News
August 24, 2025
Dubai Real Estate Market 2025: Rental Demand Drops as Oversupply Looms
For the first time in years, the Dubai real estate market is facing a slowdown. Reports from Property Monitor, Espace, Allsopp & Allsopp, and AirDXB reveal a sharp drop in rental demand and transaction volumes across major communities.
While Dubai property prices surged by ~60% between 2022 and Q1 2025, the latest data suggests a new phase: stabilization and correction.
Villas: Transaction Volumes Down Double Digits
- Meadows: –20%
- Jumeirah Park: –17%
- Jumeirah Golf Estates: –20%
- Green Community: –30%
For years, villas were considered “gold dust.” Falling volumes now signal a demand gap—fewer tenants are willing or able to commit at current price levels.
Rental Market Activity Is Down
Market Reports indicated leasing activity fell by roughly 27–28% comparing H1 2025 with both H2 2024 and H1 2024, echoing what landlords feel on the ground: longer vacancies and weaker renewals.
Oversupply Risk: Launches vs. Deliveries
With a sizable pipeline over the next few years, stock is building faster than it’s being absorbed—pressuring both prices and yields.
Contracts & Renewals: What the Data Shows
AirDXB’s Q2 2025 read points to consistent declines across comparisons (YoY, half-year, and quarter-on-quarter), with renewals dropping the most. That suggests tenants are walking away instead of locking in.
Defaults & Jobs: The Demand Side
Rental default rates are reportedly up, and a more competitive job market means many residents are struggling to keep up with higher rents—another reason the Dubai rental market is cooling.
Price Outlook
External forecasts point to a potential price correction into late 2025 as oversupply meets softer demand. Unlike 2008, this appears to be a Dubai-specific normalization driven by internal factors: supply, affordability, and vacancy.
Short-Term Rentals: Flexibility vs. Saturation
Many owners are testing the short-let route for flexibility, but stock growth there is significant, which can weigh on rates and occupancy. Still, keeping units sale-ready can be strategic in a cooling cycle.
Policy Support
Recent initiatives—first-time buyer incentives and real-estate tokenisation—aim to broaden participation. Positive impacts are expected, though it’s too early to quantify.
Bottom Line for 2025
- Transactions trending lower across rentals and sales
- Supply building; launches outpacing deliveries
- Rents & yields moderating; renewals weakest
- Job market competition tightening
Investor insight: Expect a more balanced, negotiation-friendly market in H2. Community selection, unit quality, and pricing strategy will drive outcomes.
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