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Вusiness / Real Estate / Investments / Analytics / United Arab Emirates / Real Estate UAE 14.01.2025
Experts Question the Sustainability of Dubai’s Real Estate Market

In 2024, property prices in Dubai surged by 20%, marking the longest market rally since foreigners were first allowed to own property in 2002, reports Bloomberg. Analysts anticipate a slowdown and recommend caution when approaching new projects and investments.
A Construction Boom Amid Caution
In 2025, Dubai will see the construction of new skyscrapers and residential complexes. Developers are launching projects weekly, often claiming units sell out in days or even hours. However, even major players like Emaar Properties PJSC, Dubai’s largest developer, are beginning to exercise caution.
In December, Mohamed Alabbar, founder and managing director of Emaar, expressed optimism, stating that the market would continue to thrive globally and locally in 2025. “The business sentiment is positive, especially with Trump’s arrival,” he noted. Yet, Emaar now acknowledges that excessive price hikes could have negative consequences. To sustain demand, Dubai must attract new residents to fill the growing number of homes and ensure affordability to prevent expats from being priced out amid rising inflation and living costs.
According to Bloomberg Intelligence, Emaar, best known for building the world’s tallest tower, plans to construct 6,000 to 7,000 homes annually by 2026 and 2027. The company’s performance serves as a key market indicator, with analysts estimating Emaar’s 2025 profits could reach 13 billion dirhams, up significantly from 3.8 billion dirhams in 2021.
Price Trends and Affordability Challenges
According to Knight Frank, nearly one-fifth of homes in Dubai are now valued at over $1 million. Prices are projected to rise by 8% in 2025, a slower pace compared to the 20% increase in 2024. Meanwhile, the luxury real estate market is expected to grow by 5%, outpacing London (2%) and New York (3%).
The rapid price growth has raised concerns about market sustainability, as much of the new supply is sold off-plan with installment payment schemes. This strategy carries risks, as some buyers may default. The strengthening U.S. dollar, to which the UAE dirham is pegged, also makes local property more expensive for international buyers.
Demand Drivers and New Residents
The market has benefited from an influx of wealthy investors, cryptocurrency millionaires, and affluent Indian buyers seeking second homes. Dubai’s population increased to 3.8 million in 2024, up from 3.66 million in 2023. Rising rents have displaced many residents, forcing them to relocate to suburban areas on the edge of the desert.
"Demand persists, but sales are slowing as prices and rents have definitely hit a ceiling," said Yasin Valimulla, CEO of luxury brokerage The Luxury Address.
Emerging Slowdowns and Developer Strategies
Real estate brokers note that sales are slowing, particularly in new projects. Buyers of off-plan properties are increasingly reducing prices to resell them before project completion. According to REIDIN, the average price per square foot dropped to 1,600 dirhams ($436) from 1,700 dirhams in 2023.
Despite the slowdown, SOHO Properties sold 84 of 110 apartments in one of its towers. “Real estate is a cyclical business, and this cycle has a continuation,” said Sahil Khosla, CEO of SOHO. He added that payment plans are designed for end users, allowing them to pay half during construction and the remaining amount upon completion with a mortgage. “We are cautious and stick to our strategy,” Khosla said. “We are growing very slowly.”
Market Risks and Regional Trends
Imran Farooq, chairman of Samana Developers, reported record monthly sales in September 2024, following exceptional performance in July, typically a slow month for the company.
According to Gulf Today, 50,423 sales transactions were recorded in Dubai during Q3 2024, up 16.6% from the previous quarter and 37.9% year-over-year, with a total value of 141.9 billion dirhams ($38.7 billion). By the end of October 2024, total sales exceeded 435 billion dirhams, with 150,651 transactions compared to 132,628 deals worth 409.8 billion dirhams during the same period in 2023.
However, experts forecast a decline in luxury projects as developers shift focus to affordable and mid-range housing. In 2024, Dubai launched or announced nearly 140,000 buildings across 588 projects, according to REIDIN. Steady new supply could temper price increases, and the primary challenge for developers will be successful project completion.
"We’ve had a record year, and frankly, we’re overwhelmed," admitted Mohamed Alabbar, adding that Emaar’s 2024 property sales rose 70% year-over-year. He emphasized that the greatest risk lies in execution, as the demand strains contractors, suppliers, architects, and the market as a whole.
Shifting Trends Among Russian Buyers
Many Russian buyers, once highly active in Dubai, are pulling back. According to RBC, there was a 21% year-over-year decline in Russian real estate purchases in Dubai during 2024. Some sold properties fearing a market “bubble,” citing stricter financial transaction regulations and the risk of blocked accounts. Russians are increasingly exploring alternatives like Thailand and Georgia, which offer simpler residency processes and, in Georgia’s case, conditions nearly identical to those for local citizens. Georgia also boasts higher rental yields for many properties.