Dubai property prices to rise again in 2025, in good news for investors

Dubai’s residential property market is set for another year of strong growth, with house prices projected to rise by 8% in 2025, according to Knight Frank's Dubai Residential Market Review: Special Edition.

The sustained boom is underpinned by surging demand, limited supply, and a growing pool of luxury-focused buyers, according to the property analyst.

Currently, house prices across Dubai are 19.9% higher than the same period in 2023, fuelled by record-breaking property transactions.

In the three months leading to August 2024, the total number of transactions hit 47,269, the highest quarterly figure on record and a 41.8% increase from Q3, 2023. The total value of all transactions for the first nine months of 2024 surpassed AED 306.3 billion ($83.4 billion), with AED 116.8 billion generated by sales registered in the third quarter alone.

“House prices in Dubai continue to be fuelled by relentless demand,” said Faisal Durrani, Partner and Head of Research for MENA at Knight Frank.

Prices in the mainstream market are edging upwards, climbing by 4.3% in Q3, and luxury homes are selling faster than ever, with one in five homes listed selling between June and September, Durrani added.

The Knight Frank study also pinpoints surging interest from luxury property investors. Properties valued at more than $1 million now account for 18.1% of all sales in Dubai, a significant jump from 6.3% in 2020. Nearly one in five homes in Dubai is now worth more than $1 million.

Despite the bullish outlook, the pace of price growth is expected to ease after the market posted a 44.4% rise in 2022 and 16.3% in 2023.

Dubai’s housing supply remains tight, particularly for villas, Knight Frank found. While nearly 300,000 homes are expected by 2029, just 8,900 villas will be completed by the end of 2024, with an additional 19,700 by the close of 2025. Developers face challenges in delivering the volume needed to meet projected demand of 37,600 to 87,700 new homes annually through 2040, the analyst said.

Still, apartments continue to dominate the city’s residential pipeline, accounting for 80.1% of the total supply scheduled for delivery by 2029.

“The limited availability of sites across key locations in the city is also contributing to rising prices for off-plan homes,” added Petri Mannila, partner and head of Prime Residential UAE at Knight Frank.