Knight Frank Predicts Dubai Home Price Hike in 2025

Dubai’s real estate market is gearing up for another strong year, with home prices expected to rise further in 2025. Knight Frank’s latest report highlights an 8% increase in residential property values, following a staggering 20% surge in 2024. For luxury homes, the rise will be slightly lower, at about 5%, yet still significant for the high-end market.

This sustained growth reflects the city’s ongoing recovery since the pandemic and solidifies Dubai’s position as a global real estate hotspot.

Dubai’s Millionaire Property Boom

Dubai’s price surge has turned many homeowners into millionaires. Of the 530,000 homes sold in Dubai since 2002, about 95,000 are now worth over $1 million.

“These days, a million-dollar home is really the average price for a single-family house,” noted Faisal Durrani, Head of Middle East Research at Knight Frank. “This highlights how much values have increased over the past four and a half years.”

Why Demand for Dubai Real Estate Is Soaring

Dubai’s appeal lies in its investor-friendly environment, world-class infrastructure, and liberal visa policies. The city’s handling of the pandemic also played a critical role in attracting foreign buyers.

The luxury market has been particularly vibrant, with prime waterfront villas and exclusive neighborhoods drawing wealthy investors. These include:

• Russians seeking to safeguard assets.
• Crypto millionaires.
• Bankers relocating from Asia’s stricter Covid-19 restrictions.
• Affluent Indians buying second homes.

Fewer Risks This Time Around

Unlike previous boom-and-bust cycles, Dubai’s market appears more stable this time. Tighter regulations, such as higher down payment requirements, have reduced speculative activity. Most buyers today are end-users rather than flippers.

“The drivers are very different in this cycle, and we don’t see speculative activity,” said Durrani. “There is nothing in the data to suggest we are approaching a cliff-edge moment.”

Record-Breaking Sales Activity

Dubai’s property market is hotter than ever, with transaction volumes in the first three quarters of 2024 surpassing all of 2023. The third quarter alone saw sales hit a record $31.7 billion.

Developers are racing to meet demand, with plans to deliver 300,000 new homes by 2029. But supply struggles to keep pace with population growth, especially in the villa market, where inventory is scarce.

The Road Ahead

As Dubai’s population continues to grow, the shortage of available homes, especially villas, is fueling price increases. “The biggest driver for the market is the shortage of homes to accommodate the influx of people moving into the city,” Durrani added.

With its robust demand, luxury appeal, and investor confidence, Dubai’s real estate market is set to remain a top choice for buyers and investors in 2025 and beyond.