Record Demand-Supply Gap In Dubai Real Estate

Dubai’s real estate market experienced a landmark year in 2024, driven by unprecedented demand in both residential and office sector. As supply struggles to keep pace, the market is seeing record-breaking growth in rents, prices, and transaction volumes according to data from Cushman & Wakefield Core’s Dubai Annual Report 2024-2025. With no sign of slowing demand, 2025 will see further increases, despite more stock coming to market, particularly in the residential market. Looking ahead to 2026/2027, major project completions, and regulatory adjustments will help address the imbalance, bringing more stability to the market and reinforcing Dubai’s position as a global real estate investment hub. 

Key takeaways:

Supply struggles to keep pace

• Just 30,200 residential units handed over in 2024, 11% down on 2024 forecasts and 30% lower than 2023.
• Dubai holds second-highest global office occupancy levels at 92% and expected to exceed 94% by end-2025.

Record-breaking price and rental increases

• Citywide residential rents and sales prices increased by 16% and 18% year-on-year, respectively.
• Office rents surged by 22% year-on-year in 2024, with further increases of 10-12% forecast for 2025.
• Accessing large office space is a particular challenge for major occupiers, forcing them to act quickly on transactions or consider emerging locations.
• Ultra-prime residential sales hit record highs as Dubai sees the largest influx of millionaires globally. New waterfront districts present investment opportunities but questions remain around long-term value in comparison to iconic Palm Jumeirah

“With off-plan transactions now more than double those in the secondary market, Dubai’s residential market is becoming increasingly investor-driven,” says Prathyusha Gurrapu, Head of Research & Consulting at Cushman & Wakefield Core. This trend is pricing a segment of end-users out of the market, as off-plan activity becomes skewed toward investors. Rising inflation and growing affordability challenges, particularly in the rental market, are driving a shift toward suburban areas and the Northern Emirates – in turn, creating opportunities for investors and developers as local neighbourhood infrastructure grows.”

“We saw significant transactions within the commercial real estate space in 2024, including the highest ever single-buyer commercial development transaction at AED 2.3 Billion – Aldar’s acquisition of one of the largest commercial towers in DIFC. This institutional level of interest has been replicated in the strata market with successful launches of off-plan commercial projects and further announcements on the horizon,” says Robert Thomas, Head of Agency at Cushman & Wakefield Core. 

Surge in new supply still won’t fully meet demand in 2025; Moderation expected in 3-5 years

• 2025 will see a forecasted 41% y-o-y surge in residential handover volumes with over 42,000 units, bringing some relief to the market; moderate increase in rent and sales prices of less than 10% expected as supply pipeline builds.
• There was the equivalent of one residential project launch every 15 hours in 2024, providing strong future supply.
• Double the amount of new office supply expected in 2025 compared to 2024 (1.66 million sq. ft.) but the market is expected to remain undersupplied until 2027/2028.
• DIFC responsible for a third of the total city-wide office supply over the next 3 years – most of which is expected to be pre-leased due to unrelenting demand.

“We’re seeing an incredible surge in demand for office space in Dubai, with more companies entering the market and existing tenants looking to expand,” says Robert Thomas, Head of Agency at Cushman & Wakefield Core. “While the supply pipeline is stronger this year, much of it is pre-leased or focused in specific freezones, which is adding to the pressure. Many of our clients are now taking a strategic approach – maximizing the use of their existing spaces or exploring newer zones like Dubai CommerCity and Expo City Dubai to meet their needs.”

Regulatory updates to help address imbalances

• By reflecting real-time trends, the updated RERA index will support regulatory clarity and reinforce confidence across Dubai’s residential and commercial real estate market, helping stabilise the rental increases while also encouraging landlords to upgrade assets to maximise benefits.
• While the January 2025 UAE Central Bank directive – introducing a 6% additional down payment for mortgage buyers from February 1st – will influence some segments of the market.

“While the most recent regulatory updates will vary in impact, we will start to see them help address market imbalances, encouraging asset upgrades, and strengthening Dubai’s position as a global real estate leader,” says Prathyusha Gurrapu, Head of Research & Consulting at Cushman & Wakefield Core.

“The recent DLD freehold ownership expansion along Sheikh Zayed Road and Al Jaddaf is a significant development and could soon extend to other established leasehold areas, driving up asset values and diversifying the owner-occupier mix. That said, the question remains: will GCC landlords sell, especially for developed properties with high rental yields and little to no debt?”

“This month’s announcement on additional mortgage downpayments may slow down mortgage transactions, particularly for mid-market end-users but the overall impact on Dubai’s residential market is expected to be minimal, as off-plan and cash transactions continue to dominate activity.”