Dubai’s Economy Thrives for Two Decades Amid Geopolitical Tensions
Average Real GDP Growth of 2.9% Projected from 2025 to 2028
3.5% Average Economic Growth from 2007 to 2024
Dubai’s Economy Grows 3.2% in 2024 Compared to 1.5% Regionally
Real Estate Market Expected to Remain Strong Through 2025
Interest Rate Cuts Boost Lending Growth in Major Banks
The agency forecasts that average real GDP growth will be around 2.9% in the period from 2025 to 2028, supported by increasing economic diversification.
Despite ongoing regional geopolitical tensions, Dubai’s economy has thrived for nearly twenty years, achieving an average growth rate of 3.5% between 2007 and 2024.
In 2024, Dubai outperformed the Gulf region with a real GDP growth rate of 3.2%, exceeding the regional average of 1.5%.
These sectors have benefited from a 9% increase in tourist arrivals in 2024, alongside Dubai’s growing importance as a financial center.
The agency forecasts an overall economic growth rate of 4% for the UAE between 2025 and 2028.
These include business-friendly regulations, a streamlined visa system—including long-term residency options for foreign investors—and the ongoing development of the tourism sector.
As a result, Dubai’s population surged by 5.7%, reaching 3.9 million by 2024, contributing to a residential rental occupancy rate of about 90% in the first quarter of 2025, as reported by ValuStrat.
This figure marks a 3 percentage point increase compared to Q4 of 2023.
This upward trend persisted in the first half of 2025, with visitor numbers climbing by 6% to 9.88 million, relative to the first half of 2024. Similarly, hotel occupancy rates remained high at nearly 80%.
Strong Investor Interest
The majority of this investment originated from India, the United States, France, and the United Kingdom, focusing on sectors like tourism, real estate, business, and financial services.
Real Estate
However, a moderation in property prices and demand is expected over the next 12 to 24 months as the market adjusts to an influx of new units.
According to ValuStrat data, the annual increase in residential property prices was about 16.2% for apartments and 29.2% for villas in Q3 2025.
Sales of off-plan properties continue to rise, reaching 36.2% during the same period, while sales of completed properties fell by 3.4%.
Robust demand and rising square footage prices suggest that the real estate market will remain strong for the remainder of 2025.
There is also an expectation of a trend toward moderation in demand and prices for residential properties in the coming 12 to 24 months as the market nears equilibrium.
Jones Lang LaSalle estimates that the supply of new residential units will increase by 16% by 2027, based on current sales volumes.
This indicates that any further increases in prices and rents may be limited. Nonetheless, any decline beyond 2027 is expected to be minor due to anticipated population growth and overall supportive economic activity in Dubai.
The agency also projects that most rated developers will maintain strong profits over the next two years due to past price increases. Real estate companies are in a strong financial position.
Financial Performance
The agency predicts that revenue growth will stabilize following robust revenue from fees and land sales in 2023 and 2024.
The latest financial results for the first half of 2025, showing a surplus of 6.2% of GDP, underscore Dubai’s ability to generate revenue flexibly.
This is noteworthy despite declining oil prices, geopolitical pressures, and uncertainties in global trade.
Consequently, revenue as a percentage of GDP is expected to remain stable between 19% and 20%.
In the government budget for the period from 2025 to 2027, about AED 5 billion ($1.4 billion) is allocated annually for a general stability reserve. This reserve will provide financial leeway as needed and is expected to reach AED 20.5 billion ($5.6 billion) by the end of 2026, equating to roughly 3.4% of GDP.
Liquid Assets
We observe strong consolidated profits for the company, amounting to AED 29.6 billion ($8 billion) during the 2024-2025 period, reflecting the positive operational climate in Dubai. 2025 marks the third consecutive year of profit growth for Emirates Group.
Banking Sector
The agency anticipates that the U.S. Federal Reserve and the Central Bank of the UAE will continue to cut key interest rates by 50 basis points this year and possibly another 50 basis points next year, which could negatively impact net interest margins for banks in 2026.
This improvement reflects the strengthening economy of Dubai. The average risk cost remained manageable at 17 basis points in the first half of 2025.