The UAE real estate sector entered 2026 from a strong position, supported by strong demand for residential and commercial properties, according to a report by UBS Bank.
And the country’s top developers have reported strong sales momentum and record projects in the pipeline, driven by strong investment demand.
And the report said: "Listed real estate companies in the UAE entered 2026 from a position of strength. And both Emaar and Aldar recorded the highest levels of backlogs in FY25 results, driven by demand for residential investment in the region, along with strong momentum in the commercial real estate sector.”
However, the report noted that concerns over the housing supply in Dubai may limit further gains in property stocks.
“Shares have performed strongly in recent months, but are currently trading at an expected one-year profitability multiple of 10 times, in line with their historical average… amid concerns over supply in Dubai which have limited the expansion of valuations.”
According to the report, a large number of new residential units are expected to enter the market in the coming years, which may affect the dynamics of supply and demand.
And in Dubai, the report tested a scenario in which 110,500 housing units would be delivered in 2026, compared to an average of 27,000 units over 10 years, as population growth slowed.
And the report added that lower selling prices as construction costs stabilize could affect developers’ profit margins.
He explained: "A 10% drop in selling prices as construction costs stabilize could reduce development margins from 44% to 38% at Emaar, and from 38% to 31% at Aldar, reflecting a significant operational impact of price changes."
And UBS noted that Dubai may face higher short-term risks compared to Abu Dhabi due to price levels, its exposure to international buyers and supply trends.
And there are three reasons to be cautious about Dubai in the short term compared to Abu Dhabi… as Dubai faces greater risks than the oversupply.”
The report also highlighted that the demographics of the UAE play a key role in real estate demand. He pointed out that "foreign residents make up 88% of the population, so the UAE's demography is very sensitive to the influx of expatriates."
And according to UBS, future market trends will depend on several indicators, including the volume of real estate transactions, population flows, and project cancelations.
"Key indicators to watch include weekly transaction volumes, price negotiation levels in the Dubai residential market, cancelation rates and late payments on projects under construction, construction cost inflation, and population flows," the report said.
Despite these risks, the report noted that the market is closer to a gradual slowdown rather than a sharp one. "Overall, we see that the market is likely to see a gradual decline rather than a collapse, given the current high occupancy rates."
The report also showed that real estate prices in Dubai are still competitive globally despite recent increases. And he said: "Despite the recent significant rise in prices… house prices in Dubai are still low compared to the world, for example, they are 23% cheaper than Mumbai in 2025."
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