New Housing Supply Shakes Up Dubai Rentals

Dubai Rental Market: New Housing Supply Boosts Tenants’ Bargaining Position

In the first half of the year, more than 17,300 new residential properties have been completed in Dubai, significantly impacting the rental market. Recent data indicates that in the first six months of 2025, apartment rental prices have decreased by an average of 0.6% compared to the second half of 2024. This is primarily due to the reduction in prices for renewed contracts, as tenants had a larger selection and thus moved into a stronger bargaining position.

Main Market Trends

According to the Dubai Land Department, more than 244,000 rental contracts were registered in the first half of this year, nearly two-thirds (66.8%) of which were renewals. The entry of new apartments into the market has strengthened tenants' negotiating opportunities, especially in areas where the supply has expanded quickly. Despite this, in a year-on-year comparison with the first half of 2024, rental prices are still 9.9% higher, demonstrating that demand remains vigorous.

Supply and Future Outlook

Currently, more than 61,800 residential properties are under construction, with plans to deliver more than 100,000 new units between 2026 and 2027. This would mean an average of 9,000 new apartments monthly until 2027, although the actual pace of delivery is expected to be slower, potentially resulting in time delays. However, if the supply materializes faster, it could alleviate the pressure on rental prices.

Economic Background and Appeal

Experts suggest that Dubai's housing market offers a unique combination of favorable factors. On one hand, due to global uncertainties, investors are seeking a stable, secure environment that the UAE can provide. On the other hand, positive macroeconomic indicators—economic growth, moderate inflation—further reinforce the market. Thirdly, continuous population growth driven by job creation and political stability generates sustained demand.

Yields and Valuation

Currently, the gross rental yield is on average 7.2% for apartments, while for villas and townhouses it is 5%. Although sale prices are rising faster than rental prices, which has caused a slight yield decline, Dubai's rental returns are still outstanding, surpassing many international markets.

In summary, the increasing supply may alleviate rental price rises in the short term and make the market more balanced in the long term. Both investors and tenants can benefit from the current trends, although future pricing largely depends on the execution pace of the planned projects.

(The article is sourced from data by Dubai Land Department (DLD).)