Real-time Rental Index prompts landlords to raise rents sharply for second consecutive year
A growing Dubai rent hikes are facing the financial strain of double-digit rent increases for a second consecutive year for the residentials, as landlords take advantage of a real-time Rental Index introduced by the Dubai Land Department (DLD) earlier this year. Despite some talk of a possible cooling in the market, many tenants are being hit with back-to-back rental hikes that show no signs of abating.
Real-Time Rental Index Driving Up Dubai Rent Hikes
Since January, the DLD’s updated Rental Index has empowered landlords to adjust rents in line with area-specific market rates. Industry insiders say landlords are now rushing to match their unit rents with current averages, resulting in significant increases for existing tenants.
“There is no rental correction going on in Dubai right now,” said a leasing agent. “Landlords who are allowed to hike rents as per the data from the Rental Index are doing just that. There’s no reason for them to hold back—it’s the tenants who now have to decide whether to stay or leave.”
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The Dilemma for Tenants: Stay or Move?
The current Dubai rent hikes environment has placed many tenants in a difficult position. Choosing to stay means accepting yet another rent increase—often 10% or more. On the other hand, moving to a new property might not offer much financial relief either, with elevated rents now prevalent across the city.
“Tenants who had been shielded during the COVID-era with Dubai rent hikes are now facing reality,” said Rupert Simmonds, Director of Leasing at Better homes. “Those who’ve been in the same apartment for 3-4 years are likely seeing sharp increases, as landlords seize the opportunity to catch up to the current market.”
Softening Seen in Older Properties
While Dubai rent hikes dominate the broader narrative, not all tenants are feeling the pressure equally. Older buildings, particularly those rated lower under the DLD’s star-based classification system, are showing signs of rent softening. In many such cases, landlords are restricted from raising prices significantly, offering some reprieve for residents willing to compromise on building age and amenities.
Nevertheless, these instances appear to be the exception rather than the rule. In most popular neighbourhoods, demand remains high, allowing property owners to maintain or increase rental rates confidently.
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Developers Prepare for Rental Surge in New Projects
Adding another layer to the Dubai rent hikes is the wave of new property completions expected in 2025. Despite forecasts predicting 70,000 to 100,000 unit handovers this year, developers say a large chunk of these homes will end up in the rental market.
“About 40% of the units at our first freehold project in Liwan will be placed for rent,” said Murtaza Moiz, Vice Chairman of Symbolic Developments and Speedex Group. “The remaining 60% were purchased by end-users, which gives us a balanced demographic in the area.”
According to Moiz, Dubai rent hikes in Liwan currently stand at Dh65,000 to Dh70,000 for one-bedroom units and Dh100,000 to Dh120,000 for three-bedrooms—figures that reflect solid rental yields. He believes the area is poised for further growth due to ongoing infrastructure development.
Looking Ahead: Will the Trend Continue?
While some believe Dubai rent hikes could eventually stabilize, experts warn that current upward momentum may persist until a broader correction occurs across multiple neighbourhoods and housing categories. For now, landlords are not willing to take chances on future flattening of rates and are instead maximizing rental income while market conditions allow. Whether tenants choose to stay put or brave the increasingly competitive rental landscape, one thing is certain: navigating Dubai’s housing market in 2025 is proving to be a costly affair for many.
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