A growing population and demand for housing is expected to sustain pressures in Dubai’s residential property market, according to the latest Real Estate Outlook from ValuStrat.
Housing Demand in Dubai Reaches Record Highs as Influx of New Residents Fuels Market Growth
Housing demand in Dubai has surged to record levels, driven by an increasing number of people moving to the city and heightened interest in upscale residences from affluent buyers.
According to a new analysis by real estate advisory firm ValuStrat, Dubai’s population reached 3.92 million by the end of March 2025. A total of 89,695 new residents arrived in the first quarter alone, translating to an average of nearly 1,000 newcomers each day. For comparison, the entire net population increase throughout 2024 was 170,478 — averaging fewer than 500 per day.
This significant growth is placing increasing pressure on housing availability. For 2025, around 61,580 new residential units are forecasted to be completed. “Finding affordable housing—whether to purchase or rent—is getting more challenging,” stated Haider Tuaima, Managing Director and Head of Real Estate Research at ValuStrat.
Dubai continues to attract global talent, supported by a robust economy and favorable living conditions. The UAE economy is expected to expand by 5% to 6% in 2025, ensuring that demand will persistently exceed supply in the near future.
This ongoing demand has impacted pricing. ValuStrat’s Price Index (VPI), which monitors residential real estate, shows sustained growth across all sectors. Since Q1 2021, apartment values have increased by 21.4%, while villa prices have seen a 30.3% rise.
Villa communities experiencing the highest annual value increases include Jumeirah Islands (42%), Palm Jumeirah (41%), Emirates Hills (30%), and The Meadows (29%). Mudon reported the lowest growth rate, with only a 9% uptick.
Rental costs have also climbed. Villa rents have gone up by 5.1%, and apartment rentals have increased by 10%. As per ValuStrat, the average annual rent for a one-bedroom apartment is now AED 90,000, while a three-bedroom apartment commands approximately AED 192,000. Villas typically rent between AED 336,000 for three-bedrooms and AED 519,000 for five-bedroom units annually.
However, the latest quarter has shown early indicators of a slowdown in price momentum.
The report points out: “The only area of weakness observed this quarter was a dip in residential transactions—both off-plan and completed units—as well as fewer mortgage applications. However, this shift is relative to the previous quarter and may be due to supply-demand imbalances, possibly hinting at a future market correction.”
Construction Attempts to Keep Up
To relieve housing market strain, ValuStrat emphasized the urgency of ramping up new project deliveries. The estimated total of residential completions for this year stands at 61,580 units—70% of which are apartments, and the remaining 30% are villas or townhouses.
Major completions in the first quarter of 2025 included Berkeley Place in MBR City with 127 apartments, Torino in Arjan with 625 homes, and Azizi Amber with 109 units. Key villa developments completed include Pulse Beachfront Phase 1 in Dubai South, delivering 251 units, and Bliss Townhouses Phase 1 in Arabian Ranches 3, which added 335 homes.
Based on data from Dubai Statistics Centre, Reidin, Meed Projects, and ValuStrat, the city currently has about 840,000 residential units. This number is expected to grow to just under one million by 2026, based on the development pipeline announced by major developers.
However, Tuaima emphasized that even this expansion won’t be enough. “The population is growing, but the housing stock isn’t catching up. Rental rates have more than doubled since the pandemic and have already exceeded the previous peak levels of 2014,” he said. He added that a balance between demand and supply may only be achieved by 2028.
This projection is based on nearly 150,000 new residential units expected to be handed over by 2028. Of these, 12% are located in Jumeirah Village Circle, 8% in Business Bay, and 5% in Jumeirah Lake Towers, as outlined in the report.
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