Dubai’s residential real estate market may be nearing a turning point, with a moderate correction on the horizon, according to Redmond Ramsdale, Head of Middle East Bank Ratings at Fitch Ratings.

In a recent interview with CNBC, Ramsdale warned that the rapid pace of price increases seen in recent years is unlikely to be sustained, as new supply is expected to exceed demand by 2025 and 2026.

Residential property prices in Dubai have surged nearly 60% since the end of 2021, pushing current levels to roughly one-third above the previous market peak in 2014.

This unprecedented growth has been fueled by a confluence of factors, including post-pandemic recovery, a wave of visa reforms, and a surge in investor interest.

“We think we’re now close to the peak,” Ramsdale said, noting that the market appears to have entered a stage of maturity after three years of robust expansion.

“A moderate correction is now likely over the next 18 months,” he added, estimating that price declines could reach up to 15%.

Why is Dubai’s real estate market due for a correction?

A key driver of the anticipated correction is the significant volume of new residential supply set to hit the market in the next two years.

A wave of project launches in 2023 and 2024 will lead to a record number of housing unit handovers in 2025 and 2026.

Ramsdale emphasized that this supply boom will outpace the growth of Dubai’s population, which has already decelerated following the sharp pandemic-era increases.

“Effectively, what we’re saying here is that supply will outstrip demand,” Ramsdale explained.

While the post-COVID period saw strong demographic growth supported by reforms in residency and labor laws, the momentum is expected to slow.

Compounding the pressure on the market are macroeconomic headwinds such as subdued oil prices.

While real estate prices in Dubai were once closely tied to oil trends, Ramsdale noted that this correlation has weakened.

Still, lower oil prices can dampen investor sentiment, particularly among buyers from the Gulf Cooperation Council (GCC) states whose economies remain heavily reliant on hydrocarbon revenues.

Investor caution is also being reinforced by signs of cooling in the rental market. After significant increases since 2021, residential rental prices have stabilized in the first quarter of 2025.

“This tells us that demand has really been kind of absorbed now,” Ramsdale said, pointing out that gross rental yields have started to edge downward, albeit slightly.

Could Dubai’s property market crash in 2026?

Despite the expectation of a correction, Fitch does not foresee a market crash.

The projected price decline of up to 15% over 18 months would still leave prices well above pre-pandemic levels.

Ramsdale characterized this adjustment as “natural,” following the extraordinary growth phase spurred by a unique combination of low interest rates, investor inflows, and policy liberalization.

In conclusion, Dubai’s real estate market appears to be entering a new cycle phase, where cooling prices and oversupply may temper the bullish sentiment of recent years.

As Ramsdale put it, “We’re at the top of the cycle, and a correction is likely.” For investors and stakeholders, the coming months will be crucial in gauging how smoothly the market transitions into this next chapter.

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