Real estate investors in Dubai should not base their price correction expectations solely on new supply data. Instead, they should consider broader market indicators, according to experts.
Rating agencies such as Fitch and Moody’s, along with other real estate specialists, have predicted price corrections of about 15% by the end of this year or early 2026.
Firas Al Msaddi, CEO of fäm Properties, one of Dubai’s largest real estate agencies, emphasized that relying on the number of new units alone can be misleading without considering these key factors:
• Increased sales activity despite growing supply
• Strong investor demand driven by attractive yields
• Population growth and migration boosting end-user demand
• Record-high rents influencing purchase decisions
“We often see forecasts predicting a drop in Dubai property prices based on new supply,” Al Msaddi noted. “Many assume prices will fall with the scheduled delivery of tens of thousands of homes in Dubai, but the market is more complex. Prices don’t exist in a vacuum. Understanding them requires evaluating demand, liquidity, rental trends, and supply together.”
A report by Driven | Forbes Global Properties also suggests that the risk of a significant price correction in Dubai may be exaggerated, due to:
• Rapid population growth fueled by increased expatriate inflows, long-term visa reforms, and Dubai’s status as a global lifestyle hub.
• Delayed handovers and phased deliveries, which extend actual supply absorption beyond the initial launch year.
• More labor force participation, especially in finance, tech, and professional services, leading to stronger housing demand.
• Supportive macroeconomic fundamentals, including GDP growth, employment recovery, and continuous business formation, which bolster end-user and investor confidence.
Using its AI-driven data platform, DXBinteract, fäm Properties analyzes seven key market signals daily to provide investors with early warnings of market shifts before they appear in official data. These signals include:
Bid weakness: Early signs of a market shift occur when buyers resist current pricing, prompting increased negotiations, offers like free service charges, flexible payment plans, discounts, and promotions before official sales data reflect changes.
Firas Al Msaddi, CEO of fäm Properties
Days on market (DOM): This measures how long a property takes to sell, capturing buyer hesitation before transaction numbers change. An increasing DOM indicates properties are unsold longer, suggesting slowing demand. A decreasing DOM as homes sell faster shows a heating market.
Sales volume trends: Sales volumes are a clear demand indicator. While one weak month might not matter, three consecutive declines suggest a true trend shift. Breaking volumes down by property type and resale versus off-plan offers sharper insight.
Inventory and absorption rate: When supply outpaces buyer absorption, prices may face downward pressure. Warning signs include months of rising supply, more active listings, and sluggish absorption despite promotions.
Yield compression: When prices increase faster than rents, yields shrink. If returns are too thin, investors may pause, slowing capital growth until yields adjust.
Rent vs price divergence: This shows if the market is overheating or undervalued. Rising prices alongside flat or declining rents indicate speculative risk. Rising rents with stable prices offer strong yields and good buying opportunities.
Mortgage costs and liquidity: End-user demand relies on affordability. Higher mortgage rates or stricter lending rules quickly reduce buying power. Monitoring average mortgage rates, loan approvals, and loan-to-value ratios reveals the real liquidity behind transactions.
“Like any market, Dubai real estate moves in cycles, but investors can avoid surprises by tracking all key signals to spot changes before they hit the news,” Al Msaddi stated.
