Dubai: Are rents dropping in some communities after double-digit hikes?

Khaleej Times

18-04-2025

Rents in some Dubai communities have declined. Overall, however, rents are increasing at a slower pace.
Real estate industry executives say that the era of double-digit rent increases is behind us as the market has matured. It is now seeing much more stable and gradual growth in rentals.
Rents and property prices have been rising after the pandemic due to strong demand from a growing population, which is rising at an almost double-digit rate.
Lately, rents have been plateauing after the four-year rally and industry insiders say that they are dropping in some areas. These include locations where new supply has hit the market, and older buildings following the launch of the new Smart Rental Index.
Lewis Allsopp, chairman at Allsopp & Allsopp, said there are signs that the emirate's rental market might be entering a period of adjustment.
He said Allsopp & Allsopp's data showed an 8 per cent decrease in average rental prices across both apartments and villas/townhouses month-on-month.
'Specifically, apartment rentals have seen a 9 per cent year-on-year drop. These figures suggest a shift in the market's previous upward trend which could create a more balanced environment for both landlords and tenants.'
Rents in Dubai are likely to adjust because of a few things. The new smart rental index is a major factor, pushing landlords to keep prices fair. More new buildings mean more rental options too. Plus, with more tenants considering buying homes, landlords need to be competitive. All of this is working to balance the rental market.
'Rents have already decreased from their peak in certain areas, with some achieving lower rents in 2025 compared to 2024. Villa communities like Nad Al Sheba and The Villa have seen a 7-9 per cent drop over the past 12 months,' said Rupert Simmonds, director of leasing at Betterhomes.
He added that communities with a high level of new supply are likely to experience declines starting in 2025 into 2026.
'While some rents have plateaued or even declined, others are still increasing. Prime areas such as Palm Jumeirah, Downtown Dubai, and Dubai Hills Estate have remained stable or risen due to high demand and limited luxury properties. Meanwhile, mid-tier and affordable communities like Jumeirah Village Circle (JVC), Dubai Sports City, and Discovery Gardens show signs of stabilisation,' he said.
According to Simmonds, luxury properties in prime areas such as Palm Jumeirah and Dubai Marina will likely be less affected due to limited availability and the influx of high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI) moving to Dubai.
Growing competition among landlords
Allsopp added that the trend of rising rents has pushed many tenants towards homeownership, with the Dubai Land Department reporting a 30 per cent month-on-month decrease in rental renewals.
'This is prompting landlords to reconsider rental pricing to attract new tenants. Additionally, the Smart Rental Index will likely put pressure on landlords of older buildings to lower rents if they don't meet current amenity and finishing standards,' he said.
Rupert Simmonds noted that areas that are seeing a high volume of new unit handovers such as Dubai Creek Harbour, Mohammed Bin Rashid City, and Dubailand, could experience rent decreases.
'This is because increased competition among landlords will likely put downward pressure on rental prices. Landlords who are inflexible may face more vacancies, increasing downward pressure on prices. Landlords should be flexible on price to ensure maximum occupancy and minimum void periods because that is where a landlord makes the biggest loss,' added the director of leasing at Betterhomes.
No more double-digit rental increase
Joshua Nairn, leasing manager at Huspy Real Estate, believes the era of double-digit increases is behind us.
He expects some fluctuations in communities experiencing mass handovers of new properties, as the increased supply could temporarily impact rents in those specific areas. However, overall, he doesn't foresee a decline across the city.
'The market has matured, and we are now seeing much more stable and gradual growth in rental prices,' he said, adding that he doesn't foresee rents decreasing in Dubai's major communities.
'With that being said, we may see fluctuations in specific areas or certain market segments, but I do not anticipate a widespread decline across the city. Given Dubai's strong market fundamentals — including population growth and economic stability — I don't expect significant declines in rent over the next couple of years, certainly not by 2025 or 2026,' he added.
Nairn added that new residential units are being introduced to the market, helping to balance supply and demand, potentially slowing down the rate at which rental prices increase.