Dubai Real Estate Facing Double-Digit Price Declines in 2025-2026, Says Fitch
Dubai’s booming real estate market, which saw residential prices surge approximately 60% between 2022 and early 2025, is now on the cusp of a significant downturn. Ratings agency Fitch reported on Thursday that the emirate is likely to experience double-digit price falls in the latter half of 2025 and throughout 2026.
This anticipated sharp reversal comes after years of post-pandemic growth, fueled by substantial infrastructure spending, attractive income tax policies, and relaxed social and visa regulations that drew thousands of foreigners, including Russians following the war in Ukraine.
The primary driver for this projected decline is a massive surge in supply. Fitch forecasts that around 210,000 new units are planned for delivery in 2025 and 2026, effectively doubling the supply from the previous three years. This record increase is expected to push prices down by up to 15%.
Real estate is a crucial pillar of Dubai’s economy, serving as the Gulf’s hub for business and tourism. Last year alone, property transactions in the emirate totaled 761 billion dirhams ($207.22 billion), marking a 36% increase in volume.
Historically, Dubai’s property market has experienced severe corrections, most notably the 2009 crash that necessitated a $20 billion bailout led by Abu Dhabi. However, the government has since implemented measures to strengthen the sector, including deleveraging and consolidating major state-owned developers. It has also launched an ambitious 10-year plan, D33, aimed at doubling economic output and establishing Dubai as one of the world’s top four financial centers.
Despite the looming price corrections, Fitch indicates that Dubai’s banks and homebuilders are well-positioned to withstand a decrease. While real estate remains the largest component in UAE banks’ lending portfolios, the banking sector’s exposure to real estate firms has reportedly decreased to 14% of total gross loans by the end of last year, down from 20% three years prior. Additionally, the enduring appeal of prime locations like Palm Jumeirah and potential delays in project completion are expected to help mitigate pricing pressures.
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