backGCC real estate has moved beyond the post‑pandemic recovery phase into a period of structural change, in which hospitality, branded residences, digital infrastructure, tax, funds, REITs, rental caps and private credit play a prominent role in how capital is deployed and value is created. Saudi Arabia and the UAE sit at the centre of this transition: tourism‑led development, large project pipelines and evolving ownership, fund, PPP and tax regimes are reshaping the opportunity set for institutional investors, lenders and operators.
For decision‑makers on investment committees, credit committees and boards, the question is no longer whether to allocate to the region but how to navigate a market where international capital, local regulation, tax and operating complexity intersect. The sections that follow take stock of what actually happened in 2025, identify the trends most likely to matter in 2026 across five real estate activity areas (direct investments, real estate M&A, real estate funds, real estate private credit, and hospitality and branded residences) and distil the issues that should be occupying the minds of senior stakeholders as they assess exposure to GCC real estate.
2025: What Actually Happened?
Direct investments
In 2025, direct real estate activity in Saudi Arabia and the UAE remained resilient, supported by population growth, wealth inflows and substantial public‑sector project pipelines. Residential, hospitality and logistics assets in particular saw sustained demand, with Dubai and Riyadh both recording solid transaction volumes and rental growth in prime and mid‑market segments. In the UAE hospitality market, the balance began to shift from a pure development phase towards a more investment‑driven cycle, with value increasingly determined by operating performance, asset repositioning and active asset management rather than simple yield compression.
The introduction of a federal corporate tax in the UAE, at a headline rate of 9 per cent on taxable profits above AED 375,000, also became a practical consideration in 2025 for onshore real estate holding and operating vehicles. Real‑estate‑backed income earned by UAE tax‑resident companies (including rental income and gains on disposals) is now within scope of corporate tax unless an exemption applies, which has prompted sponsors to revisit where to locate asset‑holding SPVs, how to manage interest deductibility and depreciation and how to distinguish between business income and exempt investment income in group structures.
In Saudi Arabia, the direction of travel is to bring more international capital and high calibre professionals into the market. A new law on foreign ownership of real estate, due to take effect in 2026, will allow many more non‑Saudis to buy and invest in property across the Kingdom, alongside premium and “real estate owner” residency schemes that give long‑term or even lifetime residency to qualifying investors. These changes are meant to support the Vision 2030 project pipeline by widening the pool of buyers, developers and long‑term residents, and they sit alongside other measures such as an overhaul of the “white land” fee regime that are designed to nudge more land and stock into productive use.
PPPs were also a major focus across the GCC in 2025, with adoption accelerating. For example, in Saudi Arabia, the National Centre for Privatisation (NCP) has announced a pipeline of 175 projects. The Kingdom also issued tenders for its first stadium PPP (the Prince Faisal bin Fahad Sports City Stadium), sought expressions of interest for additional venues (including the Qiddiya National Athletics Stadium), and progressed rail PPPs (such as Q‑Express). Beyond Saudi Arabia, Abu Dhabi intends to procure approximately US$54 billion of infrastructure through PPPs and Dubai continues to bring significant schemes to market under the model, including its recent US$22 billion Strategic Sewer Tunnels Project.
Alongside traditional sectors, 2025 also brought large‑scale capital commitments into digital infrastructure. A prominent example was a strategic partnership under which a global investment firm agreed to acquire a stake in a UAE‑founded data centre platform and, together with that platform, committed to support more than US$ 5 billion of investment in data centre capacity across the Gulf. The platform already operates multiple purpose‑built facilities in the UAE and Saudi Arabia, with further sites planned in other GCC states, underscoring that data centres have firmly joined industrial and logistics assets as core components of the region’s real estate and infrastructure story.
Real estate M&A
Real‑estate‑intensive M&A remained a core route to exposure in 2025, especially in sectors where operating platforms hold significant underlying real estate, such as hotels, industrial assets and social infrastructure. Regional activity included acquisitions and joint ventures involving platform businesses, reflecting a preference for scale, operating capabilities and multi‑asset portfolios over isolated assets. Data for the wider Middle East show that overall M&A deal value reached multi‑year highs in 2025, with the UAE and Saudi Arabia together accounting for a significant share of regional deal value and attracting a high proportion of cross‑border capital, with logistics and industrial portfolios, income‑producing commercial assets and prime residential‑led platforms in Dubai and Abu Dhabi featuring prominently.
Real‑estate‑heavy M&A was not limited to traditional bricks‑and‑mortar sectors. One of the year’s headline transactions involved a global investor’s first data‑centre investment in the Middle East, via an equity stake in a Dubai‑headquartered platform that owns and operates a regional portfolio of carrier‑neutral data centres in the UAE and Saudi Arabia, with expansion plans into other GCC markets. The parties have publicly committed to support over US$ 5 billion of investment to scale capacity, aligning with national digital‑economy priorities and illustrating how M&A is being used to build out real‑asset‑backed digital infrastructure alongside more traditional hospitality and industrial transactions.
In Saudi Arabia and the UAE, foreign‑ownership reforms, jointly owned property regimes and sector‑specific licences increasingly influenced pricing, warranties and risk allocation in share deals where real estate was a central value driver, and sovereign wealth funds and large asset managers used corporate transactions to secure governance rights and access to long‑term pipelines in real‑estate‑rich platforms. In the UAE, corporate‑tax nexus rules also began to shape how foreign acquirers think about permanent establishment and nexus through UAE immovable property, particularly where real estate is held through local vehicles or fund structures.
Real estate funds
The real estate funds landscape became more institutional in 2025. In Saudi Arabia, amendments to investment fund regulations, including for real estate development funds and REIT‑style vehicles, expanded investment powers and tightened governance and disclosure standards, with the aim of supporting larger, more diversified platforms. Across the GCC, regulated funds (including Shari’ah‑compliant vehicles) played a growing role in channelling capital into tourism, residential and logistics‑linked real estate, and funds with clear thematic focus and robust governance increasingly became the preferred route for institutional capital.
In the UAE, the listing of a large residential REIT on the Dubai Financial Market in 2025 marked an important moment for the capital‑markets side of the asset class. The vehicle, backed by a substantial portfolio of more than 35,000 residential units, listed with an implied market capitalisation of around AED 14.3 billion and a targeted gross dividend yield of approximately 7.7 per cent for 2025, following an upsized offering in response to strong institutional and retail demand. This demonstrates that public equity markets in the UAE are now willing to price large, income‑generating residential portfolios on a standalone basis, providing an additional exit route and valuation benchmark for sponsors beyond traditional trade sales.
Corporate tax has rapidly become part of the fund’s conversation. Under the UAE regime, qualifying investment funds and REITs can in principle apply for tax‑exempt treatment if conditions on regulation, asset mix, investor spread and free float are satisfied, and 2025 saw additional guidance on qualifying fund, REIT and investor tax treatment. For investors, clarifications confirmed that certain exempt investors in qualifying REITs will be taxed only on a portion of the REIT’s immovable‑property income, reinforcing the need to align fund structures, documentation and tax modelling from the outset.
A further development in 2025 was a clearer trend of “funds investing in managers”, where established managers take strategic stakes in other real estate fund platforms to capture value not only at asset level but also in the management company. Transactions in which a Gulf manager acquires an interest in the manager of a UAE REIT platform exemplify how sponsors are using such stakes to scale product offerings, accelerate market entry and share in fee streams and carried interest.
In Saudi Arabia, IPO activity over 2025 confirmed that real estate and adjacent sectors are becoming a central component of the listed‑equity story, with REITs now forming a meaningful and growing segment of Tadawul and real estate issuers accounting for a significant share of main‑market listings.
Real estate private credit
Real estate private credit emerged in 2025 as a clearly identifiable source of capital in the GCC, with private debt increasingly used to fund acquisitions, development and recapitalisations that traditional bank lending was less willing to support. A growing number of transactions in the UAE saw private lenders provide secured facilities backed by real estate and related cash flows, including acquisition finance and development funding, while in Saudi Arabia regulatory shifts and growing allocations by institutional investors supported increased interest in real‑estate‑backed lending, albeit from an earlier starting point.
Tax is now part of the private‑credit equation: UAE corporate‑tax rules on interest deductibility, related‑party financing, withholding and nexus mean that sponsors and lenders need to model after‑tax cash flows, not just pre‑tax yields, particularly where cross‑border structures, holding companies and fund vehicles are involved.
Hospitality and branded residences
Hospitality performance in the GCC was strong in 2025, with UAE and Saudi data showing healthy occupancy, revenue growth in selected segments and a deep pipeline of new room supply. Contracting practice in the UAE pointed to a maturing owner–operator relationship, with more sophisticated owners and lenders focusing on performance tests, termination mechanics, key money structures and alignment with co‑ownership and development regimes.
Branded residences moved from a niche to a core segment within the luxury residential market. The UAE is now widely recognised as one of the world’s most active branded‑residence markets, with Dubai alone accounting for thousands of branded units and average price premia in the region of 60–70 per cent over comparable non‑branded stock, and some Abu Dhabi schemes achieving even higher premia. The legal architecture in these projects is more complex than in conventional residential schemes, typically involving operator licences and management agreements, owners’ association documentation that embeds brand standards, and detailed sale and purchase and disclosure packages for unit owners.
Policy in Riyadh has also turned to the rental market. A new regime freezes residential and commercial rents in the city at 2025 levels for five years, tightens the rules on when landlords can end leases and links new rents for vacant units to the last registered rent. The stated aim is to tackle sharp rent increases and improve stability for occupiers while broader land and planning reforms work through the system.
In Saudi Arabia more broadly, jointly owned property and owners’ association regulations, supported by the Mullak platform, underpinned rapid growth in recognised associations, with official data indicating a 185 per cent rise in renewed certificates and several thousand new associations in the first half of 2025, which is significant for complex mixed‑use and branded residence schemes.
Also, of note in Saudi Arabia, rising delivery costs and greater selectivity across state balance sheets have prompted sponsors to mobilise private capital through hospitality-led real estate structures to anchor core infrastructure. Recent examples include Jeddah Central Development Company’s circa US$1.8 billion of hospitality investment agreements with leading global operators (including Mandarin Oriental, One and Only, and Hilton) and Al‑Balad Development Company’s recently announced US$3.6 billion investment portfolio to develop hospitality assets in the Jeddah Historic District.
2026: Emerging Trends Across These Areas
Direct investments
Market activity and allocations in 2025-26 indicate that institutional investors are continuing to tilt towards sectors with structural demand (logistics, residential “living” products, data‑adjacent assets and experiential hospitality) while being far more selective with offices and non‑core retail. In the GCC, that is likely to support continued appetite for well‑located residential, hospitality, logistics and data‑centre assets in Saudi Arabia and the UAE, underpinned by tourism strategies, demographic trends, digital‑economy policies and large‑scale public investment. In the UAE, corporate‑tax planning around holding structures, depreciation and financing costs will increasingly be treated as a core workstream in direct investments and not just a post‑closing housekeeping exercise. A clear direction of travel is the shift from one‑off transactions towards programmatic direct investment: city‑ or theme‑specific platforms, long‑term capital partnerships with sovereign and quasi‑sovereign entities, and portfolios built around operating capabilities as much as locations.
In the UAE, a growing concern for many developers is the scarcity of attractive development land, particularly in established, central locations. After the current wave of projects, new supply is expected to slow partly because fewer prime plots are being released, which has pushed up land prices and made access to sites a differentiator in its own right. Developers and sponsors that already control well‑located land banks, or can secure plots in strategic master plans, are therefore likely to be better positioned than those relying on spot land acquisitions.
An emerging question in Saudi Arabia is how the opening‑up of the property market to foreign buyers and long‑term residents will interact with more interventionist measures such as the Riyadh rent freeze. On one view, the Kingdom is pulling strongly in favour of long‑term, diversified investment at the national level while keeping the option to step in and cool specific city markets when affordability or social stability are at stake. Boards and investment committees will therefore need to underwrite Saudi exposure on the assumption that both dynamics can operate side by side. Of note, we are seeing certain potential education and healthcare projects proceeding hesitantly or being restructured due to the high price of land in Riyadh versus the expected returns from education and healthcare assets.
Real estate M&A
Real‑estate‑intensive M&A in 2026 is expected to continue prioritising platforms over stand‑alone assets, especially in hospitality, logistics, industrial and data‑centre businesses. Sponsors are also using M&A to implement balance‑sheet‑light strategies, separating operating businesses from asset‑holding vehicles or entering into sale‑and‑leaseback and long‑term concession arrangements, which require careful integration of corporate, regulatory, tax and real estate workstreams in Saudi and UAE deals.
Real estate funds
Fundraising and product launches over the past 18-24 months show that capital is available for clearly articulated strategies (hospitality and branded residence platforms, residential rental strategies, logistics, data‑centre and regeneration clusters) rather than broad, undifferentiated real estate mandates. In Saudi Arabia and the UAE, recent regulatory enhancements and market practice point towards more thematic and development‑oriented real estate funds and greater use of master-feeder, evergreen and interval‑style structures.
In the UAE, corporate‑tax treatment of funds, REITs and investors will be a central design variable for 2026‑vintage structures, with qualifying‑fund and qualifying‑REIT regimes offering potential exemptions and nexus rules bringing some foreign investor structures within the UAE tax net where real‑estate exposure is significant. Strategic investments by established managers into other real estate fund platforms are likely to intensify, as sponsors seek to scale product ranges quickly, access new investor bases and capture a larger share of fee and carry streams.
In Saudi Arabia, IPO activity and REIT growth signal that listings are increasingly part of the natural lifecycle for larger real‑estate platforms, and public‑market valuations will influence how private fund managers position vehicles in both Saudi Arabia and the UAE. Fund documentation for 2026‑vintage vehicles will therefore need to integrate GCC‑specific PPP, co‑ownership, foreign‑ownership and tax frameworks more deeply into risk allocation, reporting and investor protections.
Real estate private credit
Real estate private credit is positioned to become a more regular component of the capital stack in GCC real estate. A significant volume of commercial real‑estate debt maturing over the 2025-27 window, combined with higher interest rates, increases the relevance of flexible refinancing capital, even in markets with lower leverage than some Western peers, and higher funding costs and tightening bank criteria are already creating space for private credit in development finance, bridge‑to‑core strategies and capex funding.
In the UAE, the build‑up of precedent in secured development and income‑producing transactions suggests that underwriting standards will increasingly focus on detailed business‑plan execution, operating metrics and long‑term risk, and will now also need to take account of borrower and structure‑level corporate‑tax leakage. In Saudi Arabia, the evolution of fund regulation and growing allocations by local institutional investors to private credit suggest that 2026 will see more bespoke debt structures backed by real estate, including alongside PPP and fund platforms.
Hospitality and branded residences
Hospitality outlooks for 2026 in the GCC remain broadly positive, driven by ambitious tourism targets, significant room‑supply pipelines and the emergence of more differentiated products, including integrated entertainment, wellness‑driven resorts and experience‑focused urban hotels. Contractually, themes such as performance‑based management agreements, flexible termination rights, capex commitments and long‑term risk‑sharing are increasingly reflected in Saudi and UAE hotel documentation and in lender expectations.
In branded residences, 2026 is likely to bring continued expansion of the UAE pipeline and growing activity in Saudi Arabia and other GCC markets, with Dubai acting as a global reference point, including for standalone branded developments not physically linked to hotels. At the same time, legal frameworks for these schemes remain unevenly developed across the GCC, with UAE jointly owned property regimes tested over multiple cycles and Saudi practice consolidating quickly but still evolving.
One emerging trend to watch in 2026 is the possible adjustment of the traditional back‑to‑back operator model in certain projects. Operators that historically avoided direct contractual responsibility to end purchasers are, in some cases, considering closer engagement with owners’ associations or more visible roles in residential operations and governance, particularly in large mixed‑use and hospitality‑heavy schemes in Saudi Arabia.
Questions For Credit Committees, Boards And Executives
Direct investments
- How should return and hold‑period assumptions for Saudi and UAE assets be calibrated, given robust demand indicators, substantial development pipelines and the possibility of policy‑driven changes in land‑use, foreign‑ownership, co‑ownership and tax frameworks over the investment horizon.
- Which contractual tools best capture long‑term operational, risk‑sharing and tax exposure in hospitality‑anchored, logistics, data‑centre and mixed‑use schemes; for example, performance‑linked management provisions, capex undertakings, tax‑sharing mechanisms and exit‑friendly governance at project‑company level.
- In Saudi Arabia, how should investors reconcile a national‑level push to open the market to foreign owners and long‑term residents with city‑level interventions such as the Riyadh rent freeze, and what assumptions about future policy flexibility should be built into underwriting.
Real estate M&A
- To what extent does target value depend on regulatory permissions, foreign‑ownership rights, data‑centre and telecoms regulations, tax nexus and PPP‑style concessions whose durability and transferability may not be fully captured in traditional property due diligence.
- How can transaction structures balance speed and certainty of execution with the need to manage long‑term real‑estate, tax and infrastructure risk; for example, through ring‑fenced SPVs, tax‑efficient holding structures, post‑closing covenants, earn‑outs tied to asset and platform performance and clear allocation of responsibility for future capex, compliance and tax filings.
Real estate funds
- Whether fund terms (on leverage, liquidity, governance and tax) are properly aligned with the risk profile, regulatory environment and time horizon of Saudi and UAE real estate, hospitality, data‑centre and PPP‑linked assets.
- How fund‑level governance should be structured to oversee portfolios that span development and income‑generating assets in multiple GCC jurisdictions, while managing conflicts between different investor classes, tax profiles and time horizons.
- How to analyse and structure strategic investments in other managers (including control rights, economics, conflicts management, tax treatment and regulatory approvals) when using platform‑to‑platform stakes as a way to scale regional real estate exposure.
Real estate private credit
- Whether underwriting standards, security packages and enforcement assumptions adequately reflect differences between UAE and Saudi enforcement regimes, insolvency frameworks, co‑ownership rules and tax treatment, particularly in the context of development‑stage, pre‑sold, hospitality‑linked or data‑centre assets.
- How best to calibrate covenant packages so that they track business‑plan execution and operating metrics (such as hotel performance, branded‑residence absorption or utilisation of data‑centre capacity) and associated tax leakage, rather than relying solely on static collateral values, while remaining compatible with local regulatory expectations.
Hospitality and branded residences
- How risk and responsibility should be allocated between developers, operators, owners’ associations and lenders in branded residence schemes if operators move closer to unit owners or assume more direct operational roles, particularly in markets such as Saudi Arabia where owners’ association regimes are still consolidating.
- In major hotel and mixed‑use projects, what combination of performance tests, termination rights, capex undertakings, dispute‑resolution mechanisms, tax structuring and PPP‑style protections is most likely to preserve long‑term value while remaining workable and bankable within Saudi and UAE legal frameworks.
Overall, 2025 reveals a GCC real estate market that is resilient and rapidly evolving, with direct investments shifting towards platform‑style strategies, real estate M&A increasingly about operating businesses (including digital‑infrastructure platforms), real estate funds and private credit becoming core channels for capital, and hospitality and branded residences at the forefront of how cities in Saudi Arabia and the UAE are repositioning themselves. Legal, regulatory and tax frameworks around co‑ownership, foreign investment, PPPs, corporate tax, data‑centre regulation and fund governance are moving quickly, which makes structuring an integral part of strategy for institutional actors rather than an afterthought. And while it is often said that ‘it’s tough to make predictions, especially about the future’, the direction of travel in GCC real estate is clear enough to demand a deliberate, joined‑up approach from any institution looking at the region today.