We were prompted to write this article by another question from a client who had been listening to stories about a property «bubble» in Portugal—mostly from Dubai estate agents.
We have prepared a sober and balanced comparative review of the property markets Portugal and UAE from the perspective of investment appeal and actual liquidity.
Liquidity: a term that is often used incorrectly
In the professional community, it is often said that Dubai is a «highly liquid» market.
Generally, this thesis is supported by two arguments:
- «The whole world knows that property is bought in Dubai, investors trust the market.
- «The country has a huge and constantly growing volume of transactions — around 140,000 in 2025.
However, transaction volume and marketing awareness do not equal real liquidity.
What is real liquidity
From an investor's perspective, liquidity is the ability of an asset to compete with alternatives and be sold quickly and with minimal discount under any market conditions.
Dubai: high activity ≠ high liquidity
In Dubai, the vast majority of transactions for foreigners are for primary market. A significant portion of these transactions consists of hundreds and thousands of identical properties in large-scale projects, such as:
- Dubai Creek — a development plan of 9 districts covering ~5 km² with dozens of high-rise towers.
- Dubai Islands — a large high-rise development cluster, remote from the business centre, with guaranteed transport congestion that will worsen as the population grows.
Investment implications
- competition in reselling is measured thousands of flats, rather than by the tens;
- the price per square metre is being dragged down by the mass economy segment, even when buying a property in the luxury class;
- in the downturn phase, mortgage buyers are the first to exit – selling at a loss;
- selling without a loss on the second-hand market is becoming extremely difficult.
Figures that won't be shown in the booklet
- the average price growth in the mass-market primary real estate sector over 5-7 years often does not outpace USD inflation;
- The real return on long-term lettings in high-rise areas, after expenses, is 3–5% per annum, with high volatility;
- The time taken to sell a property on the secondary market in oversaturated areas can be 12–24 months, or the property may be sold at a discount of 15–30%.
Additional risks of the Dubai market
- regulatory flexibility: changes to visa, rental and tax rules can be introduced quickly;
- population growth increases the strain on transport and infrastructure;
- social heterogeneity in mass housing areas reduces the stability of rental rates;
- high market sensitivity to global macroeconomics.
Dubai's budget model: reliance on external demand
Key sources of Dubai's budget revenue:
- tourism;
- property sales and registration fees;
- short-term holiday rental;
- VAT and excise duties;
- oil revenues (capped share).
Conclusion: Dubai's budget systematically depends on:
- expats;
- tourists;
- investment demand.
How the Dubai market behaves during a crisis
2008–2009
During the global financial crisis, property prices in Dubai fell by up to 50–60% from peak values.
2014–2019
Following the growth of 2012–2013, the market entered a correction phase: according to official indices, the decline was 20–27% from the 2014 peaks.
The Dubai market is pronounced cyclical nature.
Why is there so much noise around Dubai
Aggressive market promotion is explained by:
- low barrier to entry for agents;
- the lack of long-term licensing;
- minimum requirements for a deep knowledge of the market;
- with high commissions on the primary market (up to 10%, often – the weaker the object, the higher the commission);
- with a ready stream of clients from the CIS.
Exceptions exist (the luxury segment, gated community developments), but this niche market with a different budget and alternative entry logic.
Portugal: a market with real liquidity and a different risk profile
Market structure
The Portuguese real estate market is fundamentally different:
- dominates secondary market, not a mass primary organisation;
- the supply is physically constrained by urban planning regulations, historic buildings, and ecological zones;
- There is no tradition of large-scale construction of clusters of high-rise buildings of the same type.
Consequently, competition in the resale market is measured by units and tens of objects, rather than thousands.
Liquidity in Portuguese
In Portugal, liquidity is determined by:
- location, rather than a construction phase;
- by type of development (low-rise buildings, historic houses, villas);
- mostly solvent domestic and European demand, rather than an influx of speculative capital.
Price dynamics: growth without overheating
- average national growth is moderate and spread out over time;
- insular regions (Azores, Madeira) are growing faster than the mainland due to a shortage of land;
- the mainland (including Lisbon) is showing stable dynamics without sharp surges and crashes.
Key difference: The rise in prices in Portugal is being driven by the demand for accommodation, rather than by expectations of resale to the «next investor».
Rental yield
- long-term rental: 4–6% net per annum in stable areas;
- lower rate volatility;
- tenants are mainly residents, families, and expats with long-term contracts.
This is a market preservation and moderate capital growth, rather than speculative gains.
Regulation
Portugal's regulatory environment:
- changes are discussed in advance;
- phased in;
- rarely have a sharp or retroactive character.
Restrictions (e.g. regarding short-term rentals):
- curb speculation;
- stabilise the market;
- protect the long-term investor.
Market behaviour during a crisis
Historically, the Portuguese market:
- did not show precipitous drops;
- weathered crises through stagnation or moderate correction;
- recovered faster due to domestic and European demand.
Key market difference
Portugal
- liquidity is determined by the location and quality of the property;
- the secondary market dominates, the primary market is in short supply;
- Exit is possible in any phase of the cycle with a moderate discount.
Dubai
- liquidity exists in the growth phase;
- in a crisis it disappears abruptly;
- Mass-market primary real estate is becoming illiquid.
Result
Portuguese property is long-term investment theme, based on:
- limited supply;
- sustained demand;
- predictable regulation.
For the investor, what becomes key is not the peak growth rate, but market resilience under stress scenarios.
