The UAE’s residential property market showed resilience in the first quarter of 2026, despite a slowdown in transaction activity and moderating price growth as regional uncertainty weighed on investor sentiment.
According to data from JLL, the sector rebounded after an initial sharp decline in activity triggered by geopolitical tensions. Weekly transaction values in Dubai briefly dropped by nearly 50 per cent at the height of the disruption, before stabilising as market confidence cautiously returned.
“The first quarter presented a clear divergence in the UAE’s real estate market, with sharp challenges for hospitality and resilience in the living, industrial and logistics sector,” said Taimur Khan, Head of Research, MEA at JLL. “While government incentives and agile strategies are easing the pressure in the short-term, strong market fundamentals and investor confidence position the wider economy for continued stability and a firm rebound as conditions normalise.”
Within the residential segment, contrasting trends emerged between different market categories. In Dubai, off-plan sales increased by 9.5 per cent in the first quarter, highlighting continued demand from investors, while secondary market transactions declined by 8.2 per cent, reflecting cautious buyer sentiment.
Abu Dhabi saw a similar mixed picture, with new project launches pushing transaction volumes to more than double year-on-year, even as monthly activity softened toward the end of the quarter.
Despite the dip in transactions, prices continued to rise, albeit at a slower pace. Annual residential price growth in Dubai moderated to between 8 per cent and 12 per cent, down from the double-digit highs of up to 19 per cent seen previously, signalling a gradual market correction and a shift towards more sustainable pricing levels.
Rental dynamics also reflected growing caution among tenants. In both Dubai and Abu Dhabi, occupiers showed a preference for flexibility, with shorter-term leasing arrangements becoming more common. In Abu Dhabi, new rental contracts increased 13.4 per cent even as overall registrations declined, suggesting tenants were relocating rather than exiting the market.
Developers have responded to softer demand with targeted incentives, including discounts and more flexible payment terms, particularly for existing inventory. However, these measures remain limited to specific segments rather than signalling a broad-based price correction.
Looking ahead, a robust supply pipeline is expected to shape market dynamics. Around 59,000 residential units are forecast for delivery across the UAE in 2026, with a significantly higher volume anticipated in 2027, although supply chain disruptions could affect timelines.
While risks remain tied to regional stability and investor confidence, the overall outlook suggests the UAE residential market is entering a phase of adjustment rather than decline, supported by strong fundamentals and sustained demand from both investors and end-users.
