Dubai real estate investors have been warned not to rely on forecasts of price corrections based solely on new supply data, and anchor their decisions on much broader key market signals.
In recent months, rating agencies Fitch and Moody’s, as well as other real estate specialists, have pointed towards price corrections of around 15% by the end of this year or in early 2026.
In response, Firas Al Msaddi, CEO of fäm Properties, one of Dubai’s biggest real estate agencies, said today forecasts based on the number of new units scheduled for delivery can be misleading, without consideration of these key factors:
- Rising sales activity despite supply
- Resilient investor demand thanks to attractive yields
- Strong migration and population growth fuelling end-user demand
- Record-high rents supporting purchase decisions
“Every few months, we see forecasts that Dubai property prices are about to fall, based on one factor, that of new supply,” said Al Msaddi. “With tens of thousands of homes scheduled for delivery, as is the case in Dubai, the assumption they make is that prices must drop.
“But this market is much more complex than that. Prices don’t move in isolation. To understand direction, you need to look at demand, liquidity, rental trends, and supply together.”
Using its AI-driven data platform, DXBinteract, fäm Properties analyses seven key market signals daily to give investors early warning signs of shifts before they appear in official data.
The seven key indicators are:
Bid weakness: The first warning sign of a shift happens when buyers push back on current pricing. This brings more negotiations and counteroffers, incentives like free service charges or flexible payment plans, and discounts and promotions before official sales data changes.
Days on market: Measuring how long a listing takes to sell, DOM captures buyer hesitation before transaction numbers change. Rising DOM indicates properties sitting longer, pointing to slowing demand. Falling DOM as homes move faster shows the market heating up.
Sales volume trends: Sales volumes provide a clear measure of demand. One weak month may not be significant, but three consecutive declines suggest a genuine trend change. Breaking volumes down by property type and by resale versus off-plan provides even sharper insight.
Inventory and absorption rate: When supply grows faster than buyers can absorb, downward pressure on prices can follow. Warning signs include months of rising supply, more active listings, and sluggish absorption despite promotions.
Yield compression: When prices climb faster than rents, yields shrink and if returns are too thin, investors pause, slowing capital growth until yields reset.
Rent vs price divergence: Shows if the market is overheating or undervalued. A combination of rising prices and flat or declining rent points to speculative risk for investors. Rising rents while prices stay flat bring strong yields and good buying opportunities.
Mortgage costs and liquidity: End-user demand depends on affordability. Higher mortgage rates or tighter lending rules quickly reduce buying power. Tracking average mortgage rates, loan approvals, and loan-to-value ratios shows how much real liquidity is behind transactions.
