This year, Dubai will once again see the rise of gleaming new towers and villas as developers rush into one of the world’s biggest property booms. But there are growing signs that the record price surge is slowing. Every week, builders start building homes that they say will sell out in days or even hours. But some, including Dubai’s largest developer Emaar Properties PJSC, are starting to see the need to be more cautious, reported by Bloomberg.
Home prices to rise an average of 8% in 2025
The emirate’s property boom has been going on for several years, the longest since home ownership was first opened to foreigners in 2002. “We expect the market to perform well here and around the world next year. “There is a positive sentiment for business, especially with Trump coming in,” Emaar founder and managing director Mohamed Alabbar said in December. But Emaar is now becoming increasingly cautious about raising prices too much because it could “kill the golden goose,” Alabbar said.
Dubai will need to continue to attract new residents to fill the homes under construction. It also needs to provide affordable housing to avoid driving expats out of the city at a time when many are struggling with a global surge in inflation and rising living costs. Almost a fifth of Dubai’s homes are priced at more than $1 million. He predicts that home prices will rise by an average of 8% in 2025, slower than the stunning 20% jump the previous year.
Dubai’s luxury home prices to rise 5%
Meanwhile, the firm predicts that Dubai’s luxury home prices will rise 5% this year, outpacing London’s 2% and New York’s 3%. Emaar, best known for building the world’s tallest tower, is aiming to complete 6,000 to 7,000 homes a year before peaking in 2026 and 2027. But Dubai’s growth has many questioning the sustainability of the market, where much of the new supply is being sold on installments before construction begins. It’s a strategy that comes with risks, as some buyers may not complete their payments.
The strength of the US dollar, to which the United Arab Emirates pegs its currency, is also making local property more expensive for many foreign buyers. An influx of new residents, including wealthy investors, crypto millionaires and wealthy Indians looking for a second home, has helped boost demand. Dubai’s population was 3.8 million in 2024, up from 3.66 million in 2023. Rents have also risen sharply, leading many to abandon their homes and helping residents relocate to neighborhoods on the edge of the desert.