21-02-2025
Dubai real estate sales prices increased 20% and rents went up 19% last year – what will happen in 2025?
The Dubai residential real estate market saw a 20 per cent increase in sales prices and a 19 per cent rise in rental rates in 2024, according to Deloitte's annual Real Estate Predictions report.
The Emirate's reputation as a safe-haven for investors remains solid, bolstered by a 5 per cent increase in population, record-high residential transactions, and robust economic expansion.
Villas continue to outperform apartments in price growth, while rental hikes remain steady across segments.
Dubai real estate predictions
The influx of new supply later in 2025 may stabilise price increases but is unlikely to dampen the overall momentum of the sector.
Despite global economic fluctuations, Dubai's office sector demonstrated resilience, with rents rising 17 per cent year-on-year, reflecting sustained demand from multinational corporations seeking prime office space.
Meanwhile, the retail sector remains a key growth driver, with total retail expenditure in Dubai expected to increase by 6 per cent from 2025 to 2027.
The hospitality sector reached new heights, with average hotel occupancy rates hitting 78 per cent in 2024.
Oliver Morgan, Partner at Deloitte Middle East, said: 'Dubai's real estate sector continues to thrive due to strong investor confidence, a diversified economy, and a strategic vision for long-term urban development with a robust masterplan.
'It is driven by strong economic fundamentals, attractive lifestyle offerings, and progressive policies.
'The sustained influx of expatriates and tourists over the past year, coupled with major infrastructure projects, positions Dubai as one of the most dynamic real estate markets in the world.'
Residential real estate
Dubai's residential market retained its upward trajectory, with average sales prices rising by 20 per cent in 2024 to AED 1,597 ($435) per sq ft.
Sales transaction volumes surged in 2024, marking unprecedented levels, with 44 per cent of transactions in the secondary market.
The demand for affordable, family-friendly villa communities and townhouses remains strong.
Gross rental yields grew to 6.7 per cent, reflecting the sustained demand across villas and apartments. Rent increases were most prominent in Dubailand, Meydan, and International City, with year-on-year spikes ranging from 39 per cent to 46 per cent.
The rental market remains dominated by cash buyers and existing residents seeking affordable villas and townhouses.
Hospitality
Dubai's tourism sector gained further momentum, welcoming 18.7m overnight visitors during 2024, marking a 9 per cent increase from the previous year. Additionally, the average hotel occupancy rate rose to 78 per cent.
Revenue Per Available Room (RevPAR) increased by 1 per cent, driven by the success of global tourism campaigns and the Emirate's position as a leading luxury and business travel destination.
The introduction of new hospitality brands and innovative tourism concepts has reinforced Dubai's standing as a global tourism leader.
Office market
Demand for Grade A office space soared in 2024, with premium towers such as ICD Brookfield in DIFC maintaining occupancy rates above 95 per cent, reflecting continued interest from global financial and corporate firms.
Prime office space demand remained high, leading to a 12 per cent increase in rents in 2024.
Despite regional competition from Abu Dhabi and Riyadh, Dubai's pro-business policies and economic growth continue to drive corporate relocations and expansions.
Retail
Retail real estate continues to benefit from the growth in consumer demand and the influx of both new residents and tourists, with total sales projected to see a 6 per cent increase between 2025 and 2027.
E-commerce growth is reshaping retail real estate, with brands adopting hybrid brick-and-mortar and digital strategies. Dubai's Urban Master Plan 2040 emphasises the expansion of community-based retail hubs to improve accessibility and convenience.
Dubai's strategic retail initiatives, coupled with its focus on technological innovation and sustainability, are transforming neighbourhood retail experiences across the city.
Industrial and logistics
Dubai's industrial real estate market continues to expand, fuelled by demand from manufacturing, logistics, and e-commerce sectors.
Among the industrial zones in the south of Dubai, the highest rental rates were observed in JAFZA, Dubai South, and DIP. Warehouse rental rates in JAFZA rose by 28 per cent year-on-year.
The UAE's import and export trade saw an 8.4 per cent and 6.6 per cent growth, respectively, in 2024, reinforcing the emirate's status as a key trade and logistics hub.
2025 Dubai real estate forecast
Dubai's real estate sector is positioned for sustained growth, supported by ambitious government initiatives, infrastructure projects, and increasing foreign direct investment.
The residential, commercial, and hospitality markets are expected to continue their upward trajectory, with moderate stabilisation in some segments due to increased supply.
As Dubai progresses towards its 2040 Urban Master Plan, the city's focus on sustainable urban development, transportation infrastructure, and smart city initiatives is anticipated to enhance attractiveness to investors and residents alike.
