Dubai Real Estate Market 2025: Boom or Bubble?

Hi, I'm R GG Benitez, a certified international property specialist and a licensed realtor connecting global real estate investors with the incredible opportunities in Dubai real estate. And this is season five of the Dubai Connect podcast. And on today's episode we're going to start off by talking about what to expect in the Dubai real estate market in 2025 with my highly esteemed, highly experienced counterpart here in Dubai. So stay tuned. Well, I'd like to welcome yet again my colleague Ahmed Ashwak on to the Dubai Connect. Hi Ahmed. Hi GG. Wow, season five. Can you believe it? Where did time fly? Isn't that crazy? What a blessing. Aren't you proud of what we've done? Extremely, extremely. So yes, I was really looking forward and looking at my watch every day and saying when will GG be back? And before you even know it, you're here. I'm back. So yes, let's do this. Let's do this. So Ahmed, I really want, well, you know our job has been right, is to guide global real estate investors, particularly from America, but also we have clients in the UK and Singapore and in France and Germany and Canada as well, is to guide them through not just the process of how to buy in Dubai and where to buy, but what to expect for the future in 2025. So I wanted to share a little bit about some of the feedback you I know have heard, and I have heard, such as is it too late to get into the market? With the prices having peaked so high in December, how would you address that? Good question GG, but when people say have we missed the opportunity, have the prices peaked high, compared to what countries are we comparing it to? If you're comparing it to the top 10, such as Singapore, London, New York, Hong Kong, India, we're not even close. So when people come up with that question to me, I wish that I was in the PR business so I could give them a long piece of my mind. Yes. But gratefully, thankfully, we are not into the PR business. So we have to give them stats and facts. As far as why we have not reached that peak yet. We're still a 24-year-old market, GG. That's still considered as a baby market, unlike the US, the West, the Europe. They've been in it for decades. Are you trying to tell me that after every 20, 30, 40 years, they come to a full stop when it comes to growth? There's no ending to growth. And we have seen nothing. We have just seen the tip of the iceberg so far. Three years nonstop in a row, we've been breaking every sales record. Our average per square foot price was starting 3 years ago around 950 dirhams per square foot. Today we're at 1,500 dirhams per square foot. Do you think that's where it ends for us? Within the next 10, 20 years? I don't think so. It's a very good point. And I love that when you explain that we're just still a baby and actually, even to compare when you were talking about prices per square foot, I sell real estate in California as well. I'm a licensed realtor in California. We're at least a third, maybe a fourth, less price per square foot in Dubai. And then if you compare waterfront, prime luxury prices, Dubai is even significantly less than New York, then Los Angeles, then Chicago, in Toronto, Vancouver. So from prices per square foot, Dubai is still quite affordable indeed. Definitely. Then we can go into the rental returns and compare that on a global basis. What are the long-term rental returns? Well GG, currently, right now, especially last year, due to the demand and a shortage of supply, landlords were in a position to demand and increase their rents almost up by 25%, which is extremely high, because they were in that position to demand what they wanted. And that's one of the reasons I don't know if you remember or not, just recently Dubai government created a new rental index in order to rate and control the fluctuation. Once again, we do not want to repeat 2008, where people are just randomly adding capital appreciation without any sense or increasing rents without any structure. There has to be a structure in order to balance the market, to monitor the market, to make it fair. And when you said did investors lose the opportunity of entering the market, this is why these structures guide to make sure that everything falls in order accordingly, as per the timing. Because Dubai operates as a business and everything is done strategically, and because of the Dubai Land Department and the Real Estate Regulatory Agency working on things such as the smart rental index, working with developers to control supply and demand and make sure there's not that unhealthy imbalance where it's still affordable for residents, not unaffordable, but still benefits investors. And with the smart rental index, what it's going to do is that if an older building doesn't meet up to certain standards, they're going to be held accountable before they can increase their rent to the level of a newer product, right, that has that meet the standards. Exactly. If we go back to some of our podcasts we did in the early stages, which was last year, I believe, this is one solid point that we kept on bringing up. Why more demand on the newer buildings that have started being built during pre-ICO time? Because the standards are totally different compared to what was being built and delivered four years ago. For example, in today's projects, you have the state-of-the-art amenities. Every developer is competing one another to outbeat when it comes to the facilities, to the finishing, to the amenities. So yes, of course, someone who does not deserve to be into a five-star category should not be able to ask for that high rental return. So yes, that's one of the best things about the rental index. It will be to control and monetize that. So going to the actual rates and comparing the rental returns, we are looking at about 7 to 9% long-term rental returns in Dubai, and that will continue because we have such a shortage. Dubai continues to be a top tourist destination. And of course the population that's happening in Dubai, where it hit 3.8 million expats at the end of last year. But with the master 2040 plan and with the trends, it's potentially going to double in the next 14 years by 2040. Indeed. So GG, there's no doubt we've been breaking every sales record. Last three years straight in a row. 2024 we ended up breaking one of the largest record sales records in Dubai's history by doing over 400 billion dirhams in sales. Okay, wow. So so there is a reason behind that. The problem is you have the majority, the newcomers in the market who do not have the real estate experience. They have a short vision. And when I say short vision, I'm referring to, they do not see beyond the high-rise skyscrapers. Their thinking process just stops over there. They do not see what brings all of this together, the main element, which is the economic agenda, which is the Dubai 2033 plan. And what is the purpose of this plan is to double up the economy by 2033. Look at let's look at the numbers. Last year 2024 our GDP. Most one of the average GDP numbers, a country is anywhere around 1 to 2%, okay? UK last year was up by 1.1%. Canada was up by 2.33%. The US was up by 2.7%. So do you know what Dubai's GDP was last year in 2024? Above 4%. Yes, that's correct. We were up by 4.6%, that's incredible. And we have been predicted to go up to 5% for 2025. That that is incredible. And we'll get into the future of because that's the point of this podcast is to really talk about the future of real estate. But if I can go back for just one moment and rewind back when we're talking about the long-term rental returns and we're talking about people thinking that they've been priced out of the market, and then we'll talk about what's driving it. But just to go back for a second and we're saying 7 to 9%. Again, being a licensed realtor as well in California and setting up an office in Spain right now, comparatively speaking on a global basis, you're talking about Los Angeles, maybe 2 to 3% rental returns. New York, maybe 2%. I believe Toronto, about the same. So where are you getting these long-term rental returns of 7 to 9% with zero property taxes, which significantly eats into your profit margins as an investor. Short-term returns, 10, 12, even higher in Dubai, right? Depending on where and what your capital investment was, correct. Through Airbnb and other short-term portals, that is becoming, I mean, I spent the summer in Spain, they are trying to outlaw even having Airbnbs in many locations in Europe. California is becoming more difficult. New York is becoming more difficult. London, Toronto, all of it's becoming more difficult to do Airbnb. Dubai welcomes investors to have the short-term rentals. Of course, there are regulations in place, but it welcomes them such as a smart rental index, etc. And again, all this is done digitally. So we talked about the entry level price per square foot. We talked about the long-term rental returns and on a global comparison basis, and how Dubai outweighs all these other areas. And that talks about the future of Dubai 2025, short-term rental returns, no property taxes. Now to dive in deeper into what is driving the economy, what is driving the real estate opportunities in Dubai for 2025 and beyond, that's where I do believe it's so important for our viewers and listeners to understand. This is not, you say this and I love when you say this, Dubai's real estate is not a stock market. Yes. I love when you say that. I've always said that since the first time I got into the industry, back in 2002, being a stock trader. That's why it's easier for me to do the comparison with the two. People who've always treated real estate market as a stock market, they've always walked out losing, right? So when people come and say oh I want that quick flip, look, we know a few years ago people made millions doing that, correct. We understand. And for those people that now say oh it's too late, if that's their objective and mentality of treating Dubai as a stock market, where you walked in to a developer's office, got your hands on an off-plan and let's say even before DLD regulations, place the minimum hold that you had to have before you flip. But you walk out, you flip it, you make your millions. That is also what contributes to a bubble. And that is not sustainable. And as an investor, if that's what you're looking for, don't do real estate. I agree 100% because, Ahmed, it was these type of investors, the flippers, who created the bubble to begin with, correct. And when it crashed, they were the first ones to make the noise and complain. What went wrong? Not realizing you are the ones you contributed to it. Exactly. You contributed to it. And that's one of the reasons RERA was formed during that time to prevent such a big event. Let's clear one thing for once and for all. I'm sure we've been getting this question a lot from our investors, especially Americans, because they took the biggest beating during 2008, during financial crisis. People use the word bubble very casually in today's time, which I disapprove of. There's a difference between a bubble and a market correction, okay? The bubble, for people who are not aware of, once again, people use it very formally, not knowing what even caused the bubble. It was one of the first financial crisis global that was linked to real estate. And why that was? Because us, the investment bankers, were selling mortgages, okay? And they were financing people who should have never been able to afford or own a home with zero. You know how difficult and restricted it is, as far as your security backup check. If you don't have a good credit score, you don't get qualified to finance for a home. Imagine that's what they were doing in 2005, 6, and 7, even, where literally everybody was being encouraged to come and take a home loan. And what happens when they were not able to pay off? People started falling delinquent on their payments. That's when they started ending up falling into foreclosures. And it was a domino effect globally. Now don't get me wrong. The reason Dubai felt the effect of 2008 financial crisis, because banks, lenders, are not buying it. Cash as per the new law in Dubai with RERA now. A developer has to own his land before he comes out and be able to sell it. Back in those days, they were taking loans from banks and buying their land. And even as far as paying for construction. To pay for construction. Now when the market crashed, guess what happened to a lot of these handful of developers? They couldn't afford because people, instead of sending their monthly installment or quarterly installment, they stopped because they were feeling the heat back in their own country. So when there was no money coming to the developers, guess what happened? They couldn't afford to continue on paying for the construction. So a handful of them packed up and fled the country. So guess what happens to the bank? Who's going to pay off the loans now? There's no one to pay off the loans. And that's why we had this crash. So will Dubai face another bubble? Of course not. No way in the world. Will we face another bubble because our market has been regulated since 2008 to avoid such incidents? That's number one. Number two, and I've said it previously, we are not a mortgage-owned society in Dubai, unlike the US. We've been blessed and fortunate enough, especially these last four years during pre-ICO, majority. And when I say majority, I'm talking about over 80% of the buyers have been going along with the developers payment plan. Meaning in 3 years, they are paid off. They own the home with a clear title deed. The banks will never own our real estate in Dubai, which is why we avoid foreclosures, which is why we will avoid this whole terminology that people use, bubble bubble effect. So going back to your question, is there going to be a price correction? Okay, yes, there will be a price correction. But you know what? Not anytime soon. But when the time comes for this price correction, who will be affected? People who've been buying lavish, overpriced, high-end projects. I'll give you one quite example. A 30 million dirham Palm Jumeirah villa today. Anyone who's selling it out in the market for 250 million dirhams, of course, will feel the pinch. Of course you will see a price correction over there, okay? Because there has to be a justification on 500% or above capital appreciation. We could talk about a lot of other high-end projects where they are facing and dealing with the same situation. But this is where the correction will come. But the average person who's coming into Dubai who's buying an apartment worth starting anywhere from $240,000 out in the suburbs versus buying something for even half a million dollar, one of Emaar's projects, are they going to go through a price correction? Of course not. Actually, speaking of Emaar, what you were just talking about is that their founder just announced, or the company did announce, that for this year, for 2025, they're going to focus on delivering versus continuously increasing the prices at the same level that they were increasing. But Ahmed, this is where I say people have been spoiled here. Yes, we went up 50% in the past four years, correct? They went up. I believe 25% last year. Anybody who understands real estate understands it's a cycle. Real estate is a cycle. Yes, okay. So understood. It's going to level out. And when we say price correction, we don't mean drop. We mean that that rate of growth is going to stabilize. Yes, which is very healthy. It is healthy. Yes. And I can talk more about the bubble later in another podcast about what UBS said. That even though Dubai had the greatest increase of price per square foot over the past year, that they're still considered only a moderate risk because being in a bubble is also if it's speculative buying, if it's not actual need for property, if the supply isn't going to be able to meet that need. There are other factors. And Dubai does not play with that, right? That's not the situation. Yes. But going into so with Emaar and with a lot of other of the high-level developers working closely and strategically with the government of Dubai to monitor what's happening since you said 2008 and make sure to decrease the chances ever of having a bubble, yes, okay. And then working on delivering now. Let's look into the future of Dubai and what is driving this place to continue to be one of the best investment options for someone who understands real estate as a savvy real estate investor and is comparing building generational wealth, not the flippers market stock market wealth, a generational wealth through real estate. Why is Dubai the place to be? And of course you mentioned the Dubai 2033 plan, the Dubai 2033 agenda, the GDP, which is extremely important because it symbolizes the strength of our economy. We have, we've almost forgot to touch two main aspects, parts to this plan. One is the urban plan, okay? That's one very important factor. The other one is the green field foreign direct investment, which almost last year was almost close to 39 billion dirhams, was received, was responded by these foreign companies. And the urban plan, why we are so much focusing on the close coastline towards the Deira, and the and the bird Dubai area, the Expo City. These five areas fall into the urban hub because that's where they're planning to shift the 5.7 million that will be migrating and living in Dubai because there's no choice because exactly, how much more space can you do, exactly. So I love that you're talking about that because we'll get into other podcasts about the areas in there. Whether it's like you said, Expo City, and then by Deira, Dubai would be like Dubai Islands, Maritime City, Port Rashid, Yatsa Marina. And that's important. And then what about the master 2040 plan in general? Wow, in general, that is one of the most important factors. When people especially ask you, well, why are those people going to be here? How, how. Who's going to be able to afford to buy these or rent these properties? Where will the jobs come from? So yes, this is where the category falls into. Because when these foreign companies are coming and investing directly via green field and not brown field, is because when you're coming and investing through brown field, it's basically you're looking into collaborating with a business partner over here to cut cost of your expenses. But when you're coming as a green field investor, guess what? You're starting to build from scratch in Dubai. So imagine the kind of money that you will be spending into this country to build the infrastructure first, the factories, the number of staff you have to hire. So the list goes on. And that's why the figures are so large because this is what creates jobs at the end of the day in Dubai. When these foreign investors come and invest into this country. And with jobs that creates a necessity for a place for. Exactly. So people should. And this is why GG, it is very important that people should start looking beyond just the skyscraper. The numbers as far as what kind of view is offering, what sort of capital return, they are missing out on the biggest point that what runs the country. It's the economy that runs the country. We already have our future set up 20 years ahead of time, which is why we are so confident to say there is so much of growth because no one wakes up in Dubai overnight and says I have a great plan today. No, everything is pre-planned. All the cards are set up on the table when the time is right. No, smart. I know little announcements that because if the market is doing extremely well on its own, why should anyone lay out all their cards on the table in one shot? And that's why I believe we have so much more surprises coming ahead that will shock people and motivate more people to invest. So for those pessimistic investors who've been sitting on the sideline since pre-ICO assuming that yes, once again, this is a hype, this is the bubble. These are the same people who will end up entering the market at a way higher price per square foot. Because pre-ICO, the prices were, the average price was 960 per square foot. Today we're looking at 1,500. So these people have already missed that boat, you see what I'm saying? For being pessimistic. On Bloomberg, actually I just watched, Zaia Fataah was on there and she was talking about the projections for this year are an increase of 8%. 5% in the prime market in Dubai. So when someone says I missed out, let's go. Let's just compare that to New York, to London, to Toronto, where it's maybe 3% or 4%. So it is still 8% is huge. And it's just not what it was last year, no, because there has to be a stabilization. So the future of real estate investing for those who want to, again, build their wealth, diversify, be a part of the city of the future, that's constantly like you said, laying out another one of their cards about what they're going to announce, whether it's this initiative, the AI campus, their university initiative, the smart rental index. I mean, they're the largest airport in the world, the metro system that they have for connectivity. It's just going to continue to grow because of the vision of the Sheikh. Yes GG, you just mentioned a very good, solid point. The Airbnb, okay? For everyone who's been asking us, who's going to fill out these apartments? Do you know 2024 ended up with 21 million visitors in Dubai? Wow. And it got to a point where in November, they stopped issuing visit visas because we had filled in our quota above our expectation and we couldn't let any more people in. Now tell me something. Do you honestly think we have 21 million hotel keys in Dubai today? We don't. So when people ask you, who's going to fill in these Airbnb hotel rooms? You know the answer. And with Sheikh Zayed Airport coming up, where we're planning to bring in 220 million visitors, at a time where do you think these people are going to stay, GG? Exactly. So when anyone asks you this question, just give them the figures. We are blessed today. We have all the stats and the figures. We're transparent. Compared to 22 years ago, we didn't have these data and statistics. Today we have access to these numbers. So it's not just a sales pitch that a broker is giving to you. The numbers are the facts that back up what you're saying, right? So yes, then the numbers don't lie. Having said all that, I think we covered a lot of information about the future of investing in Dubai real estate for 2025. It's still important to work with an experienced and an ethical and well-rounded real estate broker, agency company that can help guide our listeners, viewers, and investors, not just into the process and which projects to invest in, but the post-sale service of timing the sale of their property, helping them with property management if they're looking for rental returns, helping with the financial corners if they're looking for the Golden Visa. Which, for example, in Spain, they just right now announced the end of the Golden Visa program. But Dubai's continues. That not to mention the 100% tax that is coming up, which which I don't think that will be approved. But it's already scared a lot of people off because imagine if I'm an investor, if it's even a chance of a 100% tax. Well GG, Singapore did not hesitate to add 60% tax. So don't be surprised what we see. You know, being in Spain and doing real estate in Spain, a lot of us think this is just it's to appease the people. Which all of this goes back to how welcoming Dubai is for people to come, live, work, enjoy, raise our families here, visit here, invest here, open businesses here. And on season five of the Dubai Connect podcast, we will continue to present the upcoming opportunities and areas to invest in and also talk about business and how to open businesses here and talk more because I'm asking I'm receiving a lot of inquiries now about okay, we know we want to invest there. What if we want to move there and open a business? So we'll cover this throughout the podcast. But again, it is important to work with someone that is going to be able to guide you in that post-sale service, to be able to that after-service. Absolutely indeed. And not everyone does it indeed. So Ahmed, it's always a pleasure. Like I always learn something new every time we sit down and talk, which is every day. And I thank you for taking the time and to help me on this journey of being the Dubai Connect. Thank you for having me by your side. Thank you. So with that, please make sure to like, subscribe, follow, and share, and stay tuned for the next episode of the Dubai Connect podcast. Thank you and happy investing.