(Dec 3): Dubai home prices are likely to climb further next year after already surging 20% in 2024, marking an extension of the unabated recovery that started after the pandemic, Knight Frank said.

For the overall market, residential values are set to rise 8% next year while they will rise 5% on average for luxury properties, the broker said in a new report. 

Already the emirate’s price surge has minted many millionaires. At least 95,000 of the 530,000 homes sold in Dubai since 2002 are now worth more than US$1 million (RM4.46 million), the report estimated. 

“These days a million dollar home is really the average price of a single-family home, which highlights how much values have increased in the past four and half years,” said Faisal Durrani, head of Middle East research at Knight Frank. 

Demand for Dubai property is booming as the government’s handling of the pandemic and its liberal visa policies attracted scores of foreign buyers. The luxury end of the emirate’s real-estate market — including waterfront villas on the city’s man-made palm-shaped islands — has benefitted from an influx of wealthy investors. Among them have been Russians seeking to shield their assets, crypto millionaires, bankers fleeing strict Covid restrictions in Asia and rich Indians seeking second homes. 

Dubai has had dramatic boom bust cycles in the past, but analysts see fewer risks this time due to rules that boosted down payments and because most buyers are end-users, Durrani said. 

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

Sales activity has hit a record with transaction volume in the first three quarters this year surpassing the total recorded for all of 2023, according to the report. Sales in the third quarter hit a record at 116.8 billion dirhams (RM141.96 billion). 

Knight Frank estimates developers will build 300,000 homes by the end of 2029 as they race to capitalise on booming demand.

“The biggest driver for the market is the shortage of homes to accommodate the influx of people moving into the city,” said Durrani. “The population is rising without enough stock available to accommodate the growth, especially in the villa market where there is hardly anything for sale.” 

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