Dubai Rent Growth Slows in 2025 with Record Supply

The Dubai real estate market is expected to stabilise in 2025, with rent hikes slowing down significantly. This shift is largely attributed to an influx of new properties and the introduction of the smart rental index, which offers a more transparent, data-driven pricing system.

Betterhomes, a leading real estate brokerage, highlighted that the smart rental index would help tenants and landlords make more informed decisions. The introduction of this index is set to provide more accurate market insights, ensuring that both parties can rely on data to guide rental pricing. As new properties are introduced, the increased supply will help slow down the rapid price growth that Dubai has experienced over the past few years.

Increased Supply and Market Stabilisation

Rupert Simmonds, Director of Leasing at Betterhomes, noted that rent increases began to slow in 2024, compared to the previous year. The slowdown signals a broader stabilisation trend in the market. In 2024, completions were capped at 27,000 units due to project delays, but 2025 is poised to see a record 72,365 new units—a 171% increase in supply.

This significant jump in available units is expected to bring more balance to the market, curbing the pressure on rent prices. The addition of 163,000 new housing units between 2025 and 2026 is anticipated to further stabilise property prices, absorbing demand over the next couple of years.

Betterhomes also stated that, although there may be minor price adjustments, Dubai's strong market fundamentals—supported by economic growth and investments in infrastructure—will keep investor confidence high.

The Role of Infrastructure and Foreign Investment

Property brokerage Haus and Haus agreed that Dubai's real estate sector will maintain its strong demand into 2025. This is largely due to ambitious infrastructure projects and the continued influx of foreign investment. Dubai remains a top choice for global investors, thanks to its strategic location, expanding economy, and diverse property offerings.

Record Supply to Shape the Market

To prevent overheating in the real estate sector, UAE banks have been instructed not to finance a 4% Dubai Land Department (DLD) fee or a 2% brokerage fee for mortgages. This will help maintain balance in the market while still allowing buyers to access affordable financing for new properties.

In the first quarter of 2025, more than 9,000 units are expected to be handed over, with key developments in areas like Sobha Hartland, Arjan, and Jumeirah Village Circle (JVC) accounting for a significant portion of this pipeline. Betterhomes anticipates that these areas will continue to be in high demand, bolstering Dubai's position as a top global real estate hub.

2024 Projects and Market Composition

Looking back at 2024, more than 470 projects were launched in Dubai, averaging one new project every day. Despite lower-than-expected inventory of 27,000 units handed over in 2024, Dubai's real estate sector remains strong.

A majority of the units delivered in 2024 were apartments, accounting for 77% of the total, followed by townhouses (17%) and villas (6%). This trend towards vertical living is expected to continue into 2025, as Dubai’s growing urban population favours apartment living due to its convenience and accessibility.

Prominent areas such as Jumeirah Village Circle (JVC), Mohammed Bin Rashid City (MBR City), and Business Bay have seen increasing demand from both investors and end-users. These areas will likely continue to dominate the market in the years to come, reinforcing their reputations as prime residential locations.

Looking Ahead

With an expected record supply of new units, the Dubai real estate market is heading towards a more balanced and stable future. As rent increases slow down, the market will become more sustainable, offering opportunities for both tenants and investors. With strong demand, strategic investments, and a clearer pricing structure, Dubai is set to maintain its status as a leading global real estate hub in 2025 and beyond.