Dubai South recorded 12,428 residential property transactions in the first eight months of 2026, surpassing the 9,788 transactions registered throughout 2025 by 27 per cent, as demand for smaller apartments and off-plan properties continues to drive activity in the area.
According to the Anarock Dubai South Residential Micro-Market Report, residential sales value reached Dh15.9 billion between January and August, equivalent to 81 per cent of the Dh19.6 billion recorded during the whole of last year.
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The figures mark the highest residential transaction volume recorded in any full year covered by the report, which tracks the market from 2020 to August 2026.
The longer-term growth has also been significant. Annual residential sales value increased from Dh720 million in 2020 to Dh19.6 billion in 2025, while transaction volumes rose from 672 to 9,788 over the same period.
Smaller homes drive demand
The report found a shift in buyer preferences, with studios and one-bedroom apartments now accounting for around three-quarters of residential transactions.
Studios represented 45 per cent of sales between January and August 2026, more than double their 19.5 per cent share in 2025. One-bedroom homes accounted for another 31 per cent, bringing the combined share to approximately 76 per cent.
Apartments overall made up 94.5 per cent of residential sales volume, compared with 31 per cent in 2020.
Aayush Puri, CEO – Residential, Middle East and CEO of Anarock Channel Partners, said the shift towards smaller homes is changing the market.
“Dubai South has already surpassed its full-year 2025 residential sales volume in just eight months. The important change is what buyers are purchasing: studios and one-bedroom homes now account for around three-quarters of transactions,” Puri said.
He added that smaller-ticket apartments are becoming the main driver of activity, broadening Dubai South’s residential appeal beyond the larger homes that supported its earlier growth.
Prices rise despite lower purchase budgets
Despite the growing preference for smaller homes, average property prices in Dubai South have continued to increase.
The average residential price reached Dh1,656 per square foot during the first eight months of 2026, compared with Dh650 in 2020.
However, the average transaction value declined to Dh1.28 million from its peak of Dh2.57 million in 2023.
Anarock attributed the decline in average purchase value to the growing share of smaller and relatively more affordable units, rather than a broad-based correction in property prices.
“A lower average ticket size should not be mistaken for a market-wide price correction,” Puri said.
He explained that while buyers are spending less on individual properties, average prices per square foot have continued to rise, reflecting the changing mix of homes being sold.
Off-plan properties dominate sales
Off-plan homes accounted for 94 per cent of residential transaction volume between January and August 2026, up from 73 per cent in 2020.
The report said Dubai South remains largely driven by new project launches, with the ready-property and secondary markets still developing.
The secondary market accounted for less than 6 per cent of transaction volume during the first eight months of 2026.
Rental market expands
Dubai South’s rental market has also grown significantly alongside residential sales.
Average annual rents increased from Dh34,534 in 2020 to Dh82,063 during the first eight months of 2026, an increase of approximately 2.4 times.
Rental transaction volumes also rose fourfold compared with 2020.
Gross rental yields in 2025 averaged 3.9 per cent across residential properties, with apartments recording the highest yield at 4.3 per cent, followed by townhouses at 3.4 per cent and villas at 3 per cent.
The yields are before service charges, vacancy periods and transaction costs.
Airport expansion supports long-term growth
The report highlighted the role of Al Maktoum International Airport’s expansion in supporting Dubai South’s development.
The Dh128 billion expansion project, approved in April 2024, is designed to eventually accommodate 260 million passengers and 12 million tonnes of cargo annually.
Its first operational phase is targeted for 2032, although the report cautioned that major infrastructure projects remain subject to changes in timelines and development phases.
Dubai South covers approximately 145 square kilometres and is planned to accommodate around one million residents and 500,000 jobs once fully developed.
Developers continue buying land
Commercial property activity also points to continued development interest in Dubai South.
Commercial transaction value increased from Dh60 million in 2020 to Dh5.46 billion in 2025, with land accounting for 97 per cent of the 2025 total.
Developers purchased a further Dh2 billion worth of land during the first eight months of 2026, suggesting that additional residential and commercial launches could follow.
More than 38,000 homes expected by 2029
The next phase of Dubai South’s property market will depend on how effectively demand absorbs a large increase in housing supply.
According to Anarock, 38,116 residential units are scheduled for delivery between 2027 and 2029, more than 3.5 times the 10,813 homes delivered between 2016 and 2026 to date.
Handovers are expected to peak in 2028, when 16,094 units are scheduled for completion.
Apartments account for 85 per cent of the under-construction pipeline, compared with 59 per cent of existing ready stock.
“This concentrated delivery period will test absorption, with sustained demand needed to keep pace with supply,” Puri said.
The report warned that gross rental yields could come under pressure in 2026 and 2027 if property values rise faster than rents.
Sales could reach Dh23.9 billion in 2026
Based on the sales pace recorded between January and August, Anarock said Dubai South’s full-year residential sales value could reach approximately Dh23.9 billion if activity continues at the same rate through December.
That would exceed the annual sales values recorded between 2020 and 2025.
However, the company stressed that the figure is a directional projection based on current transaction trends rather than a formal forecast.
The report expects smaller apartments to remain a major driver of demand, while the secondary market is likely to develop gradually as more off-plan projects are completed and handed over.
Source: Khaleej Times