Dubai’s real estate prices may drop by double digits in the second half of this year and in 2026, Fitch predicted on Thursday. This marks a shift after years of growth following the pandemic. The agency expects a surge in new homes in 2025 and 2026, reaching 210,000 units—double the amount built in the past three years. This increase will flood the market with supply and likely cause prices to fall by no more than 15%.
Prices for homes have already risen roughly 60% from 2022 through early 2023. Dubai’s growth was driven by huge infrastructure projects, tax benefits, and relaxed social and visa rules. Many foreigners arrived, including Russians, due to the pandemic and regional conflicts. Real estate is key to Dubai’s economy, which relies on business and tourism. Last year, property deals reached 761 billion dirhams ($207.22 billion), up 36% in volume. The city has experienced sharp corrections before, similar to the 2009 property crash, which led to a $20 billion bailout from Abu Dhabi.
Since then, Dubai has worked to cut debt and support growth. It strengthened its main state-run builders and took steps to make the economy more stable. The government wants to grow sustainably and has a 10-year plan called D33. The goal is to double the size of its economy and rank among the top four financial centers globally. Fitch noted that banks and builders can handle a price drop. While real estate loans are a big part of Dubai’s bank loans, the exposure to property firms dropped from 20% three years ago to 14% last year.
Prime locations, like Palm Jumeirah, remain popular. Construction delays may help reduce pressure on prices. Overall, the market appears to be prepared for a decline, but it should be manageable.