As supply builds, Dubai’s prime residential market continues to outpace broader growth (Photo: Unsplash)
Dubai’s residential market closed 2025 on a strong note, with both transaction volumes and values reaching new highs, even as signs of market maturity begin to emerge, according to the latest Dubai Residential Market Review Q42025 by Knight Frank.
A total of 205,400 residential transactions were recorded in Dubai in 2025, marking an 18% increase from the previous year. More striking, however, was the growth in transaction value, which rose 25% y-o-y to AED544.2 billion ($188.48 billion). The stronger rise in value relative to volume points to continued momentum at the upper end of the market, particularly in prime and ultra-prime segments.
Knight Frank notes that the ultra-luxury sector remains a key driver for the Dubai housing market. Homes priced above US$10 million recorded 500 transactions in 2025, with 143 deals completed in the fourth quarter alone — levels that are among the highest ever recorded.
Read also: Dubai penthouse at Armani Beach Residence fetches AED92.5 mil amid Middle East conflict
Faisal Durrani, partner and head of research for Middle East and North Africa (MENA) at Knight Frank, states the divergence between value and volume growth reflects a shift in buyer behaviour. “The fact that value growth is outpacing volume growth indicates a market driven by capital appreciation and a shift toward higher-value assets rather than turnover alone,” he says, adding that prime residential prices have accelerated sharply, surpassing AED4,300 psf, even as mainstream price growth remains more gradual.
While headline figures point to another banner year, Knight Frank believes the market is increasingly showing signs of differentiation across segments and locations.
Shehzad Jamal, partner in real estate consultancy for MENA, says Dubai’s housing upcycle has now stretched across five consecutive years. “While we anticipate continued growth, there are clear signs that the market is maturing,” he adds. According to Jamal, demand has been supported by smaller, amenity-rich homes that appeal to both investors and owner-occupiers, alongside strong population inflows and rental yields.
However, he notes that a “two-speed market” is emerging, where prime locations continue to outperform, while price growth in the mid-market begins to normalise.
Rental performance in 2025 remained generally positive, particularly in the apartment sector. Downtown Dubai continued to command the highest rents, with one-bedroom units averaging AED127,000 annually, followed by Dubai Marina at AED102,000.
Among the most active rental markets, Jumeirah Village Circle recorded the strongest growth, with average rents rising 13% to AED72,500 annually. Business Bay followed with a 10% increase to AED99,000.
Read also: Rising Middle East tensions spur relocation enquiries to Singapore
In contrast, the villa rental market showed early signs of fragmentation. While prime communities such as Tilal Al Ghaf saw rents climb by 13%, secondary locations including Al Furjan experienced a 2% decline, suggesting increasing price sensitivity outside core villa districts.
Looking ahead, Knight Frank flagged a sizeable supply pipeline, with over 160,000 residential units potentially entering the market in 2026. Apartments account for about 85% of this pipeline, reinforcing Dubai’s dominance of vertical living, compared with 14% villas and just 1% branded residences.
That said, Jamal cautions that actual completions are likely to fall short of headline pipeline figures. He notes that only 64% of homes scheduled for delivery were completed on time in 2025 — an improvement from 2024, but still broadly in line with long-term delivery averages.
Despite the incoming supply, Knight Frank expects price growth to remain positive, albeit at a slower pace. Durrani says the firm anticipates prime residential prices to rise by about 3% in 2026, while growth in the mainstream market is expected to average around 1% by year-end.
“While the rate of house price growth may be demonstrating signs of slowing, crucially it remains positive,” he says, pointing to sustained demand from global high-net-worth individuals, wealth migration and Dubai’s continued economic diversification as key structural drivers supporting the market.
For more news and analysis, read our weekly e-paper. Prefer a print copy? Get it delivered to your home every Monday.
Read also: Singapore real estate giants feel the heat as China's property woes continue