Information, Incentives and Real Estate: The Role of Prediction Markets
Prediction markets have grown quickly
The idea of profiting from an accurate prediction about the future is certainly not new. The entire idea of investment based on the capitalisation of future profits is built around it; derivative markets which rely on it have been around for millennia; almost all human decisions are based on the concept of gaining advantage in some way. Until recently, however, collective forecasts for specific events have been confined to use as an academic research tool and to some online betting exchanges, for example in the USA and the UK. In recent years, however, prediction markets - platforms that enables participants to trade ‘event contracts’, including future financial, sports, and political events the shadows and are now a significant part of the US economy in particular, where they have become a way to avoid gambling restrictions. On platforms such as Kalshi and Polymarket, with more continually emerging,2 many people are now placing wagers on a wide range of questions, most on sports (78% of contracts on Kalshi, for example3), but including election results and geopoliti cal issues such as the outcome of conflict in the Middle East –some of them very large indeed. The platforms run the market and take a small fee – less than 1% on each bet. The result is that these two platforms alone processed $25 billion in trading volume in April – up tenfold from a year ago. That has propelled platform valuations: as of early May 2026, Kalshi reached $22bn while Polymarket stood $15bn. But as yet both platforms' combined volume equals only a fraction of Nasdaq's $125 trillion in monthly volume. Perhaps there is much more market growth still to go. There are investors who certainly think so: the parent company of the New York Stock Exchange has invested $1.6 billion into Polymarket; prime brokers including Clear Street and Marex are building out access for hedge fund clients on Kalshi. Whether they grow as fast in the future as over the past year or not, prediction markets are therefore almost certainly here to stay.
What information do they reveal?
Prediction markets offer three main advantages over traditional research:
▪ Continuous updates: They update much faster than periodic reports.
▪ Incentive alignment: Participants only profit if their predictions are correct.
▪ Straightforward pricing: If a contract trades at 63 cents, the market is pricing a 63% probability of that event occurring.
Supporters argue that this collective wisdom can be more accurate than polls or media commentary. For instance, prediction markets famously anticipated Donald Trump’s second election
victory. However, they are not infallible. They failed to anticipate the early stages of the 2026 Gulf conflict, though they did provide informative data once the situation unfolded, converging quickly on a likely end date based on diplomatic and economic signals. According to one widely cited analysis, 67% of profits on Polymarket were made by 0.01% of accounts.5
markets
Physical real estate markets are illiquid, slow-moving, and narrative-driven. Prediction markets complement them by providing faster signals on variables such as vacancy rates, interest rates, and cap rate expectations. In the Gulf, whilst the legal status of prediction markets has yet to be completely clarified, it is possible that some jurisdictions may eventually choose to classify these markets as gambling, limiting their potential use even as hedging instruments for real estate investors.10 Being unable to trade them, however, does not prevent their use as investment signals.
There are two ways they impact real estate:
Direct impact: Contracts linked to property outcomes. Currently, these are limited by a lack of fresh, daily data. Unlike equities, reliable real estate data is usually only available monthly, which limits the liquidity needed for these markets to function properly. Therefore, using them to forecast direct property values remains a risky endeavour.
Indirect impact: Tracking event contracts on the wider drivers of real estate value, such as inflation, credit-spread widening, recession odds, and demographic trends. While investors have traditionally relied on banks and brokers like Cavendish Maxwell, prediction markets provide a new stream of early signals.
These indirect signals can provoke useful debate by challenging mainstream forecasts, forcing investors to consider how market-implied probabilities might affect the net operating income or exit cap rates of their assets.
implementation
Using these markets as an investment tool is complex. They are heavily US-oriented, meaning the range of available contracts—with the notable exception of US interest rates—may not always align with Gulf market needs. Furthermore, the participants may lack deep knowledge of regional property drivers.
To use this data effectively, an investor would need to build a dashboard and integrate it into existing forecasting models. This is time-consuming and requires significant expertise.
Conclusion
The landscape of data is shifting from siloed information to a world where real-time, probabilistic forecasts are freely available. Prediction markets commoditise qualitative forecasting, turning opinions into measurable probabilities.
While they will not replace expert advice, they will become another tool in the investor’s toolkit, alongside analyst reports and futures prices. Real estate investors should monitor them to keep important risks visible, but they must exercise caution. These markets can move quickly and price incorrectly. They are no substitute for properly constructed forecasts based on multiple sources of information, but they are an excellent way to test assumptions and prepare for a wider range of future outcomes.**
Authors
Julian Roche Chief Economist Cavendish Maxwell julian.roche@cavendishmaxwell.com
Key Contacts Ali Siddiqui Research Manager ali.siddiqui@cavendishmaxwell.com
Hassan Alladin Associate Director, Strategy and Consulting hassan.alladin@cavendishmaxwell.com +971 50 117 5265
Dubai +971 4 453 9525 dubai@cavendishmaxwell.com 2204 Marina Plaza, Dubai Marina, P.O. Box 118624,
Dubai Abu Dhabi S harjah Ajman
+971 50 877 0190
cavendishmaxwell.com
Disclaimer:
Zacky Sajjad Director, Business Development and Client Relations zacky.sajjad@cavendishmaxwell.com
+971 50 644 5089
Riyadh Ras Al Khaimah
