«The risk of a real estate bubble has increased for the second consecutive year and is now at an elevated level,» Switzerland’s major bank UBS states in its latest UBS Global Real Estate Bubble Index. The analysis differs from other studies in that it does not examine individual regions but instead puts the global property market as a whole to the test.

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In 2025, Dubai was among the world’s major cities that defied the flattening global trend in property prices. Madrid recorded the strongest real price growth of all the cities analysed, with an increase of 14 percent. Dubai also posted strong gains of around 11 percent, while Tokyo completed the top three with price growth of more than 5 percent. A return to zero interest rates also supported prices in the Swiss cities of Zurich and Geneva.

Nevertheless, the risk level in the Gulf metropolis is still not quite as high as in Zurich and Tokyo, and especially Miami, says Claudio Saputelli, Head Swiss & Global Real Estate at UBS Wealth Management.

Population growth as a key price driver


The reasons behind the unbridled rise in the value of «concrete gold» in the Gulf are multifaceted. Saputelli explains: «Dubai’s population has grown by almost 15 percent since 2020. This has tightened available supply and pushed rents higher. Over the past five years, rent increases have outpaced home price gains. More recently, however, property prices have begun to overtake rent growth as investment demand strengthens.» Paradoxically, the price per square metre in Dubai remains more affordable than in other megacities, the expert notes. In 2025, Dubai crossed the threshold of 4 million residents for the first time. Sixty percent of the population is under the age of 35. In July 2025, the UAE’s total population reached 11 million for the first time, with expatriates accounting for 88 percent.

Saudi Arabia closing in


According to UBS, the market remains volatile, with exposure to oil prices and periodic oversupply. «Building permits suggest that new construction could reach levels last seen in 2017 – a year that amplified the downturn in the housing market,» the bank warns. In addition, «competition for offshore real estate investment with Abu Dhabi and Riyadh is intensifying, particularly as Saudi Arabia opens designated zones to foreign buyers from 2026. While Dubai’s government expects continued strong economic expansion, it is uncertain whether household incomes will rise sufficiently to support further price increases,» Saputelli concludes.