S&P: Dubai Real Estate Supply to Rise 20% and Apartment Prices May Decline

Credit rating agency S&P Global expects the number of residential units in Dubai to rise by around 20% over the next two years, mostly in the apartment category, which could pressure transaction volumes and prices amid ongoing regional instability.

The agency stated that specific segments of Dubai's residential market are already experiencing a price correction, attributing this to broad visa reforms that attracted a larger number of long-term investors, adding that new deliveries expected in 2027 and 2028 could accelerate the pace of correction in the investor-dominated apartment segment.

It noted that developers it rates, such as DAMAC, Emaar, Omniyat, and Sobha Realty, possess substantial revenue backlogs and limited payment arrears, supporting their ratings. Additionally, long-term buyers, regulatory improvements, and government support are factors that have kept price declines moderate.

According to Cavendish Maxwell data, residential real estate sales in the emirate reached AED 72.6 billion in the third quarter across approximately 34,000 transactions, representing a 47% decrease in sales value and a 38% decrease in transaction volume year-on-year, reflecting the impact of slowing activity as registration backlogs begin to clear.

What do these terms mean?

Credit Rating: An assessment issued by a specialized agency regarding the ability of an entity or company to fulfill its financial obligations, affecting borrowing costs.

Off-Plan Sales: The sale of real estate units prior to completion of construction, used to pre-finance the project.

Loan-to-Value Ratio (LTV): The maximum percentage of property value a lender grants as a loan, determining the required down payment size from the buyer.

Arrears: Installments or amounts overdue beyond the agreed payment deadline.