Prime house prices in Dubai to rise 3% in 2026 as residential market marks five years of uninterrupted growth

• Average residential values at the end of Q3 were 10% higher than at the same point last year 
• A record 56,854 home sales were recorded in Q3 with a total value of US$ 31.8bn 
• More than US$ 2bn transacted in the US$ 10 million+ homes market in Q3, up 54% year-on-year     

Dubai | 24 November 2025: Dubai’s residential property market has carried its momentum into the third quarter of 2025, demonstrating sustained strength and resilience across all key indicators. The Dubai Residential Market Review for Q3 2025 from global property consultancy Knight Frank shows average values rose by 2.5% during Q3, extending an unbroken run of quarterly growth that began in late 2020, leaving values 10% higher than this time last year.  

Aggregate residential transaction volumes for the year to date have exceeded AED 310bn (US$ 84 billion) – one of the highest totals ever recorded. During Q3 alone, sales reached AED 117bn (US$ 31.8bn), marginally higher than the same quarter last year.  

Faisal Durrani, Partner – Head of Research, MENA, said: “This extraordinary level of activity underscores Dubai’s growing appeal among both domestic and international investors and purchasers. As with any cycle, however, there is always a beginning, a middle and an end. And after an uninterrupted five-year property price rally, we are starting to see a slowing in the rate of quarterly rises, which averaged 2.02% in 2021, 2.22% in 2022, 4.34% in both 2023 and 2024 and eased to 3.2% between Q1 and Q3 this year. 

“Nonetheless, this persistent upward trend, which has now spanned five full years, has delivered on the promise of the ‘roaring twenties’ we predicted back in 2021.”  

Q3 2025 saw a record 56,854 home sales, up nearly 17% on Q3 2024, pushing the total for the year to the end of September to more than 148,000 sales with a total value of AED 401.7bn (US$ 109.4bn). This is already 9.2% ahead of the total for 2024, when AED 367bn (US$ 100bn) was transacted across 169,000 deals. 

Will McKintosh, Partner – Head of Residential, MENA, added: “The annual rise in house prices across the city was 10% as at the end of Q3, down from a high of 16% in Q3 2024, suggesting that the market may have already peaked in this cycle. That said, the sustained momentum in market activity and price growth reflects the city’s evolution from a speculative real estate market to one characterised by genuine end-user demand, structural depth and long-term investor confidence. Notably, growth has been underpinned by the rising popularity of smaller, high-amenity units among both investors and owner-occupiers.” 

PRICE GROWTH HOTSPOTS 

Average apartment prices increased by around 2.3% quarter-on-quarter and 9.6% year-on-year in Q3, led by waterfront and central districts. Meydan City saw the sharpest quarterly rise at 22%, equating to an annual increase of 29%, while Palm Jumeirah experienced the highest annual increase at 31%, followed by Dubai Marina (15%). 

At Business Bay, apartment prices were up 10% quarter-on-quarter in Q3, reflecting absorption of premium towers along the Dubai Canal. More modest quarterly gains were seen in Downtown Dubai (+1.46%) and Dubai Hills Estate (+1.78%) as these core markets entered a phase of consolidation after several years of rapid expansion. 

Dubai’s villa market continued to outperform apartments during Q3, with prices rising by an average of 3.6% quarter-on-quarter, leaving them 12% higher than in Q3 2024. Luxury communities were once again at the forefront of price gains, with La Mer experiencing the sharpest increase, at 33.8% quarter-on-quarter and 54.7% year-on-year. Palm Jumeirah, which has been at the epicentre of luxury home sales during this cycle, saw no price movement during Q3 and a 19% reduction in the number of transactions, suggesting more homes are being secured for the long-term.  

Across Dubai’s 10 prime neighbourhoods, residential prices average AED 3,767 psf (US$ 1,026 psf), marking an 8.4% increase on Q3 2024 and a 140% uplift since Q1 2019.  

McKintosh, said: “Across Dubai, the average apartment price is now AED 1,798 psf, an increase of 69% since Q1 2020, and villas average AED 2,250 psf, up 124% on Q1 2020. The combination of affordability, strong rental yields and sustained population inflows has kept absorption high despite elevated prices.” 

OVERSUPPLY RISK? 

As the market approaches an inevitable peak in this third freehold residential market cycle, Knight Frank has investigated the risk of a housing oversupply.  

Durrani explained: “Housing stock, at least registered projects and units, continues to grow at a clip. And there appears to be a very real risk of supply outpacing demand, i.e., the market’s ability to absorb all the newly developed homes. The silver lining, for now at least, is the apparent inability of the market to deliver all of the projects announced on time. Indeed, only 60% of promised housing was completed on time between 2022 and 2024, while this year the figure has slipped to just 46% between Q1-Q3, highlighting a potential contractor capacity crunch”.  

Knight Frank’s best-case scenario assumes that 70% of all registered housing starts will be delivered on time, equating to 66,000 homes p.a. between 2026 and 2030, still well ahead of the long-term completion rate of 36,000 p.a. This will result in almost 331,000 homes completed between 2026-2030.  

Shehzad Jamal, partner – Strategy & Consultancy, MEA, said: “Despite the inherent growing oversupply risk, we are of the view that any immediate impact on the market will likely be felt first in the locations that are expected to see the highest level of home completions. Furthermore, we also believe that any signs of a slowing in the market will be far more nuanced than in previous cycles, with ‘red flags’ first likely in specific price bands.” 

Knight Frank has run analysis around the change in the volume of home listings (supply), alongside the change in the number of home sales (demand), by price band as a way to get a ‘heads-up’ on any potential signs of a market imbalance. 

Between Q1-Q3 2025 versus the same period last year paints an interesting picture. Knight Frank says, there has been a 14% reduction in the number of homes on the market priced below AED 1 million, while the number of sales taking place in this segment of the market has grown by 10% over the same period. There has been a rise in the number of listings of properties priced AED 1-25 million, but the corresponding rise in deal activity has been at a faster rate. In essence, sales are happening faster than the stock is being replenished.  

Jamal continued: “Over the AED 25 million threshold, however, stock levels are rising faster than the rate of deals. This isn’t all that surprising given that developers are publicly pivoting toward the luxury and uber-luxury end of the market to capitalise on the insatiable demand from the global elite for luxury homes in the city”.  

STILL THE WORLD’S BUSIEST US$ 10 MILLION+ MARKET 

Dubai’s high-end residential market enjoyed another stellar quarter, with 103 homes selling for more than US$ 10 million in Q3 2025, 24% ahead of the 83 deals recorded in the third quarter of 2024. Performance was driven by strong demand in the luxury segment, which saw 17 transactions priced over US$ 25 million – more than twice the number recorded in Q3 2024. 

Total transaction value increased at an even greater rate than the number of deals, topping US$ 2bn in the three months to the end of September, representing year-on-year growth of 54%. This increased activity in the ultra-luxury market saw high-value sales push up the average deal value in the US$ 10 million+ segment to more than US$ 19.4 million, representing a 23.8% rise on Q3 2024. 

The highest price achieved in the third quarter was for a seven-bedroom mansion in Asora Bay by Meraas in the La Mer community, which sold for AED 350 million (US$ 95.3 million). 

McKintosh continued: “The fact that the growth in total transaction values for US$ 10 million+ homes is rising faster than the number of deals is a stark indication of how fast prices are rising in this exclusive segment of the market. Dubai’s luxury market has cemented its status as a safe haven for international and local luxury buyers and it looks set to be another record-breaking year for the US$ 10 million+ homes market, following the 435 deals registered during 2024. Over recent years, high-net-worth individuals [HNWI] have firmly anchored demand for luxury and super-prime assets, while a maturing base of resident end-users has provided stability across the mainstream sector.” 

2026 OUTLOOK 

Knight Frank’s residential agency team’s 2026 house view is underpinned by continued robust international HNWI demand for premium homes, the continued inflows of global wealth (and the global wealthy) and a deepening pool of resident investors. The expectation is of a housing market that is likely to show even more signs of stabilisation through 2026.  

Durrani concluded: “Dubai’s residential market in 2025 exemplifies the city’s transformation into a diversified, globally competitive hub for real estate investment. Record-high sales volumes, robust price appreciation and resilient rental performance all point to a market operating from a position of strength rather than exuberance. While moderation in house price growth rates is inevitable, the structural drivers of demand – population expansion, wealth migration and economic diversification – remain firmly intact. Although the rate of house price growth may be demonstrating signs of slowing, crucially it remains positive, underpinned by robust international HNWI demand for premium homes, the continued inflows of global wealth and a deepening pool of resident investors.  

“Overall, our residential agency team’s expectation for 2026 is for price rises of around 3% in the prime segment, while the growth in the mainstream market is likely to average around 1% by the time we get to the end of December 2026.”