ValuStrat report: Growing population bolsters demand in an increasingly unaffordable residential market

Zawya

01-05-2025

The latest Dubai 1st quarter real estate review report from ValuStrat, a globally recognised consultancy specialising in multi-sector advisory services, has revealed insightful dynamics in Dubai's real estate market. The report comprehensively analyses the residential, commercial, and hospitality sectors and underscores a market showing robust growth and market activity.
Haider Tuaima, Managing Director and Head of Real Estate Research, shares his synopsis of Dubai's real estate market. According to him, housing demand has reached unprecedented levels. 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.
The estimated number of new homes expected to be delivered this year stands at 61,580 units. Of these, 19%, nearly 12,000 apartments and villas, were completed in the first quarter alone. This is not unexpected, considering that just over half of last year's projected deliveries were ultimately handed over.
Securing an affordable home to buy or rent is becoming more difficult. 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%, while villa prices have increased by 30.3%. Rental rates have also surged, with villa rents up by 5.1% and apartment rents rising by 10%.
Demand for office space in Dubai remained strong, driven by sustained economic growth and business expansion.
The VPI tracking the office sector showed an impressive 29.1% annual increase in capital values and a 20.2% increase in asking rents. The hospitality and industrial sectors also sustained positive growth.
He concludes that 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.
To learn more about ValuStrat's real estate market capabilities and our research outputs, please visit ValuStrat's Insights Webpage.
About ValuStrat:
ValuStrat is an international consulting group providing Advisory, Valuations, Research, Transaction Advisory, Due Diligence and Industrial Consulting services, working across various industry sectors. With 45+ years of experience, a network of 14 offices in 5 countries and a client base of 1,000 corporations across the Middle East, UK, Europe and Africa, ValuStrat assists diverse clients, from governments, multinationals, large local corporations and financial institutions to startups, SMEs and family businesses. For Valuation services, it is the preferred service provider to over 120 financial institutions across the EMEA region.