The affordable homes in Dubai are tightening in 2025 - properties under $1 million are absorbed faster than new stock can come on the market. Despite talk of a slowdown, the Emirate’s residential sector remains clearly in its growth phase with values, transactions, and investor sentiment all remaining positive.
Affordable homes under Dh1 million.
Knight Frank now projects a 14% drop in properties under Dh1 million in the first nine months of 2025. In the same period, sales in this price bracket have risen by about 10%, suggesting more demand than supply in the most affordable segment.
This is because residents and investors have shifted to compact, budget apartments after five years of strong price growth. It has resulted in listings turning over faster and buyers having more competition and choice.
Mid-market and ultra-luxury shifts
Listings have gone up, but deals in this band are closing even faster, confirming the theme that sales are running ahead of stock replenishment. This means shorter selling cycles and sustained pricing power in the mainstream and mid-market spaces for developers and sellers.
Only the ultra-luxury segment, above Dh25 million, is seeing inventory build faster than sales as developers invest heavily in luxury and ultra-luxury projects. Yet global high-net worth demand remains robust, and Dubai remains a safe haven for prime and super-prime real estate.
Market performance in Q3 2025
Average values in Dubai’s residential market rose by about 2.5% in the quarter and were about 10% higher than a year ago, continuing momentum into Q3 2025. This follows a run of uninterrupted quarterly price growth that began in late 2020.
Quarterly price increases have eased from the peak years, ranging in average between 2 and 4 percent from 2021 to 2024, and easing to around 3.2 percent between Q1 and Q3 2025, in a more mature but still upward market cycle. Year to date, transaction values have topped Dh310 billion, with Q3 recording roughly Dh117 billion in sales and tens of thousands of home deals.
Apartments vs Villas
The average apartment prices in Dubai rose by about 2.3% quarter to quarter and 9.6% year to year in Q3, driven by waterfront and central districts where lifestyle appeal and connectivity remain strongest. Villas also performed strongly with values up by 3.6% over the quarter and up by 12% from Q3 2024.
That divergence reflects a two-speed market in which end users and families chase larger, villa-style homes while investors and new residents chase smaller, more affordable apartments. Together, they indicate a structurally tight market - especially at Dh1 million and below.
