Markaz Sees Strong GCC Real Estate Activity, Growth Set for H2 2025

Kuwait City – August 17, 2025 – Kuwait Financial Centre “Markaz” has released its latest real estate market outlook, providing an in-depth review of performance across Kuwait, Saudi Arabia, and the UAE for H1 2025, along with forward-looking insights for H2 2025. The report highlights the resilience of the GCC real estate sector, driven by rising sales activity, increasing property values, and sustained investor demand across residential, commercial, and hospitality segments.

According to Markaz, macroeconomic indicators point to a continuation of recovery, with lower interest rates, fiscal support, and government investment in diversification expected to fuel growth in H2 2025. While fiscal pressures remain in some markets, the overall outlook is positive, presenting opportunities for investors, developers, and stakeholders across the region.

Kuwait: Stable Recovery Amid Expanding Economic Activity

Kuwait’s real estate market strengthened in Q1 2025, buoyed by higher land prices and rental values in both investment and commercial segments. Land values posted annual growth across all areas, while rental rates for three-bedroom units and 60 sq.m. apartments in the Istithmari segment recorded significant year-on-year increases.

The commercial office segment remained largely flat, although select districts experienced moderate growth in Q4 2024.

Sales transactions reflected this momentum. Real estate sales climbed 45.0% y/y to USD 2.9 billion (KD 896 million) in Q1 2025, with gains across all segments. Residential sales rose 38.5% y/y, commercial sales were up 22.9% y/y, and the investment segment surged 49.0% y/y. Transaction volumes also expanded 20.9% y/y, including a 163.6% surge in commercial transactions and a 29.7% y/y increase in investment deals, supported by steady expatriate population growth.

Markaz projects Kuwait’s real GDP will grow by 1.9% in 2025, rebounding from a 2.8% contraction in 2024. This recovery, powered by a rebound in oil GDP and resilient non-oil activity, is expected to stimulate demand in commercial and industrial real estate. The Markaz Real Estate Macro Index for Kuwait currently stands at 3.25 out of 5.0, signaling stable conditions with potential for further gains in H2 2025.

Saudi Arabia: Momentum Builds as Diversification Drive Continues

Saudi Arabia’s real estate sector maintained strong growth in Q1 2025, supported by a 4.3% y/y rise in the real estate price index and a 37% y/y increase in sales activity. The residential property segment grew 5.1% y/y, while commercial prices rose 2.5% y/y. Robust demand for commercial assets continues, driven by non-oil economic expansion and diversification initiatives.

However, fiscal pressures are emerging. Saudi Arabia’s fiscal deficit is expected to widen to 4.9% of GDP in 2025, compared with 2.8% of GDP in 2024, largely due to lower oil revenues. While reduced income may influence spending and project awards, the Kingdom has reaffirmed its commitment to sustaining investment in economic diversification.

Markaz views the Saudi market as being in an accelerating phase in H1 2025, with momentum expected to carry into H2 2025.

UAE: Remarkable Transaction Growth and Global Investor Appeal

The UAE real estate market delivered exceptional performance in Q1 2025. Transaction values reached USD 65 billion (AED 239 billion), with Dubai leading the surge.

For the full year 2024, Dubai achieved total transaction value of USD 207.2 billion (AED 761 billion), up 20% y/y. The emirate recorded 226,000 transactions, an increase of 36% y/y, and welcomed over 110,000 new investors, up 55% y/y. In Q1 2025 alone, Dubai posted USD 38.6 billion (AED 142 billion) in sales across 45,077 transactions, reflecting a 30% y/y increase.

Residential, office, and hospitality markets are expected to maintain positive trajectories through H2 2025. Demand will be supported by rate cuts, strong tourism inflows, and limited prime supply. Dubai and Abu Dhabi also continue to outperform major global cities in rental yields, with Dubai reaching 7.6% as of May 2025, compared with New York (5.3%), Singapore (3.2%), and London (3.1%). With new supply entering the market, rental rates in Dubai may begin to stabilize, providing tenants with additional choices.

Markaz forecasts that UAE real estate will remain on an upward path in H2 2025, with land prices and rental rates in Dubai and Abu Dhabi expected to see steady appreciation.

Positive Outlook for H2 2025

Despite evolving macroeconomic dynamics, Markaz maintains a positive outlook for GCC real estate in the months ahead. Investor appetite, government-led initiatives, and ongoing diversification efforts continue to support long-term growth across Kuwait, Saudi Arabia, and the UAE.

Markaz concluded that real estate will remain a key pillar of the GCC economy through H2 2025 and beyond, reinforcing its importance as a driver of both investment activity and broader economic development.