Real estate prices in Dubai will likely slow down and marginally reverse by between 5% and 10% over the coming 12-18 months.

This is according to a new report published by S&P Global Ratings this week.

“We don’t expect a profound market disruption,” the agency stated, going on to add that the “risk of a cyclical reversal was mounting”. 

However, property prices are forecast to rise by 15% to 18% this year and a further 5% to 7% in 2024.

Although prices for villas have surpassed previous peaks, apartments are trailing at between 10% and 20% under prior peaks as a result of oversupply, Zawya reports.

The S&P findings show more robust cash generation has fuelled Dubai developers’ liquidity and metrics, allowing them to better weather the shift in the economic cycle.

Developers have passed on considerable price hikes yet also bolstered their cash revenues. Indeed, developers can collect 100% of cash on the handover of units, rather than post-handover payment plans used in the past that can last up to five years.

“As a result, we expect cash collections will remain above historical levels due to sustained flow of advance payments on new project pre-sales, faster collection on recent projects and residual collections on older projects,” S&P stated.

That said, an extended correction could highlight deeper pressures.

S&P forecasts pre-sales to slow down to a “still-healthy” level as developers adapt their offerings to coincide with demand.

“They are also likely to launch smaller units since the price per square foot has become expensive and buyers are starting to downsize spaces. This contrasts with an earlier preference for larger properties following pandemic-related restrictions,” the report went on to say.