A significant number of homeowners in the UAE have found themselves becoming “accidental millionaires” as property prices surge across the country. Recent analysis by global real estate consultancy Knight Frank reveals that nearly 20% of homes in Dubai are now valued at over $1 million.
Knight Frank’s study highlights that many homeowners who originally purchased properties for under $1 million are now holding assets worth significantly more due to market inflation. Notably, only properties that have not been resold were included in this analysis.
“Since 2002, approximately 95,000 of the 530,000 homes sold in Dubai have crossed the $1 million valuation mark, contributing to a total value of Dh822 billion,” stated Faisal Durrani, Partner and Head of Research for MENA at Knight Frank. He further noted that the proportion of homes valued at over $1 million has climbed from 6.3% in 2020 to 18.1% today, underscoring the rapid escalation in property values.
Dubai Real Estate: A Billion-Dollar Market
The cumulative value of all homes sold in Dubai since 2002 now stands at Dh1.47 trillion, reflecting an impressive 221% increase since 2020. This surge in valuations has been fueled by robust demand from both investors and new residents, driving prices to unprecedented levels.
Knight Frank’s Dubai Residential Market Review: Special Edition projects an 8% increase in property prices for 2025, driven by unrelenting demand. Despite five years of continuous growth, the rate of price escalation is expected to slow slightly due to potential risks such as a global economic downturn.
Luxury properties, particularly villas in premium locations like Palm Jumeirah and Jumeirah Islands, remain top performers. Values in these areas have nearly doubled since 2014, with the luxury segment expected to see a more moderate growth of 5% in 2025.
Housing Supply Forecast Through 2029
Developers in Dubai are striving to meet rising demand, with an estimated 300,000 new homes expected by the end of 2029. Of these, 80.1% will be apartments, while 17.4% will be villas. However, villa shortages persist, with only 8,900 new units projected by the end of 2024 and an additional 19,700 by the end of 2025.
Population Growth and Housing Needs
To accommodate a growing population estimated to reach between 5.8 million and 8.6 million by 2040, Dubai will require 37,600 to 87,700 new homes annually. Historical delays in project completions suggest a potential long-term shortfall in housing supply, further intensifying market pressures.
Challenges in Key Locations
The scarcity of development sites in prime areas is driving up prices for both off-plan and secondary market properties. According to Petri Mannila, Partner and Head of Prime Residential UAE at Knight Frank, “Limited availability of sites in key locations continues to push prices higher, especially for refurbished older homes in the secondary market.”
Mannila further emphasized that the constrained supply of ready homes and off-plan projects will likely widen the gap between Dubai’s prime neighborhoods and the rest of the city, creating a persistent challenge for developers and buyers alike.
Published on: 4 Dec 2024
Source: https://www.khaleejtimes.com/business/realty/dubai-nearly-1-in-every-five-homes-is-worth-over-1-million
