A recent report from UBS has placed Dubai’s property market in its “elevated risk” category, raising questions about whether the emirate is heading for another correction. Property prices have climbed by double digits since mid-2023 and are now approximately 50 per cent higher than they were five years ago, prompting a debate between global analysts and local market experts.
The UBS Global Real Estate Bubble Index 2025 places Dubai in the same risk bracket as Los Angeles, Amsterdam, and Geneva. The report highlights several classic warning signs, including property prices beginning to accelerate faster than rental growth. It also notes that wages have not kept pace with property inflation, eroding affordability for residents.
Analysts also point to potential external shocks. The market remains exposed to volatile oil prices and global capital flows, while intensifying competition from Abu Dhabi and Riyadh could test Dubai’s ability to absorb demand. Furthermore, new building permits are approaching levels last seen in 2017, just before the market’s previous downturn, signalling a potential risk of oversupply.
Population Growth Fuels Optimism
Despite the warnings, property experts in Dubai argue that strong underlying fundamentals will support the market. They point to record population growth as a primary driver of demand. The city’s population surpassed four million in August, a milestone originally forecast for 2026.
“The population is growing at a rate that will sustain this course for a while longer,” said Mario Volpi, Senior Vice President Investment Advisor at Allegiance Real Estate. He suggested that while some price stabilisation would be welcome, villas and townhouses are likely to “continue to see robust growth for some time to come”.
This view is shared by Barnaby Crompton, a partner at Eden Realty. He estimates that with a projected population increase of 180,000 in 2026, demand will comfortably keep pace with the 45,000 to 96,000 new properties expected to be handed over. “With around 50,000 new business licences being opened in 2025, there is ample reason to believe that the population growth will remain strong,” Crompton added.
A Resilient Market
Compared to other global cities, Dubai possesses several unique characteristics that may provide resilience. Unlike markets such as Vancouver or Sydney, which have introduced foreign-buyer taxes, Dubai remains an open and lightly regulated market. This allows supply to adjust more flexibly and helps maintain attractive rental yields.
The city’s status as a geopolitical safe haven continues to attract a high volume of cash buyers from Russia, India, Africa, and Europe. This international demand is often seen as more stable than purely speculative domestic investment. Paul Jeffreys, founder of PJ Advisory, believes these fundamentals are strong enough to withstand a cooling phase, which he predicts might only affect smaller, lower-priced units.
While the UBS report does not predict an imminent crash, it serves as a clear warning that risks are accumulating. Affordability is weakening and the threat