S&P Global Ratings expects Dubai’s population to grow by an average of 3.5% over the period 2024-2025, supporting strong demand for real estate, noting that the emirate maintains its position as a valuable and distinctive destination for real estate investment when compared to major cities around the world, as the real estate sector offers attractive investment returns after more than three years of continuous growth.
The agency also expects land prices and demand to mimic the growth in off-plan real estate sales in Dubai, and therefore a certain level of competition is expected to prevail, noting that the merger of Nakheel and Meydan with Dubai Holding has led to the unification of major landowners into one group, giving it more power in the land sales market.
Sapna Jagtiani, Director of Institutional Ratings at S&P, said in exclusive statements to Al Bayan: “Demand for real estate in Dubai remains strong, driven by population growth and a supportive economic environment, despite ongoing global economic uncertainty linked to persistent inflation and geopolitical conflicts in the Middle East and the world.”
Jagtiani expected the economic environment in Dubai to remain supportive, with strong GDP growth during 2024-2025, and an expected population growth of 3.5% on average during the same period, as the government takes measures to double GDP by 2033 under the Dubai Economic Agenda (D33) program and the ambition to increase the population to 5.8 million by 2040. She added: “This reinforces the generally supportive expectations for the sector, at least in the short term.”
“With Dubai’s housing prices rising over the past few years, the emirate remains a value-for-money destination when compared to major cities globally,” said Jagtiani.
The real estate sector also offers attractive investment returns after more than three years of double-digit increases in housing rents. Additionally, government initiatives on visa reforms are making it easier for people to come and stay in the country for the long term.
“Investment reforms and supportive regulation for businesses are also key factors in boosting the real estate market, while the costs of starting a business in the UAE remain lower and easier compared to other countries in the region, making it a gateway to the GCC,” she added. She stressed that the dynamic economic environment, security and low tax regime will maintain Dubai’s appeal to global investors.
Jagtiani said that the influx of wealthy individuals and families to Dubai is a key factor supporting the growth of luxury residential properties in Dubai. Demand from international residents and investors for mid-range and affordable properties remains a strong driver, as developers adjust their property mix and size while maintaining price per square foot to continue offering affordable apartments and villas.
She expects residential supply to increase in 2025 and 2026 as a large number of pre-sold (off-plan) properties from 2021 to 2023 are delivered, with industry estimates indicating around 80,000 units being delivered over the two years, representing a growth of 10% to 12% compared to 2024.
She added: “Absorption depends on future demand trends and Dubai’s population growth, which the agency expects to be around 3.5%, so we could see a steady impact on property prices in the next two years.”
Jagtiani expects land prices and demand to mirror the growth in off-plan property sales in Dubai, and therefore a certain level of competition is expected to prevail.
“Developers are seeing strong demand for villa communities that require larger plot sizes, and overall, over the past few years, land banks for S&P-rated developers in Dubai have declined and their land acquisition strategies have become more focused on prudent financing based on multi-year instalment payments,” she said. “There are fewer plots available in established prime areas of Dubai, such as waterfront areas, and the city is expected to expand further inland into the desert.” Jagtiani noted that the merger of Nakheel and Meydan with Dubai Holding has consolidated major landowners into one group, giving them more power in the land sales market.