UAE Property Prices To See Modest Decline In 12-18 Months, Says Moody's

2026-02-11 02:27:40

(MENAFN- Khaleej Times)

The growing population will absorb new supply as 180,000 units are set to hit the Dubai market between 2026 and 2028

PUBLISHED: Wed 11 Feb 2026, 10:44 AM

By:
Waheed Abbas

The UAE property prices are expected to see a modest decline over the next 12 to 18 months as 180,000 new units will hit the Dubai market between 2026 and 2028, according to a global ratings agency.

Moody's Ratings analysts said the surge in new completions will be largely absorbed by sustained population growth and a shift toward smaller household sizes.

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“We expect it will slow price gains in the overall market. Modest outright price declines are probable in the apartment segment, especially within the more affordable mid-market studio and one-bedroom categories, where supply remains elevated. The slowdown will prompt developers to scale back the launch of new projects and lead to lower new sales values over the next 12 to 18 months – a trend that we expect will persist for several years,” said analysts at the ratings agency.

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“After five years of extraordinary growth in the UAE's residential real estate market, particularly in Dubai, we expect developer sales to decline modestly and some price softening over the next 12 to 18 months as rising completions add supply. From 2026 to 2028, around 180,000 new units will be completed in Dubai, a significant increase from prior years that is likely to weigh on demand and slow price growth,” Moody's analysts said.

This averages about 60,000 units annually, much higher than the historical average of 30,000 to 40,000 units per year over the previous five years.

However, they said, fundamentals remain supportive, underpinned by continued population growth and an influx of high-net-worth individuals.

The ratings agency noted that rated developers' credit quality will remain resilient, supported by strong revenue backlogs, front-loaded payment plans and solid financial positions.

The UAE property market, especially in Dubai, has enjoyed five years of a strong rally, setting new records in terms of prices and transactions.

Why UAE developers will expand overseas

Moody's analysts noted that developers are benefitting from strong revenue backlogs and solid financial positions on the back of strong sales since 2021.

“Strong cash generation over the next two to three years by the UAE developers we rate will exceed domestic reinvestment opportunities as new sales moderate.

This is shifting the focus toward geographic diversification and expansion into new non-core sectors, which can be supported by higher dividend distributions from UAE operations. While financial positions remain strong, sustained cash extraction could gradually weaken local operating companies, while smaller developers remain more exposed to funding and execution risks,” said the ratings agency.

UAE-based property developer Arada last year announced it has expanded its presence into the Australian property market. Arada has set up its operations, marked by a new Sydney head office in Pyrmont, and is already planning multiple projects in New South Wales. The developments will aim to contribute to the urban renewal required to address Sydney's housing supply

The UAE developers have issued close to $12-billion of sukuk, bond and hybrid debt since 2023. Other substantial funding sources also include customer instalments on off-plan projects, joint ventures with landowners, and third-party shareholders providing equity into projects.