Rent negotiations escalate between tenants and landlords in Dubai, with an increase in newly available rental properties
Record-Breaking Residential Real Estate Market in Dubai Amid High Supply
The residential real estate market in Dubai has seen a surge in 2025, with property prices and sales volumes reaching record highs despite an increase in the supply of new units. The market recorded nearly 37,000 off-plan transactions in Q2 2025, alongside 13,700 ready home registrations, indicating a strong interest from both investors and end-users.
The influx of new homes, amounting to over 80,000 in 2025, is expected to ease pressure on the rental market by providing tenants with more options, potentially moderating rental growth. Rental increases have moderated to 4.8% for villas and 7.2% for apartments annually in 2025, less aggressive than before despite rising capital values.
The market outlook remains positive but balanced, with capital appreciation and stable rents amid supply growth and economic expansion. Dubai's market is seen as highly resilient and attractive globally due to factors like investor-friendly laws, zero income tax, and strong demographic growth. Even with accelerated supply, demand continues to rise, especially from European and global buyers investing in luxury and off-plan properties.
Sales prices in Dubai are rising at a faster pace than rental rates, with average prices increasing by 6% from late 2024 to mid-2025. The gross rental yields in Dubai for apartments stood at 7.2%, and for villas and townhouses at 5%. Despite a slight decline compared to the second half of 2024, Dubai's rental yields remain strong and outperform those in many major global markets.
Rents in Dubai have slightly decreased by 0.6% during the first half of 2025 compared to the second half of 2024, mainly due to a fall in renewal contract rental rates. Tenants in Dubai have more options to renegotiate their lease terms due to the increased supply of new residential units.
Cavendish Maxwell, a real estate consultancy, predicts that an increase in supply could offer relief to tenants by easing upward pressure on rents. Julian Roche, chief economist at Cavendish Maxwell, stated that Dubai remains competitive in the range of residential property, including luxury.
Over 61,800 units are currently under construction in Dubai, with more than 100,000 units projected for delivery in both 2026 and 2027. An average of 9,000 units are expected to be delivered each month through 2027, but actual completion rates are expected to be lower. Delayed handovers may occur due to the high number of units projected for delivery in Dubai.
Waheed Abbas, Assistant Editor, covers real estate, aviation, and business stories that directly affect UAE consumers. In addition to hard news, Waheed frequently reports human interest stories as well.
Dubai's residential market benefits from global uncertainties, positive macroeconomic indicators, population growth, and job opportunities, making it a dynamic and investable market through 2025–2027. With ongoing price appreciation but moderated rental growth linked to the high supply, Dubai is set to maintain its position as a competitive and attractive residential market in the coming years.
- The surge in Dubai's real estate market in 2025 has also attracted interest from investors in other sectors, with over 37,000 off-plan transactions in Q2 2025 indicating a strong interest from those invested in the business and lifestyle sectors.
- Food businesses seeking expansion might find Dubai's competitive and attractive market appealing, as the city's population growth and job opportunities could provide a steady customer base.
- The sports industry may also find opportunities in Dubai's investment-friendly environment, with zero income tax making it an attractive destination for teams and events, particularly in the home-and-garden sector, as the boom in real estate may lead to increased demand for sports facilities and recreational spaces.
- environmental concerns, such as sustainable food production, waste management, and energy-efficient buildings, could potentially become trends in Dubai's real estate market, driven by the city's focus on economic expansion and its commitment to reducing carbon emissions.
- The finance industry might benefit from the increasing number of transactions and investments in Dubai's real estate market, as the city's growth and stability offer opportunities for financial institutions to expand their services, including investing, mortgage, and insurance sectors.
