According to the most recent report from global property consultant Knight Frank, Dubai’s real estate sector will experience remarkable growth in 2024, with residential property values rising by 19.1 percent over the previous year to AED1,685 per square foot. This puts average prices 13.3 percent above their 2014 peak.
Villa sale prices have risen by 20.2 percent in the last 12 months, reaching AED2,009 per square foot, 38.1 percent higher than the 2014 peak. This growth demonstrates the widespread appeal of stand-alone villas, beachfront homes, and branded residences in Dubai.
“Residential property values remain on an upward trajectory, with demand showing no signs of abating, both from domestic and international buyers,” stated Faisal Durrani, partner – head of research, MENA.
Residential pipeline stands at 302,880 units
According to the report, the total number of homes under construction in Dubai’s real estate sector is now 302,880 units, with completion scheduled for 2029. Of these, 80 percent will be apartments, with the rest being villas (18%) and branded residences (2%). This equates to an average of approximately 60,576 homes per year over the next five years, which is higher than the long-term completion rate of around 36,000 homes per year.
Despite the abundant supply, the number of homes for sale in the $10 million+ price range fell by 40 percent in the last year, from 4,119 to 2,491 homes. Meanwhile, the number of homes available for $25 million or more has decreased by more than double, falling from 583 to 86 properties in the last year alone.
“In this cycle, we have noted a rise in genuine end users, rather than speculative purchasers that have defined previous cycles This change is reflected in the fact that there has been a 30 percent reduction in homes available for sale across the city last year, with the prime markets in the city experiencing an even more acute 52 percent reduction in home listings. It’s villas though where the attention of the global super-rich remains focused, with values rising by 20.2 percent last year, reflecting a 99.8 percent uplift on Q1 2020 price levels,” added Durrani.
Prime residential market prices surge 16.9 percent
Dubai’s prime residential real estate market, which Knight Frank defines as the Palm Jumeirah, Jumeirah Bay Island, Jumeirah Islands, and Emirates Hills, has also seen an increase in activity. During Q4 2024, average transacted prices in Dubai’s most affluent neighborhoods reached AED6,627 per square foot, up 16.9 percent from Q4 2023.
“Dubai’s luxury market has cemented its status as a safe haven for international and local luxury buyers with another record-breaking year for the US$ 10 million homes market registering 435 deals over 2024, 153 of which were recorded in Q4 alone making it the highest figure recorded in one quarter on record for this segment,” stated Petri Mannila, partner – prime residential, Dubai.
Office rents climb 9.1 percent in H2 2024
The office segment is another driver of growth in Dubai’s real estate sector. In H2 2024, average office lease rates in Dubai’s key submarkets increased by an average of 9.1 percent, with the Trade Center District experiencing the highest rental growth at 96 percent.
“Dubai’s office market continues to experience rising levels of demand in the form of new business entrance as well as expanding businesses. This rising demand means that prime office space is in exceptionally short supply city-wide,” added Durrani.
In 2024, Knight Frank reported 1.28 million square feet of new office space demand, a 64% increase over 2023. The top sectors contributing to demand are business services, real estate, and banking and finance, which together account for 843,111 square feet of new demand in 2024.
Knight Frank predicts that Dubai’s prime office supply will reach 8.2 million between 2025 and 2028. This represents an 86 percent increase over the 4.4 million square feet delivered between 2021 and 2024.
Strong demand drives growth in alternative office locations
Occupancy rates in the DIFC, Downtown Dubai, and Business Bay are currently between 95 and 99 percent, owing to strong tenant demand and limited new space. As a result, rents have risen significantly, by an average of 46% in Business Bay alone.
As prime office space in Dubai’s key business districts approaches capacity, companies are looking for alternative locations to expand. Areas such as Dubai Science Park and Expo City are gaining popularity due to their cutting-edge facilities and affordable rents.
“Occupiers remain driven by quality and we are seeing businesses migrate outside of central Dubai to newer locations where office space is available. With prime space in Dubai’s key business districts nearing full capacity, companies are finding new areas to expand into. Locations like Dubai Science Park and Expo City are experiencing increased interest, with occupiers drawn by state-of-the-art facilities and attractive rents,” noted Adam Wynne, partner – head of commercial agency, Dubai.