Dubai rents soar again in 2025

Dubai’s rental market is experiencing another year of substantial growth, with double-digit hikes in rents becoming a norm for many properties. For tenants, this trend presents challenging decisions about lease renewals or relocations. Here’s what’s driving these rent increases and how it’s impacting tenants across the city.

Landlords Push for Market Averages

The introduction of the real-time Rental Index by the Dubai Land Department has played a significant role in landlords increasing rents. This tool allows landlords to align with current market prices, pushing rents higher, particularly in areas where prices had been lower historically.

According to leasing agents, many landlords see no reason to hold back when the Rental Index permits increments. They are taking advantage of every opportunity to align their rental income with market trends. Tenants who have stayed in the same property for years, especially those paying “COVID-era rents,” are feeling the impact the hardest.

Tenant Dilemma

With rent hikes likely to occur for the second or even third consecutive year, tenants face difficult choices:

• Renew: Accept another steep increase and stay put.
• Relocate: Search for a more affordable property, though current market conditions often mean paying similar elevated rates elsewhere.

For some relief, softening rental rates have been noticed in older buildings and those restricted by the star rating system within the updated Rental Index. However, these savings are not widespread enough to offset the financial strain for a majority of tenants.

The Bigger Picture Driving Rent Rises

The surge in Dubai rents can also be attributed to the city’s expanding property inventory and strong tenant demand. Rupert Simmonds, Director of Leasing at Betterhomes, explains that landlords are capitalizing on the rental market’s upward momentum before it stabilizes.

“Some tenants were previously safeguarded by outdated rental limits. Now, landlords are adjusting to reflect widespread market growth within Dubai’s rental sector,” says Simmonds.

It’s not just a lack of residential stock causing the increases. Developers in areas such as Liwan, for example, are seeing strong rental yields despite releasing new inventory. Murtaza Moiz, Vice Chairman of Symbolic Developments and Speedex Group, highlights that rental rates for one-bedroom units in Liwan hover between AED 65,000 to AED 70,000, while three-bedroom units range from AED 100,000 to AED 120,000.

New Housing Stock on the Horizon

While some tenants may hope that new property completions will ease the supply-demand imbalance, the picture remains uncertain. Developers estimate the addition of 70,000 to 100,000 new housing units in 2025, with a significant percentage of these already planned as rental stock.

This additional inventory may hit the market too gradually to impact rental prices in the short term. Additionally, premium developments and infrastructure investments continue to appeal to tenants, keeping demand high.

What Can Tenants Do?

If you’re facing successive rent increases or rising costs in Dubai, consider these steps to manage the situation:

1. Negotiate with Your Landlord: Reach out to your landlord to discuss the possibility of incremental rent increases rather than a large hike. An open dialogue could lead to more amicable terms.
2. Check the Rental Index: Ensure that any proposed rent increase aligns with the Dubai Land Department’s official Rental Index. Tenants have the right to dispute hikes that exceed the index.
3. Explore Older Units: Older properties with specific limitations on rent hikes may be an option if affordability is a top priority. Remember, quality and amenities may vary, so inspect properties thoroughly.
4. Budgeting for More Stability: If relocating to a particular property feels like a stretch, reassess your budget. Consider prioritizing well-connected, high-value neighborhoods where transport and amenities help offset higher rents.
5. Seek Legal Help: Dubai offers tenant-protection laws. If you feel a rental agreement or increase violates these, file a case with the local Rental Disputes Center for resolution.

Dubai’s Rental Trends Moving Forward

While there are no immediate signs of widespread rent stabilization, some areas and buildings are experiencing slower price growth due to specific regulatory frameworks. However, premium and centralized locations remain highly competitive.

Looking ahead, the continued development of residential and commercial hubs across Dubai may help create more balanced rental dynamics. Until this happens, tenants should stay vigilant and informed about the changing market landscape.