An article warns against purchasing property in Dubai, highlighting the city’s real estate market trends that raise concerns. After a dramatic surge in residential prices, which increased by approximately 60% from 2022 to early 2025, Fitch Ratings has sounded alarms, forecasting a possible drop in property values by double digits starting in late 2025 into 2026. The expectation of an influx of 210,000 new housing units, significantly above the average of the past three years, could lead to a sharp market correction.

Despite optimistic stories about high-end villas and luxury real estate transactions exceeding $10 million, there are significant underlying issues. With a population of about four million, many residential buildings stand under-occupied, with occupancy rates often between 30% and 40%. This oversupply, especially in the mid-tier apartment segment, risks repeating the failures of past projects, such as The World archipelago, which serves as a cautionary tale for Dubai’s ambitious construction ventures.

The city’s economic structure, heavily reliant on construction and real estate—which together contribute over 17% of GDP—further complicates its future. In the event of a global or regional downturn, Dubai could face severe repercussions. Historical instances, such as the 2008 property crash, illustrate the potential for mass outmigration and significant economic fallout.

Geopolitical tensions in the Gulf region further compound risks. Disputes involving countries like Saudi Arabia and Iran, together with fluctuating oil prices below $100 per barrel, threaten to undermine investor confidence and weaken the economic foundation. The culmination of these factors casts doubt on the sustainability of the current market conditions.

Even though luxury properties continue to see high demand, the broader market, particularly in the mid-range, is facing vulnerabilities. Experts project that prices could plummet by up to 15% in certain areas, while rental yields are already experiencing a noticeable decline. As Dubai stands at a pivotal moment, those considering real estate investment must navigate this landscape with caution and foresight.