Dubai’s commercial real estate market reached new peaks in the third quarter of 2026, even as the residential sector showed its first signs of sustained correction since Covid, according to ValuStrat’s Q3 2026 Price Index.
The Office ValuStrat Price Index rose 1.9 per cent quarter-on-quarter to a record 304.6 points, up 9.7 per cent year-on-year and effectively triple its level five years ago.
Average office valuations now stand at AED 25,026 per sq m. Downtown Dubai commands the highest values at AED 53,012 per sq m, while Business Bay recorded the strongest annual growth at 10.7 per cent. Ready office sales transactions jumped 46.4 per cent over the quarter, with a record transacted price of AED 22,798 per sq m.
The industrial and logistics segment moved even faster. The Industrial VPI climbed to 199.6 points, up 7.1 per cent quarter-on-quarter and 19.6 per cent year-on-year, nearly double its 2021 baseline. Logistics warehouses averaged AED 4,297 per sq m, with Al Quoz recording a 54.3 per cent annual capital price gain. Warehouse asking rents rose 2.8% over the quarter, and supply shortages are pushing demand into secondary locations.
“From a valuation perspective, Dubai’s commercial real estate sector is currently achieving unprecedented milestones. Office capital values have effectively tripled over the past five years, surpassing the 300-point mark on the VPI, fuelled by robust corporate sentiment and a severely constrained pipeline of Grade A supply. Simultaneously, our industrial valuations show assets approaching double their 2021 levels. Driven by an aggressive ‘Just-in-Case’ supply chain pivot and e-commerce expansion, we are observing pronounced yield compression as institutional investors increasingly target long-term tenant commitments and blue-chip covenants in prime logistics hubs. The structural strength of Dubai’s non-residential economy has never been more evident,” Sean Swinburne, MRICS, Director – Valuations at ValuStrat added.
The residential picture is more mixed. The Residential VPI fell 0.6 per cent quarter-on-quarter to 218.6 points, marking the first annual decline since the pandemic at 4.5 per cent year-on-year. The rental market was softer still: the rental VPI fell 4.9 per cent quarter-on-quarter to 195.2 points, with average apartment asking rents down 6.4% year-on-year to AED 92,000 and villa rents down 2.3 per cent to AED 425,000.
Villa capital values averaged AED 12.9 million, down from AED 13.4 million a year earlier, though roughly 80 per cent of villa communities were broadly flat over the quarter.
Apartment values averaged AED 1.78 million, down from AED 1.9 million annually, with around 77 per cent of communities stable quarter-on-quarter. Selected areas saw sharper moves: Palm Jumeirah villas dipped up to 4 per cent over the quarter, and Jumeirah Beach Residence apartments fell as much as 5.2 per cent.
“Dubai’s residential market reacted immediately to the regional disruptions earlier this year, but has since shown clear signs of stabilisation. The ValuStrat Price Index recorded only marginal falls over the past three months, suggesting that the initial market adjustment has largely run its course for now. Housing demand has remained highly resilient, supported by a population that has grown by approximately 230,000 since the start of the year. While residential capital values and asking rents recorded their first annual declines since the pandemic, the surge in secondary property sales from the previous quarter’s low demonstrates that end-users are actively capitalising on current price levels,” Haider Tuaima, Managing Director and Head of Real Estate Research at ValuStrat said in a statement.
Total residential transactions reached 34,266 in Q3, down 3.4 per cent quarter-on-quarter. Off-plan registrations accounted for the majority at 24,375 deals, down 10.1 per cent on the quarter and 45.7 per cent year-on-year, totalling AED 46.8 billion. Secondary ready-home sales recovered, rising 18.5 per cent quarter-on-quarter to 9,491 transactions worth AED 25 billion. Mortgage activity also climbed, accounting for close to half of all ready transactions, with refinancing hitting a record.
Supply remained constrained. An estimated 33,000 homes were completed by end of September, fewer than one-third of the preliminary full-year target of 108,134 units.
