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Dubai has become one of the hottest destinations on the planet, with record visitor arrivals and immigration. But the city is straining under the weight of new arrivals, and the cracks are starting to show.
Real estate in the city has broken records for transactions as more people look to settle in Dubai. The price of housing continues to spike, even with new real estate projects being announced almost daily.
Under Dubai's current plans, the city aims to have 5.8 million residents by 2040, adding more than half its current estimated population in just 15 years. Since 1980, its population has already soared from around 255,000 to around 3.8 million.
Today, average prices per square foot are at all-time highs, according to Property Monitor. Rental prices increased as much as 20 per cent in key neighbourhoods last year, with further rises likely this year. Some residents are even moving to communities further out in the desert, according to real estate firm Engel & Völkers.
ValuStrat added that the ready-to-move-in property demand grew in 2024 as more tenants turned to ownership due to high rentals as well as a drop in mortgage rates. Demand for affordable units also grew last year as consistent surges in prices made properties beyond the reach of some residents and investors with off-plan continued to dominate the market.
We observed sustained demand in both the luxury property and off-plan markets, trends that we believe will persist into 2025. The growing interest in off-plan properties indicates strong investor confidence in future developments, a positive sign for the market in the coming year. By the end of 2024, apartment asking rents grew at twice the rate of villas, as some villa communities began reaching price ceilings, said the real estate consultancy, he said.
