Dubai ( Rajeev Sharma): Dubai’s residential property market is entering a more cautious phase in 2026, creating fresh challenges for Indian and other overseas investors who were among the largest buyers during the post-pandemic boom.
According to market reports by global property consultancies Knight Frank, JLL and CBRE, Dubai home prices rose sharply between 2022 and 2024, driven by foreign capital inflows, high rental demand and an influx of new residents. However, these firms note that price growth has begun to slow in 2025, particularly in apartment-dominated communities.
Industry estimates cited by JLL and Dubai Land Department data indicate that more than 80,000 to 100,000 new residential units are scheduled for completion across Dubai in 2025 and 2026. Analysts warn that such a large pipeline of supply could put downward pressure on prices and rents if demand does not keep pace.
A senior Dubai-based real estate agent who works with overseas buyers said market conditions have clearly shifted.
“Two years ago, off-plan investors could exit quickly at higher prices. Now resale periods are longer, and buyers are negotiating harder. Rental demand is still present, but returns are no longer rising at the pace seen in 2023,” the agent said.
Fitch Ratings and other international risk agencies have previously highlighted Dubai as a market prone to boom-and-correction cycles, noting past downturns after rapid expansion in 2009–10 and 2015–16. Economists say the current construction pipeline and elevated prices show similarities to earlier phases that later cooled.
Investors were initially attracted by gross rental yields of 6–8 %, according to data from Global Property Guide and CBRE. Brokers now report that yields are beginning to normalise as new units enter the leasing market and vacancy levels rise in high-supply districts.
Another property consultant noted that incentives are returning in some areas. “Landlords are offering rent-free periods and flexible payment plans to keep tenants. That usually signals that supply is starting to outpace demand,” the consultant said.
Global conditions are also influencing investor behaviour. Higher interest rates in major economies have increased borrowing costs, while currency fluctuations and slower global growth have reduced speculative buying activity. Despite the cooling trend, Dubai continues to attract foreign buyers due to its tax-free property regime, absence of capital gains tax and residency linked property visa programmes. The UAE government has not announced any restrictions on foreign ownership, and infrastructure spending remains strong.
Property advisers now recommend a change in strategy. “Short-term flipping carries higher risk in 2026,” one agent said. “Buyers should focus on established locations with proven rental demand and a longer holding period.”
Market analysts conclude that Dubai’s real estate sector is shifting from a rapid-growth phase into a more balanced and correction-sensitive environment, where investment performance will depend less on speculation and more on fundamentals such as location, pricing and long-term demand.
