Insights: Is there value for institutional investors amid moderating growth in the Dubai real estate market?

Dubai’s real estate market has been on an exceptional run, with residential property prices rising 20% and rental rates jumping 19% in 2024, according to Deloitte’s Real Estate Predictions 2025. But as we move through 2025, there are some indications that the pace is beginning to settle. Growth in certain segments - particularly the mid-market - has moderated, and investors are asking the inevitable question: is a correction looming?

For institutional capital, the more important question is this: can value still be created in a market that is stabilising rather than surging? The short answer is yes. But it requires nuance, discipline, and a keen eye for quality.

Growth is not uniform - and never has been

Too often, discussions around the market treat it as a single, monolithic entity. In truth, Dubai’s real estate sector is fragmented across price points, asset classes, and buyer profiles. And while some segments may be slowing, others remain remarkably resilient.

Take the luxury residential market, for example. Knight Frank forecasts five percent growth in Dubai’s prime property segment in 2025, supported by tight supply and growing international demand. Listings in prime neighbourhoods have fallen 52% in the past year, with a 65% decline in vacancies for $10 million-plus properties - demonstrating just how constrained this segment has become. Meanwhile, demand for top-tier, well-located, and exceptionally finished products continue to outpace availability.

Institutional investors who treat all residential assets as equal risk being blindsided. A more refined lens - one that distinguishes between overbuilt, transactional stock and enduring, end-user-led product - is essential to navigate this cycle.

Resilience lies in discipline, not timing
A market that is stabilising - or even cooling - is not a market to retreat from. Rather, it is one that rewards discipline over speculation. Institutional investors have a clear advantage here: they are not reliant on short-term flips or leverage-fuelled gains. Instead, they can create value through thoughtful acquisition, strong governance, and long-term capital deployment.

In the context of a potential correction, the fundamentals matter more than ever: attractiveness of location, efficiency of execution, quality of build and finish, and security of funding. Fully financed projects with stable cash flow profiles are far better positioned to ride out softening demand than those that rely entirely on off-plan sales or overly optimistic price escalations.

The conversation also needs to shift from headline returns to risk-adjusted ones. A 2x equity multiple in a softened global environment is still highly attractive - especially when compared to increasingly volatile public markets or low-yielding core real estate in developed economies.

Dubai remains a beneficiary of global capital realignment
Global capital doesn’t disappear in uncertain times - it simply reallocates. And right now, we are witnessing that reallocation unfold. With geopolitical tensions clouding the outlook in the US and China, and structural sluggishness persisting in parts of Europe, many investors are looking toward more stable, forward-looking destinations. Dubai has emerged as a net beneficiary of this recalibration.

This isn’t just about weather or lifestyle but about vision, regulation and execution. Dubai’s macroeconomic fundamentals are strong - population increased 8% to reach 3.82 million last year, and the city welcomed 18.7 million overnight visitors. Major infrastructure investments and a future-focused policy framework add further appeal for long-term capital.

What we’re seeing isn’t a temporary spike in attention - it’s a structural shift in how global investors perceive this region’s role in their portfolios.

The market will reward relevance, not just presence
While supply has historically dominated headlines, it is demand that will define success in this next phase of the cycle. Dubai continues to create demand - by attracting global talent, supporting new businesses and positioning itself as a financial, tourism, and logistics hub for the wider region.

The question is whether the product being delivered to market is aligned with this evolving demand base. Institutions have a critical role to play in shaping that alignment. By focusing on relevance - of location, quality, and experience - they can create durable income streams and long-term asset value, even as the overall market slows.

Where next for institutional capital?
Dubai’s residential market is entering a new phase - one defined not by speculative surges, but by sustainable, demand-led growth. As the city continues to attract a global, mobile, and quality-conscious population, the need for thoughtfully developed, well-located homes will only deepen.

This next chapter offers institutional investors a rare opportunity: to help shape the fabric of a city that is still expanding, still evolving, and still full of promise. In a world of uncertainty, Dubai’s residential sector stands out - not just for its resilience, but for its readiness to reward those who invest with clarity, conviction and care.

Martin Linder is Managing Partner and CEO at Global Partners Limited, a DFSA-regulated alternative asset manager.