Fitch: “Property prices in parts of Dubai may fall due to expected oversupply in 2025—2026"

Fitch: “Property prices in parts of Dubai may fall due to expected oversupply in 2025—2026"

For years, Dubai's real estate market has benefited from international capital inflows, rapid population growth and a record number of project launches. But the year 2025 may mark the beginning of a new phase: stabilization, correction and oversupply.

Price drop of up to 15% possible according to Fitch Ratings

According to a recent report by Fitch Ratings (2025), the residential real estate market in Dubai could experience a price drop of up to 15% in the second half of 2025 to 2026. The main reason is a surplus of supply compared to demand. In recent years, home prices have risen by more than 60%, but this increase is not sustainable in light of the current pace of construction (Fitch Ratings, 2025).

At the same time, the UBS Global Real Estate Bubble Index (2024) points out that there is no bubble in Dubai: with a score of 0.64, the city is well below the 1.5 bubble line, and even below cities such as Amsterdam (0.98), Tokyo (1.67) and Miami (1.79) (UBS, 2024). Instead of overheating, there seems to be a normalizing market. The slight price drop of -0.57% in January 2025 can therefore be interpreted as a sign of maturity: Dubai is increasingly developing into a market where fundamental supply and demand predominate, rather than pure sentiment and momentum (DXB Interact, 2025).

However, this maturity does not guarantee stability in every segment and location. That is why, in the remainder of this article, we look at what parties such as Fitch and Reuters have to say about the increasing supply and its possible consequences.

243,000 new homes before the end of 2027

From data from Cavendish Maxwell (2025) shows that no less than 243,000 new homes will be completed in Dubai by the end of 2027. By comparison, only around 30,000 units were completed in 2024. It is therefore about an increase in an enormous scale.

Around 80% of these future deliveries are apartments, and 145,000 new off-plan units were launched in 2024 alone, an average of around 400 per day (Abbas, 2025).

Jumeirah Village Circle: textbook example of oversupply

The area that seems to be hit hardest by this wave of construction is Jumeirah Village Circle (JVC). according Cavendish Maxwell (2025), nearly 25,000 new homes will be completed in JVC by 2027, accounting for more than 10% of the city's total expected supply.

But JVC isn't necessarily popular among end users. As a local broker interviewed by GREM said:

“11% of all off-plan apartments in Dubai come into JVC. It's a neighborhood where people live temporarily until they can afford a better neighborhood. The infrastructure is poor, and with an additional 11,000 cars, traffic will become unlivable”

The issues mentioned by interviewed residents and real estate agents include:

• Traffic problems through poorly designed roads
• High vacancy upon completion of new towers
• Price pressure due to increasing competition among landlords
  

Supply and demand out of balance

The structural mismatch between housing supply and population growth is at the heart of the risk. according Fitch Ratings (2025), Dubai's housing supply is currently growing at around 16% per year, while population growth is only around 5%. That 11% gap is, according to Fitch Ratings (2025) is not sustainable in the long term.

Advice for investors

Not every real estate project in Dubai offers the same risk-reward ratio. Locations with generally proven appeal such as Dubai Marina, Downtown Dubai and Dubai Hills usually offer better protection against price drops thanks to stronger rental profiles, better developed infrastructure and longer residents' length of stay.

But areas such as JVC, Arjan and parts of Dubailand usually require a much more critical assessment. With each new project, ask yourself the following questions:

• How many similar units will be added in the immediate vicinity?
• How does the rental price develop when the supply increases?
• What are the risks of vacancy or depreciation upon completion?
  

Conclusion

The real estate market in Dubai remains attractive, but investors need to look beyond the brochure or payment plan. Especially in 2025, location and absorption capacity within this location are very important. Those who want to protect their returns would do well to do careful due diligence and get advice based on independent data.