In 2023, the number of new rental contracts for both apartments and villas reached its highest point, and current levels in 2024 are already nearing 90% of that peak, according to data from Square Yards.
Following a period of stabilization in Dubai’s apartment rental market, experts predict that 2025 will be another strong year for investors and homeowners, with short-term lease rentals expected to increase by an average of 18%, and long-term leases projected to rise by more than 13%.
The continued influx of professionals moving to Dubai for work and lifestyle reasons, along with rising property prices, is expected to drive the increase in rental rates next year, said Ritesh Mehta, Senior Director and Head (North and West) of Residential Services and Developer Initiative at JLL India.
Dubai’s real estate market has seen substantial growth since the pandemic, supported by the city’s global appeal, business-friendly environment, and steady inflow of professionals. Although both buying and renting activity have remained strong, there has been a natural period of stabilization following rapid growth in recent years. Experts refer to this as a stagnation phase, where apartment rental rates have remained relatively stable in recent quarters.
However, JLL forecasts that over 100,000 new apartments and villas will enter Dubai’s real estate market in the next 15 months, which should help alleviate pressure on prices and rentals in the emirate.
Dubai’s economy has faced both growth and challenges in recent years, including the effects of global economic uncertainty and fluctuating oil prices.
As an oil-exporting region, Dubai’s economy is influenced by oil price fluctuations, which can affect overall economic growth and the real estate market.
Recent changes in regulations, such as adjustments in property purchase laws and visa policies, have also impacted market dynamics. For example, the introduction of long-term residency visas and incentives for property investors have boosted demand and helped counteract cooling trends.
“Additionally, borrowing costs have fluctuated in recent years, influencing property affordability and investment decisions. Higher interest rates can reduce affordability, while lower rates tend to stimulate demand,” Mehta added.
Furthermore, due to the rise in residential prices over the past year or two, purchasing a home has become unaffordable for many. “Many potential buyers are in a wait-and-watch mode, opting to rent instead. This surge in rental demand has led to higher rental values recently. We expect rental prices to rise by 10-15% in prime areas of Dubai in 2025,” said Morgan Owen, Managing Director of MENA at ANAROCK Group.
Rental yields in Dubai are another key factor driving interest.
With sustained demand from expats, job growth, and a rising population, experts predict rental yields will remain stable in 2025, with prime locations offering returns exceeding 8% for investors.
Rental yields vary depending on location and property type, with average yields ranging between 6% and 7%, according to Rabiah Shaikh, Chief Business Officer & Principal Partner of Global Markets at Square Yards.
Dubai’s diverse rental market serves a mix of low-to-mid and high-end segments, catering to a broad range of local and expatriate residents. Areas such as Jebel Ali, Al Warsan, Business Bay, Dubai Marina, Jumeirah Village Circle, Dubai Silicon Oasis, and Downtown Dubai have seen significant rental activity, and experts anticipate further rental growth in these areas.
In 2023, the number of new rental contracts for both apartments and villas peaked, and current levels in 2024 are already close to 90% of that peak, according to Square Yards data.
Other notable areas expected to see continued growth include Jumeirah Lake Towers (JLT), Dubai Production City, and Dubai South.
Financing options for Indian investors have also piqued interest.
Experts note that Indian investors have various financing options available for real estate purchases in Dubai. A cash purchase, involving full payment upfront, is one straightforward option. Several UAE banks offer mortgage loans to foreign residents, including non-resident Indians (NRIs), typically requiring a 20-30% down payment. Some Indian banks with international operations also offer loans for overseas property purchases, including in Dubai.
Additionally, many Dubai property developers offer attractive payment plans that spread the cost over several years, while some schemes allow part of the rent to count toward eventual ownership.
Mehta also noted that NRIs may be able to secure loans against their existing properties in India to finance Dubai real estate purchases. “Some investors set up offshore companies to purchase and finance properties in Dubai. Shariah-compliant mortgage products are also available from some UAE banks,” he added.
