Dubai’s residential property market has carried through with its momentum with average values up 2.5% during Q3 2025 alone.
This extends an unbroken run of quarterly growth that began in late 2020, leaving values 10% higher than this time last year, according to a new Knight Frank assessment.
Aggregate residential transaction volumes for the year to date have exceeded AED 310 billion (US$ 84 billion) – one of the highest totals ever recorded. During Q3 alone, sales reached AED 117 billion (US$ 31.8 billion), marginally higher than the same quarter last year.
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 401.7 billion (US$ 109.4 billion). This is already 9.2% ahead of the total for 2024, when AED 367 billion (US$ 100 billion) was transacted across 169,000 deals.
A Knight Frank spokesperson says: “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.”
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.
As the market approaches an inevitable peak in this third freehold residential market cycle, Knight Frank has investigated the risk of a housing oversupply.
The agency’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.
A spokesperson continues: “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.
“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”.
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.
“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.”
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