Dubai’s residential market recorded its first annual price decline since the post-pandemic recovery in Q3 2026, with average prices falling 2.2 per cent year-on-year to AED1,644 per square foot, according to new research from Cavendish Maxwell.
The drop comes as the emirate absorbs a significant surge in new supply. Some 38,000 residential units were handed over in the first nine months of 2026, already exceeding the full-year completion totals for both 2023 and 2024, and up 41 per cent on the same period last year. A further 24,000 units are scheduled for handover before year-end.
Sales activity also weakened. Q3 transactions reached 33,900, generating AED72.6 billion in sales value, down 2 per cent and 13 per cent respectively from Q2. Against Q3 2025, the declines were sharper: transaction volumes fell more than 38 per cent and sales values dropped more than 47 per cent.
“Following two years of sustained increases in sales activity, transaction volumes have declined over the last four quarters, with Q3 2026 purchases at their lowest level since Q1 2024 and more than 38% down on the peak levels recorded a year ago. Cavendish Maxwell has reported a more measured investment environment over the last few months, and this latest insight highlights how regional tensions continue to affect investor confidence and buyer sentiment. Developer caution is also deepening, with a considerable year-on-year decline in new project launches,” Ronan Arthur MRICS, Director, Head of Residential Valuation at Cavendish Maxwell said in a statement.
“Following a period of strong and record-breaking growth, price appreciation has slowed over the last 12 months because of a number of factors. The acceleration in residential completions means more available stock, transaction activity has declined, regional tensions have affected market sentiment and home finance conditions have softened. Looking ahead, planned upcoming supply of more than 290,000 units over the next two years is likely to add to pricing pressure,” he added.
Off-plan remained the dominant segment, accounting for over 72 per cent of Q3 transactions and AED47 billion in sales, though off-plan volumes fell nearly 42 per cent year-on-year. The ready segment showed some resilience quarter-on-quarter, rising nearly 20 per cent, though it remained 28 per cent below Q3 2025 levels. Apartments led demand in both segments, taking a 91 per cent share of off-plan sales and nearly 79 per cent in the ready market.
Dubai South was the top location for off-plan apartment sales with 4,776 transactions, more than 2.5 times its nearest competitor. Jumeirah Village Circle held first place in the ready apartment segment with 1,111 sales. Sobha Sanctuary led off-plan villa and townhouse purchases, while DAMAC Lagoons topped the ready villa segment.
The luxury segment, defined as homes priced at AED20 million and above, recorded 257 sales totalling AED9.6 billion, down 40% year-on-year. Ultra-luxury properties generated AED3.4 billion across 42 transactions, a 34 per cent annual decline. Nine properties sold for more than AED100 million during the quarter.
Mortgage activity moved against the broader trend. Q3 mortgage values hit AED21.8 billion, a new quarterly record surpassing the previous high of AED20.5 billion in Q4 2025, with 10,000 loans secured.
Rental rates averaged AED77.3 per square foot in September, up 5.5 per cent year-on-year, though the pace of growth has slowed from 11.5 per cent in Q3 2025.
The share of lease renewals recording a rent reduction rose from 4.8 per cent in Q1 to more than 21 per cent by Q3, indicating a shift in negotiating power toward tenants. Gross rental yields averaged 6.6 per cent for apartments and 4.9 per cent for villas and townhouses.
New project launches in Q3 totalled 15,300 units across 48 projects, more than double Q2 but down more than 70 per cent year-on-year. Cavendish Maxwell’s pipeline data shows approximately 136,100 units due in 2027 and 155,700 in 2028.
“The contraction in launches highlights a significant scaling back of development, with caution among developers and regional uncertainty leading to some projects being deferred. Meanwhile, the volume of new units planned for handover in the next two years is considerable, even when materialisation rates are brought into the equation. This new supply will potentially bring another 291,800 homes to Dubai’s residential inventory, and absorption will depend on population growth, household formation, employment investment demand,” Arthur further explained.
