Dubai rent growth eases as apartment supply surges
<h2><strong>Dubai rent growth steadies as apartment boom reshapes housing market</strong></h2><p>Dubai’s property market is entering a new phase of stability, signaling maturity after two years of record-breaking rent and price surges. With more homes entering the market, tenants are finally getting relief, while apartment sales continue to soar and villa demand cools slightly.</p><h3><strong>Rents flatten as supply catches up</strong></h3><p>According to new data from <i>ValuStrat’s Q3 2025 Real Estate Review</i> and <i>Betterhomes’ Shaping Skylines</i> report, rental growth has begun to stabilize. Rents across Dubai rose by just <strong>2.1% in Q3</strong>, compared with <strong>5.5% in Q2</strong>, bringing annual growth down to <strong>14.8%</strong>. The slowdown reflects a growing balance between housing supply and tenant demand.</p><p>Apartment rents grew at a slower pace, while villas — particularly in high-demand areas such as <strong>Arabian Ranches</strong> and <strong>Palm Jumeirah</strong> — even saw small quarterly declines. Analysts attribute this to the sharp increase in new residential completions across the city.</p><p>Betterhomes also recorded a <strong>92% surge in leasing transactions year-on-year</strong>, but with rental prices holding steady. The average annual rent in Dubai now stands at <strong>Dh196,000</strong>, with apartments dominating new leases.</p><p>For many residents, this marks the first sign of relief in years. “More supply is coming online, giving renters options again,” said a Dubai-based leasing manager. “Landlords are now more open to negotiation on prices and flexible payment terms.”</p><h3><strong>Apartment sales take center stage</strong></h3><p>While rents are cooling, apartment sales have taken off. Betterhomes reported apartment transactions worth <strong>Dh93 billion in Q3</strong>, the highest quarterly total ever recorded. Sales volumes climbed <strong>22%</strong>, and off-plan sales surged <strong>35% quarter-on-quarter</strong>.</p><p>Off-plan properties now represent nearly <strong>70% of all transactions</strong>, underscoring strong developer confidence and investor appetite for new projects. Many buyers are targeting mid-range communities such as <strong>Jumeirah Village Circle</strong>, <strong>Business Bay</strong>, and <strong>Arjan</strong>, where improved affordability and a recent <strong>US interest rate cut</strong> have boosted activity.</p><p>ValuStrat’s report confirmed this shift toward apartments, noting that most new supply and sales momentum are concentrated in these emerging areas rather than Dubai’s luxury segment.</p><h3><strong>Villa market takes a breather</strong></h3><p>After two years of exceptional gains, villa and townhouse sales dipped <strong>30% in Q3</strong>, a sign of natural market recalibration rather than a decline in interest. Prices in established upscale neighborhoods like <strong>Emirates Hills</strong> and <strong>Dubai Hills Estate</strong> remain firm, supported by limited prime supply and long-term investor confidence.</p><p>“Villas aren’t falling out of favor,” explained <i>Betterhomes CEO Louis Harding.</i> “This is a moment of pause, not panic. The market is simply digesting the rapid growth seen in 2023 and 2024.”</p><h3><strong>Prices reach record highs</strong></h3><p>Despite the slowdown, overall residential prices continue to climb modestly. Betterhomes data shows Dubai’s average home price now stands at <strong>Dh1,664 per sq ft</strong> — almost double the level seen in 2020. ValuStrat’s index indicates an annual price increase of <strong>21.6%</strong>, though quarterly growth is moderating as new projects enter the market.</p><p>More than <strong>28,500 residential units</strong> were delivered in 2025 alone, around <strong>85% of them apartments</strong>, easing supply pressures. Analysts expect as many as <strong>200,000 new homes</strong> to be completed by 2027, which should further balance demand and keep rents in check.</p><h3><strong>Outlook: balance and opportunity</strong></h3><p>With increased inventory, competitive pricing, and improving affordability, Dubai’s real estate market is maturing into a more balanced ecosystem. Renters finally have leverage after years of steep hikes, while long-term investors continue to see the city as a resilient, high-yield destination.</p><p>“The days of runaway rent growth are over,” one analyst summarized. “Dubai’s property market is entering a sustainable phase — still dynamic, but far more balanced.”</p>