Key Takeaway
Many Dubai residents are experiencing back-to-back double-digit rent increases as landlords rush to align their rates with the new real-time Dubai Rental Index, despite hints of stabilisation in certain older properties. Tenants must quickly decide whether to absorb these successive hikes or search for alternative accommodation in a still-competitive market.
Despite occasional reports suggesting rent stabilisation in Dubai, a significant portion of residents are currently facing difficult decisions as landlords implement substantial rent increases for the second consecutive year.
The introduction of the real-time Rental Index by Dubai Land Department in January has prompted many property owners to rapidly adjust their rental rates to match area averages, resulting in continued upward pressure on housing costs across the emirate.
No Widespread Rental Correction in Sight
Industry experts confirm that broader market correction remains elusive. According to a prominent leasing agent interviewed by JobXDubai,
“There is no rental correction going on in Dubai right now. Landlords who are allowed to hike rents as per the data from the Rental Index are doing just that.”
This places affected tenants in a difficult position:
- Stay and absorb another significant rent increase
- Leave and potentially face similarly elevated rents elsewhere in Dubai
Catching Up After COVID-Era Rates
Rupert Simmonds, Director of Leasing at Betterhomes, explains the trend:
“This is likely affecting tenants who have been in the same property for the last 3-4 years. They would have been paying ongoing COVID-time rents – and because of the previous Rental Index, they probably were protected from today’s rates.”
Simmonds notes that landlords are seizing every opportunity to increase rents because “the rental market has gone up significantly over the last year.”
Property owners appear motivated to maximise their returns before any potential market stabilisation takes hold across Dubai. Currently, such stabilisation appears limited to select older buildings that cannot command higher rents under the star rating system of the updated Rental Index.
New Supply: Will It Bring Relief?
The rental market may see changes as newly completed residential properties enter the market. Murtaza Moiz, Vice-Chairman of Symbolic Developments and Speedex Group, recently delivered a Dh150 million building in Liwan and indicated:
“About 40% of the units at our first freehold project in Liwan are expected to be placed in the rental market. The other 60% were acquired by end-users.”
Current rental rates in Liwan demonstrate the ongoing strength of the market:
- One-bedroom apartments: Dh65,000-Dh70,000
- Three-bedroom units: Dh100,000-Dh120,000
These figures represent attractive yields for investors, with further growth anticipated from planned infrastructure improvements.
Will 2025 Bring Market Balance?
Industry forecasts suggest between 70,000-100,000 new units could be handed over this year across Dubai. Areas experiencing significant new project deliveries include:
- Liwan
- Arjan
- Sports City
- Dubai South
If a substantial portion of these new properties enters the rental market, it could finally trigger meaningful changes in Dubai’s rental landscape by year-end.
A real estate industry source told JobXDubai:
“If rents stabilise at current levels, that’s ideal for landlords. A 5%-10% downward change would benefit tenants and indicate that increased supply is influencing rental demands.”
However, the source cautioned that any rent drop of 15%-20% would constitute a major correction and signal a potential downturn for Dubai’s property market overall.
Options for Tenants Facing Increases
For tenants currently facing renewal negotiations with substantial increases, property experts suggest:
- Review the Rental Index: Verify that the proposed increase aligns with allowable limits based on current market rates for your area
- Negotiate payment terms: Some landlords offer lower rates for fewer cheques
- Consider relocation: Explore newer developments in emerging areas where initial rental rates might be more competitive
- Examine older properties: Buildings with lower star ratings under the new system may offer more stable rental prices
Market Outlook
While supply-demand dynamics suggest potential relief by late 2025, tenants should prepare for landlords to continue maximising returns under the current Rental Index framework in the immediate term.
The coming months will prove critical in determining whether Dubai’s rental market achieves greater balance or continues on its upward trajectory in prime locations.
For more insights on Dubai’s property market and rental trends, follow JobXDubai for regular updates on the region’s real estate landscape.
JobXDubai 
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