Property prices and rental rates in Dubai are expected to maintain stability over the next 18 months, with a potential decline thereafter due to an influx of new supply from numerous project launches post-pandemic, according to analysts at S&P Global. The agency’s recent report highlights the resilience of Dubai’s property market, noting that it has not been adversely affected by regional geopolitical tensions. This stability is largely attributed to robust demand from both local and international investors, bolstered by recent visa reforms that enhance market confidence.
As the supply of available units is projected to increase significantly by 2025, particularly in non-prime areas, rental growth is anticipated to stabilize. Analysts predict that approximately 182,000 new residential units will be delivered between 2025 and 2026, a substantial rise compared to the average annual delivery of 40,000 units from 2019 to 2023. This surge in supply may eventually meet the previously unfulfilled demand, potentially leading to lower property prices and rents.
Despite the current upward trend in property prices and rents across many areas in Dubai, factors such as population growth—expected to rise by about 3.5% during the same period—will influence the absorption rate of real estate inventory. Although deliveries in 2024 have not matched those of 2023, any significant delays in project completions could tighten the market temporarily, supporting price increases. However, a balanced residential real estate market is anticipated by 2026.
S&P Global projects that Dubai’s population could reach around 4 million by 2026. The agency notes that high demand for real estate investments in Dubai continues to attract buyers willing to pay premium prices per square foot for new constructions compared to many European markets. The D33 agenda has been launched to further stimulate growth in the real estate sector and draw foreign direct investment.
While new project launches are expected to decrease over the next one to two years due to market saturation, developers are likely to remain flexible in their strategies. They may shift focus towards smaller units during price increases or adjust payment plans during downturns to sustain sales. Notably, recent reports indicate record-high off-plan development launches with substantial sales value, although the luxury segment may see a reduction as developers pivot towards more affordable housing options.
