Nearly one in five homes in Dubai is valued at over $1 million, according to an analysis by global real estate firm Knight Frank. By monitoring the price progression of each property over time, Knight Frank identified 'accidental millionaires'—homeowners who purchased properties for less than $1 million but now see their value skyrocket due to market inflation. Only homes that have not been resold have been considered in this analysis.
'Of the 530,000 homes sold since 2002, 95,000 are now worth over $1 million, totaling a combined value of Dh822 billion,' stated Faisal Durrani, Partner and Head of Research for Mena at Knight Frank. He further noted that homes valued at over $1 million have surged from 6.3% of all sales in 2020 to 18.1% today, indicating that nearly one in five homes in Dubai now exceeds the $1 million mark.
Knight Frank's analysis revealed that the total value of all homes sold in Dubai since 2002 stands at Dh1.47 trillion, marking a 221% increase since 2020. Property prices in Dubai have experienced unprecedented growth in recent years, driven by high demand from new residents and investors, pushing prices to record highs.
According to Knight Frank's Dubai Residential Market Review: Special Edition, property prices in Dubai are forecasted to rise by 8% in 2025 due to sustained demand. The study highlighted that house prices in Dubai are currently 19.9% higher than they were a year ago. 'After nearly five years of continuous growth, we anticipate the rate of house price growth will start to decelerate in 2025. Additionally, considering potential market risks, notably the threat of a global economic slowdown,' Durrani added.
The study also pointed out that Dubai's prime residential market is expected to see a more moderate growth of around 5%, building on the 44.4% growth in 2022 and the 16.3% increase last year. The luxury villa market has particularly excelled, especially in waterfront or prestigious areas such as Palm Jumeirah and Jumeirah Islands, where values have nearly doubled since 2014.
Developers are racing to meet the escalating demand for housing, with Knight Frank estimating that nearly 300,000 homes will be completed in Dubai by the end of 2029. Apartments will account for 80.1% of this supply, while villas will make up 17.4%. Knight Frank anticipates the villa shortage to continue, with only 8,900 new villas expected by the end of 2024 and an additional 19,700 by the end of 2025.
Knight Frank ran three population growth scenarios to assess the potential mismatch between supply and future population growth. Over the next 16 years, up to 2040, the firm forecasts that Dubai will require between 37,600 and 87,700 homes annually to accommodate a population ranging from 5.8 to 8.6 million. This projection considers both low and high population growth rates.
Assuming historical delays of up to 30% persist, 210,000 units will realistically be completed over the next six years, equating to 35,000 homes per year. This suggests a potential long-term housing shortage, despite the cyclical nature of the market and risks to ongoing price appreciation.
'The limited availability of sites in key city locations is also driving up prices for off-plan homes, while the secondary market is seeing significant price growth, particularly for refurbished older homes,' said Petri Mannila, Partner and Head of Prime Residential UAE. 'While there may be a slight shortfall in the supply needed to house Dubai's growing population, the scarcity of development sites and homes for sale, whether off-plan or ready, will continue to widen the gap between prime neighborhoods and the rest of Dubai,' Mannila concluded.
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