MARKET INSIGHT – Selective Overpricing Risk in Certain Off-Plan Projects

Why Some Individual Developments May Face Short-Term Price Corrections Despite a Strong Market

While Dubai’s real estate market remains fundamentally strong—supported by population growth, land scarcity, high cash liquidity, and structural demand—not all projects move with the same fundamentals.
Beyond the macro picture, certain individual developments are showing clear signs of short-term overpricing, which may lead to temporary price corrections over the next 12–24 months.

This is not a market-wide issue.
It is a project-specific phenomenon, driven by how some developers price and market their launches.

1. Launch Prices Pushed Too High Due to Post-Handover Payment Plans

Many developers include built-in financing costs inside post-handover payment plans.
When interest is embedded into the price—rather than shown transparently—the launch price becomes artificially inflated.

The result:

• The headline price appears high relative to the real market value.

• Investors accept the premium because of “easy terms.”

• Resale buyers two years later do not pay for financing baked into the price.

Projects with heavy post-handover premiums may see short-term resale corrections.

2. Developer Price Increases Driven by Marketing Hype Rather Than Market Fundamentals

Some developers raise prices aggressively after selling the first 20–30% of units, driven not by real demand but by:

• Highly effective marketing campaigns

• Emotional buying from international investors

• Launch momentum

• Scarcity pressure during the first days of sales

This can push the project 10–20% above true market value, creating:

• A healthy first batch of early investors

• A vulnerable group of later buyers who enter at inflated prices

When resales open, the early buyers can profit, while the late entrants struggle.

3. Brokers Inflating Prices to “Close Fast” With Overseas Clients

Another issue seen frequently in the market is:

• Some brokers selling units above developer price

• Using secondary listings during high-demand launch phases

• Pushing clients into units that are already overpriced

• Selling inventory that is not aligned with market value

This results in:

• Investors entering at a premium

• Competing later against hundreds of buyers who entered at fair prices

• Reduced resale competitiveness

These buyers may face losses or minimal gains in 12–24 months.

4. The Core Issue: Inefficient Entry Prices

When a buyer enters a project at a price that is too high relative to the average entry point of the building, they face a structural disadvantage:

• Early investors can undercut the resale market and still make profit

• The late investor cannot sell without a loss

• During handover, hundreds of similar units hit the market simultaneously

• If the buyer entered at the “hype top,” their exit window becomes limited

This dynamic does not mean the project is bad—
it simply means the buyer entered at the wrong price and at the wrong time.

5. Who Is at Risk?

Short-term risks apply mostly to:

• Projects with aggressive price escalations at launch

• Developments with interest-heavy post-handover plans

• Buildings dominated by international marketing hype

• Projects where 40–60% of buyers entered at significantly different price levels

• Areas with high future supply in the next 24 months

These cases are exceptions, not the rule.

Dubai’s overall market remains strong.
But entry price discipline is essential.

Conclusion

Dubai remains one of the most robust and resilient real estate markets globally, but investors must understand that not all projects behave equally.
While the macro trend points to long-term growth, certain launches priced too aggressively—often due to payment plan structure, marketing hype, or broker-driven inflation—may experience short-term resale corrections.

Strategic investors should:

• Analyze true market value

• Avoid paying premiums hidden inside payment plans

• Compare entry levels of other buyers in the same project

• Favor developers with transparent pricing strategies

In a strong market, the biggest risk is entering the right project at the wrong price.