One in five Dubai tenants now pays less rent than under previous contract
More than one in five Dubai tenants are now paying less than they did under their previous contract, as a growing supply of completed homes hands renters greater bargaining power. Cavendish Maxwell, the property consultancy, put the share of rental transactions recording a reduction at 21.4 per cent in the third quarter of 2026, up from just 4.8 per cent in the first quarter. A further 38.7 per cent renewed at the same rent, while the share recording an increase fell to 40 per cent from 59.4 per cent over the same period.
The consultancy said the shift points to diminishing landlord pricing power and greater scope for tenants to negotiate. Average rents stood at Dh77.3 per square foot per year in September, up 5.5 per cent year-on-year, a sharp slowdown from the 11.5 per cent annual growth recorded in September 2025. More than 172,000 rental contracts were registered in the quarter: renewals totalled 94,300, down 10.6 per cent year-on-year, while new contracts rose 18.2 per cent to 77,700.
Supply is behind the change. Dubai delivered about 38,000 residential units between January and September, up 41.4 per cent on the same period of 2025 and more than the full-year totals for 2023 and 2024, with about 12,400 homes handed over in the third quarter alone. Cavendish Maxwell expects the expansion of available stock to weigh on rental growth going forward, particularly for apartments, which make up the largest share of completions. Gross rental yields averaged 6.6 per cent for apartments and 4.9 per cent for villas and townhouses; Dubai Investments Park led apartment yields at 10 per cent, while Dubai Industrial City topped villa and townhouse yields at 6.5 per cent.
The sales market is cooling alongside it. Residential sales reached Dh72.6 billion across 33,900 transactions in the third quarter, down 13.2 per cent in value and 2 per cent in volume from the second quarter, and 47.6 per cent and 38.6 per cent respectively year-on-year, leaving transactions at their lowest quarterly level since the first quarter of 2024. Average sales prices stood at Dh1,644 per square foot in September, down 2.2 per cent year-on-year, the first annual decline since the post-pandemic recovery began.
Developers are pulling back. Launches fell to 48 projects with 15,300 units in the quarter, down 72.7 per cent and 62.9 per cent year-on-year, though unit launches more than doubled from the second quarter. Ronan Arthur, director and head of residential valuation at Cavendish Maxwell, said the contraction in launches highlighted a significant scaling back of development, with caution among developers and regional uncertainty leading to some projects being deferred, while the volume of new units planned for handover in the next two years is considerable. The consultancy expects downward pressure on prices to persist into 2027 and rental growth to compress further.
