A recent report from real estate firm Knight Frank indicates that the ongoing Dubai real estate boom is expected to keep pushing home prices up by 8% in 2025 due to a significant shortage in housing supply.
The “Dubai Residential Market Review: Special Edition” reveals that current house prices in the emirate are 19.9% higher compared to the same period last year, a trend supported by increased property transactions throughout 2024.
Knight Frank notes that the number of transactions in Q3 2024 reached a record 47,269, marking a 41.8% increase from the same quarter in 2023. Between January and September 2024, property deals exceeded 306.3 billion UAE dirhams ($83.4 billion), reflecting a 36% growth year-on-year. In Q3 alone, sales totalled AED 116.8 billion. Continued robust demand is driving Dubai’s house prices upward, with the mainstream market seeing a 4.3% increase in prices during Q3 and an overall rise of 19.9% compared to last year. The number of property listings has decreased by 30% year-on-year. Additionally, luxury home sales have surged, tripling over the past 18 months, with nearly one in five listings sold between June and September.
Supply Challenges
Knight Frank forecasts the completion of approximately 300,000 new residences in Dubai by 2029, as developers aim to meet growing housing demand. By 2029, it is projected that apartments will account for 80.1% of the housing supply, while villas will represent 17.4%. However, with only 8,900 new villas expected by the end of 2024 and another 19,700 by the end of 2025, a villa shortage is anticipated to persist. The report suggests that Dubai will need between 37,600 and 87,700 new homes annually by 2040 to accommodate a population ranging from 5.8 to 8.6 million people. Considering historical delays of up to 30%, only about 210,000 units are likely to be completed in the next six years—averaging 35,000 homes per year, pointing towards a potential long-term housing shortfall. Limited availability of sites in prime areas is also driving up prices for off-plan homes, with significant price growth in the secondary market, particularly for renovated properties.
While the long-term rise in house prices is expected to be sustained by supply-demand imbalances, macroeconomic risks—such as global economic downturns, oil price fluctuations, and competition from cities like Riyadh—could affect residential values.
November Driven by Off-Plan Sales
The off-plan sector significantly boosted the Dubai real estate market in November 2024, resulting in 8,548 sales, a year-on-year growth of over 46%.
Overall real estate transactions in Dubai rose nearly 19% compared to November 2023, reaching over 14,479 transactions worth more than AED 43 billion, reflecting a 1.6% increase from the previous year, according to Property Finder, a key real estate portal in the MENA region.
Interest in property types varied, with about 33% of buyers seeking one-bedroom apartments, 35% preferring two-bedroom units, and 15% looking for studios. Among villa and townhouse seekers, 37% were interested in three-bedroom homes, while 50% targeted four-bedroom or larger options. Popular areas for apartment purchases included Palm Jumeirah, Business Bay, Downtown Dubai, Dubai Marina, and Jumeirah Village Circle, while villa and townhouse buyers showed interest in Mohammed Bin Rashid City, Palm Jumeirah, Al Furjan, Dubai Land, and Dubai Hills Estate.
Off-Plan vs. Existing Market
The value of off-plan transactions increased by approximately 30% year-on-year, reaching about AED 18.2 billion, up from AED 14 billion in November 2023. In contrast, the ready market experienced a 6% decline in volume, totalling 5,931 transactions, with a value of about AED 24.8 billion—a decrease of 12.22% from AED 28.3 billion in November 2023.
As 2024 comes to a close, industry professionals express excitement about the upcoming growth in 2025. At the recent Property Finder Awards, it was noted that the sector is experiencing a transformative shift, emphasising trust and transparency. Notably, there is a growing presence of female and Gen Z investors, creating new opportunities for success in the real estate market.
Rental Preferences
Approximately 65% of tenant’s searching for apartments preferred furnished options, while 34% opted for unfurnished units. Among those seeking villas or townhouses, around 51% looked for unfurnished properties, compared to 48% who preferred furnished ones.
In terms of apartment preferences, 35% of tenant’s favoured one-bedroom units, 31% preferred two-bedroom apartments, and 24% sought studios. For villas, 40% of tenants were interested in three-bedroom homes, while 38% looked for four-bedroom or larger options. The most popular areas for apartment rentals included Jumeirah Village Circle, Dubai Marina, Downtown Dubai, Business Bay, and Deira. In contrast, sought-after locations for villas and townhouses were Jumeirah, Dubai Hills Estate, Damac Hills 2, Al Barsha, and Umm Suqeim.
