Dubai Property Market Poised for Correction Amidst Supply Surge
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- Editorial team
Dubai’s real estate sector, after experiencing a significant surge in property prices over the past few years, is now approaching a pivotal juncture. According to a recent report by Fitch Ratings, the market is expected to undergo a correction, with property prices potentially declining by up to 15% in the near future.
Supply Outpacing Demand
Fitch’s analysis indicates that between 2025 and 2027, Dubai will witness a substantial increase in property supply, projected to grow by 16%. This surge in new developments is set against a backdrop of a comparatively modest population growth of around 5% during the same period. The report states, “Under our base case, we expect that prices either have already reached their maximum level in the current cycle or will reach that level in 2025. The correction, which we expect in the second half of 2025 or 2026, should not exceed 15%, especially if there are more delays in project completion.” (khaleejtimes.com)
Shift in Developer Strategies
In response to the anticipated market correction, developers are expected to adjust their pre-sale payment plans. The current average of 70% payment during construction is likely to be reduced to 50%, aiming to make property acquisition more accessible to investors. This strategic shift reflects an effort to maintain investor interest amidst changing market dynamics. (khaleejtimes.com)
Resilience in Prime Locations
Despite the forecasted correction, properties situated in prime locations are anticipated to demonstrate greater resilience. The report highlights that assets in these areas are less susceptible to price fluctuations due to a different investor profile, characterized by longer holding periods and a higher tolerance for market volatility. (khaleejtimes.com)
Market Outlook
The anticipated correction follows a period of exceptional growth in Dubai’s property market, driven by demand from foreign investors, high-net-worth individuals, and professionals relocating to the UAE. Fitch’s data reveals that residential property prices increased by approximately 60% between 2022 and the first quarter of 2025. While the upcoming correction may present challenges, it also offers opportunities for investors to enter the market at more favorable price points. (khaleejtimes.com)
In summary, Dubai’s property market is on the cusp of a correction, influenced by an impending oversupply and evolving developer strategies. Stakeholders are advised to monitor these developments closely to navigate the changing landscape effectively.
