Shiny new towers and villa communities will again spring up in Dubai this year as developers pile into one of the world’s biggest property booms. Yet there are growing signs that the record rally in prices is slowing.
Every week, builders are breaking ground on homes they say are selling out within days or even hours. But some, including Dubai’s largest developer Emaar Properties PJSC, are starting to see the need for more caution. The emirate’s property boom has already continued for several years, its longest rally since homeownership was first opened to foreigners in 2002.
“Our expectations are the market will still do well next year here and globally. There is a positive sentiment for business especially with Trump coming in,” Emaar’s founder and Managing Director Mohamed Alabbar said in December.
But Emaar is now growing more wary of raising prices too much because it could “kill the golden goose,” Alabbar said.
Dubai would need to keep attracting new residents to fill the homes being built. It also needs to provide affordable housing to avoid pushing expats out of the city at a time many are grappling with the global surge in inflation and rising costs of living.
New Millionaires
Already, nearly a fifth of Dubai’s homes are valued above $1 million, according to the property firm Knight Frank. It predicts that residential prices will rise an average 8% in 2025, moderating from the eye-popping 20% jump of the previous year.
Meanwhile, Dubai’s prime home prices will rise 5% this year, the firm predicts, topping London’s 2% and New York’s 3%.
Emaar – best known for building the world’s tallest tower — is set to complete 6,000 to 7,000 homes a year by the peak of 2026 and 2027, according to Bloomberg Intelligence.
But Dubai’s rally is leaving many questioning the sustainability of a market where much of the new supply is sold via installments ahead of construction. It’s a strategy that comes with risks because some buyers may not complete payments.
The strength of the US dollar, to which the United Arab Emirates has pegged its currency, also makes local property more expensive for many overseas buyers.
An influx of new residents including wealthy investors, crypto millionaires and rich Indians seeking second homes has helped drive up demand. Dubai’s population stood at 3.8 million in 2024, up from 3.66 million in 2023. Rents have also surged, pricing out many from their homes and helping drive residents into outskirt developments on the edge of the desert.
“The demand is still there but sales are slowing down as prices and rents have definitely hit a ceiling,” said Yasin Valimull, chief executive officer at property broker The Luxury Address, who specializes in high end sales.
Brokers say sales are starting to slow especially in the off-plan market. Buyers of such homes purchased ahead of construction are having to reduce prices to sell before completion, with the median price falling down to 1,600 dirhams ($436) a square foot from 1,700 dirhams in 2023, according to data by the researcher REIDIN.
Party Goes On
For developers, the good times are rolling on for now. SOHO, a developer, has managed to sell 84 out of 110 apartments in one of its towers.
“Real estate is a cyclical business and this cycle has got legs,” said Sahil Khosla, CEO of SOHO, said in a recent interview. “The city and the country have got their act together, where they offering the golden visas. They’re attracting businesses, they’re attracting international funds to move here.”
Khosla said his payment plans are geared toward end users who can pay half during construction and half after completion, when buyers can lineup mortgages.
“Still, we’re so cautious and we’re very strategic,” Sahil Khosla said. “We’re very slowly developing.”
Meanwhile, Imran Farooq, chairman of Samana, said his company had record monthly sales in September. That came after an exceptionally strong performance in July, which is typically a slow month for the developer, which is one of the biggest providers of homes below 1 million dirhams.
Emaar is among the best barometers for the health of the market. Its profit in 2025 is likely to hit 13 billion dirhams as many developments under construction are completed, according to analyst estimates compiled by Bloomberg. That’s a surge from profits of about 3.8 billion dirhams in 2021.
Still, the steady supply of new homes has the potential to limit prices. Dubai’s property developers launched a record number of new housing developments in 2024, according to REIDIN, with a total of nearly 140,000 homes having been either started or announced by developers across 588 projects.
And for many property firms, the big challenge will now be to complete the projects.
“We’ve had a record year and frankly we’re short of breath,” said Alabbar who says Emaar’s property sales surged 70% in 2024 from a year earlier. “That’s a big stretch for contractors, suppliers, architects and the overall market and the biggest risk is execution.”
For developers, the good times are rolling on for now. SOHO, a developer, has managed to sell 84 out of 110 apartments in one of its towers.
“Real estate is a cyclical business and this cycle has got legs,” said Sahil Khosla, CEO of SOHO, said in a recent interview. “The city and the country have got their act together, where they offering the golden visas. They’re attracting businesses, they’re attracting international funds to move here.”
Khosla said his payment plans are geared toward end users who can pay half during construction and half after completion, when buyers can lineup mortgages.
“Still, we’re so cautious and we’re very strategic,” Sahil Khosla said. “We’re very slowly developing.”
Meanwhile, Imran Farooq, chairman of Samana, said his company had record monthly sales in September. That came after an exceptionally strong performance in July, which is typically a slow month for the developer, which is one of the biggest providers of homes below 1 million dirhams.
Emaar is among the best barometers for the health of the market. Its profit in 2025 is likely to hit 13 billion dirhams as many developments under construction are completed, according to analyst estimates compiled by Bloomberg. That’s a surge from profits of about 3.8 billion dirhams in 2021.
Still, the steady supply of new homes has the potential to limit prices. Dubai’s property developers launched a record number of new housing developments in 2024, according to REIDIN, with a total of nearly 140,000 homes having been either started or announced by developers across 588 projects.
And for many property firms, the big challenge will now be to complete the projects.
“We’ve had a record year and frankly we’re short of breath,” said Alabbar who says Emaar’s property sales surged 70% in 2024 from a year earlier. “That’s a big stretch for contractors, suppliers, architects and the overall market and the biggest risk is execution.”
