The GCC real estate market is poised to sustain its upward trajectory into the first half of 2026, building on strong momentum recorded in the latter part of 2025, according to a new report by Kuwait Financial Centre (Markaz).

Markaz's latest 'Real Estate Outlook: H1 2026' report, offers a comprehensive analysis of real estate market performance across the key real estate sectors in Kuwait, Saudi Arabia, and the United Arab Emirates (UAE).

It says the higher oil production, growth in the non-oil economy, continued government spending on infrastructure and development projects, along with policy rate cuts, are expected to improve liquidity and credit growth. These factors support borrowing and investment activity across residential, commercial, and industrial real estate segments.

Kuwait: Stability with selective upside

Kuwait’s real estate sector maintained a stable growth trajectory through the first nine months of 2025, supported by rising land prices and rental rates across Istithmari (investment) and commercial segments. Land prices increased on an annual basis across governorates, while rental rates in the investment segment recorded steady gains.

Real estate transaction activity strengthened in three quarters of 2025, with total real estate sales rising by 26.9% year-on-year to KD3,043 million ($9936.66 million), driven by growth across all segments. Investment segment sales increased by 60.0% year-on-year, while residential and commercial segment sales rose by 8.0% and 17.4% respectively. Transaction volumes grew by 27.8% year-on-year to 4,247, supported by increased activity across residential, investment, and commercial properties.

Looking ahead, Kuwait’s real GDP is projected to grow by 3.9% year-on-year in 2026, driven by higher oil production, improved non-oil activity, stronger project awards, and anticipated interest rate reductions. These factors are expected to support demand for commercial and industrial real estate.

Based on macroeconomic indicators and a Markaz Real Estate Macro Index score of 3.45 out of 5.0, Markaz expects Kuwait’s real estate market to remain stable in H1 2026, with prospects for increases in land prices and rental rates.

Saudi Arabia: Acceleration continues

Saudi Arabia’s real estate sector remained in an accelerating phase in H2 2025, driven by strong residential activity and tight office market conditions. Residential transactions increased by 17.9% quarter-on-quarter in Q3 2025, with Riyadh and Jeddah leading price gains, while developers continued to accelerate supply through giga-projects and premium residential developments.

The office segment remained highly constrained, with vacancy in Riyadh at near-zero levels (0.5%), supporting prime rent growth of 7.3% year-on-year. Demand was underpinned by the Regional Headquarters Program and expanding activity in healthcare and technology sectors.

While the fiscal deficit widened to 3.7% of GDP in 2025 and is expected to remain at similar levels in 2026, increased capital expenditure under Vision 2030 is anticipated to support construction activity, sustaining demand across commercial and residential segments. Population growth continues to underpin housing demand, with Saudi Arabia’s population reaching 35.3 million by mid-2024, up 4.7% year-on-year, with non-Saudis accounting for 44.4% of the total.

Based on these trends, Markaz believes Saudi Arabia’s real estate market remains in the accelerating phase and is expected to sustain momentum in H1 2026, signaling stable market conditions with room for further gains for investors.

UAE: Strong performance with signs of peaking

The UAE real estate market recorded strong performance during the first three quarters of 2025. In Dubai, real estate transaction values increased by 28.3% year-on-year to AED554.1 billion ($150.88 billion), while Abu Dhabi recorded total real estate sales of AED 58billion, reflecting a 75.8% year-on-year increase. The number of transactions in Abu Dhabi also rose by 42.3% year-on-year to 15,800.

The UAE continues to offer attractive rental yields compared to global peers. As of June 2025, rental yields in Dubai stood at 7.47%, marginally lower than the previous month but well above yields in major global markets such as Singapore (3%), New York (5.8%), and London (3.3%).

Although Dubai’s annual sales values have consistently outperformed the previous year over the past three years, concerns regarding sustainability have emerged. Markaz notes that the current growth cycle is supported by strong fundamentals, reducing the likelihood of a sharp correction. However, a period of moderation or cooling is expected over the medium term. Nonetheless, Markaz forecasts that the UAE real estate market could peak in H1 2026, marked by steady growth in prices and rental rates in both Dubai and Abu Dhabi.

Despite evolving macroeconomic dynamics, GCC real estate markets are expected to sustain momentum in H1 2026. Markaz believes real estate will remain a key contributor to the region’s economic development, offering attractive opportunities for investors across residential, commercial, and industrial segments. - TradeArabia News Service