Key Takeaways

• Dubai’s real estate market is facing mixed forecasts for 2025—Moody’s predicts price stability, while S&P warns of a correction.
• A record 182,000 new units are expected by 2026, but supply chain delays and rising costs may limit actual deliveries.
• Foreign demand remains strong, with up to 75% of pre-sales driven by international investors.
• Luxury may soften, but mid-market and strategic investments still present opportunities.
• Monitoring project timelines and market absorption will be key to making informed decisions.

The Market Forces at Play

Dubai’s real estate sector is entering a pivotal moment in 2025. With competing narratives from top credit agencies—Moody’s forecasting stability and S&P signaling a downturn—the question remains: which outlook will prove correct?

Supply & Delivery Uncertainty

One of the biggest variables affecting Dubai’s real estate trajectory is supply absorption versus actual delivery rates.

• A projected 182,000 new units are set to hit the market in 2025-2026, more than double the annual average since 2019.
• Yet, supply bottlenecks remain—only 58% of 2024’s expected 47,000 units were delivered, as developers faced design revisions, labor shortages, and cost escalations.
• Construction costs continue to rise, with subcontractor wages increasing 12% year-over-year.

With these factors at play, supply-side execution remains uncertain, making it difficult to predict whether the market will truly be oversaturated.

Moody’s Perspective: Price Stability?

Moody’s maintains a conservative yet optimistic outlook, anticipating minimal price fluctuations.

• Price forecast: Flat to -3% movement in 2025.
• Supply constraints may prevent major price corrections.
• Dubai’s 3.5% population growth and consistent foreign demand (65-75% of pre-sales) will help sustain property values.

Their belief? Strong demand and supply delays will keep the market balanced.

S&P’s Perspective: Market Correction Ahead?

S&P, on the other hand, warns that Dubai’s market may be heading for a correction, citing oversupply risks.

• Expects a 5–7% price drop in 2025-2026.
• Delayed projects could flood the market if delivered simultaneously.
• Pre-sale backlogs and execution risks could strain investor confidence.

Their position? If developers meet projected supply goals, prices may dip.

What This Means for Investors and Developers

So, where does this leave investors, developers, and buyers?

• If construction delays continue, Moody’s stable market scenario is more likely.
• If supply floods the market, S&P’s correction outlook strengthens.

However, Dubai’s 2040 Master Plan, visa reforms, and a 4.1% economic growth forecast ensure that long-term fundamentals remain solid.

The luxury sector may see softening, but mid-market properties, especially in high-demand areas, will remain attractive to foreign investors. The key is monitoring project completion rates, absorption capacity, and international buyer sentiment.

Explore Prime Investment Opportunities

No matter where you stand on the Moody’s vs. S&P debate, one thing is clear: Dubai remains a global hotspot for real estate investment.

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