Thousands of Dubai homeowners become ‘accidental millionaires’ as property values soar

Nearly 1 in 5 homes is now valued at over $1 million, says Knight Frank's latest analysis


News Desk December 05, 2024
A general view of a resident and business development site in Dubai, United Arab Emirates, June 14, 2023. PHOTO: REUTERS

Thousands of homeowners in Dubai have become “accidental millionaires” as nearly one in every five homes in the city is now valued at over $1 million, according to a new analysis by global real estate consultancy Knight Frank.

By tracking the price progress of properties over time, Knight Frank identified homeowners who purchased properties for less than $1 million, which have now appreciated in value due to significant price inflation.

This trend highlights a surge in Dubai's property market, where the proportion of homes valued above $1 million has grown from just 6.3% of sales in 2020 to 18.1% today, meaning that nearly one in five homes in the city are now worth more than $1 million.

The total value of all homes sold in Dubai since 2002 currently stands at Dh1.47 trillion, marking an impressive 221% increase since 2020.

Knight Frank's latest Dubai Residential Market Review predicts property prices will rise by another 8% in 2025, driven by continued high demand from residents and investors.

“After almost five years of growth, we expect the rate of house price growth to begin to slow in 2025. However, the threat of a global economic slowdown remains a significant risk,” said Faisal Durrani, partner and head of research for Mena at Knight Frank.

The report also noted that Dubai's prime residential market has seen more modest growth of nearly 5%, with luxury villas in high-demand locations like Palm Jumeirah and Jumeirah Islands registering impressive gains, with values nearly doubling since 2014.

In response to the surge in demand, developers are racing to deliver new housing, with an estimated 300,000 homes set to be built in Dubai by 2029. However, Knight Frank anticipates a continuing shortage of villas, with only 8,900 new villas expected by the end of 2024.

“The limited availability of sites in key locations is pushing up prices for off-plan homes, and older properties are seeing significant price growth thanks to refurbishments,” said Petri Mannila, partner and head of prime residential UAE at Knight Frank.

Despite new construction, Knight Frank’s analysis suggests that Dubai may face a long-term shortfall in housing to meet its population growth.

The city’s projected population growth will require an estimated 37,600 to 87,700 new homes per year through 2040, with delays in construction further exacerbating the shortfall.

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