Dubai’s property market has entered the “elevated risk” category in the UBS Global Real Estate Bubble Index 2025, putting the emirate alongside global cities such as Los Angeles, Amsterdam, and Geneva. The report warns that Dubai’s rapid price growth — up roughly 50% over the past five years — raises the risk of overheating, even as local experts argue that population growth and strong demand will continue to underpin the market.
According to UBS, Dubai’s housing prices have surged in double digits since mid-2023, fuelled by a near 15% population increase since 2020 and limited new supply. While rental costs also soared in recent years, home prices are now rising faster than rents — a pattern often seen before property market corrections. The bank cautioned that affordability is weakening, with wage growth failing to keep pace with property inflation and borrowing costs remaining high.
Still, market professionals say Dubai’s fundamentals remain resilient. “Whilst any elevation in this index from a previous lower level is never welcomed, we have to assess all factors,” said Mario Volpi, Senior Vice President Investment Advisor at Allegiance Real Estate. “The market can’t keep rising indefinitely, but population growth and demand will sustain momentum for a while longer.”
Volpi added that while apartment prices may stabilise, villas and townhouses are likely to see continued strong growth. UBS noted that an expanding population — now exceeding four million, two years ahead of official forecasts — remains one of Dubai’s key strengths.
Barnaby Crompton, Partner at Eden Realty, highlighted that “even with 45,000 to 96,000 new properties expected in 2026, demand should keep pace comfortably.” He pointed to the 50,000 new business licences projected for 2025 as further evidence of continued population and economic growth.
However, Crompton also cautioned that Dubai is not immune to global headwinds. “It’s important to understand that Dubai is not an island,” he said. “But for now, I’m encouraged by the fundamentals.”
Other analysts agree. Paul Jeffreys, founder of PJ Advisory, said a potential cooling phase would likely affect only lower-priced segments, while scarcity of premium properties would keep the top end of the market stable.
Globally, UBS identified Miami, Tokyo, and Zurich as the cities most at risk of a housing bubble, while markets such as London, Paris, and Hong Kong were deemed “low risk.” Dubai, the report said, sits somewhere in between — overheated but not in the danger zone of a full-blown bubble.
Despite the warnings, experts say Dubai’s flexible market structure, high rental yields, and status as a safe haven for global investors differentiate it from other cities. With strong inflows from Russia, India, Africa, and Europe, and a growing population base, Dubai may yet defy the bubble fears once again — though analysts agree that vigilance is warranted as new supply ramps up and affordability tightens.
