Dubai real estate market posts first monthly dip in two years

Khaleej Times

26-02-2025

Dubai's red-hot real estate market has recorded its first monthly price decline in over two years, signalling a long-anticipated shift toward equilibrium.
According to Property Monitor, a leading real estate intelligence firm, average prices fell by 0.57 per cent in January 2025 to Dh1,484 per square foot — the first drop since summer 2022. This cooling follows four consecutive years of unprecedented growth, during which prices surged by over 30 per cent in 2024 alone, smashing records for transactions, launches, and mortgage activity.
January 2025 marked the strongest month on record for sales volume, with 14,413 transactions. However, this figure represented a 4.6 per cent month-on-month decline from December 2024, hinting at a moderation in buyer momentum. Notably, the off-plan sector continued to dominate, with 53 new launches adding 12,400 units to the pipeline.
With 7,555 transactions, the off-plan market accounted for 52 per cent of sales during January, down 17.7 per cent on December 2024. Title deed sales saw a marked month-on-month increase, rising by 15.7 per cent and accounting for 47.6 per cent of sales.
Developers such as Emaar (16.5 per cent market share), Damac (15.8 per cent), and Danube (5.3 per cent) led activity, though off-plan sales dipped 17.7 per cent compared to December.
Meanwhile, ready property transactions rose 15.7 per cent, reflecting renewed investor interest in completed assets.
The slight price correction underscores growing affordability constraints after years of steep appreciation. Median prices in January stood at Dh1.35 million for apartments, Dh2.61 million for townhouses, and Dh6.92 million for villas. While luxury segments saw eye-popping deals—including a Dh425 million villa in Emirates Hills—entry-level buyers gravitated toward affordable options, such as a Dh175,000 studio in Dubai Production City.
Zhann Jochinke, COO of Property Monitor, noted, 'Dubai's market is maturing. After a phase of explosive growth, stakeholders are recalibrating to balance supply with sustainable demand.' Mortgage activity echoed this sentiment: despite tighter Central Bank regulations, loans rose 6.8 per cent month-on-month to 4,134, with stable loan-to-value (LTV) ratios indicating sustained lender confidence.
'While the total number of transactions remains strong, affordability constraints and market maturity are beginning to shape the landscape. With sales volumes and mortgage transactions moderating, Dubai's property sector could be transitioning from a continued phase of rapid growth to a more sustainable trajectory. A careful balance of supply and demand will determine the future of the market in 2025 and beyond,' said Jochinke.
January's dip comes on the heels of a historic 2024, when Dubai's property sector defied global headwinds to achieve record-breaking sales (over 150,000 transactions) and price peaks. Analysts argue that January's moderation reflects a natural market cycle rather than a downturn, with developers and regulators now prioritizing long-term stability over unchecked expansion.
With 12,400 new units launched in January alone, developers must align future projects with evolving buyer preferences, particularly in mid-market and sustainable housing, market analysts said. Stable LTV ratios and rising loan volumes suggest financing remains accessible, though rate fluctuations could impact sentiment. The polarization between ultra-luxury and budget-friendly segments will likely persist, requiring tailored regulatory and investment strategies.
As Dubai's market transitions from 'boom' to 'balance,' 2025 is poised to test its maturity—and its ability to sustain growth without overheating, market pundits said. 'For investors and end-users alike, the era of guaranteed double-digit returns may be fading, but opportunities endure in a market now defined by nuance, diversification, and strategic foresight.'