Dubai property prices could drop up to 15% as they hit peak, report says
Dubai's property prices have reached their peak in the current cycle. A correction is expected soon with prices likely to drop not more than 15 per cent, according to a new study released on Thursday.
According to global ratings agency Fitch, the emirate will see a massive increase in new supply, growing at 16 per cent during 2025 and 2027, surpassing population growth of around 5 per cent.
'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 per cent, especially if there are more delays in project completion,' said analysts at Fitch Ratings.
'This will also translate to an easing of pre-sale models offered by developers to investors to 50 per cent payment plans during construction, compared to a current average of 70 per cent. The payment plan has a significant impact on an investor's ability to acquire a new property,' Fitch's analysts said in the latest report on the emirate's real estate market.
Dubai's property market has had an exceptional rally over the past four years, driven by demand from foreign investors, high-net-worth individuals and professionals flocking to the UAE over the years.
Fitch data showed that prices of residential units increased by about 60 per cent between 2022 and the first quarter of 25 with demand underpinned by immigration in the post-pandemic years coupled with the improved attractiveness of the Dubai property market for investors in the healthy economic environment.
Record supply
The handover of new units will lead to a record increase in supply. Fitch estimated an average 16 per cent increase in supply in 2025-2027, exceeding forecast population growth of around 5 per cent.
Following a record number of new property projects in 2023-2024, about 250,000 units are expected to be released. 'The spike in deliveries is expected in 2026, when about 120,000 units are planned for handover, compared to only 30,000 in 2024 and 90,000 in 2025,' said Fitch analysts.
Dubai's population is on track to reach 4 million this year as it hit 3.948 million on May 29.
According to Dubai Statistics Centre data, the emirate's population grew 51,295 to 3.914 million at the end of March 2025.
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