The Dubai real estate market is witnessing a significant shift as the gap between lease renewals and new tenancy contracts continues to narrow. Historically, tenants in Dubai have preferred to renew their leases due to rising rental prices. However, the increasing availability of new residential developments in Dubai is giving tenants more options, allowing them to explore affordable rental properties in emerging neighborhoods.

Why Are Tenants Still Renewing Their Leases?

Industry experts agree that high rental costs in Dubai remain the primary reason why tenants opt for lease renewals rather than moving to new units. Renewing a lease often means avoiding additional costs associated with moving expenses, security deposits, agency fees, and higher rental prices in competitive areas like Dubai Marina, Downtown Dubai, and Palm Jumeirah.

New Developments Are Changing the Game

Despite this trend, new residential projects on the outskirts of Dubai are offering tenants compelling alternatives. According to Matthew Green, Head of Research for MENA at CBRE, newly launched developments attract tenants seeking spacious apartments in Dubai with modern amenities at competitive rates.

• New community expansions in areas like Dubai South, JVC, and Dubailand are attracting families and professionals looking for larger spaces at lower costs.
• Rental demand in Dubai’s emerging neighborhoods is steadily increasing due to better connectivity, improved infrastructure, and community-centric developments.

Projected Housing Supply & Market Growth

A record-breaking 72,365 residential units are expected to be handed over in 2025, a 171% increase compared to previous years. While the current rental market in Dubai remains undersupplied, the anticipated influx of new apartments and villas will help moderate rental prices in the long run.

Key Forecasts for the Dubai Rental Market:

• Rental prices for apartments in Dubai have already increased by 16% in 2024, while villa rentals have grown by 13%.
• With a 3.8 million population and growing demand for rental properties, the city is seeing increased lease registrations, with a 7% year-on-year growth.
• The introduction of the Smart Rental Index by Dubai Land Department (DLD) aims to create fairer rental calculations by considering unit quality and amenities.

Cooling Measures to Stabilize the Market

To prevent an overheated real estate market, the UAE Central Bank has implemented measures to restrict lending on transactional setup fees such as:

• 4% DLD Registration Fee
• Mortgage Arrangement Costs
• Other Property Transactional Fees

These steps come at a time when off-plan property transactions in Dubai have surged to 70% of all sales in 2024, a cyclical high for the market. Some developers have also adjusted their payment plans, requiring higher upfront deposits and phased construction-linked payments, reducing speculative buying.

Real Estate Investment Opportunities in 2025

Despite these regulatory changes, the Dubai property market remains a top investment destination. Savills predicts continued market resilience in 2025, with strong investor confidence, rising demand for off-plan properties, and increasing interest in luxury real estate in Dubai.

Best Areas for Real Estate Investment in Dubai 2025:

• Jumeirah Village Circle (JVC) – Affordable living with strong rental yields
• Business Bay – High-end apartments with strong ROI potential
• Palm Jumeirah – Luxury waterfront properties with high capital appreciation
• International City – One of the highest rental yield areas in Dubai

Final Thoughts: Should You Renew or Move?

For tenants, renewing leases in Dubai might still be the best option in core communities like Dubai Marina, Downtown Dubai, and JLT, where supply remains limited. However, those willing to explore new rental properties in Dubai’s expanding neighborhoods can benefit from lower rental costs, larger spaces, and modern amenities.

For real estate investors in Dubai, the current market conditions offer opportunities to capitalize on rising rental demand and capital appreciation. With more properties being handed over in 2025 and beyond, tenants and investors alike should stay informed about Dubai’s property trends to make the best decision.

Looking for Expert Real Estate Guidance?

At Blue Collection Real Estate, we specialize in helping tenants, landlords, and investors navigate Dubai’s dynamic property market. Whether you’re looking to renew your lease, move to a new home, or invest in Dubai real estate, our expert team is here to assist you.

Get in touch today to explore the best real estate opportunities in Dubai.