Introduction: Dubai's Dynamic Real Estate Market
The Dubai real estate market is dynamic and ever-changing, presenting great opportunities as we head towards 2026. At the core of this market is the relationship between the number of homes available and the city's growing population, a connection I've examined by looking at various economic factors.
During 2022-2024, Dubai's real estate market experienced significant pressure due to population growth outstripping new housing supply, leading to notable price and rental increases. For 2025-2026, although many new units are planned, historical completion rates suggest actual deliveries will be moderate. Population growth is expected to remain robust, driven by government initiatives and favorable visa policies. As a result, the population-to-supply ratio is likely to remain elevated, supporting property values and rental rates.
My outlook for 2026 suggests a market characterized by sustained growth, though likely at a more measured pace compared to the rapid escalations of 2022-2024. I expect price trajectories to continue their positive movement, particularly in prime and well-located mid-market segments, with variations across different property types. Rental dynamics, too, are likely to favor landlords, although the rate of rental growth may temper as new supply gradually enters the market and affordability thresholds are met.
Current Market Situation (Early - Mid 2025 Snapshot)
As we moved into 2025, the Dubai real estate market continued its strong momentum. My observations from Q1 2025 reveal robust transaction volumes and values across both off-plan and ready property segments. Total residential property transactions surged by 23% year-on-year to over 42,000 deals, with sales values increasing by 29% to approximately AED 114 billion. Off-plan sales represented a significant 59% of all transactions, while the ready property market also achieved record-breaking volumes and values. This dual strength across market segments, in my view, points to a healthier and more sustainable growth trajectory. Average sales prices continued their ascent, reaching a historic high of AED 1,535 per square foot in Q1 2025, a 16% increase compared to Q1 2024. Rental rates also maintained an upward trend, with average increases of nearly 11% for apartments and 9% for villas year-on-year. This performance is underpinned by strong population growth, with approximately 1,000 new residents added per day in Q1 2025.
Article Objectives and Structure
My primary objective in this article is to deliver a quantitative, evidence-based analysis of the Dubai real estate market, culminating in a nuanced forecast for 2026. I've placed a central focus on the fundamental relationship between housing supply and population growth, integrating a comprehensive array of micro and macroeconomic influencing factors, and enhancing this with qualitative market sentiment. This article is structured in three phases: first, a historical review and projections (2022-2024); second, an in-depth analysis of influencing factors (up to mid-2025); and finally, a synthesized market outlook, forecast, and risk assessment for 2026.
Phase 1: Housing Supply vs. Population Growth
Historical Market Dynamics (2022-2024)
To understand Dubai's future, I it's crucial to examine its recent past. The period from 2022 to 2024 was marked by a significant shake - up in market activity, driven by a complex interplay of new supply and robust demographic expansion. New residential unit deliveries were 38,674 in 2022, 38,892 in 2023, and 33,175 in 2024. A consistent theme I've observed is the significant gap between planned and actual completions, with rates typically around 56% to 58% of initial forecasts.
Concurrently, Dubai's population grew by 71,600 in 2022 (to 3,549,900), 105,100 in 2023 (to 3.655 million), and 170,478 in 2024 (to 3.825 million). This escalating growth, in my assessment, is fueled by Dubai's robust economic performance, its appeal as a global hub, and proactive government initiatives like visa reforms (Golden Visa, Green Visa) and strategic plans (D33, 2040 Urban Master Plan).
The "population-to-supply ratio" provides a quantitative measure of market pressure, with higher ratios indicating demand outpacing new supply. This period saw consistently high ratios correlating strongly with market appreciation:
- 2022: A ratio of ~1.85 (71,600 new residents vs. 38,674 units) coincided with ~9.2% price and ~27.3% rental appreciation.
- 2023: The ratio intensified to ~2.70 (105,100 new residents vs. 38,892 units) fueling ~18.9% price and ~19.2% rental growth.
- 2024: An exceptionally high ratio of ~5.14 (170,478 new residents vs. 33,175 units) drove strong performance, with apartment prices up 23.6%, villas up 31.6%, and rentals up 13% (apartments) and 5.8% (villas).
This direct correlation, in my analysis, underscores the fundamental demand-supply tension that characterized the Dubai real estate market during this period.
Table 1: Housing Supply, Population Growth, and Population - to - Supply Ratio (2022 - 2024)
Note: Price and rental change percentages are indicative, based on available full-year or year-to-November/October data from cited sources. Variations exist between consultancies and segments.
Future Projections (2025 - 2026)
Looking ahead, understanding Dubai's real estate market requires a balanced view of the expected housing supply and the projected population growth. For 2025, approximately 95,542 units are planned, with 91,000 units anticipated for 2026. So far, 17,472 units have been completed in 2025. Using a historical completion rate of 58%, I project that the actual deliveries will be around 55,414 units for 2025 and 52,780 units for 2026. This variance between expected and actual completions suggests a more measured effect on the future supply outlook.
Dubai's population is projected to exceed 4 million by 2026, driven by the D33 agenda, 2040 Urban Master Plan, and visa reforms. An average net annual population growth of 182,500 residents for both 2025 and 2026 is expected, reflecting sustained attractiveness.
Using these projections, the population-to-supply ratio is estimated at ~3.29 for 2025 (182,500 residents vs. 55,414 units) and ~3.46 for 2026 (182,500 residents vs. 52,780 units). These elevated ratios indicate that demand will continue to substantially outpace new housing supply, suggesting ongoing upward pressure on prices and rents, albeit potentially moderating from 2024 peaks.
Table 2: Projected Housing Supply (Planned vs. Realistic Estimate) & Population Growth (2025-2026)
Note: Basis for Population Projection for both 2025 and 2026 is Sustained growth based on 2024 levels, Q1 2025 trends, and strategic initiatives (D33, 2040 Plan, visa reforms).
Table 3: Projected Population - to - Supply Ratio and Preliminary Market Pressure Indication (2025-2026)
Phase 2: In - Depth Analysis - Key Influencing Factors (Data up to Mid - 2025)
Demand Side Dynamics
Expatriates, who make up 92% of Dubai's population, are the primary drivers of its growth. These include skilled professionals, entrepreneurs, and high-net-worth individuals (HNWIs) attracted by the Golden and Green Visa programs. This influx is associated with job creation in high-value sectors such as Technology, Professional Services & Finance, Real Estate & Construction, Tourism & Hospitality, Trade & Logistics, and Healthcare & Education. From what I've seen, new residents tend to prefer higher quality, larger units, and properties with premium amenities in well-connected communities.
The issue of housing affordability is increasingly pressing. In the first half of 2025, the Price-to-Income Ratio (PIR) ranged from 5.1 to 6.63, showing a decline in purchase affordability. Many residents are spending more than 30% of their income on rent due to sharp increases. Online communities are abuzz with concerns about rising costs and perceived declines in building quality and maintenance. Some residents are considering commuting from neighboring emirates to save money, despite the inconvenience. Mortgage rates in early 2025 ranged from 3.94% to over 5%, and a new Central Bank directive from February 2025 requires buyers to pay transaction fees upfront, adding a significant cash requirement. For a property worth AED 1 million, this means an extra AED 60,000 in immediate costs. This has sparked online discussions about the financial burden of these upfront costs, which many see as a major hurdle beyond the down payment. These factors are pushing some buyers towards off-plan properties with flexible payment plans or increasing cash purchases in the secondary market. Despite these challenges, Dubai's rental yields remain attractive globally, averaging around 6-8%.
Leading foreign investors in 2025 are Indian nationals, followed by British, Chinese, Saudi Arabian, and Russian investors. The market shows a strong cash preference, with 14,400 cash transactions versus 9,400 mortgage-backed sales in Q1 2025. The February 2025 mortgage rule change may further affect this. Off-plan sales are prevalent due to flexible payment plans, though they are often priced significantly higher than ready properties, raising concerns about resale value and handover delays. While apartments dominate transactions, villas and townhouses are gaining traction, with buyers seeking communities offering amenities and smart technologies.
Table 4: Key Affordability Metrics - Price-to-Income & Rental - to - Income Ratios (2024 - H1 2025)
Table 5: Dubai Mortgage Market Overview - Interest Rates, LTV, DBR (2024-H1 2025
Table 6: Buyer Profile Snapshot - Top Nationalities, Cash vs. Mortgage, Off - Plan vs. Secondary (2024 - H1 2025)
Note: Cash vs. Mortgage breakdown from ValuStrat for Q1 2025 ready properties. Betterhomes reports higher mortgage share overall but may include off-plan financing or reflect their specific client base.
Supply Side Dynamics
During the first quarter of 2025, Dubai's ready property market achieved record-breaking transactions, amounting to AED 87.5 billion, with properties selling at an accelerated pace, averaging 34 days on the market. Nevertheless, the recent Central Bank regulation on upfront fees could slow down activity for buyers who rely on mortgages. While official statistics reflect strong secondary market performance, there is concern about the competition from new projects potentially affecting demand for existing properties. Despite these challenges, prime properties maintain strong performance, although older units or those from off-plan flips might face slower sales and pricing pressures.
The residential vacancy rates are still quite low, largely due to the continuous influx of new residents. By the end of 2024, residential occupancy was at 90.1%, while office spaces were even busier with a 94% occupancy rate in Q1 2025. This high occupancy gives landlords an advantage in setting prices. However, with a wave of new units expected to enter the market soon, we might see vacancy rates rise slightly, which could help ease rental prices in certain areas.
The surge in off-plan launches suggests developers are eager to sell quickly, possibly due to high supply expectations. With over 141,404 apartments and 29,649 villas/townhouses under construction by 2029, delivery depends on rising construction costs, labor availability, and phased developer strategies. Online discussions often highlight the large upcoming supply, raising concerns about a potential 'shadow supply' risk. Many off-plan buyers might default, leading to distressed sales in the secondary market, impacting prices and straining developers financially.
Market Performance Indicators
In the first half of 2025, Dubai's residential market demonstrated strong year-on-year growth in sales prices and rental rates, although the quarterly growth rate has moderated. By March 2025, residential capital values had increased by 25.9% annually, with villas seeing a 30.3% rise and apartments a 21.4% increase year-on-year. The average sales price reached AED 1,535 per square foot in the first quarter of 2025, reflecting a 16% year-on-year increase. Prime luxury properties have maintained robust gains, with Savills projecting an 8-9.9% growth in prime residential prices for 2025. In terms of rentals, the first quarter of 2025 saw apartment rents increase by 10% year-on-year, with a 1.6% quarter-on-quarter rise, while villa rents grew by 5.1% year-on-year, remaining flat quarter-on-quarter. CBRE noted average rental increases of nearly 11% for apartments and 9% for villas year-on-year. Some reports indicate stabilization in the first quarter of 2025, with apartment and villa rates showing 0% and 1% quarter-on-quarter growth, respectively.
The market's mood about prices and rentals is quite split. While official figures show impressive year-on-year growth, some market watchers worry about overvaluation, predicting price drops of 15-40%. There are stories of price dips and easing rents in areas like Sports City and Dubai South. On the flip side, many believe in the market's strength and ongoing rise. This split shows a big difference between overall stats and personal experiences, with prime properties still growing strong, while older areas or those with lots of new supply might see prices level off or drop.
Investors in Dubai's rental market can expect attractive returns, with gross rental yields averaging 7.4% in Q1 2025. Affordable apartment communities are especially lucrative, offering yields between 9% and 11%, while mid-range areas yield 7.5% to 8%. Luxury apartments also perform well, yielding over 7.88%. For villas, affordable communities offer yields above 5.71%, and mid-range villas achieve yields of 5% to 8%. It's essential to consider net yields, which account for service charges and operational costs, to gauge true profitability. For instance, an 8% gross yield in JVC might translate to a net yield of approximately 6.2% to 6.5%. Mid-market and high-demand affordable segments often provide superior net yields, making them a wise choice for investors seeking consistent returns.
Table 7: Average Price PSF/PSM Trends by Property Type & Segment (2024 - H1 2025)
Note: Data combined from multiple sources; PSF/PSM conversions assumed standard. YoY/QoQ changes are indicative based on specific report comparisons.
Table 8: Average Rental Rate Trends by Property Type & Segment (2024 - H1 2025)
Table 9: Gross & Estimated Net Rental Yields in Key Dubai Communities (Apartments & Villas, H1 2025)
Note: Net yields are analyst estimates based on typical service charge ranges and may vary significantly based on specific building/unit and management efficiency.
Broader Economic and Regulatory Context
Dubai's economic diversification, in my opinion, makes its real estate market increasingly resilient to direct oil price volatility. The CBUAE forecasts non-hydrocarbon GDP growth of 5.1% in 2025 and 4.8% in 2026 , directly supporting job creation and housing demand. The UAE continues to attract significant FDI, with USD 30.6 billion in 2023 , and Dubai's D33 agenda targets over AED 650 billion in FDI over the next decade. While oil prices (Brent crude expected to average USD 65 in 2025 and USD 62 in 2026 ) indirectly influence regional liquidity, I see the strong non-oil economy and FDI as more direct and sustainable drivers.
Phase 3: Synthesis, Forecast, and Risk Assessment for 2026
Integrated Market Outlook for 2026
Looking ahead to 2026, I see Dubai's real estate market continuing to grow, though at a more measured pace. The expected population-to-supply ratio of about 3.46 suggests that demand from new residents will comfortably absorb the new housing supply, keeping property values and rental income stable.
I anticipate that residential property prices will continue to rise in 2026, but at a more relaxed pace, with annual increases expected to be between 4-7%. Prime segments might see slightly higher growth, thanks to interest from high-net-worth individuals and the appeal of Golden Visas. Meanwhile, mainstream and mid-market areas are expected to follow the general trend, with affordability playing a crucial role. The mortgage rule introduced in February 2025 might put some pressure on buyers who rely on mortgages in the secondary market. However, off-plan properties with enticing payment plans are likely to remain popular. Buyers should be mindful of the prices they pay for off-plan units, especially given the abundance of similar units with smaller sizes compared to previous years, which might face challenges in resale due to a lack of distinctive features.
Rental rates are expected to rise by 3-6% year-on-year in 2026, driven by a steady influx of new residents. Prime rental properties are likely to see higher growth due to their appeal. In contrast, mainstream and mid-market segments might experience more moderate increases as they adjust to the new supply. Affordable segments will continue to attract demand, but rent hikes will be limited by what tenants can afford. As more housing becomes available, the growth in villa and townhouse rentals may align more closely with that of apartments. The gradual increase in housing stock will be a key factor in moderating rental growth, particularly as new developments with multiple similar-sized units come to market. These buildings will face competitive pressure, with landlords needing to offer the most attractive pricing to secure tenants quickly and maintain high occupancy rates.
The Dubai real estate market in 2026 is anticipated to be stable and continue its growth trajectory, rather than experiencing a significant downturn. This is due to sustained demand, evidenced by a population-to-supply ratio of about 3.46, and strong economic fundamentals, including non-oil GDP growth and foreign direct investment. Strategic population growth initiatives, enhanced regulatory oversight, and realistic supply expectations further support this positive forecast.