Dubai on the Verge of Tier-1 City Recognition: A Real Estate Perspective

Executive Summary

Dubai’s Real Estate Market: Transitioning into a Mature Global Hub

Dubai is approaching broad recognition as a tier-1 global city, joining the ranks of New York, London, Singapore, and Hong Kong. While distinct in its economic model and urban landscape, Dubai has solidified its position as a global hub, demonstrating strong performance across key economic and urban indicators. The Dubai Economic Agenda (D33) aims to double the city’s economy by 2033 and establish Dubai among the world’s top three cities, reinforcing its trajectory toward full tier-1 status.

Market Sentiment: Confidence in Dubai’s Tier-1 Trajectory

Industry sentiment is overwhelmingly positive regarding Dubai’s evolution as a tier-1 city. According to our Dubai Real Estate Market Sentiment Survey, 73% of stakeholders, including institutional investors, developers, and financial professionals, believe Dubai is either already a tier-1 city or will reach this status within 5-10 years. This optimism is underpinned by structural advantages, including high quality of life, advanced infrastructure, strong governance and regulatory environment, and safety and security.

Our survey findings indicate that:

• 43% of respondents view Dubai’s real estate market as appropriately valued
• 35% consider it somewhat overvalued
• 11% believe it is undervalued

Short-term sentiment suggests a neutral to cautious outlook on price movements, with no strong consensus on near-term fluctuations. However, medium- (3–8 years) and long-term (8–15 years) expectations remain overwhelmingly positive, with most respondents anticipating continued price appreciation. The findings suggest that Dubai’s market is transitioning from a phase of rapid price gains (2021-2023) to a more measured, mature growth trajectory. Short-term softening or stagnation in property prices is expected, but rental price growth remains favorable due to population expansion, economic diversification, and sustained demand for premium rental properties.

Global Indices: A Lagging Reflection of Dubai’s Rise

According to several major global market indices that evaluate leading cities based on factors relevant to Dubai’s real estate development, Dubai ranks 13th, trailing cities such as New York, London, and Singapore. However, these traditional benchmarking models may not fully account for the rapid transformation of emerging global hubs like Dubai, as they often prioritize long-established economic and institutional frameworks over dynamic, high-growth markets.

Dubai’s Position in the Tier-1 City Index

The Tier-1 City Index by Driven | Forbes Global Properties assesses Dubai’s global standing across six key domains derived from 28 major indicators critical to real estate viability and urban competitiveness. The index benchmarks Dubai against six other top-tier global cities, including Singapore, Hong Kong, London, New York, Paris, and Sydney. Dubai currently ranks 5th out of these seven cities, trailing Singapore, Sydney, London, and New York, while scoring on par with or ahead of Hong Kong and Paris. Notably, Dubai excels in specific categories, such as:

• Infrastructure quality (ranked 2nd)
• International appeal (ranked 3rd)
• Safety and security (ranked 4th)
• Quality of life (ranked 4th)

Continued structural improvements could further elevate Dubai’s standing among top-tier global cities.

Cap Rates and Investment Dynamics

Dubai currently offers higher cap rates than traditional tier-1 markets, indicating that property prices remain relatively lower in relation to their income generation. Several structural factors contribute to this:

• Dubai’s shorter real estate market history and higher historical price volatility
• Limited institutional investor activity compared to established tier-1 cities
• Lower availability of high-quality, institutional-grade real estate assets
• A marginally higher financial risk-free rate and increased regional market risk premium

As Dubai continues to mature, with strong economic growth, infrastructure expansion, and improved data transparency, cap rate compression is expected, gradually aligning Dubai’s investment profile with other leading global real estate hubs.

Conclusion: Dubai’s Real Estate Market Is Evolving Into a Mature Global Hub

Our findings suggest that Dubai is on the cusp of full-tier-1 city recognition, backed by its D33 Economic Agenda, real estate expansion, and policy-driven urban planning initiatives, most notably the Dubai 2040 Urban Master Plan. While short-term price fluctuations and rental market softness may persist, medium- to long-term fundamentals remain highly favorable, positioning Dubai for sustained real estate appreciation and investment stability.

Our primary research on market sentiment suggests that Dubai is either already a tier-1 city or on the cusp of being recognized as one, alongside New York, London, Singapore, Hong Kong, and other leading global hubs. The Tier-1 City Index ranks Dubai 5th out of 7 cities, placing it on par with or ahead of Hong Kong and Paris, while an aggregate of global indices ranks Dubai 13th globally. These findings reflect Dubai’s growing competitiveness and evolving global position. However, disparities in rankings highlight differences in benchmarking methodologies, with traditional indices often prioritizing long-established economic centers over rapidly emerging markets. As Dubai continues diversifying its economy, expanding infrastructure, and enhancing its regulatory environment, its position in global rankings is expected to strengthen further.

As institutional participation expands and the real estate market matures, cap rates are expected to compress. This will further align Dubai’s market with global benchmarks and reinforce its status as a premier international real estate hub.