Dubai reports rise in multi-year tenancy contracts as rents increase

Tenants seek more favourable lease terms in a competitive environment

In Dubai, one- and two-cheque payments increased by 10 per cent and 11 per cent, respectively, on a quarterly basis in the first three months of 2025, according to Betterhomes. Chris Whiteoak / The NaShow more

Dubai is recording an increase in multi-year rental contracts as more tenants are planning to stay in the city for longer and seek to secure favourable lease terms, a new report has found.

“These tenants value the ability to lock-in their rent for better financial planning, while landlords benefit from reduced turnover and fewer vacancy periods,” said Rupert Simmons, directors of leasing at real estate company Betterhomes.

“Longer-term commitments are a positive indicator of a maturing rental market.”

One- and two-cheque payments increased by 10 per cent and 11 per cent, respectively, on a quarterly basis in the first three months of 2025, the data found.

This trend is potentially driven by tenants aiming to secure more favourable lease terms in a competitive environment and indicates a growing presence of higher-income demographics entering the market, according to the Betterhomes report. While multiple cheque payments remain a common practice, tenants with higher budgets tend to show greater flexibility in their payment terms, the research revealed.

Renewal contracts continued to dominate rental activity, with 64 per cent of all leases in the first quarter being renewals, the highest proportion in the past year. This shows that tenants choose to remain under the protection of the rental price index as they see better value by staying put, rather than re-entering the market, the report said.

Dubai Marina, Jumeirah Lakes Towers and Downtown Dubai were the top leasing communities for apartments, while family-friendly communities such as The Springs, Dubai Hills Estate and Tilal Al Ghaf were most popular for leasing townhouses, Betterhomes revealed.

“The strongest increase in demand was seen in the townhouse segment, pointing to increased interest in this housing type,” the report said.

A growing number of long-term tenants are choosing to purchase property, driven by relatively lower mortgage payments compared to rental costs.

“In today’s market, the gap between renting and owning has never been narrower. With mortgage rates stabilising and property values on the rise, buyers are seizing the opportunity to turn monthly payments into long-term equity. Ownership in Dubai is a strategic financial move,” said Jeffrey De Souza, head of mortgages at Lomond, a mortgage service provider.

To put this into perspective, consider a two-bedroom property in The Springs, typically priced at around Dh3 million ($816,882). The annual range for such a property ranges between Dh150,000 and Dh200,000, according to the Real Estate Regulatory Agency’s rental index calculator, the Betterhomes report explained.

A 25-year mortgage on a Dh3 million property at an interest rate of 3.99 per cent would result in monthly payments of approximately Dh12,655, or Dh151,860 annually, highlighting the financial advantage of buying over renting, the report said.

Dubai's property market has been benefiting from government initiatives such as residency permits for retired and remote workers, expansion of the 10-year golden visa programme and overall growth in the UAE’s economy on diversification efforts.

The city’s real estate market recorded 42,422 sales transactions in the first quarter of 2025, a 23 per cent increase compared with the same period last year, according to the Dubai Land Department. However, transaction volumes declined by 10 per cent compared with the particularly active final quarter of 2024. The off-plan sector was a major contributor, accounting for 24,942 transactions, a 25 per cent increase annually, and representing 59 per cent of all deals.

The overall value of real estate sales in Dubai recorded a 29 per cent year-on-year increase, touching Dh114 billion in the first quarter of this year, according to the DLD data.

Apartment sales rose 14 per cent year-on-year to 32,237 transactions, with their total value up 12 per cent to Dh60.8 billion. Villa transactions jumped 65 per cent to 10,185, and value rose by 56 per cent to Dh53.4 billion.

“What’s notable is the shift to more end-users and mortgage-backed buyers, indicating deeper confidence in Dubai as a place to live and invest long-term,” said Christopher Cina, director of sales at Betterhomes.

While 7,848 units were handed over in the first quarter of 2025, a considerable volume of new properties is expected to be delivered in the coming years, according to data from Property Monitor. There is expected to be a notable peak in anticipated completions in 2026, with nearly 97,000 units forecasted.

“This substantial influx of new supply over the medium term will be a key factor to watch, alongside ongoing demand dynamics, as it may influence both property prices and rental rates,” the Betterhomes report said.

Projected supply remains elevated through 2027 and 2028, before tapering off towards 2029, the report added.