Dubai’s residential market cooled slightly in 2Q, as the growth in capital values, rents, and sales volumes eased from last year, according to ValuStrat’s Dubai’s Real Estate Research 2Q 2025 (pdf). Dubai’s residential ValuStrat price index (VPI) rose 4.7% q-o-q and 23.9% y-o-y — with quarterly growth cooling from the 6.4% growth seen in 2Q 2024. This also marks a slight slowdown from the 5% quarterly rise logged in 1Q this year.

Still, sales reached record highs: Off-plan registrations surged 23.9% q-o-q to a record 35.7k valued at AED 113 bn, marking a 43.1% y-o-y increase. Ready-home transactions also saw a record high of 13.7k — up 10.4% q-o-q and 19% y-o-y.

Top areas: Jumeirah Islands and Palm Jumeirah both led villa capital gains with 8.5% growth each. Overall, the segment’s growth eased up to 6% q-o-q, compared to the 7.4% in quarterly growth recorded in the same period last year. Apartment value growth also slowed down to 3.4% q-o-q and 19.1% y-o-y, with Remraam seeing the biggest uptick at 5.4%, followed by Dubai Silicon Oasis (5%) and Town Square (4.6%).

On the rental and sales front: Asking rents for villas were up 4.8% y-o-y but held steady on a quarterly basis, while apartment rents climbed 1.2% q-o-q and 7.2% y-o-y, with average annual rent reaching AED 95.5k. Direct payments outweighed mortgage agreements, with 16k transactions valued at AED 37 bn compared to AED 24 bn in mortgages.

More supply than expected this year: Some 13.5k apartments and 4k villas were completed in 1H, accounting for 28% of the builds set to be delivered during the whole year. ValuStrat also revised its forecast for new build units entering the market this year to 66.6k, up from 61.6k earlier in 1Q. There are 158.9k apartments and 40.2k villas currently in the construction pipeline, set to be wrapped up by 2029.

Office market demand stayed strong despite slowing growth: Capital values for office assets rose 4.9% q-o-q and 23.7% y-o-y — a slowdown from 31.7% growth in the first quarter of the year. DIFC led with a 26.9% increase, followed by Jumeirah Lake Towers (23%) and Barsha Heights (21.9%). Average office transaction values reached AED 19.8k per sqm — up 10.4% q-o-q — while annual rents grew 5.6% on a quarterly basis to AED 2k per sqm.

REMEMBER- New supply is expected to cool the market over time: Knight Frank forecasts an 8% price increase in 2025, down from double-digit growth in 2024, while Moody’s sees a dip or stabilization over the next 12-18 months. S&P Global also warns that construction bottlenecks could delay completions and prolong tight conditions. Just 58% of projected units were delivered last year and historical trends suggest a 30% lag between scheduled and actual handovers.

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