A recent report by Fitch Ratings predicted a potential “moderate correction” in Dubai’s residential real estate market with price declines of up to 15% by late 2025 or early 2026. The primary argument? That new housing supply in the pipeline would soon outstrip demand.
But if you look beyond the surface and examine Dubai’s actual market fundamentals, you’ll find the picture is very different.
In this blog, we’ll break it down with facts and current data:
- Dubai’s population is growing faster than forecast
- Economic momentum is driving new business, talent, and investor inflows
- Real estate demand is structurally strong across all sectors
- The upcoming supply is needed, not excessive and is aligned with the city’s long-term growth vision
In short: Dubai is not heading for a market dip. It is undergoing a well-managed, demand-driven expansion and is still far from oversupply.
Population Growth: Accelerating, Not Slowing
Fitch’s thesis relies heavily on the idea that the supply has increased by 60% since 2020 whereas it totally fails to factor the actual population growth.
As of May 2025, Dubai’s population has reached 3.95 million, a 6.3% YoY increase, adding over 230,000 new residents in the last year alone.
Historical trend:
2024: 3.71 million (+3.54%)
2023: 3.58 million (+2.36%)
2022: 3.50 million (+2.15%)
Conclusion: Dubai’s population growth is accelerating, not decelerating.
At this pace, Dubai will surpass 4 million residents by mid-to-late 2025, years ahead of previous projections.
Strategic Growth Aligned with Dubai’s Vision
Dubai’s growth is not random: it’s aligned with two major strategic plans:
Dubai 2033 Economic Agenda
– Targets to double the economy in 10 years
– Aim: 5.8 million residents by 2040
– Major expansions across sectors: trade, tourism, tech, finance, creative industries
Dubai 2040 Urban Master Plan
– Focus on sustainable, planned urban growth
– New business districts, residential hubs, green corridors
– Massive infrastructure investments to support population and economic expansion
Bottom line: The current (and future) housing supply is being developed to cater to this strategic growth, not as uncontrolled oversupply.
Trade & Economy: Still on Strong Uptrend
Dubai’s non-oil economy is booming:
Non-oil trade hit AED 2.6 trillion in 2024, up from AED 2.3 trillion the year before.
Why this matters for real estate:
More business setups → more talent inflows → more housing demand
Corporate relocations → C-level and executive housing demand (luxury market)
Rising middle-class expat inflows → strong demand for mid-market and affordable housing
Dubai’s role as a global trade & services hub is expanding, driving real estate demand across the entire value chain.
Investor Confidence Remains High
Dubai continues to be one of the world’s most attractive property markets for yield and appreciation:
Rental yields in prime areas:
- Dubai: 6–8%
- London: 3–4%
- Singapore: 2–3%
- Hong Kong: 2%
Plus you have the advantages of no tax:
Zero capital gains tax
100% foreign ownership
Stable, business-friendly governance
Result: Continuous inflows of investors and end-users, driving both primary sales and secondary market strength.
Freezones & New Businesses on a Surge
Dubai’s business ecosystem is one of the strongest drivers of real estate demand.
Freezone visas and new business registrations remain at record highs:
Example:
2023: Over 30,000+ new free zone companies established (DMCC, DAFZA reports)
2024 continued strong, with tens of thousands of new licenses issued
Why this matters:
Each new company brings:
– Founders
– Executives
– Managers
– Staff & families
All of whom need homes, from apartments to villas, and office space.
Global trends fueling this business migration:
Europe → Tax efficiency, better lifestyle
India, Pakistan → Capital-friendly jurisdictions
Russia, CIS → Political and financial stability
GCC → Diversification beyond oil economies
Major companies relocating: Siemens, among others, have moved headquarters or regional hubs to Dubai.
Supply vs. Demand: Are We Really Facing Oversupply?
Now, let’s tackle the core of Fitch’s argument: that Dubai is heading into oversupply in 2025–2026.
Projected new supply:
2025: ~90,000 units
2026: ~120,000 units
At first glance, that looks large. But here’s the demand side:
Population is growing by ~230k people annually
Average household size ≈ 3 people
This implies a natural demand for ~75,000+ new housing units per year, without even counting demand from investors, second-home buyers, or corporate relocations.
And here’s the kicker:
[1] Not all new projects will deliver on time
– Dubai always sees delays & phased completions
– Some 2025–26 units will actually hand over in 2027 or later.
[2] Segment mismatch:
– Much of the new supply is mid-market apartments.
– Premium villas, waterfront homes, branded residences remain under-supplied, and continue to sell out fast.
[3] Investor vs. end-user dynamics:
– Many units are purchased by investors or second-home buyers, not all will immediately enter the rental market.
[4] Policy alignment:
– Dubai authorities actively monitor the market.
– The 2040 Master Plan intends to balance supply with demand, not repeat the unregulated booms of the 2000s.
Commercial & Retail Markets: Strengthening
Office space:
Grade A office occupancy: 90%+
Rents: Up 22% YoY in 2024
Vacancy: Near-zero in core districts like DIFC
Why?
Corporate HQ relocations, fintech/crypto firms, startups, SMEs, all driving new office demand.
Retail space:
Prime mall occupancy: ~95%+
Retail rents: Rising steadily
Strong demand from global luxury brands, F&B, and fashion retailers.
Dubai’s tourism boom and rising affluence continue to support the retail real estate market.
Outlook: No Major Correction Ahead
Let’s sum it up:
- Population growth is accelerating
- Dubai’s economy is booming
- Investor confidence is high
- Business formation is strong
- Supply is aligned with the city’s long-term strategic growth
- Premium segments remain under-supplied
- Commercial & retail sectors are fundamentally strong
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Dubai’s Real Estate Market Is Maturing: Not Crashing
- Will Dubai’s 60%+ price surge of the past three years continue at the same pace? No, and that’s healthy.
- But are we heading for a 10–15% market-wide price correction as Fitch suggests? Highly unlikely.
More probable outcome:
- Premium & prime segments: Prices remain resilient or continue moderate growth.
- Mid-market segments: Price stabilization, but no crash, supported by population growth.
- Peripheral / speculative locations: Possible softening if demand doesn’t keep pace, but these are isolated pockets, not systemic.
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Final word:
Dubai is entering a phase of mature, strategic growth, aligned with its D33 Economic Agenda and 2040 Master Plan.
The city’s leadership is actively managing supply and infrastructure, and global demand for Dubai real estate is still growing.
Dubai is no longer a boom-and-bust market. It is becoming one of the world’s most attractive, strategically planned urban hubs, where long-term real estate value is being created.
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Key Takeaway: The Dubai Real Estate Market is not heading for a correction, it is building for a sustainable, high-demand future.
Sources & References
- Dubai Population Data (DXBInteract)
https://dxbinteract.com/dubai-population - Dubai Statistics Center (Official Government Source)
https://www.dsc.gov.ae/en-us/Themes/Pages/Population-and-Vital-Statistics.aspx - Khaleej Times: Dubai population to hit 4 million in 2025
https://www.khaleejtimes.com/uae/dubai-population-to-hit-4-million-2025 - Economy Middle East: Dubai’s Non-Oil Trade Hits AED 2.6 Trillion
https://economymiddleeast.com/news/dubais-peak-day-time-population-hits-5-13-million-2024/ - DMCC: Record Free Zone Company Registrations
https://www.dmcc.ae/news - Financial Times: Dubai Property Market Rally
https://www.ft.com/content/84ea61c4-4c7c-48bc-bec0-d966a80a880e - Knight Frank: Dubai Real Estate Pipeline Forecast
https://www.knightfrank.com - CBRE Middle East: Rental Yields and Market Trends
https://www.cbre.ae/insights - Business Insider: Expats Driving Dubai Rents Up
https://www.businessinsider.com/expats-flock-dubai-living-costs-surge-salaries-flat-challenge-jobs-2025-3 - Dubai 2040 Urban Master Plan (Official)
https://www.dubaiplan2021.ae/en/Dubai-2040-Urban-Master-Plan - Dubai Economic Agenda (D33): Government Source
https://mediaoffice.ae/en/news/2023/January/04-01/Dubai-Economic-Agenda-D33
