UAE investment outlook: Sectors, risks, and opportunities to look out for

Vijay Valecha, December 21, 2025, Khaleej Times

As we head into 2026, the macro picture in the UAE remains supportive, as most sectors are expected to perform strongly, analysts say.

Sectors to watch in 2026

Banks and financials: Banks remain a backbone of both ADX and DFM. Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank and other large institutions have seen healthy earnings growth, supported by rising credit, strong capital buffers and a still-healthy interest margin. As rates edge down in 2026, margins may soften, but the drag is likely to be offset by higher lending volumes, fee income and continued safe haven inflows to the UAE. For investors, banks should continue to offer a mix of income and growth, although total returns may moderate from the very strong gains of 2025.

Energy and commodities: Energy and energy-linked names remain important for Abu Dhabi. The outlook for 2026 will hinge on oil prices, Opec+ policy and global demand. Late in 2025, oil prices softened, which weighed on the ADX, but demand is expected to improve and the 2026 surplus to narrow, while OPEC retains a constructive demand view.

IPO pipeline and capital markets: Another important theme for 2026 is the ongoing IPO pipeline. Both ADX and DFM have benefited from a steady flow of listings in recent years, including government-related entities and family businesses. More IPOs in sectors such as real estate, logistics, utilities and tech should deepen the market and broaden the opportunity set for investors.

Reasons for optimism in 2026

Despite those risks, the overall picture for the UAE in 2026 remains positive. Growth is forecast to be solid, inflation is low and stable, and the policy backdrop is supportive. The banking system is well capitalised, capital markets are deepening, and the country continues to attract both foreign investment and skilled labour.

“The UAE’s economy is very well-diversified with over 75 per cent of GDP stemming from non-oil sectors. However, in the short run, the developments in oil markets could influence short-term volatility. U.S. data about the labor market, retail sales, and inflation could also influence near-term sentiment in the UAE as it influences the Fed’s future interest rate decisions,” said Vijay Valecha, Chief Investment Officer, Century Financial.

For equity investors, earnings growth, particularly in banks, real estate and selected energy and tech names, should provide a tailwind, even if returns are more measured than in previous boom years. The UAE’s reputation as a safe and stable market, the lift in foreign investor interest and its long-term push into diversification and innovation all help to strengthen the investment case for 2026. With capital markets continuing to mature and policy support remaining steady, the region stands out as an attractive destination for investors.

Source

Khaleej Times