Dubai Real Estate prices poised for an 8% surge by 2025

Unprecedented sales growth: The market has seen record-breaking activity, with 47,269 transactions in Q3 2024, a 41.8% increase compared to the same quarter in 2023. The total sales value for January to September 2024 reached AED 306.3 billion ($83.4 billion), reflecting a 36% growth from the previous year. Sales in Q3 alone hit AED 116.8 billion, the largest quarterly total ever recorded.

Luxury Market Booms: The luxury property segment has witnessed a meteoric rise, with 18.1% of homes now valued at over $1 million, up from 6.3% in 2020. In just 18 months, the rate at which luxury homes are sold has tripled, driven by high demand and a declining number of listings, which have fallen 30% year-on-year.

‍Persistent Supply Challenges: Despite plans to deliver over 300,000 new homes by 2029, the pace of development remains insufficient to meet demand. Approximately 8,900 villas are expected by the end of 2024, with another 19,700 in 2025, leaving a considerable gap as villa shortages persist. Annual demand through 2040 is projected to range between 37,600 and 87,700 homes, but historical construction delays suggest that only 35,000 homes annually are likely to be completed over the next six years.

‍Off-Plan and Renovated Properties in Demand: With limited availability of land in key areas, off-plan home prices continue to rise sharply. Meanwhile, older homes in the secondary market, especially those that have undergone refurbishment, are also attracting significant buyer interest.  
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A Gradual Shift in Growth: While house prices are expected to climb further, the pace of growth is predicted to moderate, providing a slight reprieve for prospective buyers. The prime residential market, which saw 6% growth in 2024, is forecasted to grow by 5% in 2025, following substantial increases of 44.4% in 2022 and 16.3% in 2023.

Key Risks on the Horizon: Despite the robust demand, macroeconomic factors such as global economic uncertainties, fluctuating oil prices, and competition from emerging cities like Riyadh could influence the long-term trajectory of Dubai’s real estate market. However, the current supply-demand imbalance continues to underpin property values, particularly in the luxury sector.

Dubai’s real estate market is poised for sustained growth, driven by its unique position as a global hub for business, tourism, and luxury living, even as challenges in supply and macroeconomic risks shape its evolution.