Dubai Residential Property Market Shifts as Tenants Buy

DUBAI, UAE – Dubai’s residential property market is undergoing a decisive shift, with more tenants opting to buy homes instead of remaining in the rental cycle, according to a report by Engel & Völkers Middle East.

The report highlighted a 22% increase in secondary market sales during the first eight months of 2025 compared with the same period last year. The rise underscores growing confidence among residents who increasingly view Dubai as a permanent base.

“For many tenants, ownership is no longer aspirational; it’s becoming the preferred choice for long-term security and value creation,” said Daniel Hadi, CEO of Engel & Völkers Middle East.

Surge in Transactions and Off-Plan Sales

Dubai recorded 17,879 residential transactions in August worth AED42.4 billion ($11.55 billion), marking a 17% increase in volume and 12% rise in value year-on-year. Off-plan sales dominated activity, rising 25% and accounting for nearly three-quarters of all deals.

End-user demand continues to drive the resale market. Sales of larger family homes surged, with transactions of four-bedroom properties up 70% and those of five-bedroom or larger villas increasing 63% from a year earlier.

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“Dubai’s market today is being fueled by a dual dynamic: strong global investment flows into off-plan projects and a clear shift among residents toward homeownership,” Hadi added.

Price Growth Across Communities

Average property prices in the Dubai residential property market climbed to AED1,664 per square foot in August, up 16.3% year-on-year, according to Property Monitor.

Lifestyle-led villa communities led gains:

Victory Heights (+37.0% YOY)
Dubai Hills Estate (+26.0% YOY)
Arabian Ranches (+23.2% YOY)

Apartments also showed robust growth, particularly in:

Jumeirah Village Triangle (+29.3% YOY)
Jumeirah Village Circle (+17.0% YOY)

Rental Yields Remain Competitive

Despite rising prices, Dubai remains attractive to global investors due to strong rental yields. Average gross yields in August stood at 6.76%, with apartments delivering 7.12% and villas at 4.92%.

These returns outpace prime global cities, including London (3–5%), Singapore (3–4%), and New York (5–7%). The resilience is supported by Dubai’s growing population, limited quality rental stock, and consistent new company formations.

Leasing Trends Reflect Tenant Shift

Overall leasing volumes in 2025 declined 4% year-to-date. New rental contracts dropped 14%, while renewals rose 2.6%.

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Luxury segment leasing, particularly large villas, registered double-digit declines — a sign many families are choosing to purchase rather than renew leases.

“August’s activity reflects both the city’s international appeal and the growing number of long-term residents putting down roots,” Hadi said.

Diverse Investor Base

Demand remains broad-based across both local and international buyers. Active nationalities include Indian, British, German, Egyptian, and Chinese investors.

Mortgages remain a critical enabler, with loan-to-value ratios at 70–80% and competitive interest rates around 3.9%. Cash transactions and flexible developer-backed payment plans also support off-plan sales momentum.

Engel & Völkers expects this dual-market momentum to extend into Q4 2025, driven by robust developer activity, flexible financing options, and sustained end-user demand.

“Dubai’s property market is no longer just about short-term investment cycles. It is increasingly about residents choosing to establish roots here — buying homes for security, lifestyle, and long-term value creation. This shift is set to define the next phase of the city’s real estate story,” concluded Hadi.

Perspective for Indian Investors

Indian buyers remain one of the largest investor groups in the Dubai residential property market. Rising rents in Dubai and favorable financing options make ownership an increasingly practical choice.

For Indian professionals and families relocating to Dubai, villa communities such as Dubai Hills Estate and Arabian Ranches offer long-term appreciation potential, while apartment clusters like Jumeirah Village Circle provide strong rental yields and entry-level investment opportunities.

With yields averaging over 7% for apartments, Indian investors view Dubai not only as a lifestyle hub but also as a market offering superior returns compared with traditional property markets in India.