Swiss bank UBS has reported that real house prices in Dubai have receded to levels not seen since mid-2025, and real rents have decreased by 4% over the past year. The residential property market in the emirate remains at a heightened risk of a bubble following a significant slowdown in price growth.

Current Market Landscape

According to UBS’s Global Real Estate Bubble Index 2026 report, Dubai’s once-thriving housing market faced a sharp halt in growth due to the onset of regional conflicts. Prior to this setback, prices had grown by more than 10% in 2025. The index now places Dubai at a score of 1.16, indicating an increased risk, securing the fourth position among the 23 cities analyzed. Zurich and Tokyo are categorized as having the highest risk with scores of 1.69 and 1.54, respectively. Other cities, such as Miami, Seoul, Geneva, and Lisbon, also share this elevated risk rating, which falls between 1.0 and 1.5.

Real estate prices in Dubai saw a minor increase of 0.4% in the year leading to the second quarter of 2026, while the rental market has contracted. This raised a note of caution from UBS, who indicated that despite this small uptick, the risk of a market bubble remains significant.

Ownership Viability

UBS suggests that existing tenants are in a prime position to leverage this temporary stagnation in price growth, especially given the appealing opportunity to consider purchasing homes. Despite prevailing high mortgage interest rates, Dubai stands out as one of the few locations where owning property is competitively attractive compared to the sharply rising cost of renting.

Data shows that, on average, a skilled service worker in Dubai requires approximately five years of income to purchase a 60-square-meter apartment in proximity to the city center. In stark contrast, similar properties demand around 15 years in Hong Kong and 11 years in London. Moreover, it takes about 16 years of rent to cover the equivalent apartment cost in Dubai, a notably low ratio in comparison to other cities surveyed. This disparity is largely attributed to less regulated rental markets, elevated risk premiums, and rising interest rates.

Market Uncertainty and Global Trends

UBS also pointed to uncertainties regarding the recovery of the inflow of high-income earners into Dubai, which currently casts a shadow over the premium property segment. Nevertheless, the city retains significant structural advantages, such as its strategic location and its reputation as an international business hub. An improvement in the geopolitical climate could potentially rejuvenate market sentiment and alter price expectations for the better.

Concerns regarding supply also contribute to the market’s unpredictability. Some ongoing developments have been delayed, raising issues about potential oversupply. UBS emphasizes that despite these challenges, the market may still be subject to significant fluctuations due to these persistent worries.

Globally, the pace of growth in real residential prices across the cities analyzed averaged 0.5% over the past year, a drop from 1.4% in mid-2025. Seoul experienced the highest growth at 11%, while cities like Toronto and Vancouver faced declines of around 10%. The report further notes that capital from the Gulf region could drive up property prices in other markets, indicating an ongoing interest from Middle Eastern buyers that may positively influence locations like Geneva and London’s premium segments.