Fitch forecasts Dubai home price correction: Fitch Ratings expects Dubai residential real estate prices to undergo a moderate correction in the second half of 2025 after peaking in 2024, according to a research note. The agency expects prices to decline, though not by more than 15%, and expects any declines to be absorbed by developers and banks to avoid rating downgrades. This is helped further by improved leverage from developers and lower levels of real estate financing among banks, which have improved capital cushions.

We’ve been expecting this: This month, Fitch Ratings’ Paul Gamble also forecast that real estate could see a “modest correction” in prices owing to the amount of supply coming to the market, but the government is expected to be able to manage the supply effectively. Multiple other agencies have forecasted a moderation in price growth, including Knight Frank, which forecast an 8% price increase in properties for 2025, down from double-digit growth in 2024. Moody’s also expects a price dip or stabilization over the coming 12-18 months.

Prices for residential units increased approximately 60% between 2022 and 1Q 2025. This demand stemmed from post-pandemic immigration and increased investor interest.

Expect price corrections to affect properties outside of prime locations, with those in prime locations usually showing more resilience during periods of correction, Fitch said.

The record number of new projects in the pipeline since 2023-24 are expected to add about 250k units to supply. Deliveries will spike in 2026, with the 120k units planned for handover dwarfing the 30k units delivered in 2024 and 90k in 2025. Fitch expects new units to cause an average 16% annual increase in housing supply between 2025 and 2027, outpacing expected population growth of around 5%.

New supply is expected to add pressure on rental yields, which have already declined 30 basis points between 2H 2024 and 1Q 2025 to 7.4%.

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