Will Dubai housing market see an oversupply in 2026?

Dubai’s residential market is entering a more measured phase after an exceptional multi-year boom, but leading property analysts say concerns of a widespread oversupply in 2026 appear overstated, with risks largely confined to specific segments rather than the broader market.

According to a new assessment by global consultancy Cushman & Wakefield, city-wide residential values rose 13 percent year-on-year in 2025, extending Dubai’s price growth cycle to 22 consecutive quarters. The market has clearly begun to normalize after rapid gains of 22 percent in 2023 and 18 percent in 2024, but demand fundamentals continue to underpin pricing and absorption.

Analysts say the deceleration signals a transition to a more sustainable growth phase rather than a peak. Pricing trends are now increasingly differentiated by location, asset quality, and unit size, with prime districts and family-oriented communities continuing to show resilience even as growth moderates in more supply-heavy apartment markets.

Dubai’s total residential inventory stood at roughly 935,000 units by end-2025, with about 46,700 homes delivered during the year. Around 55,000 units are expected to be handed over in 2026 and approximately 75,000 in 2027. Over the longer term, more than 400,000 units are under construction or planned between 2026 and 2030, but actual delivery rates are likely to be significantly lower due to capacity and execution constraints.

Population growth remains a key demand driver. Dubai added over 208,000 new residents in the past year, a 5.2 percent increase that outpaces the trajectory required under the Dubai 2040 Urban Master Plan. This expansion reflects sustained economic growth, job creation, and the emirate’s continued appeal as a global hub for talent and capital.

Additional latent demand is emerging from commuters and residents currently based in neighboring emirates. Data from the Dubai Statistics Centre show that 1.68 million people commuted or stayed temporarily in Dubai during peak periods in 2024, up 10 percent year-on-year, indicating a growing pool of potential long-term residents.

Housing demand is increasingly end-user-driven rather than speculative. Rental registrations rose 7 per cent year-on-year, with renewals outpacing new contracts as tenants choose to remain despite rising rents. Average residential rents increased 6 per cent in 2025 to about Dh122 per sq ft annually, while average sale prices reached Dh1,911 per sq ft. Private school enrollments climbed 6 percent, reinforcing the rise of family households and longer-term settlement.

Industry observers broadly share the view that oversupply risks are concentrated in specific segments. Nearly 45 percent of under-construction stock is located across five districts—JVC/JVT, Dubai South, MBR City, Business Bay, and Dubailand Residence Complex—while about 66 percent of upcoming units comprise studios and one-bedroom apartments. Apartments account for more than 86 percent of the pipeline, compared with an existing market composition of roughly 80 percent apartments and 20 percent villas, supporting continued strength in villa and townhouse prices.

According to Knight Frank, Dubai’s residential market is “transitioning from rapid expansion to a more sustainable phase,” with prime and family housing expected to remain undersupplied despite a broader increase in deliveries. The consultancy noted in a recent outlook that villa prices and rents continue to outperform apartments due to limited availability and sustained end-user demand from high-net-worth and expatriate families relocating to the emirate.

Similarly, analysts at CBRE have highlighted strong absorption rates and population-led demand as key buffers against a market-wide correction. CBRE reported that Dubai recorded one of its strongest ever years for residential transactions in 2024, with both investor and end-user demand remaining robust despite rising prices. The firm said the scale of new supply “should be viewed in the context of sustained population growth and economic expansion,” adding that delivery delays and phased project launches would help moderate supply shocks.

Off-plan sales continue to dominate market activity, accounting for about 72 percent of total transactions in 2025, driven by flexible payment plans and a wider pricing spectrum compared with ready properties. Off-plan volumes rose roughly 30 per cent year-on-year, while secondary market transactions grew a more modest 8 per cent as a persistent bid–ask gap limited resale activity.

Developer activity remains concentrated among major players. Damac Properties led off-plan transaction volumes with an 11.4 percent share in 2025, followed by Emaar Properties and Binghatti. In the resale segment, Emaar accounted for about 16 per cent of transactions, reflecting the depth and liquidity of its completed communities.

Supply delivery timelines continue to face structural constraints linked to contractor capacity and supply-chain challenges. Several major developers—including Emaar, Ellington Properties, Azizi Developments, and Arada—are increasingly internalizing construction capabilities to manage costs and timelines, suggesting that actual completions may lag announced pipelines.