Record Demand-Supply Gap in Dubai Real Estate
Dubai’s real estate market experienced a landmark year in 2024, driven by unprecedented demand in both residential and office sector. As supply struggles to keep pace, the market is seeing record-breaking growth in rents, prices, and transaction volumes according to data from Cushman & Wakefield Core’s Dubai Annual Report 2024-2025. With no sign of slowing demand, 2025 will see further increases, despite more stock coming to market, particularly in the residential market. Looking ahead to 2026/2027, major project completions, and regulatory adjustments will help address the imbalance, bringing more stability to the market and reinforcing Dubai’s position as a global real estate investment hub.
Key takeaways:
Supply struggles to keep pace
- Just 30,200 residential units handed over in 2024, 11% down on 2024 forecasts and 30% lower than 2023.
- Dubai holds second-highest global office occupancy levels at 92% and expected to exceed 94% by end-2025.
Record-breaking price and rental increases
- Citywide residential rents and sales prices increased by 16% and 18% year-on-year, respectively.
- Office rents surged by 22% year-on-year in 2024, with further increases of 10-12% forecast for 2025.
- Accessing large office space is a particular challenge for major occupiers, forcing them to act quickly on transactions or consider emerging locations.
- Ultra-prime residential sales hit record highs as Dubai sees the largest influx of millionaires globally. New waterfront districts present investment opportunities but questions remain around long-term value in comparison to iconic Palm Jumeirah
Surge in new supply still won’t fully meet demand in 2025; Moderation expected in 3-5 years
- 2025 will see a forecasted 41% y-o-y surge in residential handover volumes with over 42,000 units, bringing some relief to the market; moderate increase in rent and sales prices of less than 10% expected as supply pipeline builds.
- There was the equivalent of one residential project launch every 15 hours in 2024, providing strong future supply.
- Double the amount of new office supply expected in 2025 compared to 2024 (1.66 million sq. ft.) but the market is expected to remain undersupplied until 2027/2028.
- DIFC responsible for a third of the total city-wide office supply over the next 3 years – most of which is expected to be pre-leased due to unrelenting demand.
Regulatory updates to help address imbalances
- By reflecting real-time trends, the updated RERA index will support regulatory clarity and reinforce confidence across Dubai’s residential and commercial real estate market, helping stabilise the rental increases while also encouraging landlords to upgrade assets to maximise benefits.
- While the January 2025 UAE Central Bank directive - introducing a 6% additional down payment for mortgage buyers from February 1st - will influence some segments of the market.