Real Estate

Dubai property optimism remains despite price correction warnings

June 2, 2025, 6:44 AM

Dubai Marina skyline. A massive pipeline of over 250,000 new units is set to hit the market by 2026, prompting experts to predict a potential price adjustment and a cooling period

Rental yields soften
Developers post profits
Market cooling into 2026

Real estate professionals in Dubai are maintaining a cautiously optimistic outlook on the market, even as fresh warnings of a potential double-digit correction cast a shadow over the city’s record-breaking property surge.

Ratings agency Fitch forecast this week that Dubai’s residential property market is likely to cool through the second half of 2025 and into 2026, driven by declining affordability and a surge in upcoming project deliveries.

Prices have jumped roughly 60 percent since early 2022, but that growth is expected to slow, or even reverse, as inventory levels swell.

“We expect prices will not fall more than 15 percent,” Fitch said, while highlighting a record pipeline of residential projects. More than 250,000 units are scheduled to enter the market between 2023 and 2026, with completions peaking in 2026 at around 120,000 units, four times the number handed over in 2024.

While some delays in handovers are likely, Fitch said, the overall increase in supply comes at a time when Dubai’s population, now estimated at 3.8 million, is expected to grow by 5 percent over the next two years.

Rental yields, another closely watched market metric, also show signs of pressure.

The average gross residential yield fell 30 basis points to 7.4 percent between late 2024 and early 2025, Fitch noted, and may soften further as supply continues to rise.

Still, listed developers have reported robust earnings amid a continued surge in demand. Emaar Properties posted a 27 percent jump in first-quarter profit to just over $1 billion, while its development arm, Emaar Development, saw profits soar 48 percent to $523 million.

Abu Dhabi’s Aldar Properties reported a 25 percent rise in Q1 net income to $446 million. Only Union Properties’ earnings declined.

Daniel Hadi, CEO of real estate agency Engel & Völkers Dubai, remains bullish.

“We have delivered the best quarter in our history,” he said. “We are positioned at the beginning of what I believe will be two more years of remarkable growth in this bull run.”

Dubai’s property market registered AED62.1 billion ($16.9 billion) in sales in April alone, a new monthly record, according to official figures.

“Premium investments continue to have enduring value with healthy market interest, while rental rates are adjusting to create more accessible entry points across all segments,” said Abdullah Alajaji, founder and managing director of Driven Properties.