With rents and property prices reaching record highs, citizens and investors in Dubai can also quickly experience few reprieves. Over the subsequent 18 months, prices are projected to stay strong, followed by a possible decline. The foremost motive is expected supply growth, as new projects released after the pandemic start achieving completion. This outlook brings hope for those concerned about Dubai’s high housing costs.
Dubai: Rents, Property Prices Could Decline After 18 Months Due To Rising Supply
Stable Rents And Prices In Dubai
The recent surge in rental and property prices has raised concerns among residents and investors. While demand for properties in Dubai remains robust, analysts indicate that prices will likely stabilize in the short term before decreasing. The projection comes from several recent studies, which suggest that the market’s growth has reached a point where it is likely to slow down. In 2025, the availability of new properties, especially in non-prime areas, is expected to put downward pressure on rental prices and property values.
Many new housing units are expected to enter the market over the next two years. Predictions estimate that Dubai’s residential inventory will expand by around 182,000 units between 2025 and 2026, a significant jump from the yearly average of 40,000 units from 2019 to 2023. Many of these new units were pre-sold during 2022 and 2023, and with their delivery approaching, the additional supply could reduce the current demand pressure and lead to a more balanced market.
Geopolitical Stability And Investor Confidence
Dubai’s property market has shown resilience despite regional geopolitical uncertainties. Factors such as demand from both local and international investors and several visa reforms aimed at increasing market stability have contributed to this resilience. These visa reforms have allowed more residents to stay long-term, bolstering local demand. The UAE’s strategic positioning and stable governance have also helped maintain investor confidence in the region.
Additionally, Dubai has been proactive in enhancing its appeal as a global city. With various initiatives aimed at promoting tourism and business investments, the city continues to attract people from around the world. This influx contributes to a steady demand for housing, which, combined with new supply, may help to stabilize or even lower prices in the coming years.
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Population Growth And Housing Demand
Dubai’s population is projected to grow at a rate of about 3.5% annually through 2025 and 2026, reaching an estimated 4 million residents by 2026. This growth is expected to sustain the demand for housing, although it may not completely offset the anticipated increase in supply. As the city’s population expands, demand for residential properties remains strong. However, the influx of newly completed properties could create enough supply to meet this demand, potentially reducing pressure on prices. In 2024, the delivery of new residential units has slowed compared to previous years, which has helped keep prices high in the short term.
Delays in project completions are not unusual in the real estate industry, often due to construction limitations. If delivery timelines are extended, the limited supply could temporarily support upward price trends. However, experts believe that any delays will be temporary, and the overall market is expected to reach a balance by 2026, with more affordable options becoming available to buyers and renters. Dubai’s economy is expected to remain relatively stable, with a projected real GDP growth rate of around 3% annually from 2024 to 2027.
This steady economic performance helps maintain investor confidence, even amid geopolitical tensions. Dubai’s GDP per capita is estimated to be about $38,000 in 2024, supporting the city’s appeal as a destination for both residents and investors.
Slower Pace Of New Property Launches
As the real estate market absorbs the new supply, the pace of new project launches is expected to slow over the next one to two years. Developers, who are in strong financial positions, are likely to adjust their project schedules based on market demand. This adaptability allows them to release smaller, more affordable units in response to price changes, maintaining a balance between supply and demand. Smaller developers may also begin to offer more flexible payment plans to attract buyers in a potentially slower market.
Off-plan developments continue to thrive, with just over 13,500 off-plan units added to the market in recent months, valued at a combined Dh28.9 billion. During the first nine months of 2024, nearly 100,000 units were launched, with a total sales value of approximately Dh242.7 billion. This figure is slightly lower than 2023’s sales value but shows strong investor interest in new projects, contributing to Dubai’s expanding property inventory.
By 2025, analysts anticipate a decrease in the number of luxury developments as developers shift their focus to affordable and mid-market properties. While luxury developments typically yield higher profit margins, the demand for affordable housing is growing. As a result, developers are likely to adjust their offerings to include more reasonably priced apartments and villas, catering to a broader demographic. This trend aligns with the city’s growing population and increasing need for housing that is accessible to middle-income residents.
Arshad Darbar’s Thoughts
Arshad Darbar, a seasoned real estate expert, shares his insights on the recent projections regarding Dubai’s rental and property market. He emphasizes that the anticipated stabilization and potential decline in prices over the next 18 months are welcome news for both renters and investors. “With the significant increase in supply expected from new developments, we are likely to see a more balanced market that can better accommodate the needs of a growing population,” he notes. Darbar highlights the importance of affordable housing in the city’s evolving landscape.
“Developers shifting their focus toward mid-range and affordable properties is essential for meeting the demands of diverse residents,” he adds. He believes that this trend will not only provide relief to those struggling with high rents but also foster a more inclusive community. Furthermore, Darbar underscores that Dubai’s resilient economy and investor confidence play crucial roles in maintaining the property market’s stability. “As the city continues to grow and adapt, it will remain an attractive destination for both local and international investors,” he concludes, optimistic about the future of Dubai’s real estate sector.
Conclusion
The outlook for Dubai’s property market suggests a period of stability followed by a potential decrease in prices and rents as new properties enter the market. This shift promises relief for both renters and prospective buyers, who have seen prices rise steadily over recent years. With population growth, economic stability, and increased supply, Dubai’s real estate sector appears headed for a more balanced future.
The evolving landscape of Dubai’s real estate market reflects broader trends in urban development and investment strategies. As the city continues to grow and adapt to changing demands, it remains a key player in the global real estate arena, poised for continued growth and investment opportunities.
