Dubai’s residential real estate market is experiencing a significant surge, with property values climbing by 21.3% over the past year, driven by the growing ‘buy-to-stay’ trend. As of the second quarter of 2024, the total number of homes planned or under construction has reached an impressive 308,099 units. However, despite this substantial pipeline, the market continues to grapple with a tightening supply, which is contributing to the sharp rise in property prices.
Villas, in particular, have seen remarkable growth. Their sale prices have surged by 24.3% over the past year, reaching Dh1,896 per square foot. This increase has pushed villa prices to 28% above the peak levels seen in 2014, underscoring the strong demand for stand-alone, beachfront homes and branded residences. Knight Frank’s Q2 2024 Dubai Residential Market Review notes that the enduring appeal of these properties is largely driven by their immediate access to the Dubai lifestyle, including proximity to greenery, wellness centers, and waterfront locations.
The luxury sector is also thriving. The average transaction prices in Dubai’s prime residential areas—Palm Jumeirah, Jumeirah Bay Island, Jumeirah Islands, and Emirates Hills—rose by 7% in the first half of 2024, reaching Dh3,706 per square foot. Among these, Palm Jumeirah led the way with 853 homes sold, accounting for 89.3% of prime deals. Jumeirah Islands followed with 5.03%, Jumeirah Bay Island with 3.56%, and Emirates Hills with 1.05%.
The market dynamics are shifting as the preference for purchasing homes has evolved from purely investment-driven motives to a focus on personal use. This change is leading to a decrease in available listings, with the number of residential properties for sale falling by 22.8% compared to the previous year. For the first time since early 2022, the number of unique home listings in a single quarter has dropped below 100,000. The luxury segment has been particularly affected, with the supply of homes in Dubai’s four prime residential communities decreasing by 47% over the past year to just 2,851 properties.
This decrease in supply highlights the growing ‘buy-to-stay’ and ‘buy-to-hold’ mentality among buyers, who are increasingly purchasing properties as primary residences, holiday homes, or second homes. This shift is contributing to sustained price increases and reflects the maturing market’s expanding appeal to both domestic and international buyers.
Looking ahead, Knight Frank has projected a total pipeline of 308,099 residential units scheduled for completion by 2029. Of these, 82% will be apartments and the remainder will be villas. This development pipeline translates to an average of approximately 51,350 homes per year over the next six years, which is notably higher than the long-term average completion rate of around 30,000 homes per year. Despite this, the forecasted supply still falls short of the estimated 73,000 homes per year needed to accommodate Dubai’s ambitious vision of a population of 7.8 million by 2040. This shortfall is further exacerbated by potential 30-40% delays in project completions, highlighting ongoing challenges in meeting the city’s growing housing demands.
Dubai’s residential real estate market is experiencing a significant surge, with property values climbing by 21.3% over the past year, driven by the growing ‘buy-to-stay’ trend. As of the second quarter of 2024, the total number of homes planned or under construction has reached an impressive 308,099 units. However, despite this substantial pipeline, the market continues to grapple with a tightening supply, which is contributing to the sharp rise in property prices.
Villas, in particular, have seen remarkable growth. Their sale prices have surged by 24.3% over the past year, reaching Dh1,896 per square foot. This increase has pushed villa prices to 28% above the peak levels seen in 2014, underscoring the strong demand for stand-alone, beachfront homes and branded residences. Knight Frank’s Q2 2024 Dubai Residential Market Review notes that the enduring appeal of these properties is largely driven by their immediate access to the Dubai lifestyle, including proximity to greenery, wellness centers, and waterfront locations.
The luxury sector is also thriving. The average transaction prices in Dubai’s prime residential areas—Palm Jumeirah, Jumeirah Bay Island, Jumeirah Islands, and Emirates Hills—rose by 7% in the first half of 2024, reaching Dh3,706 per square foot. Among these, Palm Jumeirah led the way with 853 homes sold, accounting for 89.3% of prime deals. Jumeirah Islands followed with 5.03%, Jumeirah Bay Island with 3.56%, and Emirates Hills with 1.05%.
The market dynamics are shifting as the preference for purchasing homes has evolved from purely investment-driven motives to a focus on personal use. This change is leading to a decrease in available listings, with the number of residential properties for sale falling by 22.8% compared to the previous year. For the first time since early 2022, the number of unique home listings in a single quarter has dropped below 100,000. The luxury segment has been particularly affected, with the supply of homes in Dubai’s four prime residential communities decreasing by 47% over the past year to just 2,851 properties.
This decrease in supply highlights the growing ‘buy-to-stay’ and ‘buy-to-hold’ mentality among buyers, who are increasingly purchasing properties as primary residences, holiday homes, or second homes. This shift is contributing to sustained price increases and reflects the maturing market’s expanding appeal to both domestic and international buyers.
Looking ahead, Knight Frank has projected a total pipeline of 308,099 residential units scheduled for completion by 2029. Of these, 82% will be apartments and the remainder will be villas. This development pipeline translates to an average of approximately 51,350 homes per year over the next six years, which is notably higher than the long-term average completion rate of around 30,000 homes per year. Despite this, the forecasted supply still falls short of the estimated 73,000 homes per year needed to accommodate Dubai’s ambitious vision of a population of 7.8 million by 2040. This shortfall is further exacerbated by potential 30-40% delays in project completions, highlighting ongoing challenges in meeting the city’s growing housing demands.
Source: Khaleej Times
