New project launches in Dubai have plunged 47% compared to the same period last year, whilst half a million homes remain under construction—the largest pipeline the emirate has ever carried simultaneously.
The collision between record land prices and slowing sales velocity has pushed developers into a corner. By early February 2026, the economic calculus behind launching new projects had fundamentally shifted.
Firas Al Msaddi, chief executive of fäm Properties, sees the year ahead as decisive. The market faces a fork in the road: either land prices must fall to restore viability at current off-plan pricing, or off-plan prices must climb to justify what developers are paying for sites.
“Land prices in Dubai are at historic highs, and developer profitability depends far more on how quickly units sell than on headline margins,” Al Msaddi explained. “Sales velocity is becoming the key constraint.”
That constraint is already reshaping the market. Fewer launches are coming to market, even as completed properties surge. Al Msaddi expects between 40,000 and 50,000 units to be handed over in 2026—well above the 35,000 ready homes Dubai typically absorbs in balanced conditions.
The spike in completions doesn’t signal a crash, he argued, but it does mean something else: margins are tightening, selling cycles are lengthening, and developers are recalculating what makes sense to build.
“This doesn’t point to a price correction,” Al Msaddi said. “What it means is slower selling times, flatter prices, and tighter margins. The impact is felt by developers first, not end users.”
The mechanics of that squeeze are straightforward. Escrow rules in Dubai protect buyers by ringfencing their deposits, but those same rules offer developers no equivalent safety net. “Escrow accounts protect buyers, but they do not guarantee developer returns,” he noted.
When sales slow, the cash flow problem becomes acute. “When sales slow, cash flows tighten, returns get squeezed, and developers naturally become more selective about launching new projects.”
What happens next depends on which path the market takes. Al Msaddi outlined two sustainable scenarios, each with distinct consequences.
“There are two sustainable outcomes,” he said. “If land prices adjust, launch feasibility improves, end prices stabilise and transaction volumes return gradually.”
The alternative route is more challenging. “If land prices remain elevated, off-plan prices must rise, product quality and differentiation become critical, and only the strongest locations and developers will succeed.”
What’s unsustainable, he added, is the status quo—a prolonged period where land prices stay elevated, sale prices remain flat, and transaction volumes hold steady. Markets don’t tolerate that kind of imbalance indefinitely.
The scale of Dubai’s construction pipeline amplifies the stakes. Close to one million freehold ready homes now exist across the emirate, most of them occupied and trading within stable parameters. Persistent vacancy pressure hasn’t materialised, and forced selling remains rare.
But the 500,000 units still under construction represent uncharted territory. It’s the largest development pipeline Dubai has ever managed at one time, and most of those units have already been sold—typically to investors rather than end users.
“Most of this supply is already sold,” Al Msaddi observed. “The key issue is how and when investors sell and move their money out.”
That exit dynamic will determine how smoothly the market absorbs the wave of completions. If investors hold and rent, pressure stays manageable. If they rush to liquidate, the ready-home market could face headwinds that spill back into off-plan sentiment.
By contrast, the supply of new launches is contracting sharply. The 47% year-on-year decline in new project announcements reflects a rational response to deteriorating economics, not a collapse in underlying demand.
Developers are simply being more selective. Launching a project in today’s environment means navigating elevated land costs, uncertain sales velocity, and the possibility that units take longer to shift than pro formas anticipated.
Al Msaddi expects that selectivity to intensify as the year progresses, resulting in materially fewer launches across 2026 compared to 2025. The early data suggests that trend is already entrenched, though it remains too soon to quantify the full-year effect with precision.
What’s clear is that the frenzied launch activity of recent years has hit a natural ceiling. Developers are recalibrating, waiting to see whether land prices soften or whether they can push off-plan pricing higher without choking off demand.
For buyers, the implications are mixed. Fewer launches mean less choice in the off-plan segment, but also potentially more disciplined pricing and a greater emphasis on quality and location. Developers who do proceed will need to offer compelling propositions—either through price, design, amenities, or prime positioning.
For the broader market, 2026 shapes up as a year of adjustment rather than crisis. The fundamentals—population growth, economic diversification, and sustained international interest—remain intact. What’s shifting is the rhythm of supply and the financial logic that governs it.
The question now is how quickly the market resolves the tension between land values and project economics. If land prices correct, the development cycle could regain momentum relatively quickly. If they hold firm, off-plan pricing will need to rise—and with it, the bar for what buyers expect in return.
Either way, the era of abundant new launches at compressed margins appears to be drawing to a close. The pipeline already under construction will keep completions elevated through 2026 and beyond, but the next wave of supply will depend on whether the economics make sense again.
Whether that happens through cheaper land or pricier apartments remains the central unresolved question facing Dubai’s property market this year.