The gap between lease renewals and new tenancy contracts in Dubai is narrowing as tenants increasingly consider moving to newly developed areas on the city's outskirts.
According to industry experts, most tenants still prefer lease renewals to avoid higher rental costs. However, the delivery of new units in suburban locations offers more affordable options with larger unit sizes, prompting more tenants to explore fresh living spaces.
Matthew Green, head of research for MENA at CBRE, noted that although tenants generally favor lease renewals, the widening supply of new developments in peripheral areas is giving them alternative choices. New projects provide tenants with competitive rates and more space without sacrificing amenities.
Real estate activity has surged, with a projected 72,365 units expected to be handed over in 2025, marking a 171% increase. While the leasing market remains undersupplied in the short term, with only 25,000 units expected in 2024, a significant increase in new deliveries is anticipated between 2026 and 2028, as the development cycle peaks.
Despite these changes, rents are still on the rise, with apartment rents increasing by 16% and villas by 13% in 2024, according to CBRE. The Dubai Land Department’s recent launch of the Smart Rental Index aims to better reflect unit quality in rental calculations, promoting a fairer assessment of lease terms.
Meanwhile, cooling measures are being implemented to prevent market overheating, including restrictions on lending for transactional setup fees and stricter developer payment terms. With strong investor confidence and continued demand, 2025 is expected to bring more growth and opportunities in Dubai’s residential market.
News Source: Khaleej Times
