A new forecast from Fitch Ratings is predicting that Dubai’s red-hot real estate market will experience a double-digit plummet in prices during the second half of this year and into 2026.
Reuters reports Dubai is expected to see 210,000 planned units through 2026, doubling the level set in the previous three years. However, Fitch warned this will create a record increase in supply that will seesaw with prices falling by no more than 15%. This would follow the roughly 60% spike in residential unit prices between 2022 and the first quarter of this year.
Real estate is an important aspect of Dubai’s economy, with $207.22 billion in transactions last year, which marked a 36% volume increase. But Dubai is no stranger to real estate sector corrections – a 2009 crash resulted in a $20 billion bailout led by Abu Dhabi.
On a positive note, Fitch predicted that banks and homebuilders can withstand a drop in real estate prices – the banking sector’s exposure to this market is 14% of total gross loans at end of last year, down from 20% three years earlier – while delays in several major projects could buffer the pressure on pricing.
