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%
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
