While rental prices in Dubai are moderating, they are not in freefall. The market saw a 3.4% rise in rental transactions in July, with strong demand persisting
- Rents show slight moderation
- Dubai Land Department helps
- Renters gain negotiation power
Despite talk of cooling rents in Dubai, fresh data shows more of a moderation in prices rather than impending collapse.
Rents dipped just 0.6% in H1 2025 versus the previous half-year, but remain 10% above where they stood in H1 2024.
“This dip was mainly due to a fall in renewal contract rental rates, as more units have come onto the market, giving tenants more options and greater room to negotiate with landlords,” the latest industry report from consultants Cavendish Maxwell said.
While roughly 61,800 residential units are expected to be completed in the second half of the year, actual deliveries are likely to fall short, according to the report, as only around a fifth of these projects have surpassed 75% construction progress.
“Should upcoming supply materialise faster than current market absorption, it could offer significant relief to tenants by easing upward pressure on rents,” it said.
Rent moderation has been evident in apartment communities such as Downtown, according to Alec James Smith, head of sales and leasing at Savills Middle East, but he guarded against banking on any sustained drop in prices.
“It’s not quite accurate to call it a renter’s market. What we’re seeing is more of a healthy correction from previously elevated prices,” he told AGBI.
He said new buyers can still expect rental returns of 5% to 6% . By comparison, yields typically range between 3% and 5% in London, Manhattan, Singapore and Hong Kong, according to the latest price comparison from Hermes Real Estate.
Across Dubai, the average rental price over the first six months of this year stood at AED72,000 ($19,600) for apartments, AED172,000 for townhouses and AED255,000 for villas.
Tenants have been afforded a degree of negotiating power through the Smart Rental Index, launched by the Dubai Land Department in January.
The index regulates rent increases by tying adjustments to individual property and building ratings, replacing a district-based model that grouped buildings into rent bands solely based on location.
“This transparency promotes balanced negotiations, ensuring fairer outcomes for everyone,” said Cherif Sleiman, chief revenue officer at Property Finder.
Data this week from research company ValuStrat found Dubai’s rental market is showing early signs of a shift, but it depends on property type.
In the second quarter of 2025, apartment rents grew by 1.2% quarter on quarter and 7.2% year on year, while villa rents remained stable quarter on quarter but increased 4.8% from a year earlier.
“Affordability pressures are increasingly shaping market dynamics,” said Haider Tuaima, Managing Director at ValuStrat.
“While the market still favours landlords, these trends point towards a gradual shift in favour of renters. Over the next six months, villa rents are expected to stabilise, while apartment rents — particularly in the low- to mid-market segment, are likely to record further gains.”
Dubai recorded 39,251 rental transactions in July, a 3.4% month-on-month rise. New contracts made up 40% of these deals, up from 37% in June, according to data from Betterhomes.
“Dubai’s rental market is powering ahead, with more tenants willing to pay for the right property. July’s jump in new contracts shows fresh demand is still flowing into the city,” said Rupert Simmonds, director of leasing at Betterhomes.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q2 2025
