Strong fundamentals, global benchmarking, and investor confidence position Dubai as a rising Tier-1 real estate market
Dubai’s real estate market is on a transformative trajectory, with property prices expected to double over the next five years, according to Abdullah Alajaji, CEO and founder of Driven | Forbes Global Properties.
This bold forecast comes amid an already impressive performance by the emirate’s property sector. In 2024 alone, Dubai recorded 217,000 real estate investments worth AED 526 billion, marking year-on-year growth of 38% in transaction volume and 27% in value, according to data from the Government of Dubai.
Alajaji shared his outlook during the launch of a new report titled Dubai on the Verge of Tier-1 City Recognition, which benchmarks Dubai against some of the world’s most established global cities — including New York, London, Paris, Singapore, Sydney, and Hong Kong — across 28 indicators such as infrastructure, safety, economic depth, and quality of life.
“Our thesis here is, if we’re still at one-fifth of the prices of global cities, and the cap rates are still more than double, we do expect that… prices will go up,” Alajaji said in an interview with Gulf Business.
Cap rates, or the yield a property generates relative to its full value, are a cornerstone of this optimism. For instance, if a property nets $50,000 annually and is valued at $1 million, it reflects a 5% cap rate — significantly higher than returns in more mature markets.
Unlike previous boom cycles, Alajaji noted that the current momentum is supported by robust fundamentals.
“I would compare this time to pre-2008. Back then, every single area went up at the same level… but rental yields were much lower. Today, rents have risen in tandem with prices, which suggests real demand.”
Dubai’s Emergence as a Tier-1 Global City
According to Driven’s Tier-1 City Index, Dubai ranked fifth out of seven cities evaluated. It scored especially high in infrastructure (2nd), international appeal (3rd), safety and security (4th), and quality of life (4th).
The report also revealed the strength of Dubai’s transaction activity, with total transaction value reaching around $200 billion last year — triple that of London — a clear indicator of market maturity and liquidity.
Survey data within the report found that 43% of respondents believe Dubai’s property prices are fairly valued, 35% consider them somewhat overvalued, and just 11% see them as undervalued.
Looking ahead, Alajaji advised investors to focus on areas with limited land availability.
“The way I would navigate it… is to look at areas that have limited supply of new land available for development.”
He concluded on a bullish note:
“We continue to invest in the growth of the city. We like it, we enjoy it, and we have fun doing it — so we’ll continue doing so.”
With a strategic location, visionary leadership, and strong market fundamentals, Dubai is not only growing — it’s evolving into a true global powerhouse in real estate.
