United Arab Emirates

Dubai’s residential housing stock is expected to increase by 20% over the next two years, with apartments making up a significant share of the additional units, S&P Global said. The ratings agency said rising supply and continuing regional instability could reduce transaction activity and place further downward pressure on prices.

According to S&P Global, parts of the emirate’s residential market have already begun to see price adjustments. It linked those corrections in part to the UAE’s broad visa reforms, which helped attract a larger number of long-term property investors.

The agency’s base-case scenario assumes that disruption related to the regional war will continue into next year. It said the expected delivery of new homes in 2027 and 2028 could deepen the correction, particularly in apartment segments that are largely driven by investors.

Despite the outlook for additional supply, S&P Global said the decline in residential values has been moderate during the seven months since the war began. It cited the presence of long-term buyers, regulatory improvements and government support as factors limiting the scale of the decline.

Earlier this year, the government introduced mortgages for off-plan properties. The financing framework sets a maximum loan-to-value ratio of 50% and requires buyers to make a minimum upfront payment of 50%. The measures were intended to strengthen developers’ liquidity and extend buyers’ payment periods.

S&P Global said developers it rates, including Damac, Emaar, Omniyat and Sobha Realty, have sizeable revenue backlogs and limited payment delinquencies. Those factors continue to support the companies’ ratings.

Sales value and transaction numbers decline year on year

Dubai recorded more than Dh72.6 billion in residential sales in the third quarter of this year, while the number of transactions reached 34,000, according to a report by Cavendish Maxwell.

Compared with the same period last year, however, the total value of sales was down 47%, and transaction volumes fell 38%. Cavendish Maxwell said the declines reflected reduced activity as a lag in property sales registrations started to clear.