United Arab Emirates' Residential Property Market Analysis 2026

The war in the Gulf has turned the UAE housing market. Dubai prices are now falling year-on-year for the first time since the pandemic, sales are well below last year's levels, and rents are dropping. Abu Dhabi is still growing, but much more slowly. And the central bank has started raising interest rates again.

This extended overview from Global Property Guide covers key aspects of the housing market in the United Arab Emirates and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Property Prices and Price Index
• Property Demand Trends
• Property Supply Trends
• Rental Market: Rents and Rental Yields
• Mortgage Market and Interest Rates
• Economic and Social Factors

Property Prices and Price Index

In our June 2026 edition, both of the UAE's main housing markets were still rising, although Dubai was slowing. Since then, Dubai has moved into decline, while Abu Dhabi has kept growing at a much slower pace. The turning point was the war in the region, which began in late February 2026 and has disrupted trade, tourism, and shipping through the Strait of Hormuz.

United Arab Emirates (Dubai) house price annual change:

Dubai prices have turned down

In September 2026, the Dubai Residential Market Sales Price Index was 1.27% lower than a year earlier, according to REIDIN. It was the second month in a row of annual decline. In April, prices had still been 6.09% higher than a year earlier, and at the end of 2025, almost 13% higher.

The index has fallen month after month since March. It dropped 1.07% in May, 1.24% in June and 0.65% in July, according to REIDIN. The falls then became much smaller: 0.07% in August, followed by a small rise of 0.25% in September. That suggests the decline is slowing, but not yet that prices are recovering.

Other measures show the same picture. ValuStrat's Dubai residential index, which is based on valuations of a fixed sample of homes, fell to 218.6 points in Q3 2026. That is 4.5% lower than a year earlier and the first annual fall since the pandemic, according to ValuStrat. The index first fell in Q1, when it dropped 3.8% from the previous quarter, its first quarterly decline since 2020. Villas were still 12.1% higher than a year earlier at that point, according to ValuStrat's Q1 review.

The biggest monthly fall came in March, when values dropped 6%, just after the war began. After the ceasefire of 8 April, the monthly falls shrank to 2% in April and 1% in May and June, ValuStrat said. By September, monthly falls were close to zero.

The decline is uneven

Not all of Dubai is falling at the same pace. In Q2 2026, CBRE's measure of Dubai prices was still 1.9% higher than a year earlier, with apartments up 1.3% and villas up 5.7%, according to its Q2 market review. But CBRE expected this to turn negative in the following quarter, because sales are registered with a delay and the data had not yet caught up with the market.

The biggest falls have been in expensive areas with a lot of existing stock. In Q2 alone, apartment prices on the Palm fell by about 9%, and in Business Bay and Downtown Dubai by around 7%, according to CBRE. Apartments in DIFC and Meydan held up better. Among villa communities, prices fell 8% in Jumeirah Golf Estates, 7% in The Sustainable City and 5% in Dubai Hills, while Al Barari, Damac Hills and Jumeirah Islands saw prices rise.

Part of the fall in average prices is due to the mix of homes being sold, rather than to lower prices for the same homes. Savills noted that average apartment and villa prices softened in Q3, but that like-for-like prices were fairly stable. Prime homes have held up best: ValuStrat's prime villa index was still 1.2% higher than a year earlier in Q3, and Savills said the prime segment continued to show resilience.

Abu Dhabi is still rising, but more slowly

Abu Dhabi is still growing, but the pace has slowed sharply. Its sales price index was up 11.17% year-on-year in September 2026, down from 27.76% in April and a peak of more than 33% in February, according to REIDIN. Month-to-month, prices have been broadly flat since the summer: they fell 0.72% in June, rose 0.46% in July, fell 0.16% in August and rose 0.17% in September.

Consultancies report similar trends. In Q2 2026, CBRE measured Abu Dhabi prices 21.6% higher than a year earlier, with apartments up 24.4% and villas up 6.3%. But both segments fell by 1.4% from the previous quarter. ValuStrat's index rose 2.1% in Q2 from the previous quarter and 17.8% from a year earlier, with apartments up 24.1% and villas up 12%. Ready homes sold at an average of AED 1,442 (USD 393) per sq. ft. In Q3, Savills reported that average apartment values in Abu Dhabi were 9% higher than a year earlier, and villa and townhouse values 8% higher.

ValuStrat describes Abu Dhabi as being at an earlier stage of its property cycle than Dubai, with more affordable prices that continue to attract buyers who want to live in their homes.

The northern emirates are also cooling

The smaller emirates have followed Dubai. In Ras Al Khaimah, apartment prices fell 2.04% in September 2026 from August and were 4.73% lower than a year earlier, according to REIDIN. As recently as May, they had been more than 25% higher than a year earlier. In Sharjah, apartment prices were 6.94% lower than a year earlier. Ajman was the exception, with apartment prices up 2.51%.

Ras Al Khaimah had been one of the fastest-growing markets in the UAE. In the first half of 2026, apartment prices were still 18.0% higher than a year earlier, according to CBRE, but growth had slowed since February.

Outlook

The outlook has changed. At the start of 2026, ValuStrat forecast that Dubai home values would rise by about 10% this year, after a rise of almost 20% in 2025. With its index now 4.5% lower than a year ago, that forecast will not be met.

Most consultancies now describe Dubai as stabilising rather than recovering. Savills expects the market to move towards a more sustainable balance, with affordability and financing conditions remaining important. CBRE was more cautious in its Q2 review, expecting wider falls in both prices and rents in the coming quarters unless the conflict is resolved for good. For Abu Dhabi, Savills expects demand to be supported by infrastructure investment, a growing number of international buyers and demand for premium homes.

Property Demand Trends

Dubai sales have fallen sharply

The war hit buyer confidence quickly. In Q2 2026, Dubai recorded fewer than 37,000 residential sales, compared with more than 51,000 a year earlier, a drop of 29%, according to CBRE. Sales of ready homes fell 42% and off-plan sales 23%. Villa sales were hit hardest, falling 57%, while apartment sales fell 22%.

The value of sales fell even more. Residential sales in Q2 were worth AED 88 billion (USD 24.0 billion), down about 43% from close to AED 154 billion (USD 41.9 billion) a year earlier, according to CBRE.

In Q3, sales stabilised at a lower level. Dubai recorded about 34,500 residential sales, worth AED 70.8 billion (USD 19.3 billion), according to Savills, based on Dubai Land Department data. That was only 4% fewer than in Q2, when Savills counted 35,884. In Q1 2026, Savills reported about 45,200 sales, and in each of the last three quarters of 2025, more than 50,000.

Different consultancies count sales in slightly different ways, so their figures do not match exactly. For Q2, ValuStrat counted 35,465 sales, 20% fewer than in Q1. But all sources agree on the direction.

Off-plan sales are losing ground

Off-plan sales drove the boom of recent years, and they are now driving the slowdown. Developers have cut back new launches sharply. In the first half of 2026, just over 40,000 new units were launched, according to REIDIN data cited by CBRE. Launches fell from about 32,000 units in 93 projects in Q1 to about 10,000 units in 41 projects in Q2, and most were mid-market homes, as developers held back luxury projects.

Off-plan sales still make up most of the market. In Q2, ValuStrat counted 27,113 off-plan registrations, 76% of all sales, worth AED 63.7 billion (USD 17.3 billion). That was 24.1% fewer than a year earlier. In Q3, off-plan registrations fell a further 10.1% from Q2, according to ValuStrat.

Sales of ready homes, by contrast, have picked up. They rose 18.5% in Q3 from Q2, to 9,491, according to ValuStrat. Savills also reported that ready-home sales strengthened in Q3, and said the drop in total sales was driven mainly by fewer off-plan launches and a different mix of homes being sold, rather than a broad weakening of demand.

Population growth continues to support demand. Dubai's population has grown by about 230,000 so far this year, according to ValuStrat. That is a large increase for a city whose population ValuStrat expected to reach 4.7 million by the end of 2026.

Abu Dhabi demand has cooled from a record start

Abu Dhabi had a record start to 2026, and demand has held up better than in Dubai. In Q2 2026, the value of residential sales reached AED 32 billion (USD 8.7 billion), 150% more than a year earlier, according to CBRE. The number of sales rose 80% to nearly 7,600. CBRE said demand from UAE nationals, who heavily supported recent launches by large local developers such as Aldar and Modon, was a key reason.

But activity has slowed since the start of the year. The value of sales in Q2 was 23% lower than in Q1, and the number of sales was about 10% lower, according to CBRE. In Q3, there were 6,085 residential sales, according to Savills, down from 7,129 in Q2. Savills said the slowdown should not be read as a weakening of demand, because there is a delay between project launches, sales and registration.

Off-plan homes dominate. They made up 81% of sales in Q3, according to Savills, and 83% in Q2, according to CBRE. Demand for expensive homes has been particularly strong: sales above AED 10 million (USD 2.7 million) rose 35% in Q3 from the previous quarter, Savills said.

Foreign buyers remain important. International buyers accounted for 70% of the value of residential sales in Abu Dhabi in the first half of 2026, according to Savills.

Property Supply Trends

Dubai completions lag far behind schedule

Dubai still has a very large pipeline of new homes, but construction delays mean that far fewer are being finished than planned. Only about 33,000 homes had been completed by the end of September 2026, less than a third of the full-year target, according to ValuStrat. At the start of the year, ValuStrat had estimated the 2026 pipeline at 131,234 units, most of them apartments, and had warned that actual deliveries would be lower.

The war has made the delays worse. Some construction materials are taking longer to arrive because of problems with shipping through the Strait of Hormuz, and many deliveries planned for 2026 have already been moved into 2027, according to CBRE. CBRE counted about 18,000 completions in the first half of 2026: 14,800 apartments, 2,300 villas and 1,000 branded residences. Savills counted about 27,300 homes handed over in Q2 alone, the most in a single quarter in recent years. Sources differ widely on how many homes have been finished, but all agree that deliveries are well behind schedule.

The delays may help the market in the short term. CBRE said that slower deliveries could cushion Dubai from a more severe fall in rents and prices.

A large wave is still coming

The slowdown in launches will ease some of the pressure. But more than 525,000 homes are scheduled for delivery in Dubai between 2027 and 2030, according to Savills. Even if many are delayed, that is a large amount of new supply for a market where demand has weakened. How quickly it is absorbed will depend on population growth and on how long the conflict lasts.

Abu Dhabi supply is smaller but rising

Abu Dhabi's pipeline is much smaller. About 7,400 homes were completed in 2025, bringing the total stock to about 315,000 units, according to Cavendish Maxwell. It projects 15,900 completions in 2026, 18,600 in 2027 and 22,300 in 2028, which would lift the stock to about 371,800 units. But it expects actual deliveries this year to be only 6,500 to 9,000.

CBRE expects about 10,000 new homes a year in Abu Dhabi in 2026 and 2027, rising in 2028 and staying high until 2031. Short-term supply-chain problems could delay some of these, CBRE said.

In Ras Al Khaimah, the pipeline is growing quickly. Completions are expected to rise from modest levels to more than 24,000 units between 2028 and 2030, mostly on Al Marjan Island and in new master-planned communities, according to CBRE. About 10,000 branded residences are due by 2030.

Rental Market: Rents and Rental Yields

Dubai rents are falling

Rents have turned down. In September 2026, Dubai's residential rent price index was 6.81% lower than a year earlier, according to REIDIN. In our previous edition, rents were still 1.5% higher than a year earlier. Rents fell 1.47% in September from August alone. ValuStrat's rental index for Dubai fell 4.9% in Q3 from Q2.

United Arab Emirates (Dubai) rent price index:

The falls have been steepest in areas with a lot of existing supply. In Q2, apartment rents fell 11% in Downtown Dubai and 10% in Dubai Hills and Dubai Marina, according to CBRE. Villa rents fell 12% in Dubai Hills, 11% in Al Barsha and 8% in Jumeirah Park. Over the whole market, CBRE measured a 6.2% fall in rents in Q2 from Q1, with apartments down 6.5% and villas down 4.0%.

Three things are pushing rents down, according to CBRE. More new homes are being completed. Demand from tenants is weaker. And many homes that were let to tourists as short-term rentals are now being offered as long-term rentals instead. New tenants are paying much less than tenants who renew existing leases.

Lower rents have brought tenants back into the market. Rental transactions rose 16% in Q3 from Q2, according to Savills. At the start of 2026, ValuStrat had already forecast that Dubai rents would stop rising this year, as they reached a ceiling.

Abu Dhabi rents are flat after the freeze

In Abu Dhabi, rent growth has stopped. The rent index was 0.13% lower in September 2026 than a year earlier, according to REIDIN, compared with rises of more than 20% at the end of 2025.

The main reason is a rent freeze. In June 2026, the Abu Dhabi Real Estate Centre (ADREC) introduced a temporary freeze on rent increases for residential, commercial and industrial property, until further notice. Landlords can no longer raise rents when leases are renewed, where previously increases of up to 5% were allowed, and new leases on previously rented homes must be at the same rent as before, according to CBRE. In Q2, Abu Dhabi rents were still 3.6% higher than a year earlier but fell 4.8% from Q1.

Rental transactions in Abu Dhabi rose 29% in Q3, mainly renewals, according to Savills, while rents for new leases moved in different directions in different communities.

In Ras Al Khaimah, rents were still rising strongly in the first half of 2026, up 14.3% from a year earlier, according to CBRE.

Rental yields

Gross rental yields in the UAE averaged 4.94% in Q2 2026, according to research by Global Property Guide. That is down from 5.45% in Q4 2025. With rents now falling in Dubai faster than prices, yields there are likely to come under further pressure.

Mortgage Market and Interest Rates

Interest rates are rising again

The dirham is pegged to the US dollar, so the UAE central bank follows the US Federal Reserve. Its Base Rate, the rate it pays banks on overnight deposits, is tied to the interest rate the Fed pays on bank reserves. In late 2025, the Central Bank of the UAE (CBUAE) cut its Base Rate three times, from 4.40% to 3.65%, and it held it there for the first eight months of 2026.

United Arab Emirates mortgage loan interest rates:

That has now reversed. The CBUAE raised its Base Rate by 0.25 percentage points to 3.90% from 17 September 2026, after the Fed raised its own rates. It was the first increase since 2023. The rate for banks borrowing short-term money from the central bank remains 0.50 percentage points above the Base Rate.

Mortgage costs are rising

Most UAE mortgages are linked to the Emirates Interbank Offered Rate (EIBOR), usually the 3-month rate, plus a bank margin. Many loans start with a fixed rate for one to five years, after which they switch to EIBOR plus the margin. The 3-month EIBOR was 4.21% on 19 October 2026, according to the CBUAE, up from 3.69% at the end of May. It had briefly reached 4.39% at the start of October. So borrowers with variable-rate loans are now paying more.

The CBUAE's next Credit Sentiment Survey, due in November, will show how bank lending to households has held up since the war began.

Economic and Social Factors

The war has pushed the economy into recession

The UAE entered 2026 in strong shape. Real GDP grew by 6.6% in 2024 and 6.2% in 2025, according to the World Bank. Growth was still 3.0% in Q1 2026, but the war that began in late February hit trade, tourism and aviation. Accommodation shrank by 5.8% in Q1, and transport by 2.2%.

Oil production fell from 3.4 million barrels per day to 1.9 million in March. It then recovered to 3.8 million by June, as more oil was exported through the pipeline to Fujairah, which avoids the Strait of Hormuz, and after the UAE left OPEC+, which allowed it to pump more. The UAE plans to raise its production capacity from about 4 million to 5 million barrels per day by 2027, the World Bank said.

Forecasts have been cut sharply. The World Bank now expects the economy to shrink by 1.6% in 2026, before growing 9.5% in 2027 and 7.1% in 2028. In April, it had expected growth of 2.4% this year. The IMF is more pessimistic: in its October 2026 World Economic Outlook, it forecast a 3.9% contraction in 2026, followed by 7.7% growth in 2027, assuming the Strait of Hormuz gradually reopens from March 2027. CBRE, using Oxford Economics forecasts, expected a smaller contraction of 0.04% in 2026, down from a forecast of 4.8% growth at the start of the year.

Tourism has been hit hard

Tourism, one of the main drivers of the economy and of demand for short-term rentals, has suffered most. Before the war, the UAE was receiving about 2 million overnight visitors a month, according to CBRE. After March, the numbers dropped sharply as many international airlines suspended flights. In the first half of 2026, hotel occupancy in the UAE was 27.7 percentage points lower than a year earlier, and revenue per available room fell by 31.8%. Dubai was hit hardest, with revenue per room down 35.2%, while Abu Dhabi did better, with a fall of 20.3%, helped by events and local tourism.

Some recovery is under way. Emirates Airlines is now operating close to its pre-war capacity, CBRE said. And business activity outside the oil sector has picked up again: the non-oil purchasing managers' index fell from 55.0 in February to 50.8 in June, but recovered to 55.3 in August, according to the World Bank.

Inflation is rising

Inflation has picked up because of higher food, energy, and shipping costs. Dubai's consumer price inflation reached 5.7% in June, the highest since August 2022, according to CBRE, and averaged about 4.4% in the first half of 2026, according to the World Bank. The World Bank expects national inflation of 2.7% in 2026, up from 1.3% in 2025, before it eases to 1.8% in 2027. Government measures to limit the cost of basic foods and housing have helped to contain prices.

Jobs and population

The labor market has cooled. The number of businesses fell by 0.4% in the first half of 2026, after rising 7.8% in 2025, and workforce growth slowed from 12.4% to 2.2%, mainly because companies hired fewer foreign workers, the World Bank said. This matters for housing, because expatriates make up most of the workforce and most of the tenants. Employment of Emiratis in the private sector kept rising, from 176,125 in 2025 to over 190,000 in the first half of 2026, supported by government targets.

The government has responded with support for businesses. These include help with loan restructuring and fee deferrals, and a Dubai-led AED 2.5 billion (USD 681 million) package for small businesses and the private sector, according to CBRE.

Public finances remain strong

The UAE has large financial buffers. The World Bank expects a budget surplus of 4.2% of GDP in 2026, as high oil prices boost revenues, and public debt of only 28.4% of GDP. In May 2026, Fitch Ratings affirmed the UAE's AA- rating with a stable outlook. It expects consolidated government debt to rise to 27% of GDP in 2026 from 24.3% at the end of 2025, still far below the median for AA-rated countries. Fitch said the stable outlook reflected resilient oil export revenues during the war and large fiscal and external buffers.

The main risk is the war itself. A longer conflict could further damage energy infrastructure, trade, tourism and real estate, while a faster end to it could speed up the recovery, the World Bank said.

Sources:

Global Property Guide

• United Arab Emirates Rental Yields: globalpropertyguide.com

REIDIN

• UAE Residential Property Price Report, September 2026: reidin.com
• UAE Residential Property Price Report, August 2026: reidin.com
• UAE Residential Property Price Report, July 2026: reidin.com
• UAE Residential Property Price Report, June 2026: reidin.com
• UAE Residential Property Price Report, May 2026: reidin.com

ValuStrat

• Dubai Real Estate Review Q3 2026: valustrat.com
• Dubai Real Estate Review Q2 2026: valustrat.com
• Dubai Real Estate Review Q1 2026: valustrat.com
• Abu Dhabi Real Estate Review Q2 2026: valustrat.com
• Dubai Real Estate Market Outlook 2026: valustrat.com

CBRE

• UAE Real Estate Market Review Q2 2026: mktgdocs.cbre.com
• RAK Real Estate Market Review H1 2026: cbre.ae

Savills

• Dubai Residential Market Report Q3 2026: savills.ae
• Dubai Residential Market Report Q2 2026: savills.com
• Abu Dhabi Residential Market Report Q3 2026: savills.com
• Abu Dhabi Residential Market Report Q2 2026: savills.com

Cavendish Maxwell

• Abu Dhabi Residential Market Performance 2025: cavendishmaxwell.com

Abu Dhabi Real Estate Centre (ADREC)

• Temporary Update to Annual Rental Cap Increase in Abu Dhabi: adrec.gov.ae

Central Bank of the UAE (CBUAE)

• CBUAE Raises the Base Rate by 25 Basis Points: centralbank.ae
• EIBOR Rates: centralbank.ae

World Bank

• United Arab Emirates Macro Poverty Outlook, October 2026: thedocs.worldbank.org

International Monetary Fund (IMF)

• World Economic Outlook, October 2026: imf.org

Fitch Ratings

• Fitch Affirms the United Arab Emirates at 'AA-'; Outlook Stable: fitchratings.com