Dubai rents to increase in 2025: Which areas will see a hike in rentals?
The emirate’s population has grown by more than 159,000 this year to reach 3.814 million – the most ever. Dubai rents will go up – although slowly – by 10 per cent next year, as demand stays steady because of new residents flocking to the emirates.
Real estate sage — In high-end communities, prices might increase due to scarcity of new housing and the millionaires. Also the areas in the remote regions of the emirate will grow significantly because they will move there since prices are high centrally.
Growing population has been the driving force behind rents and prices of properties in the recent post-pandemic period. The population of the emirate reached 3.814 million as of 10 December, up from 3.654 million at the end of last year and 159,522 more in a year, Dubai Statistics Centre reported.
Because there are a lot of new residents, the rents are high. A penthouse was rented for Dh4.4 million for the first time this week and a villa for Dh15.5 million a year in October.
Gain trend for next year
As more professionals, high-net-worth people and retirees are expected to come in the 2025, rents will stay steady in the emirate over the next year.
The rent market experienced an average rise of 15-20 per cent in most areas in 2024, which slowed from its heights in 2022 and 2023, said Rupert Simmonds, director of leasing at Betterhomes.
"In 2025, we expect the growth rate to slow and rentals are going to increase 5-10 per cent in the city. The slowdown is due to more supply from new property sales and tenants’ increasingly demanding longer-term leases at current rates," Simmonds said.
Haider Tuaima, director and head of real estate research at ValuStrat, told us residential rents in new contracts increased by 5 per cent in 2024 for villas and 16 per cent in apartments. "Villa rents will stabilise in the coming 12 months, with apartment rents rising to 10 per cent."
Andrew Cummings, director, residential Middle East at Savills, expects 10 to 12 per cent overall growth in rental prices in Dubai by 2025.
"Apartments will be in the bigger increase than villas, as there is high demand for urban homes due to the influx of foreigners and Dubai remains a global hub. The lack of good quality units, especially around the centres, is also pushing rents up," Cummings said.
"New supply may stabilise some areas, but overall there is a strong rental demand and supply for the majority of submarkets keeping rentals higher," he continued.
Ramjee Iyer, chairman and managing director of Acube Developments, said the rental rate in 2024 averaged 10-15 per cent growth but premium areas grew 20 per cent.
Following the comments of others in the industry, Sunrise Capital CEO Yogesh Bulchandani claimed that rental recorded a robust growth of approximately 15 per cent in 2024 due to huge demand for luxury and budget properties from city’s growing population and international investor appetite.
"For 2025, I see an average rental growth of 10-13 per cent, and in certain areas, luxury, perhaps even 15-18 per cent growth, especially in short-term rentals," he added.
What is going to drive the highest rental increases in 2025?
Bulchandani forecast that exclusive neighbourhoods like Jumeirah Islands and Al Barari will remain a hot spot for rental hikes with a lack of supply and high demand while new districts like Dubai South, with huge-scale infrastructure developments like Al Maktoum International Airport on the way, will also see impressive growth.
"Proprietary neighbourhoods like Jumeirah Beach Residence (JBR), Town Square and Dubai Production City may be able to enjoy more consistent growth with supply-demand balance."
Rupert Simmonds predicted prime, waterfront properties such as Dubai Marina, Palm Jumeirah, Downtown Dubai and Jumeirah Bay Island will remain in high demand due to limited supply and the arrival of rich expats and international professionals.
"Let’s expect rental increases to be around the top of the forecast range, 10-12 per cent. Suburban neighbourhoods such as Dubai Hills Estate and Arabian Ranches could also increase, as families look for lifestyle-centric, urbanised neighbourhoods."
The low-end areas such as Jumeirah Village Circle (JVC) and Al Furjan could be rented at relatively low rates, around 2-5 per cent, since they will see more new house turnovers. Outlying areas such as Dubai South and International City may find rental market more stable due to low prices and growing number of available apartments.
Ramjee Iyer thinks prime areas with best amenities such as Dubai Marina, Downtown Dubai, Palm Jumeirah, and Business Bay will increase more. Al Quoz, Jebel Ali Village, Al Barsha South, Al Warqa, and International City: Rentals are likely to rise less in 2025.
Haider Tuaima experiences the highest rent increases towards the bottom end of the market in apartments outside Dubai.
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