According to the Dubai Residential Market Review prepared by Knight Frank, Dubai’s residential real estate market expects another year of significant growth, with house prices projected to rise by 8% in 2025.
According to the real estate analyst, the steady boom is being supported by growing demand, limited supply and a growing number of buyers focused on luxury properties.
Currently, housing prices in Dubai are 19.9% higher than in the same period in 2023, driven by a record volume of real estate transactions. Despite this, buying apartments in Dubai is a profitable investment.
In the three months to August 2024, the total number of transactions was 47,269, which is the highest quarterly figure in history and 41.8% more than in the 3rd quarter of 2023. The total value of all transactions in the first nine months of 2024 exceeded 306.3 billion dirhams. UAE (83.4 billion US dollars), with 116.8 billion dirhams. The UAE accounted for sales registered only in the third quarter.
“Housing prices in Dubai continue to be fueled by relentless demand,” says Faisal Durrani, partner and Head of Research at MENA (Middle East and North Africa) at Knight Frank. —
Prices in the mass market are rising, rising 4.3% in Q3, while luxury homes are selling faster than ever: one in five homes for sale was sold between June and September,” Durrani added.
The Knight Frank study also notes an increase in interest from investors in luxury real estate. Properties worth more than $1 million now account for 18.1% of all sales in Dubai, up significantly from 6.3% in 2020. Almost every fifth house in Dubai is now worth more than 1 million US dollars.
Despite the optimistic forecast, the price growth rate is expected to decrease after the market grows by 44.4% in 2022 and by 16.3% in 2023.
According to Knight Frank, the housing supply in Dubai remains limited, especially for villas. While almost 300,000 homes are expected to be built by 2029, only 8,900 villas will be built by the end of 2024, and another 19,700 by the end of 2025. According to the analyst, developers are facing difficulties in providing the volumes needed to meet the projected demand for 37,600-87,700 new homes per year until 2040.
Prices per square foot increased in all segments:
- Apartments under construction – 1,790 AED / sq.ft., an increase of about 5% per year — the lowest in the last two years
- Finished apartments – 1250 AED / sq.ft., an increase of about 9% per year;
- Villas under construction – 1400 AED / sq.ft, annual increase of about 17%
- Finished villas – 1300 AED / sq.ft., an annual increase of about 30% – the maximum in the last two years.
These indicators indicate the continued steady interest in the market, especially among buyers who purchase housing for personal residence.
Increased construction volumes could increase input volumes in 2025 – 2027 to between 50,000 and 70,000 units per year. While they do not yet raise concerns of market saturation in 2025, they certainly increase competition by refocusing the market on the end-user. Dubai continues to be attractive to investors and the risk of a property market bubble is moderate.
Nevertheless, apartments continue to dominate urban housing construction, accounting for 80.1% of the total supply planned for completion by 2029.
About The Author
