Rents in Dubai are expected to remain under pressure in 2025 and 2026 due to a significant influx of over 200 000 new residential units entering the market. This assessment comes from Fitch Ratings, which highlights that the local property market will be tested by this large supply.

According to Fitch, “Rent prices in most areas showed signs of stabilisation in the first quarter of 2025 after three years of high growth, correlating with unit prices.” They anticipate that the abundance of new projects will lead to lower rent prices, ultimately affecting asset prices as well.

While Fitch analysts do not foresee a real estate crash similar to the one during the 2008-09 financial crisis, they warn that the combination of declining rental yields and increasing supply may result in a moderate price correction. They note that the extent of this correction will depend on investors’ willingness to accept lower rental yields, especially if interest rates remain elevated.

In the wake of the 2008-09 financial crisis, which severely impacted the UAE and global economy, the Dubai property market is now preparing for the delivery of 210 000 new units over the next two years. This includes 90 000 units in 2025 and 120 000 in 2026, following the addition of 30 000 units in 2024.

The real estate consultancy based in the UAE reports that the Dubai rental market is showing signs of increased stability. In the first quarter of 2025, average rental rates for apartments and villas grew at a restrained pace of zero percent and one percent, respectively. However, year-on-year growth remains positive, with a 9 percent increase for apartments and a 7 percent increase for villas, indicating healthy underlying demand.

Certain areas of Dubai continue to witness rental appreciation, often supported by limited new inventory or the introduction of higher-quality residential offerings. Conversely, other localities are experiencing market adjustments due to the influx of new supply and a growing preference among residents for affordable housing options.

The Smart Rental Index, introduced by the Dubai Land Department (DLD) in early 2025, is playing a crucial role in promoting stability in rental prices. Looking forward, real estate firm Asteco anticipates further shifts in the rental market dynamics.

They noted, “Despite supply constraints in established communities with limited new development, the market is actively expanding, marked by a significant influx of newly delivered residential units and a considerable future supply pipeline.” This growing inventory is expected to create a more balanced environment, potentially moderating rental increases and providing residents with greater options.