Fitch Forecasts Potential Double-Digit Decline in Dubai Real Estate Prices by Late 2025
Dubai’s property market may experience a sharp downturn in the second half of 2025 and into 2026, with home prices projected to fall by up to 15%, according to a recent report released by ratings agency Fitch. This signals a notable shift following several years of robust post-pandemic growth.
Fitch attributes the expected correction to a significant rise in housing supply — with 210,000 new units scheduled for delivery by 2026. This figure represents more than double the number delivered over the past three years and could trigger unprecedented inventory levels that weigh on prices.
This forecasted decline comes after a steep climb of nearly 60% in residential property values between 2022 and Q1 2025. Dubai’s popularity soared in this period, fueled by large-scale infrastructure investment, favorable tax policies, relaxed visa regulations, and a surge in expat relocation, including an influx of Russian nationals amid geopolitical tensions.
Real estate remains a cornerstone of Dubai’s economy. The emirate recorded property transactions worth AED 761 billion (approx. $207 billion) last year — a 36% rise in transaction volume, as per official government statistics.
Historically, Dubai has faced sharp real estate corrections, notably the 2009 crash that necessitated a $20 billion bailout led by Abu Dhabi. Since then, the government has implemented structural reforms to stabilize the sector, including efforts to reduce debt exposure and merge key state-owned developers.
Additionally, the emirate has outlined long-term strategies aimed at sustainable economic expansion. Among them is the D33 initiative — a decade-long plan to double the economy’s output and position Dubai among the world’s top four financial centers.
Despite the projected downturn, Fitch noted that the financial sector is well-positioned to absorb a price drop. Real estate, while still the largest segment in bank lending portfolios, now accounts for just 14% of total gross loans — down from 20% three years prior.
Demand for prime properties, such as those on the iconic Palm Jumeirah, coupled with potential project delays, could help ease pressure on pricing, the agency added.
