Dubai Residential Market Cools in H1 2026, Yet Ultra-Luxury Sales Hit Record High

Dubai's residential real estate sector recorded 80,509 home sales valued at AED 226.5 billion ($61.7 billion) in the first half of 2026, marking the second-highest H1 performance on record. This represents a decline of approximately 13% in transaction volume and 15% in value compared to the record-setting first half of 2025, when 92,910 transactions totalled AED 266.3 billion ($72.5 billion).

Market Dynamics

The six-month period, as reported by Engel & Völkers, showed distinct phases. January and February were strong, with volumes nearly 12% higher than the same months in 2025. However, monthly sales then dropped from 15,981 in January to 9,735 in May, the weakest month, before recovering to 12,890 in June. This slowdown was attributed to heightened regional uncertainty from late February, which extended buyer decision-making times, with the impact most visible in May's data, partly due to the extended Eid holiday.

Luxury Segment Soars

Despite the overall cooling, the ultra-luxury market demonstrated exceptional strength. A record 320 homes were sold for more than $10 million each, an increase of 23% year-on-year for a first half. These transactions collectively amounted to $6.0 billion, accounting for 9.7% of the total residential sales value, despite representing less than 0.5% of all deals. This figure significantly surpasses the 35 luxury sales recorded in the first half of 2021. Palm Jumeirah and Dubai Hills Estate led this segment with 53 deals each, followed by Palm Jebel Ali (40) and Jumeirah (21).

Notably, the largest single transaction reported was an off-plan apartment in Aman Residences, Jumeirah 2, selling for AED 422 million ($114.9 million). An off-plan villa at Jumeirah Asora Bay in La Mer fetched AED 350 million ($95.3 million), and a completed villa on Jumeirah Bay Island sold for AED 340 million ($92.6 million).

Off-Plan Dominance and Price Trends

Off-plan properties continued to drive the market, securing a 71.3% market share, equating to over seven in ten transactions. The value of off-plan deals reached AED 133.1 billion ($36.2 billion), significantly outweighing the AED 93.4 billion ($25.4 billion) in the secondary market. This trend is linked to developer payment plans, a steady stream of new project launches, and buyer confidence in established developers.

Price growth varied considerably across districts. Villa values on Palm Jumeirah saw the sharpest increase, rising 37% year-on-year to AED 8,406 per square foot. Jumeirah Village Circle and Jumeirah Village Triangle villas and townhouses each experienced a 20% gain, while Arabian Ranches and The Springs rose by 12%. Conversely, Dubai Hills Estate villas remained broadly flat, and villa prices at Jumeirah Golf Estates declined by 3%.

Rental Market and Mortgages

The rental market saw 271,445 tenancy contracts with a total value of AED 23.8 billion ($6.5 billion), and an average annual rent of AED 87,507 ($23,830). Apartments dominated leasing, making up 90.8% of deals. Average gross rental yields stood at 6.6% as of June, with apartments yielding 6.9%, townhouses 5.1%, and villas 4.5%. Dubai South, Arjan, Jumeirah Village Circle, and Jumeirah Lakes Towers were identified as attractive areas for income-focused investors.

For financing, the best available two-year fixed mortgage rates were 3.78% with salary transfer and 3.95% without, as of July 20. Five-year rates were quoted at 4.19% and 4.25% respectively. Non-resident buyers can typically borrow up to 60-65% of a property's value, though with fewer lenders compared to residents.