Dubai’s residential real estate market entered the third quarter of 2025 with strong momentum and continued growth across all key indicators. According to Knight Frank’s latest review, average residential prices rose by another 2.5% during the quarter, extending the uninterrupted upward trend that has continued since late 2020. Year-on-year, prices are now 10% higher.
The total transaction volume since the beginning of the year has already exceeded AED 310 billion (US$ 84 billion), one of the highest figures ever recorded. In Q3 alone, sales reached AED 117 billion (US$ 31.8 billion), slightly surpassing the same period last year.
Faisal Durrani, Partner and Head of Research at Knight Frank MENA, notes that market activity remains exceptionally strong, driven by both domestic demand and international buyers. He points out that despite five years of continuous price growth, the rate of quarterly increases is gradually slowing. For example, average quarterly growth reached 2.02% in 2021, 2.22% in 2022, 4.34% in 2023 and 2024, and slowed to 3.2% between Q1 and Q3 of 2025. However, the overall upward trend remains solid.
Q3 also set a record for the number of transactions: 56,854 homes were sold, an increase of 17% compared with last year. Fr om January to September, Dubai recorded more than 148,000 sales worth AED 401.7bn (US$ 109.4bn), already surpassing the full-year result for 2024.
According to Will McKintosh, Partner and Head of Residential at Knight Frank MENA, annual price growth reached 10%, compared to 16% a year earlier. He believes the market is gradually entering a plateau phase of the current cycle. Despite this, demand remains strong, and the market is shifting away from speculative activity toward genuine demand from end-users and long-term investors. A key driver of growth is rising interest in smaller, well-amenitized units.
Price trends across segments
Apartment prices continued to rise: up around 2.3% quarter-on-quarter and 9.6% year-on-year. The strongest growth occurred in Meydan City, wh ere prices surged 22% in the quarter and 29% annually. Palm Jumeirah led annual growth with a 31% increase, followed by Dubai Marina at 15%. In Business Bay, prices rose 10% during the quarter, supported by strong demand for premium towers along the Dubai Canal. Downtown Dubai and Dubai Hills Estate showed more moderate gains as these markets entered a period of stabilisation.
The villa segment grew even faster: up 3.6% QoQ and 12% YoY. La Mer recorded the highest growth, with prices jumping 33.8% in the quarter and 54.7% YoY. Palm Jumeirah, despite being the main hub of demand, saw no price increase in Q3 and recorded a 19% decline in transactions, indicating more homes being held for the long term.
Across Dubai’s 10 prime neighbourhoods, average prices reached AED 3,767 per sq ft, an 8.4% annual increase and a 140% surge since 2019. Current averages: apartments at AED 1,798 per sq ft (+69% since 2020) and villas at AED 2,250 per sq ft (+124%). Strong rental yields and steady population growth continue to support high absorption levels.
Oversupply risk
Amid active development, Knight Frank evaluates the possibility of oversupply. Durrani notes that although construction is accelerating, actual completions lag behind — only 60% of scheduled projects were delivered on time between 2022 and 2024, and in 2025 timely completions fell to 46% in Q1–Q3.
Even if 70% of projects are completed on schedule, Dubai would add around 66,000 new homes annually in 2026–2030 — significantly above the historical average of 36,000. In total, around 331,000 homes could be delivered in five years.
According to Shehzad Jamal, Partner for Strategy and Consultancy, any cooling would likely appear selectively — in areas with heavy construction activity and in specific price bands. Analysis shows that listings under AED 1 million declined by 14%, while sales in this segment increased by 10%. In the AED 1–25 million range, listings grew, but sales are rising even faster. In the 25 million+ segment, supply is increasing faster than demand, driven by developers shifting toward ultra-luxury projects.
Leader in the ultra-premium segment
Dubai retains its global leadership in the US$ 10 million+ homes market. In Q3 2025, 103 such homes were sold — 24% more than a year earlier. Seventeen sales exceeded US$ 25 million, more than double last year’s figure.
Total sales in this segment surpassed US$ 2 billion, a 54% YoY increase. The average transaction value rose to US$ 19.4 million (+23.8%). The most expensive Q3 sale was a seven-bedroom mansion in Asora Bay by Meraas in La Mer, sold for AED 350 million (US$ 95.3 million).
McKintosh emphasises that the total value of transactions is growing faster than the number of deals, reflecting rapid price escalation in the ultra-premium segment. Dubai maintains its status as a safe investment destination for wealthy global buyers, and 2025 is expected to end at record levels.
Outlook for 2026
Knight Frank expects further signs of market stabilisation in 2026. However, sustained demand from international HNWIs, strong capital inflows and a growing pool of resident investors will continue to support positive momentum. Analysts forecast price growth of around 3% in the premium segment and approximately 1% in the mainstream market by the end of 2026. Despite a gradual slowdown, core demand drivers remain strong: population expansion, wealth migration, economic diversification and steady global capital inflows.
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