Dubai property market sees 55% transaction collapse while prices hold firm

Dubai’s residential property market absorbed a sharp drop in transaction activity during the first half of 2026 without a corresponding collapse in prices, a divergence that UBP and CBRE both interpret as stabilisation rather than structural decline.

The numbers behind the slowdown are striking. Transaction values in Dubai fell 55 per cent between December 2025 and May 2026, according to UBP analysis, with delivered-property deals down 49 per cent and off-plan sales contracting 58 per cent. The Dubai International Financial Centre recorded an even steeper 67 per cent decline over the same period. CBRE’s second-quarter 2026 review corroborates the picture: residential transaction volumes dropped 29 per cent year-on-year to fewer than 37,000 sales, against more than 51,000 in the equivalent quarter of 2025. Total transaction value shrank to 88 billion dirhams from nearly 154 billion dirhams a year earlier.

Prices, by contrast, held their ground. UBP reported Dubai’s average residential price per square metre down 10 per cent year-to-date, but the breakdown matters: completed properties declined only 2.4 per cent while off-plan properties fell 10.8 per cent. CBRE found residential sales prices actually rose 1.9 per cent year-on-year in the second quarter, a result that signals the market has not entered the sharp depreciation typically associated with a property downturn.

The rental sector is adjusting on its own terms. New rental contracts across Dubai declined 4.8 per cent from their February 2026 peak, yet renewal rents rose 3.1 per cent, supported by regulations capping increases for many existing tenants. That split between new and renewal contracts reflects a structural constraint built into the market rather than a simple directional trend.

Both UBP and CBRE noted that Dubai’s market had reached record levels before disruption caused by the US-Iran conflict. UBP attributed the market’s ability to sustain relatively stable prices despite weaker volumes to greater maturity compared with previous property cycles. The firm cautioned that geopolitical uncertainty remains a risk to investor confidence going forward.

Supply will be the next variable to watch. Around 350,000 residential units are projected for delivery by 2030, though UBP noted that historically no more than half of announced projects complete on schedule, a pattern that could constrain near-term supply pressures more than headline figures suggest. CBRE recorded approximately 18,000 residential completions during the first half of 2026, which the market absorbed without significant distress.

Abu Dhabi tells a different story entirely. Residential property values there rose 21.6 per cent year-on-year in the second quarter of 2026, indicating that the cooling in Dubai reflects a market-specific correction from elevated levels rather than a broader regional downturn. Whether Dubai’s off-plan segment, which bore the steepest price and volume declines, finds a floor before the next wave of completions arrives is the question investors and developers will be watching most closely.