A shifting trend in Dubai real estate investments

Although cash transactions continue to dominate Dubai’s residential property market, a noticeable trend of Shariah compliant financing is increasingly being instituted – especially to meet a rising demand of investors from Asia, Turkey plus other parts of the Middle East.

“Shariah compliant financing structures allow investors to participate without interest,” said Injad Ansari, property consultant at Aliyas Real Estate, told IFN Investor. “This is important for faith-based investors who otherwise would have to stay out of the market.”

Of special interest is properties under construction – off-plan offerings which Ansari said appeal due to the absence of financing costs. “Developers offer four-year payment plans with no interest, which makes it easy for investors to participate.”

Dubai’s property market in 2024 saw a decisive shift toward off-plan sales, fueled by flexible developer-led payment terms and the growing uptake of Shariah compliant financing. Ansari noted off-plan properties accounted for over 60% of total sales, a share he expects will keep on rising.

By the first half of 2025, this momentum had accelerated. Independent consultancy Cavendish Maxwell reported that off-plan sales made up 70.2% of residential transactions by value, totalling AED187.9 billion (US$51.16 billion).

There has also been a shift in investor interest with institutions also entering the fray as the UAE’s regulatory framework has made it easier for Islamic pension funds and Shariah-focused institutional capital to access the property market, noted Ansari.

Institutional interest has been particularly strong in Grade A offices, especially in the Dubai International Financial Centre. Ansari said these properties, often ESG-certified, offer stable long-term leases and high occupancy rates, aligning with global investment trends.

“Recently, Omnia Properties came with a very good project: Grade A, ultra-luxury office spaces, which are very limited in the market. Now, whether offerings are plots for commercial or retail, each and every sector has huge demand led by tenants and businessmen. The current trend is consumer-led, business-led, making it very attractive to investors.”

While innovative financing options are gaining ground, Dubai’s ready property market remains overwhelmingly cash-driven. “In ready property, 90% to 95% of purchases are made in cash. Mortgages exist, but they are a much smaller share,” Ansari said.

Many of such purchases involve high-net-worth individuals and institutional buyers seeking long-term holdings. “It’s not that mortgages aren’t available, they are. But most investors here don’t want to be tied to bank debt and be exposed to interest rate volatility.”