Dubai Residential Market: Villas outperform apartments but values still below 2014 peak

The two most popular types of residential homes in Dubai are villas and apartments. Whether you choose to buy or rent, both options come in a variety of sizes, pricing points, architectural styles, and geographic regions.

Residential values across Dubai rose by 2.6% during Q3 2022-23, marking the 7th consecutive quarter of price rises, however, average prices remain 22% below the 2014 peak. Villas continue to outperform, with average values growing by 1.9% in the third quarter to AED 1,350 per square feet (psf), leaving them 14.3% higher than this time last year. This now leaves villa prices 7.2% below the 2014 peak.

Apartments prices also increased during Q3 by 2.7% to approximately AED 1,130 psf. Despite rising by 8% over the last 12-months, apartments still trail the 2014 peak by 24.2%. In Indian Rupees, one AED – United Arab Emirates Dirham is equal to about Rs 22.50.

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A report published by Knight Frank titled, ‘Dubai Residential Market Review Winter 2022-23’ shows the ongoing outperformance of villas is more pronounced when benchmarked against the start of the Covid-19 pandemic. Since January 2020, villa values have risen by an average of 33.8% across Dubai, whereas apartments have experienced relatively more modest growth of 5.7% over the same period.

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Dubai’s perennial challenge has been its ‘build-it- and-they- will- come’ mantra, which has resulted in more homes being built than the market is capable of absorbing.

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In this cycle, however, the number of new high-end homes planned is failing to keep pace with demand. At first glance, with nearly 81,000 units due by the end of 2025, the city appears well supplied. However, closer analysis reveals that just eight new villas are due in Dubai’s prime residential areas between 2023 and 2025, all of which are on Jumeirah Bay Island. Despite strong demand, developers are not delivering new projects at a faster rate as seen in the past.