Dubai real estate market 2026: Rental yields, prices & what's next

After years of fast-paced growth, Dubai's property market is shifting in 2026. It’s not crashing, it’s maturing into a more stable, sustainable real estate landscape.

Sustained strong demand has meant Dubai’s real estate market has seen huge gains in the last few years, price per square foot rose 13% in 2025 alone.

Slowly, supply is moving relatively closer to demand, but demand is still driving ahead as Dubai continues to attract global talent and capital.

What comes next will reward investors who understand the difference between momentum and fundamentals.

Rental yields: How Dubai compares globally

Dubai consistently outperforms major world cities when it comes to rental returns. The citywide average sits at 6.76%, but varies on location and property type.

For context, here's how that stacks up internationally:

Sources: Engel & Völkers, REDHORIZON

Yields are one things, but even more attractive is the tax environment. There's no local income tax on rental earnings, meaning what you see is closer to what you keep compared to cities where 20-40% goes to tax.

Couple that with a business-friendly environment and clear local regulations, it’s easy to see why Dubai offers compelling reasons for investment.

Gross vs net: The number that actually matters

Here's something many investors overlook. The net yield typically runs 1-2 percentage points below gross once you factor in costs, such as:

• Service charges
• Maintenance and repairs
• Property management fees
• Vacancy periods
• DEWA and energy costs

Even with those considered, Dubai’s yield stay strong by global standards, but the gap matters when you're comparing options.

Rental market: What's changing in 2026

After years of aggressive rent increases, the market is finding stability and rhythm.

Vacancy is becoming seasonal

Dubai's average vacancy rate is expected to reach 12% in 2026, but that number swings dramatically through the year:

• Summer (July-September): Vacancy could peak as heat, school holidays and slower business activity cause some tenants to leave
• October-November: Vacancy drops sharply as hiring picks up and relocations return

For investors, this means rental income won't flow evenly. Long-term annual leases are delivering more predictable returns than short or mid-term strategies that expose you to seasonal gaps.

Where rents are headed

Rents are generally expected to stabilize or record modest growth as new inventory comes online.

What this means in practice:

• Low-season rents (summer) may dip
• High-season pricing should hold close to 2024-2025 levels
• Luxury properties tend to see milder corrections than mid-market units

Price appreciation: the new reality

The double-digit annual gains of recent years are moderating, slowing down from the 12-22% annual gains in 2024-2025, but it's still healthy growth.

Context matters: prices have already risen roughly 78% since the cycle began, so moderation isn't surprising.

Why prices aren't falling

Several factors continue to support the market:

1. Population growth: Dubai crossed 4 million residents in 2025, adding over 200,000 people in 12 months. More residents = more housing demand.
2. Cash buyers dominate: Approximately 87% of purchases are made without mortgage financing. This reduces sensitivity to interest rate movements.
3. Economic fundamentals: The IMF projects UAE GDP growth of 5% in 2026, supporting job creation and household income.
4. International demand: Foreign buyers account for nearly 58% of residential transactions, drawn by tax advantages, stability, and lifestyle appeal.

What about incoming supply?

The elephant in the room: around 120,000 new units are scheduled for handover in 2026, representing the peak of the current development cycle.

However, historical delivery rates suggest only around half of the projected units actually complete on schedule. In 2026, only 48% are expected to be delivered.

Construction delays typically reduce actual handovers. Still, even at half the projected volume, absorption will be tested in certain areas.

Selecting the right developer is important. That’s why our full ownership platform - StakeOne - only partners with the top developers.

Where performance will diverge

2026 won't be uniform. Expect significant variation by property type and location.

Villas: Positioned to outperform

Limited supply and strong end-user demand create structural advantages for villa communities.

Why? Families want space. Land is scarce. And villas attract committed, long-term residents rather than short-term speculators.

Apartments: More pressure, more selectivity needed

Areas with large handover pipelines face greater absorption challenges. This doesn't mean apartment values will fall across the board.

Investors need to be more selective. Studios and one-beds deliver higher yields but are more exposed to supply increases. Well-located units in established buildings should hold up better than new stock in oversupplied areas.

Infrastructure-linked growth

Communities along the upcoming Dubai Metro Blue Line are attracting renewed interest as commute times become a bigger factor in purchasing decisions

What this means for different investors

If you're focused on income

• Target mid-market communities with strong occupancy track records
• Prioritise annual leases over short-term strategies to reduce vacancy risk
• Factor in all costs when calculating net yield, not just headline gross figures

If you're focused on growth

• Be more selective than in previous years. Not everything will appreciate equally.
• Premium villa communities with limited future supply offer strongest potential
• Off-plan purchases require more due diligence. Focus on tier-one developers with proven delivery records.
• Prime locations offer capital preservation even if yields are lower

If you're in it for the long haul

Dubai's fundamental story remains strong:

• Population heading toward 5.8 million by 2040
• Zero local income tax on rental earnings
• Growing appeal to global talent and capital
• Continued infrastructure investment

These factors support both rental demand and underlying asset values over multi-year holding periods.

Dubai property market: What’s next?

Dubai's real estate market in 2026 offers a combination of strong rental yields and projected price appreciation. In a zero-tax environment, that's a compelling total return profile compared to most global alternatives.

But the margin for error is smaller than it was during the boom years. Supply is increasing, buyer behaviour is more informed, and performance will vary significantly by location and property type.

The market is maturing. For investors who understand how to navigate this, 2026 presents solid opportunities. For those expecting a repeat of 2023-2024, it's time to recalibrate.

Interested in buying in Dubai? Explore StakeOne - our all-in-one ownership platform.

Want to start small? Own properties from AED 500.

This article is for informational purposes only and does not constitute investment advice. All investments carry risks. Stake Properties Limited is regulated by the DFSA as an operator of a crowdfunding platform in the UAE. (Stake One) Real Estate brokerage LLC is registered as a Real Estate Brokerage.