Housing demand soars in Dubai amid influx of 1,000 residents a day in first quarter of 2025

Villa rents rise by 5.1% and apartment rents surge by 10% annually, ValuStrat report finds

“Dubai Real Estate Market Sees Sustained Growth Amid Limited Supply and Strong Demand

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“There has been consistent annual growth in capital values across all segments

Dubai’s real estate market continues its upward trajectory, with consistent annual growth in capital values across all residential segments, according to the latest ValuStrat Price Index. Apartment prices have surged by 21.4%, while villa prices have climbed by an impressive 30.3%. Rental prices have followed a similar trend, with villa rents increasing by 5.1% and apartment rents rising by 10% year-on-year.

This robust growth is underpinned by a demand-supply imbalance. The number of individuals looking to buy or rent properties continues to exceed available inventory. A previous report by ValuStrat highlighted that only 27,000 new homes were completed in 2024—marking the lowest delivery rate in six years—while Dubai’s population continues to grow steadily, amplifying the demand pressure.

Government-led initiatives such as long-term residency permits for retirees and remote workers, the expansion of the 10-year Golden Visa programme, and ongoing economic diversification have significantly boosted investor and resident confidence in the market.

In 2025, around 61,580 new homes are expected to be delivered, with 70% comprising apartments and 30% villas or townhouses. ValuStrat noted that nearly 12,000 units—approximately 19% of the total forecast—were handed over in the first quarter alone.

“This is not unexpected, considering just over half of last year’s projected deliveries were ultimately completed,” said Haider Tuaima, Managing Director and Head of Real Estate Research at ValuStrat.

The consultancy estimates that 141,404 apartments and 29,649 villas/townhouses are currently under construction, with expected completion by 2029. Key development areas include Jumeirah Village Circle (12%), Business Bay (7%), and Jumeirah Lakes Towers (5%).

While off-plan Oqood (contract) registrations declined by 8% quarter-on-quarter in Q1 2025, they showed a strong 37.5% year-on-year increase, amounting to investments worth Dh77.3 billion. The secondary market recorded 12,396 ready home transactions, a 5.8% rise compared to the previous year, but a 7% dip from the previous quarter, totaling Dh33 billion in value.

Mortgage activity also reflected the ongoing market momentum. In the first quarter of 2025, there were 9,388 mortgage transactions across asset classes, totaling Dh21 billion. In comparison, 14,386 cash transactions for ready properties amounted to Dh33 billion in value.

“The only notable downside this quarter was a slight decline in residential sales and mortgage applications compared to the previous quarter. However, this trend is neither unprecedented nor unexpected and may suggest a developing mismatch between supply and demand, potentially prompting a market correction,” Mr. Tuaima added.

Despite the current growth, most apartment communities remain on average 8.1% below their capital values from a decade ago. Exceptions include high-demand locations like Palm Jumeirah, The Greens, and Jumeirah Beach Residence. On the other hand, villa valuations have soared, currently averaging 59.9% above their peak values from ten years ago.

In Q1 2025, villa capital values rose by 6.2% quarterly and 30.3% annually, with the strongest annual gains recorded in Jumeirah Islands, Palm Jumeirah, Emirates Hills, and The Meadows. Mudon showed the lowest performance among villa communities.

Apartment capital gains decelerated slightly, with annual growth of 21.4% and a quarterly increase of 3.8%. Top-performing areas included The Greens, Dubailand Residence Complex, Palm Jumeirah, Town Square, and The Views.

Rental trends remained positive. Villa asking rents were stable quarter-on-quarter but 5.1% higher year-on-year. Apartment asking rents increased 1.6% over the quarter and 10% annually, reflecting strong leasing demand.