Dubai’s real estate market continues to surge in 2025 — but not all price brackets are benefiting equally. In particular, homes priced below Dh1 million are vanishing from the listings, even as demand for affordable housing is hotter than ever. While record-breaking sales fuel optimism, this growing mismatch between supply and demand may be a warning sign for the city’s more accessible housing segment.

The Data Behind the Decline

According to a recent analysis by Knight Frank, the number of properties listed for sale below Dh1 million has dropped sharply. In the first nine months of 2025, that segment saw a 14 percent reduction in available inventory, while sales activity in the same range rose by 10 percent in the same period.

In simpler terms, homes under Dh1 million are not just selling — they’re flying off the market faster than new ones are coming in. Knight Frank observes that the pace of deal-making is outstripping the rate at which this affordable supply is being replenished.

Why the Rush for More Affordable Units?

So, what’s driving this surge? There are several interconnected forces at work:

1. Population Boom
   Dubai’s population is growing at an extraordinary clip. According to ValuStrat, by the end of March 2025, the city had swelled to 3.92 million people, adding roughly 1,000 new residents every day in the first quarter alone. This rapid inflow is fueling demand across the housing market — but the pinch is especially felt in the more affordable segments.
2. Mid-Income Buyers Enter the Fray
   It’s not just investors or ultra-wealthy buyers anymore. Mid-income individuals and families are increasingly looking to own in Dubai. As reported by Khaleej Times, they are leading demand in the affordable apartment category. For many mid-income buyers, units under Dh1 million offer realistic entry points into Dubai’s red-hot real estate market.
3. Preference for Smaller, More Practical Units
   After several years of soaring luxury prices and large-scale developments, many buyers are shifting toward more modest homes — smaller apartments, more efficient layouts, and lower price tags. Knight Frank’s analysis suggests that the “entry-level” property market is particularly appealing right now.
4. Strong Sales, But Slower Supply
   Despite the appetite for lower-cost homes, new housing supply is struggling to keep up. According to Springfield Properties, while demand continues to intensify, deliveries are lagging. The mismatch is stark: more people need homes than there are new units to absorb them, especially in affordable ranges.

The Bigger Picture: Market Momentum & Imbalances

Even as the sub-Dh1 million inventory tightens, Dubai’s overall real estate market remains bullish. Q3 2025 saw house values continue to rise, with average apartment prices up 2.3 percent quarter-on-quarter and 9.6 percent year-on-year.

Sales volumes are also breaking records: for the year to date, Dubai’s residential transaction value has already surpassed Dh 310 billion, with Q3 alone reporting Dh 117 billion in sales.

Meanwhile, the ultraluxury segment — properties worth over Dh 25 million — is experiencing a different dynamic: here, supply is growing faster than demand, according to Knight Frank.

Meanwhile, mid-market homes (Dh 1–3 million) are increasingly becoming the backbone of transaction activity, according to Springfield Properties.

Supply Constraints: Is Dubai Running Out of Affordable Units?

Part of the problem is that new housing supply is not aligned with demand. Even as construction booms, the types of housing being built are not necessarily the kinds of affordable units that buyers are clambering for.

ValuStrat notes that in early 2025, there was a significant shortfall: while the population continued to grow quickly, only about 27,000 new homes were completed in 2024, the lowest figure in six years.

Later projections suggest that for 2025, around 44,000 new units are expected to be delivered. But when you consider how many new residents are arriving each day, that delivery pace may not be nearly enough to close the gap.

Most of these new units are apartments, which helps in one way — but villas and townhouses, often more desirable for families, remain in much shorter supply.

Risks & Strategic Implications

This divergence between supply and demand in the sub-Dh1 million segment could carry several risks for the Dubai real estate market:

• Affordability Pressure: As inventory dries up, even “cheaper” homes may become harder to find — pushing entry-level buyers toward more expensive brackets, squeezing their budgets, or forcing them to delay purchase decisions.
• Potential Correction: Some analysts warn that if supply does not catch up, price growth could stall or even reverse in specific segments.
• Developer Pivot: Developers may shift focus further toward mid-market and luxury housing, where demand is already strong and margins may be higher. If the affordable segment is not replenished, this could widen the gap even more.
• Social Implications: For first-time home-buyers and middle-income residents, a lack of affordable options could become a long-term challenge, especially as Dubai continues to attract more residents with visa reforms and economic opportunities.

Why This Matters

The squeeze on Dh1 million-and-below homes is not just a niche concern — it’s central to the sustainability of Dubai’s housing ecosystem. A healthily balanced market requires affordable entry points, especially in a fast-growing city.

If lower-priced homes continue to disappear, the market loses an important segment of buyers: young professionals, middle-income families, and first-time investors. That could eventually lead to a bifurcated market — very expensive luxury properties on one end, and fewer accessible homes on the other.

Possible Ways Forward

To address this, several strategies could help:

1. Incentivize Affordable Builds: The government or developers could offer incentives (e.g., lower land costs or streamlined approvals) for projects that deliver smaller, more affordable units.
2. Encourage Mixed-Use, Mixed-Income Projects: By integrating affordable homes with mid- and high-end developments, developers can spread risk while maintaining broad appeal.
3. Monitor and Adjust Regulatory Policies: Authorities could introduce policies to ensure that a portion of new residential development is reserved for entry-level segments.
4. Innovative Financing: Offering more flexible payment plans, or encouraging post-handover payment models, might help more buyers afford properties in this bracket.

Conclusion

Dubai’s property market in 2025 is still riding strong — but the vanishing inventory of homes under Dh1 million is a red flag. As demand from mid- and lower-income buyers surges, the supply of truly affordable homes is not keeping pace. Without intervention, this mismatch could lead to long-term affordability challenges and structural imbalances in Dubai’s real estate landscape.