It seems that UAE property buyers are finally gaining more leverage over sellers than they have in years.
Recent data shows that prices have started to decline, indicating a market where developers and sellers are becoming more willing to adjust their pricing. Previously, generous commissions offered by developers were not enough to prevent a downturn in certain indices, particularly those dominated by off-plan sales.
In response to these findings, a wave of apologetic commentary has emerged, suggesting that the dip is either a temporary fluctuation or that index methodologies require revision. Some even claim that the ready market remains resilient.
However, despite these arguments, it is evident that prices have been on a downward trend for months in several areas, and the shift is only accelerating. This changing power dynamic is driven by an expanding supply pipeline, with over 300,000 units expected for delivery in the next four years. Even after adjusting for actualization rates, the number of homes available for sale is at its highest level in six years.
Joint Ventures and the Need to Conserve Cash
On the demand side, with lower competition, bidding wars have faded. Developers seeking to preserve cash flow are increasingly forming joint ventures with land banks or reviving older strategies, such as offering significant discounts for upfront payments.
As a result, properties are remaining on the market for longer—one measure suggests the longest duration since February 2020.
This pattern is not unique to the UAE. In the US, existing home sales dropped by 5% month-on-month, and last year saw the lowest home sales figures since 1995, despite limited supply.
Dubai’s land prices also recorded their first decline in both value and transaction volume. While some have attributed this to supply chain concerns, there has been growing recognition that property prices have diverged from their replacement cost. This discrepancy has been particularly evident in the widening gap between off-plan and ready property prices, which is now starting to correct.
Buyer Leverage in the Refurbishment Market
In the refurbishment market, buyers have gained the upper hand, successfully negotiating lower prices. The number of failed deals has also increased as buyers walk away in search of more realistically priced options.
A key discussion point has been buyer resistance to making large down payments or taking on higher-interest loans, only to spend further on refurbishing homes—adding to escalating costs.
Similarly, in the new housing market, supply levels have risen enough to cover more than a year’s demand, marking the highest point since the 2014 boom-bust cycle.
For retail buyers, this means increased options are finally translating into lower prices and improved affordability. In JLT, the median price for ready homes is Dh1,530 per square foot, compared to Dh2,370 for off-plan units—a gap that is even more pronounced in areas like DubaiLand Residential Complex.
From brokers to speculators, driven by analysts’ projections, a financial model has emerged where homeowners unknowingly took on significant risk in the off-plan market. However, market valuations inevitably adjust over time.
Investors, both seasoned and new, have long understood the cyclical nature of real estate. Now, both institutional and retail buyers are preparing for the next phase of the market cycle.
