UAE Residential Real Estate Market Faces Transitional Phase
Market Overview
The UAE’s residential real estate sector is poised for a slight downturn in sales and a gradual dip in prices over the next 12 to 18 months. This projection comes from Moody’s, a global credit ratings agency, which points to an increase in property completions adding pressure to market supply. While these shifts might seem concerning, several underlying factors indicate that the overall market remains robust.
Sales and Transactions Highlights
Despite the anticipated easing, developers in the UAE are sitting on solid financial ground, buoyed by substantial revenue backlogs and stable liquidity. Regulatory frameworks have successfully shielded banks from undue risk associated with construction and property markets, fostering a resilient financial ecosystem. According to a report from Markaz, the residential real estate scene in the UAE demonstrated impressive performance in the first three quarters of 2025.
In Dubai, transaction values surged by 28.3% year-on-year, reaching approximately 554.1 billion Emirati Dirhams (around $150.88 billion). Abu Dhabi also saw remarkable growth, with total sales climbing 75.8% to 58 billion Dirhams and transaction volume increasing by 42.3% to 15,800 deals.
Future Projections
Moody’s anticipates that the rapid growth in the UAE’s real estate market, particularly in Dubai, is approaching a plateau. With an estimated 180,000 new residential units expected to be completed between 2026 and 2028, the market may experience downward pressure on demand and price growth. However, the fundamentals underpinning the sector—such as population growth and an influx of high-net-worth individuals—remain strong, suggesting a potential for long-term stability.
Insights from Industry Experts
Munir Al-Daraawi, CEO of Dubai-based Orla Properties, echoed Moody’s findings, stating that the market is transitioning from an extraordinary growth phase to one of sustainable stability. Al-Daraawi believes the expected delivery of new units is a positive reflection of the UAE’s lasting appeal to affluent individuals and an expanding local population. He emphasized the importance of regulatory measures that have fortified banks against excessive exposure, ensuring a healthy market environment.
In his view, the current landscape presents opportunities for boutique and luxury developers to prioritize quality and strategic capital deployment, enhancing the UAE’s real estate narrative.
Analysis of Market Dynamics
Riad Gohar, co-founder and CEO of BlackOak Real Estate, offered a different perspective, arguing that the rise in supply does not necessarily correlate to a broad market slowdown. He pointed out that approximately 83% of residential transactions in Dubai in 2024 and 2025 were non-mortgaged, indicating that the market is largely driven by equity rather than debt. This foundation typically leads to milder, segmented corrections rather than systemic downturns.
Gohar further noted that the current macroeconomic environment is more favorable compared to previous cycles, driven by ongoing structural reforms, population growth, and significant capital inflows. Demand remains rooted in practical factors such as migration, business formation, and wealth relocation, rather than mere speculation.
Segmenting the Market
It’s essential to distinguish between prime and non-prime locations as the market evolves. Increased supply is more likely to impact less established areas, while prime properties continue to receive strong support from global high-net-worth investments. Historically, prime assets in Dubai have shown greater resilience, even during periods of broader market instability.
While some smaller developers might face tighter margins due to slowing sales, Gohar emphasizes that this could lead to a consolidation phase rather than a systemic risk. He highlighted that banks’ exposure to real estate has dropped significantly to about 12% of total loans, further mitigating any potential contagion risk.
Developer Strategies Moving Forward
The environment is shifting, prompting some developers to diversify their portfolios and explore new business avenues. Moody’s report indicates that many developers are expected to generate substantial cash reserves over the next few years but may face limited investment opportunities in the competitive Dubai market.
For instance, Binghatti is pioneering its first master-planned villa community, marking a departure from its traditional focus on high-rise developments to meet the growing demand for villas. Other notable developers are looking beyond UAE borders to discover new growth opportunities, such as Damac’s planned investments in U.S. and European data centers, as well as Emaar’s active developments in regions like Egypt, India, the UK, and potentially China.
Conclusion
The UAE’s residential real estate market is shifting, transitioning from rapid growth to a more stable phase. While challenges such as increased supply and mild price adjustments may emerge, the underlying fundamentals remain strong, and the continued influx of investment and talent positions the market for long-term success.
