Dubai: Why property prices, rentals will continue to rise 2025

By Fakhr Ahmad: Strong demand is outpacing supply at a faster rate this year than estimated, especially after the UAE’s removal from FATF Grey List is propelling property prices rise and will continue till 2025.
As Dubai population is growing 300 per cent faster than fresh supply of properties in the first quarter of this year.
Real estate industry executives are extending their forecast for the three-year rally to next year as strong demand continues to outpace supply at a faster pace this year than estimated, especially after the UAE’s removal from the Financial Action Task Force’s (FATF) Grey List.

In February 2024, the UAE was removed from the FATF’s Grey List, which demonstrated the country’s transparency in financial transactions, hence, raising UAE’s profile among foreign investors.
Initially, the price rally seemed to be slowing down this year, but going by the supply and demand estimates, real estate players are projecting that this rally will likely extend to next year as well, especially in the luxury segment.
“A lack of supply of ready homes is one of the key aspects impacting the market this year. While the population grew by 26,000 in the first three months of the year, we only saw approximately 6,500 new homes being handed over, continuing the pressure on rental stock which has resulted in rental prices increasing 22 per cent year-on-year,” said Richard Waind, chief executive officer of Betterhomes.
“Looking ahead, as Dubai continues to grow and attract talent at its current rate, we can expect current price trends to persist throughout 2024 and into 2025. It won’t be until 2026 and into 2027 that we start to see the volume of supply entering the market that is required to start to take meaningful pressure off prices,” Waind said.
“With the removal of the UAE from the FATF Grey List, the current bull market looks set to be with us for some time to come,” said Waind.
Though the number of units handed over in Q1 2024 is higher by 45 per cent as compared to the same quarter last year, they are still not able to catch up with the demand from the population growth.
Previously, some real estate analysts were expecting a slowdown in prices and rentals, due to inflows from Russia tapering off, but the unabated demand from the high net worth individual investors from other markets such as the US and Canada is keeping the prices and rentals high in the emirate.