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The year 2025 looks promising for property investors in Dubai and house owners because rental prices have been predicted to leap high. According to industry experts, this year, the rental rate will increase on average by about 18% for short-term rentals and more than 13% for long-term leases, which is encouraged by a strong influx of international professionals and rising property value.
This is partly because Dubai has an inflow of international talents lured by attractive work opportunities and its chic lifestyle. These dynamics, together with appreciating prices in real estate, will likely increase rentals and enhance demand for residential real estate as investors seek to capitalize on passive income.
According to Colife Dubai, one of Dubai’s leading real estate and rental services companies, short-term rentals for six months could increase by 18% compared to 2024, and long-term leases for six months and above may increase by about 13%. Nina Novikova, Chief Business Development Officer at Colife Dubai, attributed these forecasts to current market trends and recent transaction data.
According to Parag Bharat Parekh, the chief operating officer of PropertyPro Real Estate, rentals may increase, as the rental rate is 25% in some locations. Rentals are positioned to continue growing strongly into the coming year, building on a year wherein this market has witnessed an unprecedented 16% growth, as data compiled by Colife Dubai shows. By the close of 2024, general rental prices are expected to have increased by about 20%, thus setting the stage for further rises in the upcoming year.
Novikova emphasizes the organic development of the Dubai Property sector through an appreciation in prices, a rise of new towers, or greater volumes of transactions in both sale and rental. She elaborates on rent price increases, stating that these are very closely connected with rising property prices. According to statistics from the Dubai Land Department, collated by Bayut, there has been an excess of 48,000 sales in Q3 2024, amounting to US$32.67 billion (AED 120 billion).
In the housing market, supply will change, too; about 182,000 units are forecasted from 2025 to 2026. About 76,000 units are forecasted to be completed in 2025 as the properties pre-sold in the past few years come onto the market. On the other hand, investors can buy more expensive property and rent it at a higher price so that the investors’ returns are high when the housing prices go up.
Due to Dubai’s status as an international business and tourist destination, short- and long-term rentals are in demand. According to industry players, the charm of the city, powered by a constant flow of expatriates and tourists, has sustained demand for rentals. Business facilities and tourist attractions continuously grow to stimulate the short-term rental market. Events such as exhibitions and expositions have created a competitive environment, increasing rental prices-especially for high-end properties in key locations such as Downtown Dubai, where the rates for a one-bedroom apartment may be higher than AED 10,000 per night during peak events.
For example, Novikova reports that apartments for three-month rental at JLT are available for 10,700 AED per month, while it costs 9,500 AED monthly for 12 months. Increasingly, more professionals are moving to Dubai, and given career opportunities, attractive salaries, and a high quality of life all spur the demand.
The long-term rents will also inch up, reflecting the rapid urbanization of Dubai or the population growth seen since the pandemic. As Parekh stated, new residential developments are changing the landscape and evolving residency laws, so tenants should be prepared for rent increases. The expert has called upon all those renting or planning to move to Dubai to plan for a 13% hike, with 25% possibly seen in selected areas. Therefore, budget planning and financial readiness will be one by one for tenants whose rental expenses will increase.
While the growing rental market offers investors lucrative deals, it also involves several risks. While the high yields on rentals are attractive, shifts in the economy, regulation changes, and fluctuating demands can affect returns. Parekh and Novikova say that this requires investors and tenants to be knowledgeable and adapt to changes in strategic positioning through trend analysis.
