Shift in Dubai’s Residential Property Market: From Renting to Owning
Dubai’s residential property landscape has undergone a significant transformation recently, with many tenants opting to transition from renting to purchasing homes. According to a report from Engel & Völkers Middle East, August saw property transactions soar to AED 42.4 billion.
Increasing Confidence Among Residents
The report highlights a notable 22% jump in secondary market sales during the first eight months of 2025 compared to the same timeframe in 2024. This trend underscores a growing confidence among residents who are increasingly viewing Dubai as their permanent home base. Young professionals and families are at the forefront of this shift, aiming for property ownership to cultivate equity, ensure stability, and mitigate rising rental expenses.
The Market’s Current Pulse
Daniel Hadi, CEO of Engel & Völkers Middle East, remarked, “For many tenants, ownership is no longer aspirational; it’s becoming the preferred choice for long-term security and value creation.” This sentiment is mirrored in the numbers: August recorded 17,879 property transactions, reflecting a 17% increase in volume and a 12% rise in value year-on-year.
Off-plan properties have taken the lead, with sales surging 25% compared to the previous year, accounting for nearly three-quarters of all transactions. Meanwhile, the secondary market remains robust, driven primarily by end-user demand.
Growth in Family Home Sales
The residential property segment, particularly family homes, has shown remarkable growth. Sales of four-bedroom properties increased by 70%, while five-bedroom and larger homes saw a 63% rise compared to last year. This trend highlights a growing preference among families for more spacious living accommodations.
Rising Property Prices
In terms of pricing, residential property costs have continued their upward trajectory, reaching AED 1,664 per square foot in August. This marks a substantial 16.3% increase year-on-year. Lifestyle communities have seen significant appreciation, with areas like Victory Heights experiencing a 37% rise, Dubai Hills Estate at 26%, and Arabian Ranches at 23.2%. On the apartment side, communities such as Jumeirah Village Triangle and Jumeirah Village Circle reported increases of 29.3% and 17.0% respectively.
Attractive Rental Yields
Despite the upward movement in property prices, rental yields remain appealing at 6.76% overall for August. Apartments yield about 7.12%, while villas provide a 4.92% return. These figures stand favorably against other prime markets around the globe, including London (3-5%), Singapore (3-4%), and New York (5-7%). This robust yield is bolstered by Dubai’s increasing population, a surge in new business formations, and a limited supply of rental properties.
Leasing Market Dynamics
However, the leasing market shows signs of contraction, experiencing a 4% year-to-date decline in leasing volumes. New contracts have dropped by 14%, in contrast to a 2.6% uptick in renewals. Particularly in the luxury segment, villa leases have experienced double-digit declines as families increasingly choose to buy rather than rent.
Diverse Buyer Demographics
The demand for properties spans both UAE residents and international buyers from various regions, including Europe, the Middle East, and Asia. Notably, buyers from India, Britain, Germany, Egypt, and China have been actively involved in off-plan purchases, while local residents are driving growth in the resale market.
Supporting Financing Options
Transactions in the Dubai property market are also supported through accessible mortgage options, with loan-to-value ratios ranging from 70% to 80% and interest rates around 3.9%. Additionally, cash transactions and developer-led payment plans have continued to promote off-plan sales.
A Dual Dynamic in the Market
Daniel Hadi explained, “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.” The activity observed in August not only reflects Dubai’s international appeal but also a growing demographic of long-term residents looking to establish themselves in the city.
As Engel & Völkers anticipates continued momentum into the final quarter of 2025, it’s evident that both off-plan sales driven by developer initiatives and population growth will substantially influence the property market’s trajectory. This evolving landscape signals a shift where homeownership is no longer viewed merely as a short-term investment but as a long-term commitment to stability and lifestyle in one of the world’s most vibrant cities.
