Dubai’s residential property market continues its upward climb, though the pace of growth has started to ease for the first time in months. According to the latest ValuStrat Price Index (VPI), home prices in the city increased by 21.3% over the past year, with villas setting new records and apartments closing in on their previous 2014 peak.
Villa Prices Set New Records
The villa market remains the strongest segment, with prices jumping 26.4% year-on-year and 1.8% in the last month alone. The VPI for villas has reached a record 307.5 points, a figure nearly three times higher than in 2021 and 79% above the previous market high in 2014.
The most significant annual price gains were recorded in Jumeirah Islands (+39%), Palm Jumeirah (+38.6%), and Green Community West (+25.5%). The average cost of a villa in Dubai now stands at approximately Dh13.7 million, or Dh2,894 per square foot.
With prices in prime districts reaching saturation, buyers may find better opportunities in newer communities. For investors, the tight supply of villas suggests that capital gains are likely to remain strong, though high prices mean rental yields are becoming a more critical factor for returns over short-term sales.
Apartments Approach Previous Peak
While not matching the dramatic increases seen in the villa market, apartment values are catching up. Citywide apartment prices rose 16.1% over the last year and 1.1% in September, pushing the index to 180.4 points, just 1% below the 2014 peak.
The top-performing areas for apartments included Remraam (+22.2%), Dubai Silicon Oasis (+22.1%), The Greens (+21.8%), and Palm Jumeirah (+19.9%). The average apartment now sells for Dh1.9 million, or Dh1,434 per square foot. For many end-users, apartments continue to be the most accessible entry point into Dubai’s property market.
Off-Plan Sales and Population Growth Sustain Demand
Several trends explain the market’s continued resilience. Off-plan sales now account for nearly 80% of all property transactions, with developers like Binghatti, Damac, and Emaar successfully attracting global buyers through flexible payment plans. Dubai’s consistent population growth and influx of new businesses are also keeping demand ahead of supply, particularly for modern homes in well-connected locations.
While transactions for ready homes dipped 12.7% year-on-year, this is attributed to buyers securing off-plan deals ahead of anticipated price adjustments. Analysts expect price growth to moderate over the next year rather than reverse, as market fundamentals like high liquidity and investor confidence remain solid.
The slowing pace of growth may offer a more rational environment for buyers and investors. Villas have reached record highs and apartments are nearing their previous best, but the market’s stabilisation could provide a strategic window for those looking to purchase property in the city.
