Dubai Rental Prices Dip Year-on-Year as New Supply Reshapes the Market

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Rental prices in Dubai dip year-on-year.

Allsopp and Allsopp data shows Dubai rental transaction volume rose 48% in January 2026 year-on-year, yet total rental value grew by only 5% - a clear sign of price deceleration.
Average letting prices have dipped around 25% year-on-year in some apartment segments, driven by a surge in new residential completions across key communities.
Apartment rentals recorded an 11% year-on-year fall in transaction volume and a 5% decline in value - the sharpest correction of any property segment.
Villa and townhouse rents are proving more resilient, with rental values down only about 1% year-on-year despite a 10% drop in transaction volume.
A pipeline of more than 200,000 units scheduled through 2027 - the largest delivery wave in a decade - is the primary driver of market rebalancing.
The DLD rental index and Ejari lease registration system continue to provide the regulatory framework that underpins tenant protections and market transparency.

Dubai Land Department Data Signals a Rental Market in Transition

The Dubai Land Department (DLD) - the government body overseeing property transactions and rental regulation across the emirate - has become a critical reference point as Dubai's leasing market enters a new cycle. Drawing on DLD records, brokerage Allsopp and Allsopp has published data confirming that transaction volumes are rising while rental values are softening - a combination that signals a fundamental shift in supply and demand dynamics. The Real Estate Regulatory Agency (RERA), operating under the DLD, administers both the official Dubai rental index and the Ejari lease registration system, tools that are taking on heightened relevance as landlords and tenants navigate a more competitive environment.

Jumeirah Village Circle (JVC), Sobha Hartland, and Mohammed Bin Rashid City are among the communities most exposed to this adjustment, having absorbed a disproportionate share of recent residential completions. With more than 200,000 units in the pipeline through 2027, analysts describe current conditions not as a downturn but as a long-anticipated recalibration following several years of double-digit rental growth.

Transaction Volume Rises But Values Tell a Different Story

In January 2026, Allsopp and Allsopp reported that rental transaction volume rose 48% compared with the prior period, yet the total value of those transactions grew by only 5%. That wide gap between activity and value growth is the clearest signal yet that Dubai rents are no longer accelerating at the pace seen in previous years, even as tenant demand stays elevated.

Year-on-year comparisons between January 2026 and January 2025 reinforce this picture. DLD figures cited by Allsopp and Allsopp show renewal contracts fell 15% in volume and 9% in value over that period. New rental contracts declined around 3% in volume and 4% in value, indicating a modest but measurable slowdown in the rate at which renters are taking on new leases across the city.

Apartments Face the Sharpest Price Correction

Segment-level data confirms that apartments are bearing the heaviest impact of new supply. According to Allsopp and Allsopp, apartment rental transaction volume fell 11% year-on-year while rental value declined 5% - the most pronounced correction of any property category in the Dubai market.

The areas absorbing the most pressure are those that have received the greatest volume of new completions. Jumeirah Village Circle accounted for roughly 20% of units delivered in the first half of 2025, while Sobha Hartland represented around 11% and Mohammed Bin Rashid City approximately 8% of completions. These high-density communities are now experiencing the sharpest rental softening as new stock intensifies competition among landlords.

Villas and Townhouses Hold Firmer Ground

While apartments are repricing, villas and townhouses are proving considerably more resilient. Allsopp and Allsopp data shows villa and townhouse rental volume fell roughly 10% year-on-year, but rental value declined by only about 1%. The contrast highlights how different the supply picture is for family-oriented, lower-density homes compared with the apartment sector.

Several market forecasts for 2026 suggest villas could outperform apartments by around 10 percentage points in terms of price resilience, reflecting ongoing supply constraints and sustained demand from higher-income households. For tenants targeting villas in established family districts, pricing is likely to remain relatively firm - and landlords in those communities retain more negotiating leverage than their apartment counterparts.

A Record Supply Pipeline is Driving the Rebalancing

The primary catalyst behind rental stabilisation is a wave of residential completions on a scale not seen for a decade. Estimates cited alongside Allsopp and Allsopp's review indicate that around 20,000 units were delivered in the first half of 2025 alone, with total annual completions for 2025 forecast at roughly 90,000 and rising to approximately 120,000 in 2026. A broader pipeline of more than 200,000 units is projected through 2027, before supply is expected to taper off significantly.

This influx of new stock is giving tenants considerably more choice and eroding the bargaining power that landlords held throughout the 2022 to 2024 growth cycle. The greatest price adjustments are expected to continue occurring in apartment-heavy neighbourhoods where large volumes of new units are entering the market simultaneously. However, Allsopp and Allsopp has noted that earlier predictions of a 15% price crash - widely cited in 2025 - have not materialised. Instead, Dubai recorded over 205,000 real estate transactions in 2025, with off-plan sales rising 26% and Allsopp and Allsopp's own average sales price growing around 33%.

January Data Points to Strong Underlying Demand

Despite softer rents, demand metrics remain healthy heading into 2026. Month-on-month comparisons between January 2026 and December 2025 show listings jumped 70%, registrations grew 50%, and property viewings rose 53%, according to Allsopp and Allsopp. The brokerage notes that January is typically a busy month as new residents arrive at the start of the year, but the scale of the increases signals genuine underlying demand rather than seasonal noise.

Rental yields in Dubai - typically in the 6% to 10% range depending on location and asset type, according to research from firms including Knight Frank and Savills cited in specialist market outlooks - remain attractive by global standards. Market commentary characterises 2026 as an era of slower growth, more tenant negotiation, and increasingly differentiated sub-markets, rather than a broad collapse in values.

Regulatory Framework Supports Market Stability

The DLD rental index and the Ejari system - the mandatory online lease registration platform introduced in 2010 and overseen by RERA - continue to underpin tenant protections across the market. The rental index sets permissible rent increase limits by area and property type on renewal, which is especially relevant now as some landlords seek to hold onto peak-era pricing in a market where tenants have gained leverage. The DLD's online index calculator is publicly accessible at dubailand.gov.ae.

Beyond regulation, innovation in rent payment is also advancing. Property Finder has partnered with fintech platform Keyper to allow tenants to convert annual rent into 12 monthly instalments paid by card or direct debit, with the platform automating transfers to landlords. Meanwhile, the Virtual Assets Regulatory Authority (VARA) is supporting pilot projects in tokenised real estate that could eventually integrate with digital rent collection systems - a regulator-backed signal of the direction of travel for Dubai's leasing infrastructure.

What This Means for Tenants and Investors

For tenants, the current environment offers the most room to negotiate in several years - particularly in apartment-heavy communities where new completions have been concentrated. Market commentary for 2026 notes that tenants are increasingly securing rent reductions, more flexible payment terms, or fit-out improvements as landlords compete to maintain occupancy rates. Those targeting villas in popular family districts should expect firmer pricing, given limited new supply and ongoing demand.

For landlords and investors in high-supply apartment communities, the shift requires a strategy adjustment - with competitive pricing, stronger property management, and value-adding amenities becoming more important differentiators. In villa-dominated, lower-density neighbourhoods, investors can still plan for relatively stable rents but should account for a wider market where overall rental growth is broadly flat. The combination of DLD oversight, Ejari enforcement, and rental index guidance is designed to support a more predictable leasing environment as Dubai's housing stock moves into a more mature phase of its cycle.

What Clients are Asking their Advisors

What does Dubai rental market stabilisation mean for tenants in 2026?

Stabilisation means rents in many parts of Dubai - especially apartment-heavy areas - are falling or holding flat rather than rising sharply. Tenants now have more negotiating power and can often secure rent reductions, more flexible payment schedules, or property incentives from landlords competing to maintain occupancy.

How do I use the DLD rental index to challenge a rent increase in Dubai?

The Dubai Land Department (DLD) provides an online rental index and calculator at dubailand.gov.ae showing the permissible rent range for your area and property type. Under RERA rules, landlords can only raise rent within the limits set by this index, so comparing your current rent against the published figure is the first step in assessing whether a proposed increase is lawful.

Are Dubai villa rents falling as sharply as apartment rents in 2026?

No - the two segments are diverging clearly. Apartment rental values have fallen around 5% year-on-year with an 11% drop in transaction volume, while villa and townhouse values are down only about 1% despite a 10% volume decline. Limited new villa supply and sustained demand from higher-income families are keeping pricing relatively firm in that segment.

Could Dubai rents fall sharply through 2026, or is this just a temporary correction?

Most analysts describe current conditions as a normalisation from exceptionally high growth, not the start of a sustained crash. Earlier forecasts of a 15% price decline in 2025 failed to materialise, and Dubai recorded record transaction volumes that year. Rents are expected to remain broadly flat or decline modestly in oversupplied apartment districts, while well-located villa communities are likely to remain stable.