Luxury property values are expected to increase by 5% in 2025.
A 52% drop in luxury home listings over 12 months.
A 65% decline in listings for homes valued over $10 million within a year.
Dubai | December 4, 2024: Dubai’s house prices have risen by 19.9% compared to the same period last year. With persistent high demand, residential property values are forecast to grow by an additional 8% in 2025, according to the Middle East Residential Agency team at the global real estate consultancy Knight Frank. These findings were highlighted in the company’s special edition of the Dubai Residential Property Market Review report.
Market Overview
The residential real estate market in Dubai continues to exhibit exceptional demand, as demonstrated by a significant surge in property transactions during 2024. In Q3 2024, there were 47,269 transactions, the highest quarterly figure ever recorded, marking a 41.8% increase compared to the same period in 2023.
In the first three quarters of 2024 alone, 121,978 home sales were registered, surpassing the total transactions recorded throughout 2023.
From January to September 2024, total deal value exceeded AED 306.3 billion, up 36% from the same period in 2023. In Q3 alone, sales hit a record AED 116.8 billion.
Expert Insights
Faisal Durrani, Partner and Head of Research at Knight Frank MENA, stated:
“Dubai’s house prices continue to climb due to sustained demand. Prices across the city increased by 19.9% year-on-year in Q3, driven partly by a 30% annual decline in available property listings. Prime market prices rose by 4.3% during the quarter, highlighting this upward trend.”
Luxury home sales also surged, tripling over the last 18 months, with nearly one in five homes sold between June and September falling under the luxury category.
Housing Supply
Developers are striving to meet the rising housing demand. Knight Frank estimates approximately 300,000 homes will be delivered in Dubai by the end of 2029. Apartments will account for 80.1% of this supply, while villas will make up 17.4%.
However, villa shortages persist, with only 8,900 new villas expected by the end of 2024 and an additional 19,700 by the end of 2025.
To address future population growth, Knight Frank conducted scenarios suggesting Dubai may need 37,600 to 87,700 new homes annually until 2040 to accommodate a population between 5.8 and 8.6 million.
If historical delays in project completions persist, only 210,000 units are likely to be delivered in the next six years, creating a long-term housing shortage.
Key Challenges
Knight Frank identified three primary risks to Dubai’s property market:
- Global Economic Slowdown (High Risk):
Economic downturns or recessions could weaken population growth and market confidence, representing the most significant threat. - Oil Price Volatility (Medium Risk):
Prolonged low oil prices may impact Gulf-wide government spending, slowing growth. However, Dubai has minimized its reliance on oil revenues over the last decade. - Regional Competition (Low Risk):
While other Gulf cities are investing heavily in diversifying their economies, Dubai’s established position as a logistics, tourism, and trade hub remains secure for now.
Luxury Property Market
Dubai’s luxury property market continues to outperform, particularly in prime waterfront locations like Palm Jumeirah and Jumeirah Islands, where values are nearly double their 2014 levels.
Petri Mannila, Partner and Head of UAE Luxury Real Estate at Knight Frank, noted:
“Limited prime development sites and growing demand for off-plan homes continue to elevate prices. The luxury market faces supply constraints, widening the gap between prime areas and other parts of Dubai.”
Wealth Concentration
Knight Frank’s analysis revealed that 95,000 homes in Dubai are now worth over $1 million, collectively valued at AED 822 billion. These “accidental millionaires” purchased properties below this value, only for their worth to rise significantly due to price inflation.
“Surprisingly,” Faisal Durrani added, “the share of homes exceeding $1 million grew from 6.3% in 2020 to 18.1% today. Nearly one in five homes in Dubai now holds this value.”
Outlook for 2025
Knight Frank projects that the market will see an 8% price growth in 2025. In the luxury segment, prices are expected to rise modestly by 5%, following the substantial increases of 44.4% in 2022 and 16.3% in 2023.
As Dubai’s real estate market enters a phase of sustained demand and limited supply, the city is poised to remain a global hotspot for property investments.
