Demand for housing in Dubai has reached peak levels, buoyed by the many arrivals in Dubai seeking a home and demand for more luxury living by high net worth individuals.
The report by ValuStrat, a leading real estate consultancy, highlighted that by the end of March 2025 Dubai’s population had risen to 3.92 million, with 89,695 new residents added in just the first three months of the year, an average of approximately 1,000 people per day. For perspective, the entire net population increase for 2024 was 170,478 people, averaging less than 500 per day.
Demonstrating the pressure on the housing market, the estimated number of new homes expected to be delivered this year stands at 61,580 units. “Securing an affordable home to buy or rent is becoming more difficult,” said Haider Tuaima, Managing Director & Head of Real Estate Research at ValuStrat.
A strong economy coupled with an attractive relocation climate, with the UAE projected to grow by between 5% and 6% in 2025, meanwhile will see Dubai remain a magnet for international talent, meaning that demand will continue to (significantly) outstrip supply in the years ahead.
This effect has driven up prices. According to the ValuStrat Price Index (VPI), which tracks the residential market, there has been consistent annual growth in capital values across all segments. Apartment prices have risen by 21.4% since the firm started tracking prices in Q1 2021, while villa prices have increased by 30.3%.
Areas for villas which have seen the most significant growth over the past year include Jumeirah Islands (42%), Palm Jumeirah (41%), Emirates Hills (30%), and The Meadows (29%), while Mudon recorded the lowest gains at 9%.
Rental rates have also surged, with villa rents up by 5.1% and apartment rents rising by 10%. On average, the asking rent per annum for a 1-bed apartment now stands at AED 90,000, while a 3-bed apartment costs around AED 192,000. Average annual rents for villas are between AED 336,000 (3 beds) to AED 519,000 (5-beds), found the ValuStrat report.
Yet in the past quarter, there have been signs of slowing, or even turnaround, in price pressures.
The authors noted: “The only downside this quarter was the decline in residential sales, both off-plan and ready properties, as well as a decrease in mortgage applications, though this is only when compared to the previous quarter. This trend is neither unprecedented nor unexpected and may be attributed to a mismatch between supply and demand, potentially leading to a market correction at some point.”
New builds playing catch-up
To ease the pressure on the market, ValuStrat said that the pace of new builds needs to accelerate. The estimated number of new build units to enter the market this year stands at 61,580 homes, 70% being apartments, and 30% villas/townhouses.
Key building completions during the first quarter of 2025 included Berkeley Place in MBR City with 127 apartments, Torino in Arjan with 625 houses and Azizi Amber with 109 units. Notable villa community completions included Pulse Beachfront Phase 1 in Dubai South, delivering 251 homes, and Bliss Townhouses Phase 1 in Arabian Ranches 3 adding 335 units.
Dubai currently has a residential supply of around 840,000 units, that number is expected to reach just under 1 million by the end of 2026, based on current projects announced by developers and real estate giants.
That surge in supply will not be sufficient to meet demand, said Tuaima. “We have a rising population but we don’t have the supply of properties to match it. Rents have already more than doubled since the pandemic and definitely have surpassed the previous peaks in 2014,” he said, adding that current projections show supply could finally catch up with demand by 2028.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - April 2025
