Industry players predict that 2025 will be another excellent year for investors and house owners in Dubai. Rentals are predicted to see an average jump of 18% for short-term and upwards of 13% for long-term leases.
The anticipated increase in rentals next year is attributed to the ongoing boom in professionals from all over the world relocating to Dubai for jobs and lifestyle, as well as the emirate’s soaring real estate values.
In turn, the anticipated jump in rentals is projected to provide a further tailwind to demand for residential real estate in Dubai from buyers worldwide looking to maximize returns from passive income.
“Our forecasts for 2025 based on the latest transaction data and the current market trend is an 18% increase in short-term rentals (up to 6 months) compared to 2024, with long-term rentals (6 months or more) expected to rise by around 13%,” Nina Novikova, Chief Business Development Officer at Colife Dubai, part of the globally operating real estate and rental services major Colife.
According to Parag Bharat Parekh, CEO of PropertyPro Real Estate, a significant force in Dubai’s real estate services market, rental prices are predicted to increase by 25% in some locations in 2025 due to existing demand and trends.
Dubai rents to climb 20% in 2024; Growth to persist next year
Industry estimates showed that rental prices are expected to grow by around 20% by the end of 2024, with the upward trend continuing into next year.
In the first half of this year, rental prices are estimated to have risen by an average of 13.5%.
“Our data shows that rental prices have increased by an average of 16% since the beginning of this year,” the Colife Dubai senior executive said.
“Traditionally, there’s a peak in prices during the high season and a drop in the summer months, considered the low season,” she said.
According to Novikova, the real estate market in Dubai is anticipated to grow organically, as seen by rising property values, more new tower construction, and an increase in sales volume and rental transactions.
“The growth in rental prices is closely tied to rising property prices,” she said.
Over 48,000 property sales transactions totaled over $32.67 billion (AED 120 billion) in Q3 2024, according to Bayut’s Dubai transactions statistics, based on information processed by the Dubai Land Department (DLD).
Industry players said the market expects the housing supply to increase by approximately 182,000 units in 2025-2026, as many properties pre-sold in 2022-2023 will be completed.
Over 76,000 of these will be finished by 2025.
Novikova said that as housing prices rise, investors purchase more expensive properties and rent them out at higher rates to get passive income.
“Demand for rentals remains consistently high among tenants, both for short- and long-term rentals,” she said.
Expat, tourist influx drives rental demand
Industry insiders said the projected spike in rental prices is due to Dubai continuing to thrive as a global hub for business and tourism at an increased pace.
They said the city’s rental market has been exemplified by high demand and competitive pricing, influenced by the influx of expatriates and tourists.
Parekh said the projected 18% increase in short-term rental costs can be attributed to several factors, including Dubai’s continuous development of tourist attractions and business facilities drawing more visitors and business persons worldwide and the rising demand for flexible living arrangements, especially among professionals and IT wizards.
“Different types of exhibitions and expos [in Dubai] have also stimulated the demand for short-term rentals, creating a competitive environment where prices are driven higher,” the PropertyPro Real Estate chief executive said, pointing out that during major shows and expos, the cost of a one-bedroom apartment Downtown can exceed 10,000 AED per night for high-end properties.
According to Novikova of Colife Dubai, a one-bedroom apartment in Jumeirah Lakes Towers (JLT) from Colife costs AED 10,700 a month for a three-month rental, but for a twelve-month rental, the same property would only cost AED 9,500.
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“An increasing number of professionals from around the world are moving to Dubai for work, attracted by career opportunities, competitive salaries, high quality of life, and a warm climate, which inevitably drives up rental prices,” she said.
PropertyPro’s Parekh said the anticipated 13% rise in long-term rentals reflects the broader population growth trends and rapid urbanization in Dubai post-COVID.
“With more people moving to Dubai for work and lifestyle, the demand for stable, long-term housing is expected to surge.
“New residential developments and changing expatriate residency laws are further influencing these trends, making it crucial for potential tenants to be upbeat about this market,” he said.
However, Parekh stated that these anticipated hikes have essential ramifications, particularly for budgeting and individuals renting in Dubai or considering moving there.
“Tenants should prepare for potential hikes in their rental expenses while preparing the family budget.
“It is advisable to review personal finances and factor in these projections when planning budgets for the coming years with a minimum increase of 13%, [and going] up to 25% in certain areas,” he said.
According to industry insiders, tenants can negotiate a better lease if they know market trends.
As for investors, these projections present both opportunities and challenges, they said.
Given the anticipated increase in rental expenses, investors may discover profitable opportunities in creating properties that accommodate both long-term and short-term renters.
However, industry participants stated that changes in demand, regulation modifications, and economic swings can all affect rental returns.
“Staying informed and adaptable will be crucial,” Parekh said.
“Whether you’re a tenant looking for the best deal or an investor seeking the next opportunity, understanding the implications of these projections will be vital for the success of both,” Novikova said.
