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Dubai home prices are projected to continue surging in 2025, with overall residential values anticipated to increase by 8%, while luxury properties could see an increase of 5% y-o-y, according to a report (pdf) by global property consultant Knight Frank. Analysts perceive few downside risks to the market, thanks to regulations that increased down payments and the fact that most buyers are end users, Faisal Durrani, head of Middle East research at Knight Frank, told Bloomberg.
Buyers are expected to look for between 30k and 57k new homes in 2025, which will drive up prices given the expected 53k completions. To meet this demand, developers aim to deliver 300k homes by 2029, with an average of 50k units per year. However, anticipated delays of about 30% could result in only around 210k units being completed over the next six years — indicating a long-term shortfall in the market.
The supply pipeline: Apartments are set to dominate new developments, comprising 80.1% of the total, while villas will make up just 17.4%. Some 8.9k new villas are slated for handover by the end of 2024, underscoring the ongoing villa shortage in Dubai.
Prices to stabilize in the coming years? An increase in supply over the next 2-3 years is expected to contribute to market stabilization, Cushman & Wakefield said in a previous report.
PRICES CONTINUED TO RISE IN 3Q-
Dubai’s housing market saw prices increases 4.3% q-o-q and 19.9% y-o-y in 3Q 2024. Villa prices saw sharper growth, climbing by 5.5% q-o-q, now sitting 34.3% above 2014 peaks. Apartment prices rose at a slower pace, increasing 4.1% q-o-q, 7.7% above the previous peak. The average price of a single-family home is around USD 1 mn, Durrani said.
Data from the Dubai Statistics Center offers slightly different figures, reporting residential prices increasing by 11.3% y-o-y and 3.3% q-o-q in 3Q, Al Khaleej reports. Villa prices surged by 21.9% y-o-y and 6.3% q-o-q, while apartment prices rose by 6.6% y-o-y and 1.8% q-o-q.
The heightened sales activity led to 3Q sales reaching a record AED 116.8 bn, and the total transaction volume for the first three quarters surpassed the entirety of 2023, marking a 41.8% y-o-y increase, with a record 47.3k transactions recorded, Knight Frank said. Transaction value reached AED 306.3 bn, marking a 36% y-o-y increase.
Buyers ❤️off-plan units: Off-plan sales dominated the market, accounting for 71% of total number of transactions, with Jumeirah Village Circle, Dubai Hills Estate, and Business Bay leading off-plan activity. Emaar emerged as the top developer in this category, with 23.7% of total sales value, followed by Damac Properties and Sobha Real Estate.
The luxury segment was also popular, with 83 properties priced over USD 10 mn sold at an average of USD 15.7 mn. The Palm Jumeirah led sales with 22 transactions, totalling USD 489.7 mn. Demand from high-net-worth individuals reduced the availability of over USD 10 mn homes by 65%, according to the report.
Rentals were also on the rise: Median rents for villas rose 16% y-o-y, with three-bedroom villas averaging AED 145k annually. Palm Jumeirah recorded the highest villa rents, averaging AED 143 per sqft annually. City-wide rents increased by 18% y-o-y, with yields tightening for villas and remaining flat for apartments.
COMMERCIAL + HOSPITALITY-
The commercial property sector also saw growth, with prices increasing by 8.6% y-o-y and 1.1% q-o-q in the quarter, according to the Dubai Statistics Center. Office prices were the primary driver, surging 23.4% y-o-y and 2.1% q-o-q, while shop prices logged an annual increase of 7.1% y-o-y but declined by 1.9% q-o-q compared to 2Q.
Over in the hospitality sector, hotel apartment prices rose by 2.8% y-o-y and 3.2% q-o-q. On the flip side, hotel room prices dropped by 4.1% y-o-y and 3.2% q-o-q.
