Transaction activity has slowed, buyers and tenants are gaining greater negotiating power, and developers are becoming more selective, while prices and prime assets continue to demonstrate relative resilience.
Key findings include:
Around 55,600 residential units are due for delivery in 2026, the highest annual total since 2008
While transaction volumes softened significantly, residential prices remained relatively resilient, with city-wide sales prices down 4% and rents down 6% quarter-on-quarter
Apartment launches fell around 58% year-on-year in H1 2026 and villa launches around 78%, as developers scale back launches to align with market conditions
In the secondary market, mortgage transactions accounted for 48% of secondary residential sales in H1 2026, up from 37% in H1 2022 and the highest share in five years indicating growing end-user demand
Average office rents fell 2% quarter-on-quarter to AED 205 per sqft in Q2 2026, the first quarterly decline in almost five years, even though rents remain 9% higher than a year ago
Dubai's office secondary sales market volumes fell 53% quarter-on-quarter and 43% year-on-year, while off-plan office sales volume remain 507% higher than H1 2025 due to recent strata (individually owned office units) office project launches
Dubai’s property market is recalibrating across both residential and office sectors. Heightened uncertainty has prompted some buyers, investors and tenants to adopt a more cautious approach, with transaction volumes softening and the gap between buyer and seller expectations widening. Prices, however, have proved considerably more resilient than activity levels. Residential sales prices fell 4% quarter-on-quarter and rents declined 6%, while average office rents eased just 2%, their first quarterly decline in almost five years.
The adjustment is far from uniform. Prime residential locations and Grade A offices continue to demonstrate resilience, while softer conditions are concentrated in higher-supply residential districts and older office stock. How quickly demand responds to improving market conditions will be critical to performance through H2 2026 and into 2027.
Prathyusha Gurrapu, Head of Research at Cushman & Wakefield Core, said:
The key question now is how quickly demand responds as market conditions adjust. Dubai continues to benefit from strong economic fundamentals, alongside government initiatives designed to attract businesses, residents and investment. These structural drivers should help support absorption and provide a solid foundation for the market as it moves through the next phase of the cycle.
Residential Market
Is Supply Truly a Big Risk?
Over 23,600 residential units were handed over in H1 2026, with a further 32,000 expected in H2, taking full-year deliveries to around 55,600 units, the highest annual total since 2008. While nearly 525,000 units are scheduled for completion through 2030, only around 186,000 have progressed beyond 20% construction milestone. Actual deliveries are therefore expected to fall materially below scheduled supply, extending the delivery cycle and allowing demand more time to absorb new stock. This reduces the risk of a sudden, market-wide supply shock, although pressure is likely to remain more pronounced in individual high-supply districts.
Are Developers Aligning Launches with Market Conditions?
New apartment launches fell around 58% year-on-year in H1 2026, while villa launches dropped 78%, as developers became more selective amid softer market conditions and regional uncertainty. New projects are increasingly targeting mid-market and end-user demand, while incentives such as fee waivers and extended payment terms are being used to maintain sales momentum without materially reducing prices.
Are Tenants Regaining Negotiating Power?
With close to three-quarters of Dubai’s homes occupied by tenants, the rental market is a key indicator of changing conditions. City-wide rents fell 6% quarter-on-quarter in Q2 2026 and are now 3% lower year-on-year, although performance varies considerably across communities. Rising handovers, affordability pressures and a temporary contraction in the tenant pool have softened demand, gradually shifting the market from landlord-favoured conditions towards a more competitive environment. Looking ahead, leasing activity is expected to be driven increasingly by existing residents relocating in search of better value, giving tenants greater choice and negotiating power. Initiatives such as Flexi-Rent and rental guarantee schemes should also support the market by offering tenants greater payment flexibility while providing landlords with more income certainty.
Is Dubai a Buyer’s Market Now?
While negotiating power is gradually shifting towards buyers, Dubai is not yet a true buyer’s market. Transaction volumes have softened significantly, but prices have proved more resilient, with city-wide sales prices down 4% quarter-on-quarter in Q2 2026 to AED 1,855 per sqft, while remaining higher year-on-year across most districts we track. The market is moving towards a healthier market dynamic, where buyers have greater choice and leverage, but well-priced, high-quality properties continue to attract healthy demand.
Off-plan activity has slowed as developers reduced new launches and investors became more cautious, while the secondary market is seeing a widening gap between buyer and seller price expectations. The buyer base is also changing. Mortgage-backed purchases accounted for 48% of secondary sales in H1 2026, up from 37% in H1 2022 and the highest share in five years, pointing to a growing role for owner-occupiers and a healthier market dynamic.
Office Market
Robert Thomas, Head of Office Agency at Cushman & Wakefield Core, said:
The decline in office rents needs to be viewed in context. We are seeing a clear divergence between Grade A space, where occupancy remains above 96% and availability is extremely limited, and older Grade B and strata stock, where landlords are having to work harder to retain and attract tenants. Global businesses continue to view Dubai as a strategic regional hub, but they are becoming more considered in how, where and when they commit to space.
How Are Landlords and Tenants Behaving?
Dubai's office market has been one of the strongest performers globally for five years with exceptionally high occupancy, double-digit rental growth. That run is now cooling off. Leasing softened from March 2026 as regional uncertainty made tenants slower and more cautious. Institutional landlords are protecting headline rents and leaning on occupier support initiatives and concessions to retain tenants. Rental softening is concentrated in Grade B and strata stock, which make up close to 70% of Dubai's office inventory. City-wide rents are down 2% quarter-on-quarter, the first quarterly decline in almost five years, though still 9% higher than a year ago. Occupancy has eased too, as relocations, lease expiries and right-sizing return more secondary space to market, though city-wide occupancy still stands at 92.4%, and Grade A buildings remain above 96%. Global occupiers continue to view UAE as strategic regional hub with deep access to talent, and while regional uncertainty has delayed some expansions and new market entries, it hasn't triggered any meaningful downsizing or reallocation.
Grade A Supply Remains Tight as Flex Space Expands
Near-term supply remains tight, with just 1.13 million sqft due in H2 2026, much of it already pre-committed. While more than 19 million sqft is under construction through 2030, the majority is not expected to reach the market until 2028 onwards. As a result, Grade A occupancy remains above 96%, with limited availability continuing to support prime rents, while rental pressure is more evident across older Grade B and strata stock.
At the same time, flex operators are becoming an increasingly significant source of office demand, now accounting for more than 2.5% of Dubai’s total office stock after absorbing over 550,000 sqft in the past two years. Most operators continue to pursue expansion despite softer market conditions, while landlords are increasingly incorporating flexible workspace into their assets to support occupancy and activate larger floorplates. The sector is also helping establish new pricing benchmarks for high-quality, fully fitted office space across Dubai.
What's Happening in the Sales Market?
The sales market shows a sharper split. Secondary transactions fell 53% quarter-on-quarter and 43% year-on-year, now less than half of all office sales, as buyers favour new developments over older strata stock. Off-plan sales remain 507% higher than H1 2025, despite falling 25% quarter-on-quarter as investor sentiment cooled.
H2 2026 and Beyond: What to Watch
Looking ahead, further moderation is expected through H2 2026, although the pace and depth of adjustment will depend increasingly on how quickly demand responds. Residential transaction volumes, actual handovers and end-user demand will be key indicators, while office leasing enquiries, pre-leasing and occupancy will provide the clearest signals of business confidence. Growing demand for flexible office space could provide an additional buffer as tenants prioritise agility.
Together, these indicators will determine whether Dubai's current adjustment begins to stabilise during H2 2026 or extends into 2027.
