UAE Residential Real Estate Market Analysis 2025
UAE Residential Real Estate Market Analysis 2025
Overview
Property prices in the UAE have continued to rise in 2025, fueled by strong demand from investors and end-users, rapid population growth, and an influx of high-net-worth individuals. However, a market correction is expected as new supply comes online, particularly in Dubai and Abu Dhabi. (globalpropertyguide.com)
Housing Price Growth
Dubai: According to REIDIN data, the annual residential sales index recorded an increase of 15.6% year-on-year. Apartment prices rose by 15.22%, while villa prices jumped 17.81%.
Abu Dhabi: The annual sales index surged by 18.16%; apartment prices rose 18.17% and villas increased by about 17.19%.
Asking Price Trends
In Dubai, asking prices for apartments climbed nearly 12% compared to the same period last year, with two-bedroom units up 17% and three-bedroom units up 10%.
Villas recorded a more moderate 8% annual increase. In Abu Dhabi, asking prices rose even more strongly, with villas gaining nearly 18%.
Rental Market
Dubai rents are still rising but at a slower pace. Residential rental growth in May 2025 was about 8.5% year-on-year, down from higher rates of 14–21% earlier.
In Abu Dhabi, rents surged 27.3% in May 2025, compared to 20–21% at the start of the year, and just 9–10% a year earlier.
Rental Yields
Gross rental yields in the UAE currently stand around 4.87%, slightly lower than in previous years.
The strongest yields are found in Dubai and Abu Dhabi, with apartments achieving around 7–7.6% in some areas, while villas generally yield less.
Mortgages and Financing
Mortgage rates in the UAE largely track US interest rate policy due to the dirham’s peg to the US dollar.
Some banks now offer attractive packages, such as low initial fixed rates and payment plans of 70-30 or 80-20 for selected properties.
Mortgage activity in Dubai has surged: the number of mortgage transactions rose by about 24% in Q1 2025 compared to the same period in 2024, with total value up 46.8%.
Outlook and Challenges
Dubai is expected to deliver nearly 300,000 new housing units by 2028, with the bulk arriving between 2026 and 2028, which could slow price growth.
Premium areas such as Palm Jumeirah and Downtown Dubai are expected to remain resilient, supported by strong demand and limited supply.
Key challenges include balancing supply with demand, the trend of more buyers choosing ownership over renting, and potential risks linked to delayed projects or changing financing conditions.
