Dubai's retail and warehouse sectors entered 2026 with positive market fundamentals, supported by population growth, economic expansion and resilient occupier demand. While activity in Q1 was influenced by the timing of Ramadan and heightened regional uncertainty, overall market performance remained stable, with both sectors demonstrating underlying resilience despite a moderation in transactional activity. Retail performance was characterised by strong growth in sales activity, with transaction volumes rising 51.6% year-on-year and values increasing 171% to AED 2.1 billion, supported by higher-value transactions and price appreciation. However, leasing activity softened, with total contracts declining 7.2% year-on-year, reflecting an ongoing preference for renewals over new leasing. Despite this, retail rental rates increased 6.4% year-on-year, with performance increasingly differentiated by location, as community- led retail assets remained resilient while tourism-linked destinations faced a more uncertain environment.

In June 2026, Abu Dhabi introduced a temporary ban on rent increases for all existing leases across all sectors, including residential, commercial and industrial. This effectively suspended the emirate's long-standing 5% cap on annual rent increases. The measure requires any previously rented unit to renew at the same rent as the last registered Tawtheeq contract, including new contracts for previously rented units. It was implemented through an ADREC directive and disputes will be settled and penalties will be enforced through the existing tenancy framework established two decades ago.[1] Abu Dhabi has presented the freeze as a necessary short-term stabilisation measure during a period of regional uncertainty. It is intended to contain strong rental growth driven by record-high occupancy rates, public-sector demand, and sharply rising lease costs. Residential rents have reportedly climbed by 15% across Abu Dhabi and by 23% in investment zones, even as a longer-term development pipeline is under way.[2] How does this measure compare with other UAE rent control regulations, including those used during Covid?

Saudi Arabia's hospitality sector is likely to remain relatively resilient over the remainder of 2026, supported by strong domestic tourism activity and the continued importance of religious travel. However, softer inbound demand due ongoing geopolitical uncertainty are expected to create varying market conditions across destinations in the near term. Inbound tourism activity moderated during the first quarter of 2026, with international visitor arrivals declining by 13% year-on-year to 8.3 million visitors and inbound tourism expenditure decreasing by 7% to SAR 48 billion. Despite the slowdown, international visitors remained the largest contributor to tourism spending, accounting for approximately 58% of total tourism expenditure. The decline was partly driven by heightened geopolitical tensions across the Middle East, which disrupted regional travel patterns, prompted flight suspensions by several international carriers, and contributed to greater caution amongst international travellers. Stronger domestic tourism activity, however, helped cushion the impact, with visitor volumes and expenditure continuing to grow through the quarter.

Abu Dhabi's residential market delivered a record-breaking start to 2026, despite a more challenging macroeconomic backdrop. Approximately 8,100 residential sales transactions were recorded in Q1 2026, representing a 123.6% increase compared to the same period last year, with total sales value reaching AED 38.1 billion, the highest quarterly figure on record and a 211.5% increase year-on-year. Market activity continued to be dominated by the off-plan segment, which accounted for over four-fifths of all residential transactions and nearly 90% of total sales value, supported by new project launches and strong interest from both domestic and international buyers.