An economist predicts that Dubai’s real estate market will continue to grow in 2025 as a result of the city’s high demand for investment and tourism. The volume of new deliveries is anticipated to change market dynamics, giving asset quality and location priority, even though these factors support continued expansion.
As the city gets closer to the 2025–2026 business season, Elite Merit Real Estate offers its most recent insights on Dubai’s real estate market, which includes record tourism inflows, strong off-plan sales, and an enlarged supply pipeline.
These elements encourage continued growth, but the volume of new deliveries is expected to alter market dynamics and give asset quality, location, and sustainability more weight, according to Elite Merit Real Estate’s analysis.
An economist predicts that Dubai’s real estate market will continue to grow in 2025 as a result of the city’s high demand for investment and tourism. In the first half of the year, the city received 9.88 million tourists, a 6% increase from the previous year, with an average hotel occupancy rate of 80.6%.
The real estate firm claims that this momentum is increasing demand for short-term rentals and hotels.
69% of transactions in Q1 2025 were off-plan, and the average citywide price rose 3.7% from quarter to quarter to AED 1,749 per square foot. These figures suggest that sales activity is continuing rising, particularly off-plan.
The luxury real estate market is at its highest point ever. A new milestone for Dubai’s super-prime market was set in Q2 2025 when the total number of transactions for homes costing more over $10 million hit $2.6 billion.
Knight Frank projects that 70,452 units will be turned over in 2025 and another 133,041 units in 2026, which is significantly more than the historical norm.
Even while it offers opportunities for buyers, a Fitch Ratings analysis indicates that this raises the likelihood of a 10–15% price correction, particularly in the mid-market region where supply is concentrated.
On the other hand, premium properties are expected to maintain their value due to their strong demand globally and restricted supply.
Developers who implement stringent escrow procedures, staggered handovers, and sound financial management are best positioned to maintain stability. In the next cycle, the “flight-to-quality” tendency will accelerate, with location, brand, and ESG credentials emerging as crucial factors in determining real estate value.
According to Elite Merit Real Estate, Dubai’s branded residences are drawing an increasing number of overseas investors.
The segment has grown to over 140 projects with values that continuously outperform those of the overall market.
While mid-market districts continue to provide competitive rental returns for income-driven investors, short-term rentals benefit from a defined Dubai DET structure (AED 300 per bedroom, updated annually), which improves compliance and income stability.
Diverse, mixed-use projects are also growing in popularity. Even if office vacancy rates are only 7.7% and rents are still rising, developments that incorporate office, retail, and residential space are proving to be robust, offering steady cash flows and long-term tenants.
Due to significant anniversaries, Dubai’s landscape will alter. The relaunch of Expo Valley (532 units in phase one, with handovers beginning in early 2026) and Palm Jebel Ali (which would add 13.4 km of new beachfront) will expand the market’s geographic reach. By attracting an increasing number of European HNWIs, Expo City is strengthening Dubai’s position as a significant global investment destination.
When considered collectively, these activities point to a more varied investment offering and a greater distribution of demand until 2026, per the research conducted by the Dubai real estate agency.
A significant increase in supply is the main short-term problem, as it may put pressure on mid-market expansion. According to the survey, growing borrowing and service fees also have an effect on affordability.
However, land scarcity, continued Golden Visa incentives, and increasing international interest are expected to sustain record-high activity at the prime and super-prime tiers. The analysis states that developments that are well-located, marketed, and environmentally friendly will be the most robust in the upcoming cycle.
