Dubai’s real estate market surpassed in 2024 all initial forecasts, showcasing double-digit capital gains across both residential and commercial domains. The ValuStrat Price Index (VPI) highlighted a remarkable 31.6 percent annual capital appreciation for villas and a 23.6 percent increase for apartments. All villa communities exceeded their 10-year price peaks, with some values doubling or even tripling over a four-year span. However, apartment growth did not mirror this trend.
Transaction volumes reached unprecedented levels, with ready-to-move-in home sales increasing by 12.3 percent, while off-plan sales skyrocketed by 76.4 percent compared to 2023. Off-plan registrations represented 68 percent of all home sales, marking the highest share recorded in 15 years. A clear shift towards affordable apartments was evident, with two out of five ready sales involving units priced below AED1 million. This transformation was largely driven by tenants transitioning to homeowners, aided by reduced borrowing costs following three federal fund rate cuts in late 2024. By year’s end, apartment asking rents surged at double the pace of villas, as certain villa communities approached price ceilings.
Strong demand in the office market
The office market saw exceptional demand as existing firms expanded and new businesses were established. Median office rents surged by 20.8 percent annually, reaching record levels, while the office sector’s VPI recorded a 25.8 percent yearly increase. The industrial sector also thrived, with strong demand for well-located, high-quality warehouses propelling rents and capital values upward, resulting in a 14.6 percent annual rise in the VPI for industrial logistics properties. The hospitality industry continued to flourish, supported by high occupancy rates and rising average daily rates, driven by robust tourism growth.
2024 evidenced remarkable growth across all asset classes, with strong demand shifting towards affordable residential options. Given the forecasts that significantly exceeded expectations, the property market cycle appears to be approaching the peak of its growth phase.
Quarterly highlights
First quarter
The first quarter of 2024 recorded substantial advancements in various real estate metrics. The VPI for residential capital values hit 167.5 points, a 24.7 percent year-on-year increase. Residential rental values reached 183.8 points, reflecting an 11.7 percent annual growth. Office capital values recorded a 29.9 percent increase, while industrial capital values grew by 15.4 percent.
The total number of ready homes sold was 11,711, while off-plan properties reached 20,973 transactions. Average ticket sizes for off-plan homes rose 5.3 percent year-on-year to AED2.67 million. In contrast, ready properties remained stable at AED2.36 million.
Second quarter
In the second quarter, the VPI for residential capital values climbed to 178.2 points, indicating a 28.2 percent annual increase. Despite severe flooding in April, property valuations remained largely unaffected due to prompt responses from developers and authorities. The VPI for office capital values rose to 212.5 points, showcasing a 31.7 percent annual uptick.
Third quarter
The third quarter saw residential capital values reach 190.1 points, a 28.9 percent increase year-on-year. Off-plan sales volumes soared by 97 percent year-on-year, totaling 32,968 transactions. The average ticket size for off-plan homes fell to AED2.52 million, while ready sales recorded an increase in volume.
Fourth quarter
By the fourth quarter, residential capital values reached 200.7 points, marking a 27.5 percent annual increase. Villa communities saw substantial capital growth, with values doubling since the pandemic. The VPI for office capital values climbed to 230.6 points, reflecting a 23.9 percent annual rise, the report noted.
Future outlook for 2025
Looking ahead to 2025, economic growth is projected at 6 percent, buoyed by ongoing non-hydrocarbon momentum and increased hydrocarbon production. With a record budget of AED272 billion approved for 2025-2027, 46 percent is earmarked for infrastructure projects. Capital values in the residential market are expected to grow by 5-10 percent, though at a moderated pace compared to 2024, Valustrat highlighted.
Dubai’s office market is poised for sustained rental growth and rising capital values, particularly for Grade A spaces, driven by corporate expansions and a favorable business environment. The retail sector anticipates notable shopping center developments, while the hospitality industry prepares for significant new hotel openings, ensuring a vibrant future for Dubai’s real estate landscape.
