Dubai's Real Estate Boom: Renters Become Owners
Dubai's Real Estate Market Shift: Renters Become Homeowners
Dubai's real estate market has undergone significant changes in recent years, and by 2024, a trend has emerged that fundamentally impacts not only the market structure but also the lifestyle of its residents. More renters are becoming homeowners, leading to a dramatic reduction in property availability, especially in the premium segment. This phenomenon is driven by rising rents and rapid population growth, steering the market in a new direction.
From Renting to Owning: What Catalyzed This Change?
According to the latest report by a real estate consultancy, the number of properties for sale in Dubai decreased by 30% in 2024, with the premium market seeing an even higher decline of 52%. This trend is attributed to more people opting to purchase their own homes instead of continuing to rent. Rising rental prices and the swift population growth have made renting a less economically viable option.
The head of research emphasized that genuine homebuyers are increasingly dominating the market instead of speculative investors who characterized previous market cycles. This shift has transformed not only demand but also supply, as the availability of premium real estate has dramatically decreased. For properties valued over 10 million dollars, supply dropped by 40%, while for those over 25 million dollars, the decline was 85%.
Rising Rents and Population Explosion
In 2024, rental prices continued to rise, with apartment and villa rents increasing by 2-3% in the fourth quarter. Official figures indicate a 30% decline in lease renewals in February, suggesting that more people are opting for ownership over renting. This trend is partly due to Dubai's growing population: in the first two months of 2025 alone, nearly 27,000 new residents arrived, bringing the city's population to 3.852 million.
The combination of population growth and rising rents has prompted renters to lean more towards purchasing their own properties. This shift is especially evident in the premium market, where demand for luxury properties remains strong, while supply has sharply decreased.
Demand for Luxury Properties Remains Strong
Data shows that prices for premium properties continued to rise, reaching 6,627 dirhams per square meter in the fourth quarter of 2024. Demand for luxury properties has remained robust not only among local buyers but also among international ones. In 2024, there were 435 transactions for properties over 10 million dollars, setting a record, with 153 of these occurring in the fourth quarter.
The high demand for luxury properties is partly due to Dubai becoming a favored destination for high-net-worth individuals and millionaires. In recent years, many wealthy investors and families have moved to Dubai, further increasing the demand for premium real estate.
New Property Supply: Stabilization Expected
Currently, 302,880 homes are under construction in Dubai, with 80% being apartments and the remainder composed of villas and branded residences. This means an average of 60,576 new homes will enter the market annually over the next five years, higher than the long-term annual average of 36,000 homes. However, past experience suggests that fewer homes are completed on time than planned, and in 2024, only half of the planned homes were completed.
Dubai is expected to add 243,000 new homes to the market by the end of 2027, potentially stabilizing prices and rents, and easing the burden on renters. Jumeirah Village Circle leads the new projects list, which could contribute to a more balanced market.
Future Outlook
The strength of Dubai's real estate market is rooted in its long-term foundations. The city's ability to attract global capital and strategic regulatory initiatives ensure strong demand across all market segments. The trend of renters becoming homeowners will continue to dominate, especially due to rising rents and population growth. In the premium market, demand for luxury properties will remain high, and new project launches may help stabilize the market.
Overall, Dubai's real estate market has entered a new era, where genuine housing needs and long-term investments dominate. This transformation not only reshapes the market structure but also impacts the social and economic dynamics of the city.
