S&P Warns Dubai Off-Plan Investors Likely to Sell as Completion Wave Builds

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S&P flags Dubai off-plan risk: foreign investors near completion likely to sell. What real estate advisers must do now.

S&P Global Ratings warns that foreign investors holding near-completion off-plan apartments in Dubai are increasingly likely to sell.
Dubai is projected to deliver 210,000-230,000 residential units by 2028, with apartments forming the majority of completions.
Apartment prices face greater downward pressure than villas, with some submarkets already recording quarterly declines in late 2025.
Buyers who entered projects with low upfront equity now face significant remaining balances at UAE mortgage rates of 4.5-6.5%.
Property portals report rising listings for near-handover units, with some vendors pricing at or below their original purchase cost.
Real estate advisors should stress-test client portfolios for 5-15% price adjustments and review liquidity plans for completion-stage assets.

Dubai's Off-Plan Residential Pipeline Approaches a Critical Inflection Point

S&P Global Ratings has issued a detailed warning on risks building in Dubai's off-plan residential market. As a large pipeline of completions approaches handover between 2026 and 2028, the agency expects a growing share of foreign investors to sell rather than hold, adding pressure to secondary market pricing across the city's apartment segment.

The Real Estate Regulatory Agency (RERA) and the Dubai Land Department (DLD) have maintained robust transactional frameworks throughout the off-plan cycle, including escrow protections and open transaction data. However, S&P makes clear that these safeguards do not prevent market-driven price corrections as investor exit behaviour shifts and supply volumes accelerate.

Supply Scale is the Core Pressure Point

Dubai is projected to deliver between 210,000 and 230,000 residential units by 2028, with apartment completions forming the largest share. Approximately 35,000-40,000 units were delivered in 2025 alone, according to data from CBRE and JLL, and annual completions are set to accelerate further in 2026 and 2027. Areas including Jumeirah Village Circle (JVC), Business Bay, Dubai Creek Harbour, and Dubai South carry the heaviest concentrations of incoming supply. This trajectory aligns with JPMorgan's concurrent warning on Dubai's housing supply outlook, issued earlier this month.

S&P notes that apartment prices are considerably more exposed to this supply pressure than villas. Villa values have been supported by constrained inventory and persistent end-user demand since the pandemic, while apartment markets remain more investor-driven and sensitive to liquidity shifts. CBRE data shows apartment price growth slowed materially in late 2025, with some districts recording quarterly declines, while villa prices edged modestly higher.

Investor Behaviour is Shifting Near Completion

A central concern for S&P is the financial mechanics of off-plan investing. Many buyers entered projects with equity contributions of just 10-20% during early construction phases, relying on price appreciation before handover. As those projects near completion, buyers must settle substantial remaining balances or secure mortgages at current UAE rates - typically 4.5-6.5% - well above the low-rate environment of 2020 and 2021.

Where expected gains have not materialised, investors face a clear incentive to sell before or immediately after handover. Property portals including Property Finder and Bayut have reported rising listings for near-completion units in late 2025 and early 2026. Some vendors are pricing at or below their original purchase cost to secure liquidity, signalling that pockets of the apartment market are already under measurable stress.

What Real Estate Advisors Should Do Now

S&P's findings point to several concrete areas for advisor attention. Client portfolios with meaningful exposure to near-completion apartments - particularly in high-density communities - should be stress-tested against potential price adjustments of 5-15%. Mortgage refinancing risk deserves close scrutiny where clients face large handover obligations at prevailing rates. For investors whose primary rationale was short-term capital appreciation rather than long-term rental income, a structured liquidity plan may now be more relevant than a hold strategy.

What Clients are Asking their Advisors

What does S&P's warning on Dubai off-plan property mean for investors?

S&P Global Ratings expects foreign investors holding off-plan apartments nearing handover to increasingly look to sell, adding to secondary market supply. This could place downward pressure on apartment prices, particularly in high-density communities, over the next 12-24 months.

How can I check my exposure to Dubai off-plan completion risk?

Identify which off-plan assets in your portfolio are due for handover within 6-18 months and compare current market valuations against your original purchase price. Consider whether remaining payment obligations can be met at current mortgage rates and whether rental yield would provide adequate return if capital gains fall short.

Are Dubai villas also at risk from S&P's off-plan warning?

S&P's primary concerns target the apartment segment, where supply is most concentrated and investor ownership is highest. Villas have shown greater resilience due to limited stock and stronger end-user demand, though broader market sentiment will affect all residential property types to some degree.

Could Dubai's rental market offset off-plan price declines?

Dubai's population growth has supported rental demand, with average apartment rents rising approximately 10-15% year-on-year in 2025 according to CBRE. However, S&P cautions that rental income alone may not fully compensate for capital value losses in oversupplied apartment submarkets.