After three years of sustained double-digit growth and record-breaking transaction volumes, Dubai’s property market may be heading for a moderate price correction, according to a new report from global ratings agency Fitch. The firm forecasts that average residential prices in Dubai could decline by up to 15% in the second half of 2025, as a wave of new supply enters the market and demand begins to normalize.

Why Is a Correction Expected?

Fitch analysts point to several converging factors behind their prediction:

• Supply Surge: Developers are expected to deliver more than 73,000 new homes in 2025 alone, with over 210,000 units planned by 2026. This influx is likely to increase competition among sellers and cool price growth, especially in mid-market and off-plan segments.

• Investor Profit-Taking: Many buyers who entered the market during the pandemic-driven upswing are now looking to realize profits, leading to more resale listings and softer price negotiations.

• Affordability Pressures: As property values reached new highs, affordability became a growing concern for both residents and investors—particularly as mortgage rates have inched higher since early 2024.

• Global Macroeconomic Headwinds: Ongoing volatility in global financial markets, coupled with rising interest rates in the U.S. and Europe, is prompting greater caution among international buyers.

The Scale: A Correction, Not a Crash

While the projected 15% decline is significant, Fitch and other analysts emphasize that this is a healthy market correction—not a signal of crisis or collapse. The correction is expected to be gradual and largely concentrated in neighborhoods that have seen the most aggressive appreciation over the past 18–24 months.

“Dubai’s property market has enjoyed an extraordinary run since 2021, with prices outpacing many global cities. A moderate correction is not only expected, but necessary to preserve long-term stability and keep the market attractive for both end-users and investors,” said Michael Laurens, Senior Director at Fitch Ratings.

Areas Most Likely to See Adjustment

• Luxury and Ultra-Luxury Segments: Palm Jumeirah, Downtown Dubai, and branded residences may experience the largest price softening as new high-end supply comes online.

• Mid-Market Communities: Popular off-plan hubs like Jumeirah Village Circle and Dubai South could see increased competition and slower price growth as more units are handed over.

• Rental Yields Remain Attractive: Despite the anticipated correction, Dubai continues to offer some of the highest gross rental yields globally—averaging 6–8% in prime districts.

Investor & Developer Response

Industry insiders expect a period of recalibration, rather than panic, with developers adjusting launch strategies and focusing on projects that cater to real end-user demand and rental investors. Flexible payment plans, post-handover offers, and incentives are likely to remain widespread throughout the correction.

Many institutional investors see the anticipated price dip as an opportunity to enter or expand their Dubai portfolios, given the city’s strong economic fundamentals and the government’s ongoing push for regulatory stability.

The Outlook: Dubai Remains Resilient

Despite the forecasted price decline, most analysts agree that Dubai’s real estate market remains fundamentally strong. The emirate’s ambitious urban planning, population growth targets, and global investor appeal position it well for a stable rebound and continued long-term growth beyond 2025.

“Dubai’s ability to weather cycles and return to growth is proven,” added Laurens. “A short-term adjustment will only reinforce the city’s status as the region’s premier real estate destination.”

Stay tuned for further updates as Dubai’s property market enters a new phase of maturity and opportunity for both local and international stakeholders.