Dubai’s residential real estate market will remain buoyant, but growth of demand and prices will continue to moderate over the next 12-24 months

Property developers’ pre-sales momentum in Dubai’s residential real estate market remains strong. Until September 2025, total off-plan sales transactions had risen 39 percent year-on-year, and ready property market transactions had declined by 7 percent, according to Valustrat.

In addition, off-plan prices per square foot are up by 5 percent since the start of 2025, but ready property prices have stabilized as the governments of the UAE and Dubai continue to roll out investor-friendly reforms, fueling the demand for real estate.

In its latest report, S&P Global Ratings said it believes most of the new housing units to be completed in 2025-2027 will be absorbed by the currently strong population growth in Dubai, limiting the risk of oversupply.

Growth of demand and prices to moderate

“We believe Dubai’s residential real estate market will remain buoyant, but growth of demand and prices will continue to moderate over the next 12-24 months. This is due to several factors, including a potentially large number of property deliveries over that period,” said S&P.

Estimates by JLL suggest the supply of new residential units in Dubai’s real estate market will increase by 16 percent until 2027, based on current pre-sale volumes, suggesting further price increases could be limited. And the actual supply growth could be even higher, since more development launches are expected over the coming quarters.

That said, S&P expects price declines after 2027 to be modest, owing to several factors.

• Dubai’s population increased by about 5.7 percent in 2024, and the agency expects it to expand by 3.6-4 percent annually over 2025-2027 alongside government initiatives supporting the arrival of expats, which will likely absorb new housing units.
• The villa segment is expected to support the wider market, since the supply of villas is unlikely to keep up with demand despite new deliveries.
• Deliveries will likely be delayed, which is not uncommon in the property market, thereby slowing the buildup of supply and supporting prices, at least over the short term.
• The market could also get a boost from the gaming industry, which is expected to start operating in neighboring Ras Al Khaimah in 2027, given its proximity to Dubai, the leading tourism hub in the UAE.

Price and supply dynamics are evolving

In the mid-market apartment segment, transactions remain the strongest in Dubai, driven by affordability and a steady stream of off-plan launches aimed at young professionals and first-time buyers. Yet a surge in new supply is softening momentum in this segment.

Prices per square foot have stabilized, compared to growth rates observed over the past three years. Developers continue to deliver smaller, more compact units to appeal to a broader buyer pool and keep unit prices affordable. This supports sales but raises the risk of oversupply in areas where many towers are completed at about the same time.

“In our view, the villa and townhouse market is the tightest segment. Demand remains strong from families and high-net-worth residents seeking larger spaces. Prices here have risen faster and more consistently than for apartments. Even with new launches and deliveries, demand is unsatiated, keeping this segment resilient,” S&P said.

At the top end, luxury and ultra-luxury homes continue to outperform. Dubai’s real estate market has set global records for high-value transactions, attracting international capital. Tax advantages, political stability and lifestyle appeal have helped this market decouple from the broader cycle, with branded residences and exclusive assets in constant demand.

Key factors driving growth in off-plan property segment

Dubai’s real estate market continues to offer very attractive rental yields and remains affordable despite stronger price growth than in other financial hubs around the world. The weakening of the U.S. dollar also supports the flow of international buyers and renters, since the UAE dirham (AED) is pegged to the dollar. The report also reveals that resident expats’ contribution has risen and now accounts for about 50 percent of new buyers.

Demand for off-plan units is also outpacing that for ready property since payment plans are more manageable. Developers are offering the latest amenities, branded fittings and an improved look and feel to continue to entice off-plan buyers. Also, off-plan is attractive for high-net-worth individuals looking for bulk deals (buying several units in one go). On the other hand, the price of ready properties is about 20 percent lower per square foot as of Q3 2025.

Luxury branded units are also extremely popular in Dubai. What’s more, companies operating in various sectors, including hospitality, fashion, autos and luxury watches, are lending their brands, credibility and allure to Dubai’s residential real estate market.

“We’ve seen this trend picking up significant momentum over the last two years, and more wealthy individuals are targeting Dubai as the location of their next holiday home or fiscal residence,” S&P added.

Read: Dubai’s commercial property market surges to $8.27 billion amid strong office market demand

Dubai to maintain its lead as the UAE’s most dynamic real estate market

Dubai is expected to maintain its lead as the UAE’s most dynamic real estate market, said S&P, with strong international inflows and demand for luxury properties sustaining momentum. Nevertheless, the country’s substantial off-plan pipeline could gradually slow price appreciation in the mid-market apartment segment.

Abu Dhabi, by contrast, is likely to see steadier, more sustainable growth as government-backed projects and infrastructure investments attract long-term residents, while its end-user focus shields it from volatility. Average apartment and villa prices in Abu Dhabi increased by 14.4 percent and 11.1 percent, respectively, in the first half of 2025, according to JLL.

In Sharjah and Ajman, the residential market is emerging as an affordability hub, with transaction values climbing sharply as buyers priced out of Dubai seek alternatives in these neighboring locations.

Meanwhile, Ras Al Khaimah’s residential market is set to benefit from tourism-driven projects and branded resort-style developments, positioning it as a lifestyle and second-home destination. This market has shown ongoing double-digit growth in select off-plan launches. The residential property markets in Umm Al Quwain and Fujairah will likely remain smaller but could see a gradual uplift as infrastructure and tourism initiatives improve their visibility.