Supply predominantly consists of apartments.
Despite a tight supply in prime areas, the emirate’s housing market is witnessing a surge in new developments. Projections indicate that by the end of 2028, approximately 85,200 homes will be added to Dubai’s inventory, with apartments making up 69% (59,000 units) of this total. This year alone, nearly 40,000 residences are expected to be completed. However, while this figure exceeds the typical annual completion rate of around 35,000 homes, it’s unlikely that all projected units will be delivered on time. Delays are common in Dubai’s residential sector, with an estimated 30% to 40% of this year’s completions likely to be deferred to the following year. As of now, only 8,600 of the projected 40,000 homes for this year have been handed over.
Excluding the year 2023 and assuming all 40,000 homes are completed in the current year, the period between 2024 and 2028 will witness the delivery of 42,500 units. This averages to just 8,500 homes annually, marking a substantial 75% reduction from the long-term rate of home deliveries. Such a decline suggests sustained upward pressure on prices, especially as Dubai’s population continues to grow, recently surpassing 3.5 million residents.
Cash Retains Its Dominance
The enduring prevalence of cash transactions in Dubai’s real estate market underscores the robust demand for properties in the city, rather than indicating a decrease in lending activities by financial institutions. Currently, cash purchases account for 80% of all transactions, marking a sustained high level that surpasses historical norms.
Population Growth and Economic Expansion Propel Price Rises
Dubai’s real estate market is booming because people feel positive about it. The boost came with D33, a plan to help Dubai’s economy grow. They want to double the amount of trade with other countries and make Dubai one of the world’s top financial centres by 2033. At that time, the population could reach six million, which means more homes will be needed. By 2040, the population might grow to 7.8 million. We can already see the effect of this growth in the housing market. Prices for homes have been going up for over three years now. Apartments haven’t reached their highest prices from 2014 yet, but villas are now as expensive as they were nine years ago. This is because many people want bigger homes, but there aren’t many villas available, especially the fancy ones.
As the city aims to become a global financial powerhouse and anticipates significant population growth, the demand for residential properties is expected to continue rising. However, the limited availability of villas, especially in the luxury segment, presents a challenge amidst the growing preference for spacious living. Despite this, the market remains dynamic, offering opportunities for investors and developers alike to capitalize on Dubai’s prosperous future.
