Dubai Rents Hit New Highs: What Tenants Should Expect This Year ?
Dubai’s residential rents have surged, putting increasing pressure on tenants across the emirate. While some had hoped for a cooldown, the market continues to show robust demand and limited supply, driving average lease costs upward. According to recent data, apartment rents rose by around 6 percent year-over-year in Q3 2025, while villa rentals climbed about 7 percent.
One of the biggest challenges for tenants is that new leases are significantly more expensive than renewals — in some cases up to 30 percent more, industry experts say. This puts long-term renters in a tough spot when deciding whether to renegotiate or move.
To manage the surge, Dubai introduced a Smart Rental Index in early 2025. Under the new system, landlords must give a 90-day notice before increasing rent — and the permitted hike depends on how far below market value the current rent is.
Here’s how the new index works:
- If current rent is less than 10% below market value, no increase is allowed.
- For rents between 11% and 20% below market, a landlord may raise by 5%.
- If rent falls 21%–30% below, the hike allowed is 10%, and for 31%–40% below, it goes up to 15%.
- If a lease is more than 40% below market, a 20% increase may be permitted.
That said, not every tenant is stuck paying more — increased supply is already giving renters some negotiating power. Over 17,000 new units were completed in the first half of 2025, prompting more flexible deals.
Experts also point out that some landlords are converting units into short-term rentals (e.g., Airbnb), which reduces long-term rental supply in high-demand areas like Dubai Marina and Business Bay — pushing up the price for traditional tenants.
Still, there may be relief on the horizon: over 72,000 homes are expected to be handed over later this year, which could ease rental pressure.
Tenants who feel the rent increase is unfair can now rely more confidently on the Smart Rental Index, which offers greater transparency and a more objective benchmark.
Finally, with rents rising, many long-term renters are weighing the cost-benefit of homeownership. As mortgage rates stabilize, buying may become a more attractive and financially stable option.
