Dubai: property and rental prices will continue to rise next year.

The strong demand for real estate in Dubai exceeds supply this year more than expected, especially after the UAE was removed from the FATF gray list. Property and rental prices in Dubai are expected to continue rising until 2025, considering that the city's population is growing 300 percent faster than the influx of new properties in the first quarter of this year.

Real estate companies are extending their three-year growth forecast to next year as strong demand continues to outstrip supply at a faster pace this year than anticipated, especially following the UAE's removal from the Financial Action Task Force's (FATF) gray list.

In February 2024, the UAE was removed from the FATF gray list, confirming the country's transparency in financial operations and consequently enhancing the UAE's reputation among foreign investors. Initially, price growth seemed to be slowing down this year, but based on supply and demand forecasts, real estate market players predict that this growth is likely to continue into next year, especially in the luxury segment.

“The lack of available housing is one of the key factors affecting the market this year. Although the population has grown by 26,000 people in the first three months of the year, we are seeing only about 6,500 new homes, which continues to put pressure on the rental market, leading to a 22 percent increase in rental prices compared to last year,” said Richard Wyand, CEO of Betterhomes.

To profit from the growing demand, developers have recently launched a large number of projects, averaging one project every 18 hours.

This happened after Dubai saw a record number of transactions - 34,000 - in the first quarter of 2024, an increase of 20 percent compared to the same period last year, officially making it the largest quarter in the history of the emirate's real estate market, according to Betterhomes. Properties in the design stage continue to dominate the market in the first quarter, accounting for 58 percent of all transactions, as end-users and investors find properties in the design stage to be the most suitable. The total sales value increased by 25 percent to 87.8 billion dirhams. The average price of villas in key communities rose by 11 to 38 percent, while apartment prices increased by 7 to 29 percent.