The market is expected to see a major shift this year, with some of the affordable neighbourhoods transforming into sought-after residential hubs due to infrastructure development and better amenities

The anticipated rise in high-end villa rents will be driven by several factors, including rental market dynamics, as properties return to market rates when leases under rent control expire. Image: Shutterstock

The Dubai property rental market is predicted to see a ‘balanced’ growth this year, with specific areas and property types in prime locations projected to see a spike in rates, while the influx of new properties will curb the steep increases in some of the premium neighbourhoods, industry players said.

The market is also expected to see a major shift in 2025, with some of the neighbourhoods, considered as ‘affordable’ earlier, transforming into sought-after residential hubs due to infrastructure development and better amenities, attracting increased interest from tenants.

“We anticipate continued rental growth [this year] in specific areas and property types, particularly in prime locations and for upgraded properties,” Rupert Simmonds, Leasing Director at Betterhomes, told Arabian Business.

“A significant increase in new property handovers in key areas, however, is expected to have a stabilising effect on rising rents,” he said.

Simmonds said areas with higher volumes of new handovers may become more affordable compared to neighbourhoods with limited supply this year, creating opportunities for tenants to find better value for money.

Farooq Syed, Chief Executive Officer of Dubai-based Springfield Properties said the Dubai Land Department’s rental index will be another factor to ensure market stability this year, building trust among tenants and investors alike.

Dubai’s premium rentals on rise

Industry insiders said the maximum rental hikes this year are likely to be seen in premium property types such as high-end villas and luxury apartments, particularly in exclusive neighbourhoods like Palm Jumeirah, Mohammed Bin Rashid (MBR) District One, and Dubai Hills Estate.

This will be on top of the remarkable hike in rentals for villas in areas such as Palm Jumeirah.

“The anticipated rise for high-end villas will be driven by several factors, including rental market dynamics where properties return to market rates as leases under rent control expire. Furthermore, significant upgrades and developments have elevated the quality and appeal of many properties, justifying higher rents,” the Betterhomes Leasing Director said.

In the apartment segment, areas like Downtown Dubai, Dubai Marina, and Bluewaters Island are expected to perform well due to their vibrant city lifestyle, proximity to key business districts, and access to world-class dining and entertainment.

Emerging neighbourhoods such as Jumeirah Village Circle (JVC) and Dubai South are also expected to witness a rise in interest this year, market players said, as these locations offer affordability without compromising on quality, with improving infrastructure and new developments enhancing their appeal.

The Betterhomes senior executive said with the introduction of new supply, some neighbourhoods in Dubai, which were previously considered premium, may become more affordable this year.

“This shift encourages tenants and buyers to explore options that align better with their budgets, while still offering quality housing in desirable areas,” he said.

Simmonds said these areas remain highly desirable due to their exclusivity, convenient locations, and the availability of exceptional properties entering the market.

Dubai rental market trends

Simmonds said the Dubai rental market could also experience a balancing effect this year.

He said substantial price hikes in traditionally popular areas may push renters to explore less expensive communities further from the city.

However, over time, this could lead to a “pendulum effect”, where renters reassess their priorities, opting to pay slightly more to live closer to work or central locations rather than incurring higher costs in distant areas.

“Expect a mixed bag of results depending on the areas in question,” the Betterhomes Leasing Director said.

Industry players said the appetite for renting and purchasing homes will remain strong in 2025 as well, driven by Dubai’s growing population and its appeal as a global destination for living and investment.

More people are actively registering to rent or buy, which highlights the continued vibrancy of the market, they said.

Besides, initiatives such as the Dubai Smart Rental Index continue to create a fair and transparent ecosystem for tenants and landlords alike, creating a more conducive path for stable growth in the city’s rental market, they said.

Read More: https://www.arabianbusiness.com/industries/real-estate/dubai-real-estate-high-end-villas-luxury-apartments-to-lead-citys-rental-price-gains-in-2025