Wed, Dec 04, 2024 | Jumada al-Aakhirah 3, 1446 | DXB ktweather icon0°C

Thousands of UAE homeowners become 'accidental millionaires' as property prices rise

Dubai property prices projected to grow 8% in 2025 as there is ‘no let-up in demand’

Published: Wed 4 Dec 2024, 11:14 AM

Updated: Wed 4 Dec 2024, 10:30 PM

Top Stories

Nearly one in every five homes in Dubai is worth more than $1 million, according to an analysis carried out by global real estate Knight Frank.

By tracking the value of each home’s price progress over time, Knight Frank identified “accidental millionaires”, i.e., owners who bought properties for less than $1 million that are now worth more purely due to price inflation. Only homes that have not traded hands have been counted.

“Of the 530,000 homes sold since 2002, 95,000 are worth over $1 million today, which equates to a combined total value of Dh822 billion,” said Faisal Durrani, partner and head of research, for Mena at Knight Frank.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

He added that homes valued at over $1 million have jumped from just 6.3 per cent of all sales in 2020 to 18.1 per cent today. This effectively means nearly 1 in every five homes in Dubai is worth over $1 million.

Knight Frank’s analysis showed that the total value of all homes sold in Dubai since 2002 currently stands at Dh1.47 trillion, which is up 221 per cent since 2020.

8% jump in property prices in 2025

Property prices in Dubai have seen record increases in the past few years due to high demand from new residents and investors, pushing prices to an all-time high.

According to Knight Frank’s Dubai Residential Market Review: Special Edition, property prices in Dubai are projected to increase eight per cent in 2025 as there is a no let-up in demand.

The study released on Wednesday noted that the house prices in Dubai stood 19.9 per cent higher than at the same time last year.

“After almost 5 full years of growth, we expect the rate of house price growth will begin to slow in 2025. Furthermore, factoring for potential downside risks to the market, the most significant of which is the threat of a global economic slowdown,” said Faisal Durrani, partner and head of research, for Mena at Knight Frank.

The study noted that Dubai’s prime residential market will see a more modest growth of nearly 5 per cent, which builds on the 44.4 per cent growth registered during 2022 and the 16.3 per cent increase last year. The luxury villa market has been a standout performer, particularly in waterfront or prestigious locations like the Palm Jumeirah and Jumeirah Islands, where values are now almost double 2014 levels.

2029 & 2040 forecast

Developers have been racing to satisfy the growing levels of demand for housing and the consultancy estimated that close to 300,000 homes are due across Dubai between now and the end of 2029.

Apartments will account for 80.1 per cent of the supply due by 2029, while 17.4 per cent will be villas.

Knight Frank expects the villa shortage to persist, with just 8,900 new villas expected by the end of 2024 and a further 19,700 – by the end of 2025.

It also ran three population growth scenarios to understand the potential mismatch between supply and future projected population growth:

Over the course of the next 16 years, through to 2040, Knight Frank forecasts that Dubai will need in the region of 37,600-87,700 homes each year in order to accommodate between 5.8-8.6 million residents. This assumes both low and high population growth rates.

Assuming historical delays of up to 30 per cent of units each year persist, 210,000 units will realistically be completed over the next six years. This translates into 35,000 homes per year for the next six years, hinting at a likely long-term shortfall in housing, notwithstanding the cyclical nature of the market and risks to ongoing price appreciation.

“The limited availability of sites across key locations in the city is also contributing to rising prices for off-plan homes, while stock in the secondary market too is experiencing significant price growth, especially where older homes have been refurbished,” said Petri Mannila, partner and head of prime residential UAE.

“While it may appear that there is likely to be a slight shortfall in the supply needed to house Dubai’s growing population, the lack of development sites and homes for sale, either off-plan, or ready, is going to continue creating a bigger delta between the city’s prime neighbourhoods and the rest of Dubai,” added Mannila.

ALSO READ:



Next Story