Market momentum continues following the record sale of 500 ultra luxury homes across the emirate in 2025
The residential sector in Dubai celebrated another year of record-breaking results in 2025, according to the Dubai Residential Market Review Q4 2025 published by the global property consultancy Knight Frank. The emirate’s real estate market saw substantial expansion in both transaction volume and total financial value, with deal numbers hitting an all-time peak of 205,400, representing an 18 percent increase over 2024. The total value of these sales grew even more sharply, climbing 25 percent year-on-year to reach AED544.2 billion in 2025, a trend primarily propelled by the performance of the prime and ultra-prime segments.
Rising ultra-luxury market resilience
Knight Frank’s research highlights the ongoing strength of the ultra-luxury market, where sales for homes priced at $ 10 million or more remain at historic highs. There were 143 such deals in the final quarter of 2025, contributing to a total of 500 transactions for the full year. This specific sector continues to exhibit resilience, reinforcing Dubai’s reputation as a premier global hub for ultra-high-net-worth individuals.
Faisal Durrani, Partner – Head of Research, MENA, stated: “The fact that value growth is outpacing volume growth indicates a market driven by capital appreciation and a shift toward higher-value assets rather than turnover alone, as demonstrated by the record 500 transactions over $ 10 million in 2025. The prime residential sector continues to outpace the wider market. While mainstream prices demonstrate steady, gradual growth, prime values have accelerated sharply surpassing AED4,300 psf.”
Shehzad Jamal, Partner – Real Estate Consultancy, MENA added: “The upward trend in Dubai’s housing market has now spanned five full years, and while we anticipate continued growth, there are clear signs that the market is maturing. Growth has been underpinned by the rising popularity of smaller, high-amenity units among both investors and owner-occupiers, and the combination of affordability, strong rental yields and sustained population inflows has kept absorption high despite rising prices. Our analysis suggests that we may now be seeing a two-speed market emerging, where prime locations outperform even as price growth normalises in the mid-market.”
Evolving rental market dynamics
In terms of the rental market, Knight Frank found that Downtown Dubai leads with the highest annual costs, where one-bedroom units average AED127,000, followed by Dubai Marina at AED102,000. Jumeirah Village Circle saw the most significant annual rent hike among the top ten communities, rising 13 percent to AED72,500, while Business Bay rents increased by 10 percent to AED99,000. Unlike the apartment sector, where all top-tier locations saw rent increases in 2025, the villa rental market is becoming fragmented. High-end communities like Tilal Al Ghaf saw a 13 percent rise, but secondary areas such as Al Furjan experienced a 2 percent decline, suggesting that price sensitivity is starting to affect non-prime villa areas.
Regarding the supply of new housing, Knight Frank’s tracking of registered projects points to a significant influx of inventory for 2026, with the potential for over 160,000 units to enter the market. However, Jamal noted: “When it comes to new housing supply, the reality is that the completion rate is likely to be far lower than what the data suggests. Developers have been unable to meet completion obligations throughout this property cycle, with the total proportion of homes completed on time last year improved to 64 percent in 2025 of 39,700 units, which is just-above the long-term delivery rate of 36,000 homes per year over the last 20 years. This follows a 50 percent completion rate in 2024 of just 30,500 units.”
Sustained prime market growth
The market remains focused on vertical living, with apartments making up 85 percent of the upcoming supply, while villas represent 14 percent and branded apartments just 1 percent. Durrani concluded: “We expect to see an overall moderation in the pace of house price growth as supply increases and the natural progression of the property cycle plays out. However, the structural drivers of demand in Dubai – population expansion, wealth migration and economic diversification – remain firmly intact. While the rate of house price growth may be demonstrating signs of slowing, crucially it remains positive, underpinned by robust international HNWI demand for premium homes, continued inflows of global wealth and a deepening pool of resident investors. Overall, our expectation for 2026 is for price rises of around 3 percent in the prime segment, while the growth in the mainstream market is likely to average around 1 percent by the time we get to the end of December 2026.”
Record-breaking real estate momentum
This record-breaking 2025 has set a massive foundation for the start of 2026. Data from the Dubai Land Department (DLD) shows that January 2026 was the strongest single month in history, with total real estate transactions hitting AED107.96 billion—nearly double the AED57.89 billion recorded in January last year. This surge was led by high-value sales in Al Rowaiyah 1 and Meydan 2, indicating that the “ultra-high-net-worth” momentum mentioned in your text shows no signs of slowing down.
The structural demand for 2026 is further bolstered by rapid population growth. As of January 26, 2026, Dubai’s population has officially surpassed 4 million residents, growing at an annual rate of 5percent. This demographic expansion translates to a requirement of approximately 150 to 170 new residential units per day. With this “planned migration” of skilled professionals and entrepreneurs, the market is shifting from speculative trading toward a genuine end-user and tenant-driven model.
Regarding the supply concerns mentioned by Jamal, the “delivery gap” remains a critical market buffer for 2026. While over 160,000 units are “forecasted” for the next two years, realistic delivery rates for 2026 are hovering around 48percent (roughly 34,740 units) due to developer constraints. This continued undersupply in the face of 200,000+ new residents per year is expected to keep prices firm, despite a forecasted moderation in growth to approximately 3percent for the prime segment by the end of 2026.
Stay tuned as this line continues to rise from blueprint to bustling reality — and get ready to explore Dubai with even greater ease in the years ahead!
News Source https://economymiddleeast.com/news/dubai-real-estate-market-eyes-160000-new-units-in-2026-following-record-ultra-luxury-home-sales/
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