The Dubai property market is set for a phase of stability over the next 18 months, with potential for rents and property prices to soften by mid-2025. This outlook stems from increased supply due to numerous project launches following the pandemic, according to a report by S&P Global. 

Despite this, Dubai’s market shows resilience, bolstered by local and international investor demand, along with new visa reforms that provide additional stability. Here’s a closer look at what lies ahead for Dubai's real estate landscape.

Stable Property Prices, Evolving Rental Market

S&P Global notes that property prices and rents in Dubai are expected to hold steady for the next year and a half. 

As the stock of available units grows, rental growth will first stabilize in non-prime areas before expanding to the rest of the market. Increases in supply could potentially meet the current demand and, as a result, ease prices and rents by 2025.

Large-Scale Property Supply on the Horizon

The Dubai real estate market is anticipated to add approximately 182,000 residential units over 2025-2026, significantly higher than the annual average of 40,000 units over the previous five years. Many of these units were presold in 2022-2023 and are set to be delivered in the coming years. 

However, ongoing construction delays—often due to capacity constraints—could slow down delivery, creating tighter market conditions in the short term and possibly maintaining upward pressure on prices temporarily.

Rising Population and Investor Demand Fuel Market Resilience

The report highlights that Dubai’s population growth, projected at 3.5% for 2025-2026, will play a crucial role in absorbing the new inventory. Dubai’s population is expected to reach 4 million by 2026, with strong investor demand contributing to the market’s strength. 

Given the high returns on real estate investments in Dubai, off-plan sales have doubled in the first half of 2024 compared to the secondary market, as buyers continue to show willingness to pay a premium for new developments.

Dubai Real Estate Returns Outperform European Markets

Dubai's high rental rates and attractive per-square-foot returns make it a more lucrative market compared to most European markets. With the support of Dubai’s D33 agenda—an initiative designed to boost the economy and attract more foreign investment—the city is likely to maintain a competitive edge in real estate. 

Economic forecasts suggest that Dubai's real GDP growth will average around 3% annually through 2027, with a GDP per capita of approximately $38,000 in 2024.

Future Market Shifts: A Move Toward Affordability

While Dubai’s real estate developers have launched record levels of new projects in 2024, analysts predict a slowdown in new launches over the next one to two years as developers adapt to evolving market needs. 

S&P Global suggests that developers are likely to shift their focus toward affordable and mid-market properties in the coming years, given that demand for luxury units is relatively limited.

In the future, buyers can expect developers to adjust unit sizes and property types, creating a wider selection of affordable apartments and villas aimed at the mid-market segment.

Conclusion: Market Stability and Adaptability

Overall, Dubai’s property market is positioned for continued resilience, driven by a mix of stable prices, increasing population, and investor interest. 

While the short term may see some fluctuations due to new supply, Dubai’s real estate sector is expected to adjust smoothly, balancing affordability and market demand to attract both residents and investors.