Is the ongoing property boom a sign of an impending crash or a maturing market? With plenty of momentum in Dubai’s property market, an increase in supply, and consecutive record quarters for prices and sales, speculation has been rising on whether there are emerging signs of a bubble, similar to those that came up before the 2008 crash.

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While the market is widely expected to peak at a point in the near future, with some differentiation expected to take place across different segments of the market, the overall consensus is that there is more upside and signs of a maturing market than there is of an impending bubble.

Refresher: Home values have risen over 70% in the past four years, but market analysts now expect a correction in prices starting later this year. Fitch Ratings expects a moderate correction of up to 15% to Dubai home prices beginning in 2H 2025, while Moody’s and Deloitte also forecast a slowdown or stabilization in price and rent growth. Supply is also surging, with nearly 250k new homes set for completion in the next few years, a 30% jump, as scores of new developers enter the fray.

The fundamentals that have propped up Dubai’s property market are still there — and are arguably only getting stronger. Attractions include lower taxes, relaxed visa regulations, and a booming economy standing in stark contrast to peers in Europe, where the likes of London and Paris are quickly losing high net worth individuals and m’naires — (read: some 16.5k high-net-worth individuals are leaving the UK this year) — due to unfavorable tax regimes and economic stagnation. Increased political volatility and concerns over fiscal health in several European countries will likely continue to drive more people away from the region.

Saudi Arabia’s rise is also a boon for the UAE: The GCC in its own right has been doing very well economically, Mashreq’s global head of real estate finance and advisory, Zain Qureshi, says. It’s becoming increasingly open and global in its approach, with Saudi Arabia’s recent reforms drawing in countless people. “Saudi Arabia could be a formidable player [...] and some are coming to the sidelines — like the UAE — to watch what’s happening there and in the broader GCC,” he added.

So, what is the persistent boom in prices telling us right now? Demand has yet to let up, but if you take a deeper look at the data, signs that off-plan sales are seeing a slight dip are reflective of increased price sensitivity, especially in the middle to lower-income segments. As rentals continue to increase, end users are more likely to go for a ready product instead of burning a lot of banknotes on rent until their off-plan units are delivered, Qureshi said.

Increased off-plan activity in general could potentially be unhealthy in the long run, with some projects becoming unsustainable, boutique real estate investment firm Global Partners CEO Martin Linder said, adding that he is seeing more speculators in the market. While official data still points to record sales, those are largely off the back of off-plan activity, which could show cases of speculation, he added.

Is there an overbuilding problem? Qureshi says the bigger issue is the “ability to deliver these projects, and on time, and that largely depends on whether there is a sufficient [number] of contractors and whether or not they have sufficient capabilities and resources to do so,” Al Qureshi said.

REMEMBER- Some real estate developers have been bringing construction in-house in a bid to exercise more oversight and control over the delivery of their projects. This includes big players like Emaar, Azizi Developments, and Sobha Group, as well as others like Samana Developers. But some analysts have said that the move could stretch management capacity and add more overhead costs that could become an issue during market downturns.

Strong performance in some secondary markets still points to strong demand from end users for good products, Linder said. But there needs to be more differentiation in pricing between good quality and bad quality products, he added.

More institutionalization is going to be a good thing for the market: One thing that could help with this is the arrival of large institutional investors like Brookfield and Blackstone, which will likely prompt an improvement in the quality of products, because they’re looking for things like strong ESG standards and good locations. “Having institutional investors coming into the market doing their homework and chasing high quality products will raise the price on that product, and the gap will simply open,” he said.

Location also matters: There are pockets across Dubai where the land is undervalued and needs serious investors and an attractive masterplan to turn things around, and that’s what Global Partners is focusing on for its portfolio, which it says is on track to offer a net internal rate of return of more than 30%. The investment firm raised over USD 503 mn in capital and currently manages assets exceeding USD 1.4 bn. It is working on developing close to a USD 1 bn mixed-use project in the second phase of Dubai Healthcare City, as well as a luxury residential development along the Dubai Water Canal.

The key common factor between those projects? A masterplan that Global Partners can help shape in an area already anchored by one of Dubai’s top schools — Swiss International Scientific School Dubai — and surrounded by luxury developments and hotels, some completed and others with work underway. While the neighborhood is still evolving, its central location, connectivity to key business hubs, and ambitious future plans signal a transformative shift, Linder said.

Another sign of a maturing market, according to Qureshi, is more diversified funding options for real estate players. Alternative financing including bonds, sukuk, mezzanine options, and private debt, are becoming extremely common within the UAE, he said. “There’s a lot more depth in the market as far as liquidity is concerned, and that's what you're looking for in a developed economy,” Qureshi said. This is a sign of a more robust market, because there’s a higher level of endurance in the marketplace when macro conditions change, he added.

The government is also continuing to support demand and those who might be getting priced out of the market, he said, with initiatives like the first-time home buyer program and real estate tokenization drawing in more diversified investments to the market.

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