The United Arab Emirates’ real estate sector has entered 2026 on solid footing, buoyed by strong demand for both residential and commercial properties, according to a UBS report.
Major developers, including Emaar and Aldar, reported record-high backlogs in FY2025, reflecting robust investment interest in the region.“The UAE listed real estate companies entered 2026 in a position of strength. Both Emaar and Aldar posted record-high backlogs at their recent FY2025 results fuelled by demand for residential investment in the region, in addition to a strong momentum in commercial real estate,” the report said, according to ANI.UBS highlighted that Dubai, while showing strong performance, faces potential short-term risks due to oversupply, pricing levels, and exposure to international buyers. The report estimates that more than 110,500 residential units could be delivered in Dubai in 2026, compared with a 10-year average of 27,000 units, which could affect the supply-demand balance.“Three reasons to be more cautious about Dubai in the short term relative to Abu Dhabi… Dubai faces more risk of oversupply,” UBS noted.
The report also stressed the impact of pricing and construction costs on developers’ profit margins. A scenario involving a 10% decline in selling prices with flat construction costs could reduce margins from 44% to 38% at Emaar and from 38% to 31% at Aldar, illustrating the sector’s sensitivity to market fluctuations.Expatriate demographics remain a key factor for the UAE market, as 88% of the population consists of expatriates, making property demand highly sensitive to population flows.
UBS advised tracking indicators such as weekly transaction volumes, price negotiations, off-plan project cancellations, and construction cost inflation.Despite the risks, UBS expects a market moderation rather than a sharp downturn. “Overall our view is that the market is more likely to soften than tumble, given the very high current occupancy,” the report said.Dubai’s property prices remain competitive globally despite recent gains, with homes priced about 23% lower than Mumbai in 2025, the report added.
