Dubai’s property market is set for continued growth, with house prices projected to rise by 8% in 2025, according to the latest research from Knight Frank. The consultancy attributes the upward trend to ongoing supply constraints.
The market report highlights a remarkable 19.9% annual increase in house prices, mirrored by a surge in property transactions in 2024. The third quarter alone recorded 47,269 deals, marking a 41.8% rise compared to the same period last year.
From January to September, transaction values surpassed AED 306.3 billion, representing a 36% year-on-year increase. Third-quarter sales alone accounted for AED 116.8 billion.
Knight Frank’s Faisal Durrani emphasised the strong demand driving these trends. Mainstream market prices grew by 4.3% in Q3, resulting in a near 20% increase compared to last year. Additionally, property listings have declined by 30% over the past year, while luxury home sales have tripled, with nearly one in five listed homes sold between June and September falling into the premium category.
The proportion of homes valued above $1 million has also expanded significantly, rising from 6.3% of sales in 2020 to 18.1% this year, indicating a shift toward higher-end transactions.
Although the market remains dynamic, Knight Frank expects house price growth to moderate in 2025. The prime residential market is predicted to see a more tempered increase of around 5%, following a steady rise in recent years, including a 44.4% leap in 2022 and 16.3% in 2023.
A significant housing shortfall continues to loom, despite developers’ efforts to meet demand. Approximately 300,000 new homes are anticipated by the end of 2029, with apartments making up over 80% of this supply. Villas, however, remain scarce, with just 8,900 expected by the end of 2024 and 19,700 by the end of 2025.
Projections suggest Dubai will need up to 87,700 homes annually by 2040 to accommodate a growing population, estimated to reach between 5.8 million and 8.6 million residents. Historical delays in completions could further exacerbate the supply gap, with only 35,000 homes per year realistically expected over the next six years.
The limited availability of prime sites is pushing up prices for off-plan properties, while refurbished older homes in the secondary market are also experiencing significant appreciation, noted Petri Mannila, Knight Frank’s Head of Prime Residential UAE.
Original article reference: Zawya.
