Dubai’s property market is facing a shortage of homes priced below Dh1 million as soaring demand continues to outpace the supply of new inventory. Despite concerns of a slowdown, overall market sentiment remains positive, with properties in the affordable bracket being sold faster than they can be listed, continuing a five-year run of growth for the emirate’s real estate sector.
Demand Outpaces Supply in Affordable Housing
An analysis by global consultancy Knight Frank shows a significant imbalance in the lower-priced segment of the market. During the first nine months of 2025, the number of available homes valued under Dh1 million fell by 14 per cent. Over the same period, the volume of sales in this category increased by 10 per cent, highlighting a growing preference among residents and investors for smaller, more affordable units.
The trend extends to properties priced slightly higher. For homes listed at Dh1.25 million, the rate of deal activity has also surpassed the rate at which new stock is being replenished. This sustained demand is fuelled by the city’s strong economic appeal, which continues to attract global talent and businesses, exemplified by major financial institutions like how JPMorgan expands in Dubai.
Contrasting Trends in the Luxury Market
The situation reverses at the top end of the market. For ultra-luxury properties priced over Dh25 million, the volume of available stock is rising faster than sales are being completed. According to Shehzad Jamal, a partner at Knight Frank, this is not surprising. “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,” he explained.
This focus on high-end development is visible across the city, although some developers continue to focus on other segments, with projects including a new residential expansion in Dubai Land Residence Complex adding to the city’s diverse housing stock.
Sustained Growth Amid a Slowing Pace
The broader residential market carried its momentum into the third quarter of 2025, with average property values rising by 2.5 per cent. This marks an unbroken run of quarterly growth that began in late 2020 and leaves values 10 per cent higher than the same time last year. Aggregate residential transactions for the year to date have already surpassed Dh310 billion.
However, Faisal Durrani, Knight Frank’s head of research for MENA, noted that the pace is moderating. After averaging quarterly rises of 4.34 per cent in 2023 and 2024, the rate of growth eased to 3.2 per cent between the first and third quarters of this year. “This persistent upward trend, which has now spanned five full years, has delivered on the promise of the ‘roaring twenties’ we predicted back in 2021,” Durrani said.
During the third quarter, average apartment prices increased by 2.3 per cent, while the villa market saw prices rise by 3.6 per cent, leaving them 12 per cent higher than in Q3 2024. The data suggests a market that remains robust but is entering a more mature phase of its growth cycle.
