Transactions surged, with ready home sales up 12.3 percent and off-plan sales soaring 76.4 percent
Dubai Real Estate Market Outperforms Expectations in 2024
Dubai’s property market delivered exceptional performance in 2024, surpassing all initial predictions with impressive double-digit capital growth in both residential and commercial sectors. The ValuStrat Price Index (VPI) revealed a staggering 31.6% annual increase in villa values and a 23.6% rise in apartment prices. Remarkably, all villa communities exceeded their highest price points in the last decade, with some values doubling or tripling within just four years. However, apartment price growth followed a more tempered trajectory.
Transaction activity hit record highs, with sales of ready-to-move-in homes rising by 12.3%, while off-plan property sales soared by 76.4% compared to the previous year. Off-plan transactions accounted for 68% of total home sales, marking the largest share in 15 years. The market also witnessed a significant shift toward affordability, as two out of five ready properties sold were priced under AED1 million. This trend was driven by tenants transitioning to homeownership, supported by three federal fund rate cuts in late 2024, which lowered borrowing costs. By year’s end, apartment rental prices outpaced villa rentals, with certain villa communities nearing price saturation.
Office Market Sees Unprecedented Growth
The office sector experienced remarkable demand, fueled by corporate expansions and new business establishments. Median office rental rates surged by 20.8% year-on-year, reaching all-time highs, while the office sector’s VPI recorded an annual increase of 25.8%. In the industrial sector, high-quality warehouses in prime locations were in strong demand, leading to a 14.6% annual increase in VPI for logistics properties. Meanwhile, the hospitality sector thrived, benefiting from high occupancy rates, rising average daily rates, and significant growth in tourism.
2024 demonstrated exceptional growth across all asset classes, with heightened demand for affordable residential options. Given the performance exceeding projections, Dubai’s real estate market appears to be nearing the peak of its growth phase.
Quarterly Highlights
First Quarter
The opening quarter of 2024 saw significant progress across key real estate metrics. The VPI for residential capital values climbed to 167.5 points, representing a 24.7% annual increase. Rental values for residential properties reached 183.8 points, growing by 11.7% year-on-year. Office capital values rose by 29.9%, while industrial capital values increased by 15.4%.
Transaction volumes reached 11,711 for ready homes and 20,973 for off-plan properties. The average price for off-plan properties increased by 5.3% year-on-year to AED2.67 million, while prices for ready properties remained steady at AED2.36 million.
Second Quarter
In Q2, the VPI for residential capital values rose further to 178.2 points, an annual increase of 28.2%. Despite severe flooding in April, property values were largely unaffected due to quick and effective responses from developers and authorities. The VPI for office capital values reached 212.5 points, reflecting an annual growth of 31.7%.
Third Quarter
By the third quarter, residential capital values had climbed to 190.1 points, marking a 28.9% year-on-year increase. Off-plan sales volumes skyrocketed by 97% compared to the same period in 2023, totaling 32,968 transactions. The average price for off-plan homes declined slightly to AED2.52 million, while ready property sales experienced a volume increase.
Fourth Quarter
In the final quarter of the year, residential capital values peaked at 200.7 points, representing a 27.5% annual growth. Villa communities posted remarkable capital appreciation, with some values doubling since the pandemic. The VPI for office capital values surged to 230.6 points, reflecting a 23.9% annual increase, according to the report.
Looking Ahead to 2025
Dubai’s economy is projected to grow by 6% in 2025, driven by non-hydrocarbon momentum and higher hydrocarbon production levels. A record AED272 billion budget for 2025-2027 has been approved, with 46% allocated for infrastructure development. ValuStrat predicts a more moderate increase in residential property values, expected to grow by 5-10% next year.
The office market is anticipated to maintain rental growth and rising capital values, particularly in Grade A office spaces, supported by business expansions and favorable market conditions. The retail sector is preparing for the development of notable shopping centers, while the hospitality industry is set to welcome major hotel openings, paving the way for a thriving future in Dubai’s real estate market.
