Dubai’s real estate market is poised for another year of price increases in 2025, following a remarkable 20% surge in 2024, according to Knight Frank. Residential property values are forecasted to rise by an average of 8% next year, while luxury properties are expected to see a more moderate growth of 5%. This continuous upward trend has significantly boosted the number of million-dollar properties in the emirate. Of the 530,000 homes sold since 2002, around 95,000 are now valued at over $1 million, as per Knight Frank’s latest report.
Rising Affluence in Dubai’s Housing Market
“The million-dollar home has effectively become the norm for single-family residences, underscoring the sharp value appreciation over the last four and a half years,” said Faisal Durrani, Head of Middle East Research at Knight Frank.
Key Drivers of Demand
The demand for Dubai properties has been fueled by the government’s proactive pandemic management and progressive visa policies, which have attracted numerous international buyers. The luxury market, including waterfront villas on the iconic Palm Jumeirah, has particularly thrived, drawing interest from diverse high-net-worth individuals such as Russian investors safeguarding their wealth, cryptocurrency entrepreneurs, bankers escaping strict Asian COVID-19 regulations, and affluent Indians acquiring second homes.
While Dubai’s real estate market has historically experienced pronounced boom-bust cycles, analysts suggest that the current uptrend is underpinned by more stable fundamentals. Measures such as higher down payment requirements and the dominance of end-user buyers have mitigated speculative risks. “Unlike previous cycles, there is no evidence of speculative behavior or signs of an imminent market correction,” Durrani explained. This sentiment is supported by record-breaking transaction volumes in 2024, with third-quarter sales alone reaching AED 116.8 billion ($31.7 billion).
Future Supply and Population Growth
Knight Frank projects that developers will deliver approximately 300,000 new homes by 2029 to meet burgeoning demand. “The primary challenge is the housing shortage driven by the city’s rapidly growing population,” said Durrani. “This is particularly evident in the villa segment, where inventory remains extremely limited.”
As Dubai’s population continues to expand, the real estate market is likely to remain competitive, with rising property values and constrained supply shaping its trajectory in the years to come.
Published On: December 3, 2024
Source: https://www.bloomberg.com/news/articles/2024-12-03/dubai-home-prices-set-to-surge-again-in-2025-knight-frank-says
