Dubai property market holds near record highs amid strong demand

Dubai’s property market is continuing to hold near record highs, with prices showing resilience despite concerns of an oversupply and the possibility of a correction in the near future. Strong demand from international investors and steady appetite for luxury properties have helped keep momentum alive across the emirate’s real estate sector.

In the first half of 2025, average home prices rose by about 8.4 percent, reaching AED 1,609 per square foot compared to AED 1,484 at the beginning of the year. On a year-on-year basis, the increase stood at around 16.1 percent. Villas in particular have driven much of this growth, with some upscale neighborhoods witnessing annual gains of close to 29 percent, while apartments have posted more moderate increases but remain in demand for their relative affordability.

Transaction activity has also been robust. During the first nine months of 2025, total sales in Dubai’s real estate sector were valued at nearly AED 500 billion, or around USD 136 billion, reflecting continued interest from both regional and overseas buyers. The limited supply of prime properties in certain areas has added to the upward pressure on prices, particularly in the luxury segment.

However, several analysts are cautioning that the market may face headwinds ahead. According to Fitch Ratings, prices could decline by as much as 15 percent over the next year due to the large number of new residential units expected to enter the market. Forecasts suggest that as many as 210,000 homes could be delivered over the next two years, more than double the recent average, which may test the market’s ability to absorb supply. Even so, luxury properties in premium neighborhoods may be somewhat insulated from the full effects of a downturn because of limited availability, buyer loyalty, and slower delivery timelines.

Dubai’s real estate market has a history of dramatic swings, most notably the sharp decline following the global financial crisis in 2009. While today’s market conditions are different, the possibility of a correction remains in the background as developers race to meet rising demand. For now, prices remain elevated and close to record levels, leaving investors and buyers watching closely to see whether the rally can be sustained or whether a period of softening lies ahead.