Dubai’s residential market recorded its sharpest quarterly decline in recent memory during Q2 2026, but the underlying picture was more stable than the headline numbers suggest, according to betterhomes’ Q2 2026 Dubai Residential Market Report.
Transactions fell 31 per cent year-on-year to a combined value of AED84.9 billion, with regional tensions and the Eid Al Adha holiday slowing activity through May.
The quarter still ranked as the third-highest second quarter on record, behind 2024 and 2025, and monthly deal counts jumped 28 per cent from May to June as conditions stabilised.
Prices held up even as volumes retreated. Price per square foot rose across the majority of tracked communities, with Palm Jumeirah Garden Homes up 37 per cent year-on-year and Jumeirah Islands gaining 20 per cent. The overall average sale price was down 5.9 per cent quarter-on-quarter but remained 3.2 per cent above Q2 2025.
“The second quarter provided greater clarity on Dubai’s residential market. Regional tensions understandably caused some buyers to pause, delaying decisions rather than changing them, and activity recovered quickly as conditions stabilised. Perhaps the most encouraging aspect of the quarter was the resilience of pricing: we saw little evidence of distressed selling, and owners remained confident enough in Dubai’s long-term prospects to hold their assets rather than compromise on value. June also recorded the highest number of tenancy contracts ever signed in Dubai, which reflects real confidence in Dubai as a place to live, work and invest,” Richard Waind, CEO, betterhomes said in a statement.
Off-plan held the market together. New-build transactions accounted for 76% of all residential sales in Q2, with 26,338 deals, a 12 per cent annual decline. The secondary market was harder hit, falling 59 per cent year-on-year to 8,512 deals.
Off-plan transaction value dropped 15 per cent against a 69 per cent collapse in secondary value. Across Dubai Land Department transactions, apartments averaged AED1.79 million, townhouses AED3.65 million and villas AED13.77 million.
Buyer enquiries fell 33 per cent year-on-year and 23 per cent quarter-on-quarter. Apartment enquiries were down 41 per cent, while villas and townhouses declined a comparatively modest 34 per cent.
Buyers who did transact increasingly paid in cash: 61 per cent of betterhomes deals in Q2 involved no financing. Supply pressure is building, with approximately 74,100 homes due to complete across Dubai in 2026, rising to a projected peak of 160,700 units in 2027, the vast majority of which are apartments.
The luxury segment adjusted alongside the broader market. Transactions above AED15 million fell 59 per cent year-on-year to 578 deals, a correction from an exceptional prior-year high. Off-plan luxury sales bucked the trend, rising 27 per cent year-on-year, with buyers continuing to commit to new developments at The Oasis, Dubai Hills Estate and Palm Jebel Ali.
“One of the defining features of the leasing market in Q2 was its resilience. Tenant enquiries were up 20 per cent year-on-year and 18 per cent quarter-on-quarter, as more people held off buying and stayed in the rental market instead. With more stock on the market, tenants have real choice now, and that’s putting pressure on new rents. The properties that are priced right and presented well are still leasing fast; the ones that aren’t are taking longer,” Rupert Simmonds, Director of Leasing, betterhomes added.
Villa rents rose 5.7 per cent year-on-year to AED281,633, and average rents across all categories remained 3.1 per cent above Q2 2025, even as available supply increased by 70–100 per cent in some communities.
