DUBAI — Hopes of a rental slowdown in Dubai have been dashed for many residents, as a growing number of tenants face steep, double-digit rent hikes for the second consecutive year. The rising cost of living is prompting difficult decisions among tenants as landlords move swiftly to adjust lease rates in line with market averages.
The latest surge is largely attributed to the real-time Rental Index introduced by the Dubai Land Department earlier this year. Leasing agents report that landlords are acting quickly to align existing rental contracts with the updated market data, leaving tenants with few alternatives.
"There is no rental correction going on in Dubai right now," a leasing agent noted. "Landlords who are allowed to hike rents as per the Rental Index are doing just that. It’s up to the tenants to decide whether they should stay on or quit."
For many tenants, renewing leases now means absorbing yet another painful rent increase — or embarking on a costly search elsewhere, only to encounter similar elevated rates across the city.
Selective Softening, but Not Widespread
While some older residential properties are showing signs of rental softening — particularly where rent hikes are restricted under the updated Rental Index’s star rating system — such opportunities remain limited.
According to Rupert Simmonds, Director of Leasing at Betterhomes, tenants who have remained in their units for several years are now facing cumulative adjustments.
"It’s likely that this is for tenants who have been in the same property for the last 3-4 years," Simmonds explained. "They would have been paying ongoing Covid-era rents, and because of the (previous) Rental Index, they were protected from today’s rates. Now, each opportunity a landlord gets to increase the rent, they are able to do so."
The broader trend reflects Dubai’s strong post-pandemic recovery, which has driven property prices — and rental demand — to new heights.
Developers Eye Strong Yields Amid Market Surge
Despite the surge in available residential inventory, rental prices have remained resilient. Developers across key Dubai districts anticipate that a significant portion of newly completed units will enter the rental market.
Murtaza Moiz, Vice Chairman of Symbolic Developments and Speedex Group, highlighted this trend at the company’s first freehold project in Liwan.
"About 40% of the units at our first freehold project in Liwan are expected to be placed in the rental market," Moiz stated. "The remaining 60% were acquired by end-users, providing a balanced profile for the project and the area."
Rental rates in Liwan currently range from Dh65,000-Dh70,000 for one-bedroom units and Dh100,000-Dh120,000 for three-bedroom apartments, offering investors strong rental yields buoyed by ongoing infrastructure improvements.
Forecasts suggest that between 70,000 to 100,000 new units could be handed over in Dubai by the end of 2025. However, analysts warn that any stabilization in rents is likely to be gradual and uneven across different segments of the market.
For now, tenants confronting lease renewals must navigate a landscape where landlords, keen to avoid being locked into below-market contracts, continue to exercise their right to push rents higher.
