Dubai Real Estate Crash 2025? Experts Reveal the Truth Behind the Headlines

Dubai facing an oversupply crisis. Not so fast. Yes, a recent report suggested it. But what do population trends, developer regulations, and government leaders actually say? Let's break it down with facts and direct quotes from interviews with top Dubai experts. Is Dubai facing a bubble? Very good question. If you just compare the prices in Dubai with other cities, let's take Los Angeles. Here you can have a very nice three-bedroom with a good size, good view, waterfront, exactly. And when you go back to those cities you might end up with one bedroom maximum. According to Fitch, over 200,000 units are projected to be handed over in Dubai in the next two years. But does that actually mean they will be? Let's start by understanding how Dubai controls supply. On an episode of The Dubai Connect podcast, I had the pleasure to interview Dr. Mahmud Al-Burai, a senior adviser to the Dubai Land Department on this very topic. How do you strategically manage the supply and demand to keep that demand consistently greater than the supply and not have an oversupply of building that would contribute to potentially a market crash? We have a lot of developers and those developers by law have to own the land 100 percent. They have to pay 30 percent in the escrow account of the construction cost. So they have a big skin in the game and we make sure that will help us reduce supply because not everyone has that 30 percent and fully owns the land. Great. Plus we have a committee within the government for the supply that comes from the government developers. There is a government committee led by Sheikh Mohammed bin Rashid, who's the deputy ruler of Dubai. They give approvals for any master developer or government developer before they introduce any new project. So the supply is managed. We make sure that. But at the same time we want to make sure also that we are affordable. So with more supply prices will be affordable. So it's a constant balance making sure we're interesting, we're attractive but also we're affordable. Now let's apply what Dr. Al-Burai just said to this recent Fitch report. The report said approximately 210,000 residential units will be handed over in Dubai between 2025 and 2026. That's 90,000 in 2025 and 120,000 in 2026. But if the cycle of history of what's actually handed over repeats itself with only 30 to 40 percent of those units actually being delivered on time, then we're looking at somewhere between 63,000 and 84,000 units being completed across those two years. When all these units are handed over, there will be a shortage of supply. Let me explain why. We have parallel markets running in Dubai. People are comfortable when they look at a property cycle and they see that when the units are starting to hand over they want the developers to pull back. That's the model they understand. In a typical property cycle, developers will start a cycle when demand is showing up and for two to three years there's a lot of off-plan inventory. But come year number three and inventory is coming closer to completion, developers slow down in traditional markets. Why? Because ready units are available. If I launch a new unit now, no one is going to pay that kind of money and the serious investors who came in early have already made their money. They will cash out. So developers hold back and then the ready inventory becomes the market and a new player emerges. The homeowners, when that is absorbed, comes the developer turn again. But in our market, we don't have a property cycle anymore. We have a property wave. Dubai is operating on a wave. It's almost like a tsunami if you ask me. Now let's understand what's happening. We have a projected increase of 70 percent of population in the next 10 years. That's 2.5 million people coming in. We need roughly around 50,000 new homes every single year for that many people. We need 200,000 new homes just in the next four to five years to accommodate those who are coming in the next four to five years. So all the launches that you're seeing happening now is not for the next three to four years. Everything that launched from 2020 till 2024 are all in handovers now. Some of them in early phases of handover, some will hand over two years from now. So everything coming into the ready home market now is to take care of the market requirement now and the one million new people who are coming in the next four years. But if I'm not going to launch today, after four years when all this inventory has been absorbed and I have one million more people coming, are they going to sleep on our streets, right? So the launches of today are the requirement of the market from 2028 and beyond. The requirement of the market today has been taken care of from 2020 to 2024 and that's the inventory available for people to buy today. What is being launched today by the developers in line with the D33 agenda is to make sure once we get to 2028 and all of this is going to be absorbed, we will have more homes coming into the market because an additional one million will come in the next four years. So this launch is for the future, not for now. So you cannot confuse the two together. Let's look at one simple number. Last year we had 28,300 units handed over. We had 170,000 new residents, just new residents alone. Now, the average size of a family in Dubai is 5.3. This data is from the CEIC, Census and Economic Information Center. So if I have 170,000 people new coming into the city, we need 34,000 homes to accommodate them, either on a rental basis or if they want to buy. 34,000 were required last year just for the new people. We handed over 28,300. We were short 5,700 homes last year just for the new people coming in. What about those in the city who have elevated their lifestyle and earnings who are looking to buy? What about the holiday home companies that are coming in now and approaching owners and taking up their units? Holiday home demand has gone up by 30 percent in just one year. We are short of homes for the next 16 years. 5.15 million people will come in the next 16 years. We need one million new homes in the next 16 years. That is an average handover of 62,500 homes every single year for the next 16 years. We're only handing over between 20 and 25,000 a year. Now let's look at the demand. According to Dubai Statistics Center, over 51,000 new residents moved to Dubai in quarter one of 2025 alone. Meanwhile, real estate firm Value Strap puts that number closer to 90,000. Even using the lower figure, we're looking at over 200,000 new residents annually if the trend holds. Dubai has now a strategy 2040. And the strategy 2040, actually it's about doubling our population by 2040. That's the demand side. We're going to have five economic centers, two more. We have three now, two more new economic centers. We will build a sustainable city. Double our green areas and so on. So we have a strategy. We have a plan. We're working on demand. And that's why Dubai in the last two years introduced the golden residency to give people more long-term opportunities to stay here and be part of this country. That also creates a lot of demand. But also giving them opportunity to have their own business without a local partner. That's also to fuel demand for business ownership and bringing your companies here to be established in the country. So we've been working a lot on the demand side. Dubai is really growing at a very good speed and it's growing globally across the world as well. There is this big master plan of Dubai 2040. If you don't know that, this is a big thing. Dubai has already put a clear vision of each 20 years, what's going to happen. Already we know now the population is 3.1 million. Dubai is going to reach 5.8 million in the future. All those people, you know, they need homes. They need somewhere to live. And believe me, we have a shortage of properties. If we're going to do the calculation, we are anticipating a 70 percent increase in our population. That's another 2.5 million people coming. These are not the millionaires and the billionaires of the world. These are the working classes, I would say the mid-income range, slightly above that, all looking for an opportunity because they believe Dubai is the future. They're all coming in. If you look at the mix of units that came out into the market last year, 71.8 percent of those units were apartments. You had 29.3 percent were townhouses and only 4.3 percent were the villas and the high-end mansions. Now to compare that to the 63,000 to 84,000 units likely to be completed across those two years, that supply-demand gap is critical and it's not a coincidence. Dubai has systems in place to prevent runaway oversupply. Every law we introduce, we look at the safety of investors' money. And that's why the first law we introduced in 2007 was the trust account law and trust because we want trust. So that law says foreigners and non-foreigners, any investor who buys in Dubai off-plan, has a trust account managed by the government for that project. So your money will not go to the developer. Your money is in an escrow account that the government will release the payment as per construction. So this system of off-plan has been actually one of the most protective systems worldwide. You can go anywhere and you will not find all these details. You buy off-plan, you get a pre-title deed that says you are the owner of that unit that is going to be built in two years or three years. So we take the safety of investment and security of investment to the last mile. Figures just came out that show that with regards to ultra high net worth individuals, Dubai has taken the place as the top location of their migration and their investment. I mean, these are ultra high net worth. Obviously they have their own accounting team that are advising them, strategizing on what to do with their money and where are they choosing to invest? Dubai. And you were talking about businesses as well. Many startups as well. They choose the first location in Dubai because they know it's where people are coming to do business, right? And that's why, real estate is not about only homes being sold. It's about everything connects. Everything together. That's why if we have very healthy business, companies are making good money, real estate is growing. So you know, it's just is, yes, it's supply and demand. But if we look, that's why we have. If you read also a clear vision of Dubai which is Dubai Economic Agenda D33, you will see trillions of dirham and dollars are being planned perfectly and precisely that will attract foreign investors to Dubai. How safe is it to invest in Dubai? Well, in terms of the developers themselves, you know, the land's got to be paid for before they can even start advertising. It's got to be up to a certain construction milestone before they can start advertising. All the funds go into escrow and then are released against construction milestones as well. So it's as safe as you can get. The same as you would get in other mature market jurisdictions. It wasn't like that at the beginning. There weren't those rules. So it was a lot more high risk. But that's all gone. You know, everyone has to play by the same rules, governed by the land department. So you know, it's pretty robust, all the measures to protect. Let me tell you one thing about, like, as a developer point of view. First of all, the land has to have like 100 percent ownership of the land. We have to own the land to be able to build. We have to generate something called an escrow account. That's an escrow account. Basically, it's a bank account that controls all the parties: developer, the land department and the investors, for transparent transactions. And to get that, we have to put already 50 percent of the fund, all right, of the cost of the construction developing, yes, into the escrow account already. Then we are able to sell and all that. So it's not just like you come and build and you go. You know, all your money is safe in the Dubai Land Department. And this is the good thing. And we, as a developer, how we get the money out of the escrow account is just by completing, in stages. We take it. It's monitored and then they are able to release it. That's why, as an international investor, the safest thing or the easiest thing that you can do is just use Dubai Rest App. It's an official governmental app from Dubai Land Department that shows you everything related to transactions, what's happening in the market, how far the construction has gone. This is just one point. There's something called Mashroy or project status. If you bought something online and someone tells you, oh, the project is done, and then you go to project status on Mashroy, the project is 37 percent. And there is a real picture, a verified picture from the survey team of the building apartment. So by this, if, so that's why some developers are willing to build faster because they have to get the money out from the investors by completing. So they're motivated. Exactly, the payment. Because sometimes the payment plan is linked with the construction update. So me as a developer, in order to take that 5 percent or 10 percent, I have to reach that percentage of construction. They created the land department whereby they imposed an escrow agreement on every developer. So you're a developer. You launch the project. You cannot take the money and buy another piece of land and start a new project. You have to use the money that you've gotten from selling the property to finish the property. And that's by law and you cannot touch that money unless the land department approves it and in stages. So that's organized. You have registration of your title deed. Now you have a title deed issued in your name as a foreigner. You have the ability to sell the property even before completion. That's huge. By the way, I don't know if you're aware that you can't do that in the United States. Well, first of all, different markets are either familiar or not familiar with off-plan. So California is not huge with off-plan. But if we compare Miami, which is probably the most apples to apples comparison, if you place your deposit down for your off-plan project, you can't sell that until the project is completed. Whereas in Dubai, you can. Yeah. Now, now also though, and please correct me if I'm wrong because you're the expert, there is regulation of when you can sell, so that it's not too much of a flipper market creating that bubble, right? So may you share about how that's also? So depending on the developer, they will allow you to sell it based on percentages of completion and how much you've paid. And depending on where that property is and who the developer is, they will have different stipulations in the agreement that they've signed with you. But this is all regulated and this is all transparent. So you'll know from day one when you're making that commercial decision as to whether you want to invest in that property and when you can flip it, because maybe you buy it today and you can afford it and something happens and you can no longer afford it, you want to sell it. And that's the key takeaway. This growth is not speculative. It is a strategic growth. Dubai, often called Dubai, Inc., operates like a business. There is a strategic relationship between developers and the Dubai Land Department, which oversees and regulates all real estate activity to ensure balance and long-term success. And sometimes they don't complete on time on purpose. Okay? Because they want to regulate the market somewhat and they want to give themselves time for the market to breathe. And that's in the advantage of the investor. Why? Because the more the market breathes, the more scarcity there is, yes. The more value there is, right? Imagine if they were launching real estate and finishing it and flooding the market. Your investment will get affected. So they regulate it. This is one of the advantages. I don't see this as an inconvenience. However, they cannot delay indefinitely. Okay? Under the agreements, usually they have a delivery date and then they have a grace period of 12 months. After that you can terminate and get your money back or you start to penalize them. Okay? So on the last installment that you owe them, which is usually 20 to 30 percent, you pay less. Okay? But they never reach that point. They used to, pre-2008, but now that's it. It's all regulated and now that the reputation of Dubai needs to be safeguarded, they deliver on time, yes. You know, look, there's going to be bumps in the road over the next couple of decades, of course there is. But you know, they're in a much stronger position to manage the way this comes online, the flow, because they own most of the available land. So in a different type of market, different economy where it's privately owned, everyone's just going to be rushing to build and grab. But that doesn't happen here. So it's going to, it's got a strong chance of you know, being balanced all the way through. I mean, it's not going to be perfect. You know, any 20-year period is going to see a bump in the road somewhere, but with everything else, the dynamics of the region going on, I think it's really positive. We've already seen exponential growth in population and investment, and we haven't even discussed tourism. With Dubai being a year-round global destination, tourism creates an entirely separate layer of demand, especially for short-term rentals and branded residences. So for Airbnb or short-term rentals, you're getting in at very small price per square foot. Now you have this higher profit margin for both capital appreciation and your rental returns and your short-term and long-term rental returns. But let's say with Airbnb, we're probably looking at really maximizing that short-term rentals for people that are going to come and visit as a holiday destination, right? Dubai basically has always the best, the biggest, or the tallest. Always all the records. Sometimes I like, I forget how many biggest, tallest we have. But if we're going to speak about why Dubai, first of all, Dubai is located strategically in a good location that connects many countries and cities within, let's say, travel distance of four to six hours being a very nice location as a business center where East meets West, exactly. In terms of safety, I can, like, you have seen videos already all over social media, it has the best safety.