Is Dubai’s property market headed for more price hikes? If you are looking to buy a home inside the city, you may want to behave speedily. Property prices in Dubai have been rising regularly and this trend is expected to continue until 2025. A short supply of available homes is driving up costs, with an  8 percent increase expected next year. This article provides you with all the essential information about why this is happening, how the market is better, and what it means for potential buyers.

Dubai Property Prices Will Rise By 8% In 2025 Due To A Shortage Of Homes  

The Current State Of Dubai’s Property Market

Dubai’s property market has seen remarkable growth over the past year. Home prices in the city are already up by nearly 20% compared to this time last year. This surge in property prices has been backed by a strong demand for housing. 2024 has seen a record number of property transactions. During the third quarter of 2024, there were 47,269 transactions, marking the highest quarterly number on record. Compared to the same period in 2023, this represents an increase of nearly 42%.

The total value of property transactions between January and September 2024 exceeded 306.3 billion UAE dirhams, which is around $83.4 billion. This marks a 36% increase compared to the same period in 2023. The third quarter alone saw property sales worth AED 116.8 billion. These figures point to an ongoing and growing demand for homes, which continues to push property prices higher across the city.

Mainstream Market And Luxury Homes

In the mainstream property market, prices have been rising steadily. In the third quarter of 2024, home prices went up by 4.3%, continuing a trend that has seen city-wide prices increase by 19.9% compared to the previous year. This steady rise is driven by strong demand and a limited number of available properties on the market. Meanwhile, the demand for luxury homes has also seen an increase. 

Over the past 18 months, the rate at which luxury homes are being sold has tripled. Almost one out of every five luxury homes listed on the market was sold between June and September 2024. This rise in luxury home sales is another factor contributing to the overall increase in property prices in Dubai.

The Growing Trend Of High-Value Homes

Dubai’s property market is also seeing an increase in the number of high-value homes. More and more homes are being sold for over $1 million. Back in 2020, only 6.3% of property sales were in this price range. Today, nearly 18% of homes in Dubai are sold for over $1 million. This indicates a significant shift in the market toward higher-value properties. As the number of high-value homes increases, so too does the competition among buyers.

Many of these homes are in prime locations across the city, making them highly sought after. The rising number of luxury home sales is expected to continue, further pushing up property prices in the coming years.

Also Read: Is Dubai’s Apartment Rent The Highest In History? An Annual Rental Of Dh4.4 Million For A 4-Bedroom

The Supply Shortage

One of the key reasons for the rising property prices in Dubai is the shortage of available homes. While developers are working hard to meet the growing demand, there is still a significant gap between supply and demand. According to estimates, nearly 300,000 homes are expected to be built in Dubai by the end of 2029. However, apartments will account for most of the new housing, with only 17.4% of the supply being villas. Villas, in particular, are in short supply. By the end of 2024, only 8,900 new villas will be built in Dubai.

Another 19,700 villas are expected to be completed by the end of 2025. This ongoing shortage of villas will continue to drive up their prices in the coming years, contributing to the overall increase in property prices. The limited availability of land in key areas of Dubai is another factor that is exacerbating the supply shortage. As the city continues to grow, developers are finding it harder to secure prime locations for new housing projects. This has led to rising prices for off-plan homes, as well as for homes in the secondary market, particularly those that have been refurbished.

Long-Term Outlook For Housing Supply

Looking further into the future, Dubai’s housing market is expected to face ongoing supply challenges. The city’s population is projected to continue growing, with estimates suggesting that Dubai will need between 37,600 and 87,700 new homes each year between now and 2040. This growth will be driven by a rising population, which is expected to reach between 5.8 and 8.6 million people over the next 16 years. However, even though there are plans to build new homes, there are concerns about construction delays. 

Historically, there have been delays of up to 30% in the completion of new housing projects each year. If this trend continues, Dubai will realistically see around 210,000 new homes built over the next six years. This is equivalent to about 35,000 homes per year, which still falls short of the city’s long-term housing needs. These construction delays are likely to contribute to a continued shortfall in the supply of homes, which will put upward pressure on property prices in the years to come.

Arshad Darbar’s Perspective  

Arshad Darbar, a seasoned real estate expert with years of experience in the market, views the projected 8% increase in Dubai property prices as a significant development for both buyers and investors. He believes the upward trend is a reflection of the city’s robust appeal and its ability to attract global investors and residents. According to him, Dubai’s strategic location, strong infrastructure, and investor-friendly policies have created a market where demand consistently outpaces supply.

Darbar notes that the shortage of available homes, especially villas, will continue to drive competition among buyers. “Villas, in particular, remain highly sought-after, but the limited number of new developments puts them out of reach for many,” he explains. He highlights that this presents an opportunity for investors to focus on high-value properties, particularly in prime locations, as they are likely to see strong returns over time.

However, he also advises caution. “Global economic conditions and regional competition could impact the market’s pace of growth,” he says. For buyers, Darbar suggests acting decisively, as waiting could result in higher prices and fewer options. His insight underscores the importance of strategic decision-making in navigating Dubai’s dynamic real estate market.

Conclusion

The Dubai property market is expected to see continued price growth in 2025, driven by a shortage in supply. With home prices projected to rise by 8%, buyers may face increasing challenges in securing affordable homes. However, the demand for housing, combined with limited supply, will continue to support the market in the long term. Whether you are a buyer, investor, or simply interested in the market, it’s clear that Dubai’s property boom is far from over. 

With new homes being built to meet growing demand, it will be interesting to see how the market evolves over the next few years. For now, the message is clear: property prices are likely to keep rising, so if you’re considering entering the market, now may be the time to act.