Dubai Sees Surge in Homeownership as Lease Renewals Decline by 30%

Dubai's property market is witnessing a significant shift as more tenants transition to homeownership, driven by escalating rental prices and attractive payment plans from developers. New data highlights a growing trend among residents choosing to invest in property rather than continue renting.

According to Dubai Land Department data cited by Allsopp & Allsopp, February 2025 saw a 30 per cent month-on-month drop in rental renewals, indicating a notable transformation in the real estate landscape. Lewis Allsopp, chairman of Allsopp & Allsopp, emphasized that the shift is not just a fleeting trend but a long-term commitment by residents.

"The clear decrease in rental renewals, combined with the strong growth in villa sales, shows that people are making long-term commitments. They're moving beyond renting and choosing to settle here,"

said Allsopp.

Affordable Communities in Demand

The sustained increase in rental rates across Dubai over the past four years has more than doubled prices in some communities. This surge, driven by an influx of new residents and limited supply, is prompting tenants to seek affordable alternatives. Randy Fink, CEO of Asteco, noted that this has fueled demand in lower and mid-end market segments.

"As rental rates continued to rise across all sectors and areas, the quest for affordability drove increased rental growth and activity in the lower and mid-end segments. This trend benefited affordable communities in Dubai and Abu Dhabi, along with the Northern Emirates,"

said Fink.

Allsopp & Allsopp's February Market Snapshot further revealed a 105 per cent year-on-year surge in villa and townhouse sales value, highlighting the increasing preference for long-term homeownership.

Developers Respond with Innovative Payment Plans

To cater to the rising demand for homeownership, developers are introducing innovative payment plans. Real estate consultancy Asteco reported that some Tier-1 developers are offering payment structures as high as 80/20 or 75/25, along with incentives such as lower down payments, extended payment plans, and discounts on service charges.

In a groundbreaking move, Damac Properties, Dubai's largest private developer, announced a new financing option for off-plan projects. The initiative allows UAE residents to secure bank financing once construction reaches 35 per cent completion, a significant shift from the usual 50 per cent threshold.

Amira Sajwani, managing director of sales and development at Damac Properties, described the initiative as a game-changer.

"It is also a testament to our unwavering commitment to making homeownership a reality for many residents. We are thrilled to be the first developer in the UAE to introduce this solution, which makes luxury living even more accessible and sets a new standard for financial flexibility in real estate investment in the UAE,"

said Sajwani.

With competitive pricing, attractive financing options, and a growing desire for long-term stability, Dubai's property market is increasingly appealing to both residents and investors, solidifying the city's position as a prime destination for homeownership.

News Source: Khaleej Times