Dubai’s real estate market shifts towards affordability and mid-market appeal

Dubai's real estate sector is increasingly focused on mid-market and affordable apartments, with 40% of recent ready-home sales priced below AED 1 million ($272,000), according to ValuStrat.

The report from Haider Tuaima, ValuStrat’s Director and Head of Real Estate Research, highlights robust growth across residential, commercial, and hospitality sectors.

In Q3 2024, Dubai’s property market saw exceptional growth driven by population surges and lower interest rates, pushing home sales and mortgage applications to all-time highs. Office and warehouse prices also set new records.

Despite these gains, the average size of homes sold dropped to a record low, and per-square-foot prices softened for the first time this year.

The ValuStrat Price Index (VPI) registered a 28.9% annual rise in residential values, with freehold villa communities reaching ten-year price highs—98% of villas have doubled in value since 2020.

Villa and townhouse prices surged 33.1% annually, while apartment values increased by 24.8% this quarter, up from 23.4% in the previous quarter. Apartment rentals saw a 15.4% annual increase, significantly higher than the 4.9% rise in villa rents.

Dubai’s demand for office space remains strong, with capital values rising 2.6% quarterly and 25.8% annually. Office sales grew by 3.8%, and average rents increased by 20.8%.

The logistics sector saw a 14.6% annual increase, with a quarterly rise of 5.2%, driven by favorable conditions, business growth, and new market entrants.

Dubai’s hotel sector now boasts more hotel rooms than major cities like London, Paris, and New York, with projections to surpass Tokyo and Las Vegas. Rising tourist numbers keep occupancy high year-round, further supporting growth across the hospitality industry.