Dubai’s real estate market is showing early signs of stabilisation in 2026, following a period of significant price fluctuations during the first half of the year, according to a recent quarterly review by ValuStrat. While residential property prices continue to decline, the rate of decrease has slowed notably, and the commercial property sector continues to deliver strong gains.
The residential market registered a second straight quarterly decline, with the Residential Price Index falling 4 percent between April and June to 220 points. This extended cumulative price declines since late February to around 10 percent. However, monthly price drops have moderated significantly, decreasing from 6 percent in March to just 1 percent in May and June, indicating that the market is gradually stabilising.
Despite these corrections, overall residential values remain relatively stable compared to the previous year. The average price for villas in Dubai rose by 2 percent year-on-year to approximately Dh13 million, while apartment values dipped by 3 percent, averaging Dh1.79 million. Rental rates have remained steady during the quarter, with the rental index reflecting a 1.7 percent annual increase. Villa rents grew by 2.2 percent to an average of Dh441,000, and apartment rents increased 1.3 percent to Dh98,000. ValuStrat highlighted that affordability constraints rather than falling demand are the primary factors limiting rental growth.
Supply challenges continue to influence market dynamics significantly. Only about 20,000 new homes were completed during the first half of 2026, representing just 15 percent of the planned annual delivery target of over 129,000 units. Rising costs in construction and ongoing disruptions in supply chains have delayed project completions across Dubai.
“The trend suggests that the pace of house price declines eased considerably during the second quarter, pointing towards a gradual market stabilisation,” said Haider Tuaima, ValuStrat’s managing director and head of real estate research.
In contrast to the residential market, Dubai’s office sector saw robust growth. Office capital values rose 3.7 percent in the second quarter and surged 13.9 percent compared to the same period last year, pushing the office price index to a record high of 299.5 points. This increase is chiefly attributed to a shortage of high-quality Grade A office spaces. Although sales volumes for office properties declined by more than half during the quarter, average transaction prices reached a record Dh2,045 per square foot as buyers competed for limited inventory.
The industrial and logistics sectors continued to perform strongly, buoyed by e-commerce demand, localisation efforts, and sustained interest from third-party logistics providers. Warehouse and logistics capital values rose 8.4 percent quarter-on-quarter and 17.7 percent year-on-year. With modern warehouse space in short supply, asking rents increased by 11.9 percent in the second quarter alone.
Overall, Dubai’s real estate market shows a mixed yet cautiously optimistic picture, with signs growing that residential price declines might be bottoming out amid a surge in demand and rising values in commercial and industrial property sectors.