Dubai Fourth in UBS Global Real Estate Bubble Index

Dubai jumped to fourth place globally, up from 14^th last year, as real home prices rose more than 50% in five years — the fastest growth among surveyed cities, according to the UBS Global Real Estate Bubble Index 2025.

Authored by Claudio Saputelli, Head Swiss & Global Real Estate Senior Real Estate Economist and Chief Investment Office Global Wealth Management (GWM), and Matthias Holzhey, Chief Investment Office GWM, the index measures bubble risk based on price-to-income and price-to-rent ratios, mortgage lending, and construction activity.

Globally, Miami topped the ranking, followed by Tokyo and Zürich, which were also flagged as high risk.

According to the UBS, incomes falling behind prices, a 15% population increase since 2020, and tight supply as key reasons behind elevated bubble risk. Building permits suggest new construction could soon reach highs not seen since 2017, while competition for foreign real estate investment is intensifying between Dubai, Abu Dhabi, and Riyadh.

“Still, homes in Dubai are more affordable than most, and rental yields remain high, the report said. Optimistic investors see “catch-up potential and prospects for strong future returns,” the index revealed.

Housing Bubble Risk Surges

After rising 11% over the last four quarters, inflation-adjusted home prices in Dubai have returned to their 2014 peak. Housing bubble risk has surged for a second consecutive year and is now at elevated levels, up from last year’s moderate reading,

Dubai’s population has grown by nearly 15% since 2020, tightening available supply and pushing rents higher. Over the past five years, rent increases surpassed home price gains. More recently, however, home prices have started to outpace rent growth as investment demand strengthened, the index said.

That said, rental yields remain high, and prices are still comparatively affordable—often well below those in other major global cities.

Hence, optimistic investors see catchup potential and prospects for strong future returns. However, pricing power is weak in some segments. Incomes are not keeping pace with home prices, and affordability has deteriorated as interest rates remain elevated, it said.

“The market remains volatile, with exposure to oil prices and periodic oversupply. Building permits suggest new construction could reach levels last seen in 2017, which amplified the housing downturn,” UBS said.

Competition for offshore real estate investment with Abu Dhabi and Riyadh is intensifying, especially as Saudi Arabia opens designated zones to foreign buyers starting in 2026. While Dubai’s government expects a continued rapid economic expansion, it is uncertain whether household incomes will rise enough to support further price increases.