The residential market in Dubai has been experiencing strong growth in the second quarter of 2024, with property values rising by 21.3% over the past year. This growth is attributed to a tightening supply and the growing trend of ‘buy-to-stay’. Average residential prices have increased, with villas outperforming apartments. Villa sale prices have seen significant growth, reaching Dh1,896 per square foot, which puts them 28% above the peak in 2014.
According to Knight Frank’s Q2 Dubai Residential Market Review, the growth in villa prices illustrates the enduring appeal of stand-alone, beachfront homes and branded residences that offer quick access to the Dubai lifestyle. The report also highlights the top factors attracting international buyers, which include access to greenery, wellness centers, and waterfront locations. The luxury residential sector in Dubai has also seen strong growth, with areas like Palm Jumeirah, Jumeirah Bay Island, Jumeirah Islands, and Emirates Hills, collectively known as ‘Prime Dubai’, experiencing a 7.0% increase in average transacted prices.
Palm Jumeirah continues to lead the prime residential market, accounting for the majority of prime deals in the first half of 2024. Other areas like Jumeirah Islands, Jumeirah Bay Island, and Emirates Hills also saw some growth in prime residential transactions. The trajectory of home values in Dubai remains unchanged, with strong demand from both domestic and international buyers. The shift in buyers’ preferences, from investment-driven to personal reasons, has contributed to the sustained price increases in the market.
The number of residential listings in Dubai has decreased significantly, with a 22.8% drop compared to the previous year. The decrease in luxury home supply has been particularly pronounced, with a 47% decline in homes available for sale in prime residential communities. This decrease in supply is attributed to the growing ‘buy-to-stay’ and ‘buy-to-hold’ mentality among purchasers, as more buyers are purchasing properties for personal use or as holiday homes.
Knight Frank has updated its pipeline of residential units scheduled for completion by 2029, with a total of 308,099 units planned or under construction. The majority of these units will be apartments, with the rest being villas. Despite the increased completion rate of around 51,350 homes per year for the next six years, it still falls short of the estimated 73,000 homes per year needed to accommodate Dubai’s vision of a population of 7.8 million by 2040. The market’s growing maturity, influenced by the shift in buyers’ mentality, is expected to appeal to a broader range of buyers and investors in the future.
