HIGHNEGATIVE
Fitch warns of double-digit price fall in Dubai real estate
Fitch Ratings predicts a double-digit price correction in 2H2025 and 2026, with over 200,000 units to be delivered over 24-36 months.
Affected Areas:
Citywide
Key Performance Indicators
Real-time market metricsFirst Nine Months 2025 Transaction Volume
155,000
+33.7%9M
Total property transactions in first nine months of 2025
Total Transaction Value
500B
+33.7%9M
Total value of all property transactions (AED)
Q3 Sales Growth
24.9%
+24.9%Q3
YoY growth in Q3 sales volume
Average Rental Yield
6%
+7.1%Current
Average gross rental yield across Dubai
Current Market Standing
Market Status
Positive with Caution
Sentiment
BULLISH
Recommended Strategy
Emphasize off-plan in high-demand areas; monitor supply for villa scarcity; avoid oversupplied segments
Positive Factors
- •Record transaction volumes and values
- •Off-plan market strength
- •Population growth and visa reforms
- •Ownership shift in premium segments
Risk Considerations
- •Up to 15% price correction in 2H25-2026 Ratings
- •Over 200,000 unit supply pipeline over 24-36 months
- •Global economic uncertainties
- •Potential buyer remorse in speculative markets
Confidence Level
80%
Market Confidence
Outlook Timeframe: 12-18 months
Key Market Insights
MARKET
Off-Plan Sales Dominance
Off-plan transactions exceeded 70% of total deals, driven by new launches and investor appetite for future appreciation.
Action Items:
- •Prioritize off-plan investments in high-growth areas
- •Monitor developer track records for delivery risks
MARKET
Supply Overhang and Price Correction Risk
Fitch Ratings projects a moderate price correction of up to 15% in 2H25–2026, following a 60% price rise from 2022 to 1Q25. Over 200,000 residential units expected over 24-36 months, but banks and homebuilders are well-positioned with rating buffers.
Action Items:
- •Focus on undersupplied segments like villas and townhouses
- •Diversify into established areas with strong fundamentals
Area Analysis
Dubai Marina
Prime waterfront district with strong rental yields and mature amenities, appealing to expats and investors.
Grade A+
+8.5%
Price Appreciation
$4.1M
Avg Price
6%
Rental Yield
$3000
Price/SqFt
Opportunities
- •High short-term rental returns
- •Proven appreciation track record
- •Premium waterfront value retention
Risk Factors
- •High competition from new waterfront projects
- •Seasonal tourism fluctuations
- •Traffic congestion in peak hours
Business Bay
Central business district with luxury residences and commercial spaces, offering strong investment potential due to connectivity and growth.
Grade A+
+9.8%
Price Appreciation
$3.8M
Avg Price
6.2%
Rental Yield
$2800
Price/SqFt
Opportunities
- •Luxury apartment demand
- •Proximity to Downtown attractions
- •Strong ROI for furnished units
Risk Factors
- •Higher vacancy in commercial segments
- •Competition from adjacent districts
- •Urban density challenges
Market Facts & Data Points
Transactions increased 33.7% YoY in the first nine months of 2025 to 155,000, with value nearing AED 500B.
HIGH ImpactMARKET
Q3 2025 saw 20,304 property sales, reflecting continued market momentum.
HIGH ImpactMARKET
Following 60% price rise from 2022 to 1Q25, Fitch expects up to 15% correction in 2H25-2026 due to supply surge.
HIGH ImpactMARKET
Latest Market News & Developments
MEDIUMNEUTRAL
Price correction forecasts may be misleading, warn experts
Dubai real estate investors alerted that price correction forecasts could be misleading if based solely on supply data.
Affected Areas:
Dubai-wide
Notable Project Launches
Binghatti Skyblade
by Binghatti Properties
Business Bay, Business Bay
Handover: Q4 2028
350 units
Grade A+
Price Range
$0.9M - $2.8M
Expected ROI
8.8%
Property Types:
APARTMENT
Key Highlights
- •Iconic 40-storey tower with luxury 1-3BR apartments
- •Panoramic canal views and modern amenities
- •Sustainable design with smart tech integration
Why Consider
- •Prime Business Bay location with strong appreciation potential
- •Developer's strong sales leadership in Q3 2025
- •Appeals to urban professionals seeking luxury
Target Investors
- •Investors targeting mid-term yields
- •Young professionals and small families
- •International buyers for managed rentals
Unique Features
- •Signature Binghatti design elements
- •Rooftop amenities with infinity pool
- •Integrated smart home systems
Considerations
- •Extended handover timeline increases risk
- •Competitive market in Business Bay
- •Potential for higher service charges
Sources:
JAFZA Waterfront
by DP World
Jebel Ali Free Zone, JAFZA
Handover: Q3 2027
500 units
Grade B+
Price Range
$0.8M - $3.5M
Expected ROI
9%
Property Types:
APARTMENTVILLA
Key Highlights
- •Waterfront community with mixed residential options
- •Proximity to ports and free zone benefits
- •Eco-friendly design with community amenities
Why Consider
- •Strategic location near trade hubs
- •High ROI potential from waterfront premium
- •Appeals to business-oriented residents
Target Investors
- •Investors in logistics-linked areas
- •Families seeking community living
- •Expat professionals in trade sectors
Unique Features
- •Direct waterfront access
- •Integrated business-residential ecosystem
- •Sustainable features targeting LEED
Considerations
- •Industrial proximity may affect ambiance
- •Longer commute to central Dubai
- •Market maturity still developing
Sources:
Investment Strategy
Villa scarcity yield optimization
Capitalize on villa/townhouse scarcity (only 17.4% of new supply) by targeting emerging communities and enhancing with smart fit-outs to boost rental yields and long-term value. This approach can add 100-150 bps to yields while benefiting from ownership shift, considering Fitch's correction warnings.
LONG
Investment Horizon
MODERATE
Risk Level
10%
Target Return
Implementation Steps
1
Identify scarcity-driven micro-markets with villa supply gaps
Timeline: Month 1-2
2
Select properties with strong ownership appeal (3+BR, gardens)
Timeline: Month 2-3
3
Implement value-add fit-outs for energy efficiency and smart tech
Timeline: Month 3-4
4
Explore refinancing post-appreciation to optimize equity
Timeline: Month 18-24
Risk Considerations
- •Monitor supply impacts on prices
- •Avoid high-density areas with vacancy risks
- •Account for global factors on expat demand
Sources:
Quick Actions
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Market Conditions
- •Limited villa supply amid population growth
- •Shift from renting to owning
- •Favorable visa and tax policies
Additional Resources
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Disclaimer: This research-backed content is informational and not financial advice. All investment decisions should be made based on your own circumstances and after consulting with qualified financial professionals. Past performance does not guarantee future results.