Average house prices in Dubai are likely to fall by another 10 per cent this year with no sign of improvement on the immediate horizon, according to the ratings agency Standard & Poor’s.
The agency, which rates bonds issued by three UAE developers – Emaar Properties, Damac Properties and Aldar Properties – said that the historically low price of oil and the strong dollar would continue to push property prices down in Dubai throughout the year, while prices in Abu Dhabi will start to follow suit.
In a note published on Wednesday, S&P said that after falling between 10 and 13 per cent last year, it expected similar falls this year with few signs of optimism for the year after.
“For the coming year we see no sign of market improvement for the UAE real estate sector, despite housing affordability improving from the current price environment,” said Sapna Jagtiani, the primary credit analyst for S&P in Dubai.
“Pressures have arisen from declining oil prices, dampening the hiring and expansion plans of oil-exposed companies; non-oil private companies’ business activities having softened; and the strong US dollar rendering UAE real estate more expensive for international investors holding non-US dollar liquidities.”
But S&P said that despite the negative outlook for the real estate market it did not expect to downgrade the ratings on the three developers, which for Emaar and Damac stand at “stable” and for Aldar “positive”.
“Generally we believe that our rated developers could absorb a 10 per cent drop in residential sales prices in Dubai this year,” Ms Jagtiani said.
The ratings agency said that it came up with its predictions based on reports from property brokers in the UAE as well as from talking to the companies it rated rather than from any specific analysis of Dubai house prices.
S&P said that it did not foresee a rebound in oil prices until at least next year.
S&P’s predictions come as property brokers debate the timing of a potential property market recovery in Dubai.
This month, JLL reported that despite a 10 per cent fall in house prices in the year to the end of last month, average prices in the city were close to bottoming out and values were likely to increase later this year.
But Cluttons reported that sales prices fell by 2.2 per cent in the first quarter of the year and uncertainty over oil prices, which has a knock-on effect on banks’ liquidity, meant a recovery in the short term was unlikely.
lbarnard@thenational.ae
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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