The trajectory of key determinants of successful real estate development and investment, such as construction costs, rents, capitalisation rates and prices, can be substantially altered by geopolitical events, for example, elections, sanctions, wars, and resultant hydrocarbon price spikes. This is as true in the Gulf as anywhere: the Gulf is structurally exposed to geopolitical risk because of hydrocarbon-linked liquidity cycles, expatriate population dynamics and, as demonstrated so clearly by the present conflict, regional security architecture. The present conflict has exposed the degree to which Gulf real estate is entangled with regional security dynamics, making geopolitical risk management no longer optional but foundational.

Oman’s hospitality sector delivered a strong performance in 2025, supported by continued growth in tourism demand and improving connectivity. Airport traffic reached 14.9 million passengers, up 2.8% year-on-year, reflecting steady recovery momentum and enhanced route networks. This translated into solid hotel performance, with the 3–5-star segment welcoming approximately 2.4 million guests, a 10.8% increase compared to 2024, supported by both domestic and international segments, contributing to greater demand diversification.

Dubai's retail and warehouse sectors demonstrated resilience and growth in 2025, supported by strong fundamentals including record tourism, population growth, and rising e-commerce activity. Both sectors, however, faced tightening supply conditions that shaped market dynamics throughout the year. The retail sector experienced robust growth in 2025, with sales transaction values rising 48.4% year-on-year to AED 4.6 billion, significantly outpacing the 7.6% increase in transaction volumes. Rental activity showed signs of supply constraint, with new leases declining 15.7% whilst renewals strengthened by 6.5%, as tenants prioritised retaining space in prime locations amid limited availability, pushing rental rates 7.1% higher year-on-year.

Saudi Arabia's three major residential markets delivered divergent performances in 2025. Riyadh recorded approximately 56,600 transactions, down 31.4% year-on-year, as affordability constraints and elevated financing costs dampened buyer activity. Despite the decline in transaction volumes, average transaction prices reached SAR 1.7 million, the highest level in recent years, with apartment and villa prices appreciating 6.6% and 9.7%, respectively. The rental market remained strong throughout the year, ultimately prompting the Government to introduce a five-year rental freeze in late September 2025.