Dubai property prices and rents ‘set to keep rising for next few years’ amid sustained demand

Number of new homes completed in 2024 was the lowest in six years, report reveals, despite surge in population

Property prices in Dubai are going to continue rising for at least the next two to three years, experts have told The National.

The cost of renting in the emirate is also likely to keep going up during the same period, as the number of people seeking to buy or rent outstrips the volume of available properties.

A new report issued by ValuStrat management consultancy says almost 27,000 new homes were completed in 2024 – which the firm says is the lowest figure for six years.

Meanwhile, the emirate's population continued to grow, meaning demand was significantly outstripping supply. The ValuStrat report showed there were 20,066 new apartments completed last year, compared to 6,891 villas.

Part of the problem is not enough new properties are being built compared to apartment buildings, according to one expert. The ValuStrat report estimates that 118,401 apartments and 28,351 villas and townhouses are under construction, with a promised handover by 2028.

“There is a distinct lack of houses being built compared to apartments,” said Mario Volpi, head of brokerage at Novvi Properties. “It's easier to build a tower and have everything in it than have it all spread out in individual units like townhouses or villas.

“The number of houses handed over [in the report] is quite low. For prices to start softening then we need to have at least double that number.”

He suggested it would be 2027 at the earliest before supply caught up with demand and the cost of renting or buying a property subsided.

Another expert told The National it came down to a simple case of supply and demand.

"The market is telling us we do not have enough housing supply to meet the rising number of new residents moving to the emirate, with the population now above 3.8 million," said Matthew Green, head of research for real estate firm CBRE Mena.

"Prices and rents are expected to continue rising during 2025, but at a slower rate of growth than was recorded during 2023 and 2024.

"However, as the number of new residential deliveries increases through the period 2026-2028, we expect to see a more balanced supply and demand equation emerge, leading to some moderation of pricing growth from the current high levels, particularly for areas with significant unit completions."

This was also reflected in what he described as proxy indicators of residential demand such as increasing trips through Salik gates, mobile phone registrations, and DEWA connections.

"However, the post Covid boom in new off-plan sales launches has significantly swelled the development pipeline, with around 40-45,000 new units expected to be delivered in 2025, with annual deliveries then moving much higher again during the period 2026-2028," said Mr Green.

"This is likely to help moderate growth in rental and sales rates in the longer term, although for now demand continues to outweigh supply."

The emirate's population stands at 3.83 million, with growth projected at 3.6 per cent annually until 2030. The ValuStrat report also said Dubai's population grew by 170,000 people in 2024.

Other findings in the study showed the average cost of buying an apartment grew by 23.6 per cent, with villas increasing by 31.6 per cent. The cost of renting also grew with apartments rising by 13 per cent and villas going up by 5.8 per cent.

“We have a rising population but we don't have the supply [of properties] to match it,” said Haider Tuaima, director and head of real estate research with ValuStrat.

“Rents have already more than doubled since the pandemic and definitely have surpassed the previous peaks in 2014,” said Mr Tuaima. He added that current projections show supply could finally catch up with demand by 2028.

His reasoning was based on a pipeline of almost 150,000 properties set to be handed over to owners by 2028. Of these properties, 12 per cent were expected in the city's Jumeirah Village Circle (JVC) area. Another 8 per cent were due for Business Bay, followed by 5 per cent in Jumeirah Lake Towers (JLT), according to the report.

The National contacted number of property developers in the emirate, but only Damac was prepared to comment.

“Dubai’s rapid population growth and its position as a global hub for investment continue to drive strong demand for housing,” said Mohammed Tahaineh, general manager of projects at Damac.

This meant the property sector was having to rise to meet this demand by looking at “innovative solutions” involving advanced construction technologies and strategic planning.

Another expert said UAE residents could expect to see the cost of renting or owning a property increasing this year but perhaps not as much as first feared.

“With over 72,000 units scheduled for handover in 2025, the market will see a significant increase in supply, helping to balance the demand that has driven up property prices in recent years,” said Christopher Cina, development sales and consultancy director at Betterhomes. “A moderate increase in both rent and sales prices of less than 10 per cent is expected as the supply pipeline builds.”