Dubai’s real estate market is poised for continued growth, with house prices expected to rise by 8% in 2025, fueled by a supply shortage, according to Knight Frank’s latest report. The “Dubai Residential Market Review: Special Edition” highlights a 19.9% increase in house prices over the past year, driven by record property transactions throughout 2024.
In the third quarter of 2024 alone, Dubai saw 47,269 property transactions, marking a 41.8% increase from the same period in 2023. The total transaction value from January to September 2024 surpassed AED 306.3 billion ($83.4 billion), a 36% rise from the previous year.
“Demand for housing in Dubai remains relentless, pushing mainstream market prices up by 4.3% in Q3,” noted Faisal Durrani, Partner and Head of Research for MENA at Knight Frank. He added that luxury home sales have surged, with nearly one in five homes now valued at over $1 million.
However, the report suggests a potential slowdown in price growth for 2025, projecting a more modest increase of around 5%. This follows a 44.4% rise in 2022 and a 16.3% increase in 2023.
Knight Frank estimates that approximately 300,000 new homes will be needed in Dubai by the end of 2029 to meet demand, primarily in the form of apartments, which will constitute 80.1% of the new supply. A persistent shortage of villas is expected, with only 8,900 new villas anticipated by late 2024 and an additional 19,700 by the end of 2025.
Petri Mannila, Partner and Head of Prime Residential UAE, emphasized that the limited availability of prime development sites is contributing to the rising costs of off-plan properties. This trend is reflected in the secondary market, where refurbished older homes are experiencing significant price increases.
Despite the growth prospects, Knight Frank cautions against potential macroeconomic risks, including a global economic slowdown, oil price fluctuations, and regional competition from cities like Riyadh, which could impact residential values.
The report underscores the long-term challenges of balancing supply and demand in Dubai’s dynamic property market, hinting at a likely housing shortfall that could sustain price increases in the coming years.
