unfolds, real estate will remain a cornerstone of this growth story — and for investors looking at global options, Dubai and the wider UAE deserve a close and serious look.
Let’s Build Your Commercial Investment Strategy
I’m Stephen James Mitchell, Managing Director of Global Investments and a licensed commercial real estate advisor.
If you’re exploring how to deploy capital into Dubai’s fast-moving commercial sector, I’m here to support you with data-driven insights and access to strategic opportunities.
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