Dubai’s real estate market sees record growth amid strong demand

Dubai’s real estate sector experienced a breakthrough year in 2024, with soaring demand across both residential and commercial segments driving record-high rents, property prices, and transaction volumes. Despite new supply entering the market, demand is expected to remain strong through 2025, according to Cushman & Wakefield Core’s Dubai Annual Report 2024-2025.

As developers rush to meet demand, 2025 is projected to see a 41% surge in residential handovers, adding over 42,000 new units. While this will ease some pressure, price and rent increases are still expected, though at a moderate rate of less than 10%.

In 2024, only 30,200 residential units were delivered—11% below forecasts and 30% lower than in 2023—contributing to the ongoing supply crunch. Meanwhile, Dubai now has the second-highest global office occupancy rate at 92%, expected to exceed 94% by the end of 2025. Residential rents and sales prices saw annual increases of 16% and 18%, respectively, while office rents surged by 22%, with another 10-12% increase forecast for 2025.

Dubai remains a top destination for global wealth, with ultra-prime residential sales hitting record highs. New waterfront districts are attracting investment, though questions persist about their long-term value compared to iconic locations like Palm Jumeirah.

Shifting market dynamics

According to Prathyusha Gurrapu, Head of Research and Consulting at Cushman & Wakefield Core, Dubai’s residential market is becoming increasingly investor-driven, with off-plan transactions now double that of the secondary market. This trend is pricing out some end-users, pushing them toward suburban areas and the Northern Emirates, which in turn is creating new investment opportunities.

The commercial market is also witnessing unprecedented demand. Robert Thomas, Head of Agency at Cushman & Wakefield Core, highlighted that 2024 saw the largest-ever single-buyer commercial transaction in Dubai, with Aldar acquiring a DIFC commercial tower for AED 2.3 billion ($626 million). The momentum is expected to continue in 2025, with double the amount of new office supply compared to 2024, though market tightness will likely persist until at least 2027-2028.

Despite the increase in supply, most new office spaces are pre-leased, particularly in DIFC, which will contribute a third of total new supply over the next three years. Companies are adapting their strategies by optimizing existing spaces or exploring new business districts like Dubai CommerCity and Expo City Dubai.

Regulatory changes and market outlook

Dubai’s evolving regulations will play a key role in shaping the market. The January 2025 UAE Central Bank directive introduces a 6% additional down payment for mortgage buyers, which could slow mid-market mortgage transactions but is expected to have a minimal overall impact due to the continued dominance of off-plan and cash transactions.

Meanwhile, updates to the RERA index aim to enhance regulatory clarity, stabilizing rental increases and encouraging landlords to upgrade their properties. The Dubai Land Department’s freehold expansion along Sheikh Zayed Road and Al Jaddaf could drive asset values higher, with potential for further expansions in other leasehold areas.

Looking ahead to 2026-2027, major project completions and regulatory adjustments are expected to help rebalance supply and demand, reinforcing Dubai’s status as a premier global real estate hub. However, as GCC landlords weigh selling options, particularly for high-yield, debt-free properties, the long-term trajectory of the market will depend on how developers and investors navigate these shifts.