Dubai vs London Real Estate Market Comparison 2025

Dubai and London are some of the leading real estate investment destinations across the globe. The two cities are appealing to international investors who want to make good returns. Dubai is a place with free property ownership and high rental returns. However, there is a mature and stable investment environment in London.

The aspects of this comparison include prices, ROI, ownership laws and taxation. It assists investors in realizing which market suits them. Through the major trends, we are going to uncover the strong and weak points of the two cities.

Dubai Real Estate Market Overview

By the halfway of 2025, the real estate transactions value in Dubai amounted to around AED 431 billion, increasing by 25% annually. The volume of transactions also increased 26% in the same period to 125,538 deals in comparison to H1 2024.

Q2 2025 alone registered 50,593 transactions amounting to AED 170.53 billion. It is equivalent to a 15% increase and 27% increase in volume and value, respectively, as compared to Q1. Residential real estate prices per square foot reached about AED 1,793 in the second quarter of 2025.

The Q1 2025 was characterised by apartments, which comprised 31,270 deals estimated at approximately AED 59.35 billion. The market is still a powerful force of government policies, including zero property tax and freehold zones.

London Real Estate Market Overview

The average house price in London stood around £552,000 in March 2025, representing an increase of 0.8% per annum. In April 2025, the average price had gone up to approximately £567,000, a year-on-year up of 3.3%.

In prime central boroughs (e.g., Chelsea, Kensington, Westminster), values had gone past £1.2 million in 2025. In outer boroughs, the average was £350,000 to £450,000. The London market is stable with moderate growth and an increased cost of entry, in contrast with the emerging market.

Property Prices and ROI: Dubai vs London

Dubai

• The average price per square foot in Dubai in 2025 is around AED 1,793.
• Dubai has estimated average gross rental yields ranging between 6-8 percent due to high demand and good prices.

London

• The median house price in Greater London in 2025 is approximately £552,000.
• ROI in prime central areas provides approximately 2.5% to 3%, and the outside areas reach up to 4.5% to 5.7%.

Taxation, Regulations and Ownership Laws

Dubai

• There is no capital-gains or property tax on residential property as well as no tax on capital gains in Dubai.
• It charges the purchase value of the property at 4 percent to the Dubai Land Department.
• Tenants or owners pay a housing charge of 5% of the yearly rent through the utility bill.
• In case of a mortgage, a fee of 0.25% with an added fee of AED 290 is charged as the mortgage registration fee.
• Corporate tax can be imposed at 9% on companies that make above AED 375,000 in real estate gains.

London

• London has the Stamp Duty Land Tax (SDLT) levied on foreign purchasers according to the purchase price as of April 2025.
• Normal SDLT rates on 1 April 2025: 0% to £125,000; 2% to £125,001 to £250,000; 5% to £925,000; 10% to £1.5 m; 12% above.
• The surcharge clause on the standard SDLT rates charged on non-resident buyers in London is 2% higher.
• London leasehold reform and building-safety improvements are also being introduced, and this makes the compliance requirements high for investors.

Ownership Laws: Dubai Vs. London

• Dubai allows foreign freehold ownership in specific areas; London tends to limit foreigners through more severe finance regulations.

Market Accessibility & Financing Options

Dubai

• Most regions allow foreign investors to purchase freehold without having to reside there.
• The non-resident down payments are generally 20%.
• In mid-2025, mortgage rates are expected to range between 4.5% and 5.5%.
• Post-handover payment plans are usually offered by the developers, and they relieve the cash flow.
• Entry is easy with overseas buyers since it is fast, and little paperwork is required to finance it.

London

• The market is also controlled with higher scrutiny of overseas investors.
• The down payments lie between 25% and 40% of the purchase price.
• The average mortgage rates in mid-2025 are 5.8%, which is larger than in Dubai.
• Loans are also slow to get approval and take a lot of paperwork.
• A predictable legal framework will bring in high-net-worth, long-term investors.

Quick Insight: Dubai Vs. London

Dubai provides facilitated entry, reduced financing requirements and expedited approvals.

Whereas London offers a more developed legal and lending infrastructure, but needs a greater financial demonstration.

Luxury Real Estate Segment: Dubai vs London

1. Dubai's Luxury Market

• The Dubai luxury is booming. In the first half of 2025, the city recorded 3,731 sales of properties whose prices were more than AED 10 million. It is an increment of 62.7% as compared to the same period in 2024.
• This is a record of 2,388 ultra-premium transactions recorded in the second quarter which is now a record quarter-wise.
• The portion of ultra-luxury houses is currently over 4% of the total market volume; in the same year, it was only 1.1%.

Such data means a high level of interest among investors, high-net-worth migration, and beneficial policy is enhancing the luxury pipeline.

2. London's Luxury Market

• The luxury segment in London is more moderate. In prime central London, ultra-prime properties valued at £15 million or higher registered £694 million in transactions in the first half of 2025.
• The sales volumes are lower; there are 27 deals above £15 million in H1 2025 as compared to 46 in 2024.
• By value per square foot in PCL, the sales in some regions like Knightsbridge and Belgravia were around £2,041 per sq ft (+14.5%YoY). The rentals were around £88 per sq ft (+21.2%YoY).

Although it is prestigious, oversupply in certain segments and longer stay on the market have shifted the bargaining power to the buyer.

3. Comparative Insight: Dubai Vs. London

• The luxury market in Dubai is increasing rapidly, whereas the luxury market in London is declining.
• In Dubai, there are big high-value deals (AED 425 m+); in London, the ultra-prime deals are fewer and more discriminating.
• Dubai is more attractive with regard to yield and growth; London is more about prestige and preservation of capital.
• The luxury segment provides growth in value as well as high demand in Dubai. Rental returns are not high (around 3 to 6 per cent), and the appreciation of values is skewed in London.

4. Strategic Takeaway for Investors

• The luxury segment in Dubai has an attractive case to investors who need to leverage growth and dynamic demand.
• London is relevant, though with caution and selective targeting to those who are interested in heritage assets and capital stability.

Both markets should be subjected to deep due diligence. Verify the property condition, service charges, lease conditions (particularly in London), and macro-factors (exchange rates, tax policy, regulation) which may have an impact on returns.

Future Outlook: Dubai vs London Real Estate

1. Dubai's Market Outlook

It is estimated that a high momentum of the real estate market in Dubai will persist in the year 2026. The confidence of the investors is also high as there are business-friendly policies, an increasing population, and economic growth. The real estate sectors of prime and luxury properties are still in high demand by Buyers worldwide.

Further stimulating growth are new mega-developments, infrastructure development and sustainability projects. Long-term visa programmes and tax incentives also help in supporting demand.

2. London's Market Outlook

The property market in London is recording slow improvements following a slowdown in performance in the market. Analysts estimate the growth of prime areas to be 2-4% annually to 2026. Mortgage rates can be relaxed a bit, which will enhance the decision of buyers. The increase in living expenses and tight lending policies, however, will ensure that the market is not booming and falling.

Ultra-rich investors would probably continue to show interest in international destinations, particularly in heritage and central destinations. A weaker pound may also boost demand as it will give superior value to foreign buyers.

3. Relative Market Dynamics: Dubai Vs. London

• The rate of growth in Dubai is anticipated to be higher owing to high demand and favourable policies. London is expected to expand steadily, even at a lower rate.
• Dubai has yield-oriented and growth-oriented investors, whilst London has more asset security and prestige-oriented investors.
• Dubai has a competitive advantage in terms of visa and tax benefits. However, London has the advantage in terms of its legal system and financial position in the world.

Closing In!

Dubai and London have their own unique real estate opportunity; however, the process of market processes in each case are evidently different. Dubai is more promising with a high growth rate, fewer barriers to foreign investment, and high demand for luxury. London, in its turn, is a representation of stability, tradition, and security of assets in the long run.

Dubai can attract investors with rapid growth and an opportunity to be flexible. In comparison, London can attract investors who tend to value stability and international prestige. Finally, the most appropriate option lies in investment objectives, riskiness, and strategy.