Dubai rents are softening, but demand is still active: what landlords need to know now
Dubai’s rental market is no longer moving with the same intensity seen over the past few years. While leasing demand remains active, the market has become more price-sensitive, more selective, and more competitive, particularly for landlords who are still pricing based on last year’s peak.
This was one of the clearest takeaways from betterhomes’ second Dubai property market webinar, a follow-up Q&A session focused on the questions clients are asking most right now.
Among the strongest themes to emerge was leasing, with landlords and tenants both trying to understand whether rents are falling, how much flexibility is reasonable, and what strategy makes most sense in the current market.
The short answer is that rental pricing has already softened in parts of the city, but the market is not collapsing. It is resetting into a more value-driven environment.
Rents are already moving lower in some parts of the market
One of the most direct data points shared during the webinar was that average rents being transacted by betterhomes were 12.5% below March 2025 levels.
What this means
This does not mean every landlord is facing a sharp drop, nor does it mean all communities are behaving the same way. Some villas and apartments for rent have held relatively firm, particularly those that are well-located, well-maintained, and priced correctly. Others have seen much steeper adjustments.
The property market is no longer rewarding unrealistic expectations in the way it did during the height of rental growth. Landlords who need to secure occupancy quickly are having to align more closely with what tenants are actually willing to pay today.
As Rupert Simmonds, Director of Leasing at betterhomes, explained during the webinar:
“Leasing is need-driven, not sentiment-driven. While enquiries initially dropped at the start of the month, activity gradually regained momentum, recovering to around 30% of typical levels. Tenants are more price-sensitive and are taking the time to compare options. Landlords who price correctly and present their properties well are securing tenants, but the market has become more competitive.”
Demand has not disappeared, but tenant behaviour has changed
Dubai remains a structurally strong rental market. A large share of the population rents, which means demand does not simply vanish when sentiment turns cautious. People still need homes. What changes is how they behave.
Tenants are taking longer to make decisions, comparing more listings, and pushing harder on value.
During the webinar, betterhomes highlighted that rental enquiry activity had recovered to around 30% of typical levels following the early-month dip. Week on week, activity was improving. That matters, because it shows demand is still present.
At the same time, the pattern of enquiries per new listing has shifted sharply. Rupert shared that:
- In a more typical market, betterhomes would often see 12 to 15 enquiries per new listing
- In the first few weeks of March, that dropped to around five
- At the time of the webinar, it had fallen further to just over two enquiries per new listing
That is one of the clearest indicators that the market has become more competitive for landlords. Fewer tenants are coming through per property, which means each listing has to work harder to stand out.
Landlords need to think commercially, not emotionally
For many owners, the challenge is psychological as much as financial. After several years of aggressive rental growth, it is difficult to adjust expectations, particularly when the market was rewarding ambitious pricing not that long ago.
The strongest landlords in this real estate market will be the ones who focus on occupancy, quality tenants, and realistic pricing rather than trying to hold out for yesterday’s peak.
The webinar made the point clearly: landlords should assess the market in the context of the gains they have already made over recent years.
In many cases, rents have risen dramatically since Covid. Rupert noted that there is a strong likelihood many landlords have seen rental values double over that period. Even if a lease is agreed today at 20% below last year’s peak, the owner may still be significantly ahead versus where they were a few years ago.
This is why commercially minded decisions matter more than emotional ones. A shorter void period, a reliable tenant, and a smooth renewal can often be worth more than pushing for a headline rent that the market no longer supports.
What should landlords do if tenants ask to renegotiate?
One of the questions covered in the webinar was highly practical: what happens when a tenant comes back mid-contract and asks for a rent reduction?
Legally, landlords do not have to engage with a mid-term renegotiation. Commercially, though, the answer depends on the tenant, the market, and the alternative.
Rupert’s response was clear. From a contractual standpoint, there is generally no obligation to renegotiate rent in the middle of a tenancy.
But that is only part of the picture.
Landlords should take a commercially minded view and ask:
- Is this a good tenant?
- Have they paid on time?
- How long have they lived in the property?
- What is the realistic alternative rent in the market today?
- What would the cost of a vacancy period be?
- Would repairs, marketing time, or lost time offset the difference?
In some cases, holding firm may be the right move. In others, making a sensible concession could protect occupancy and reduce risk.
This is especially relevant for landlords whose tenants signed at the top of the market. If a tenant recently moved in at peak pricing, the likelihood of downward pressure at renewal is already there. Creating some goodwill now may increase the chances of retaining them later.
Renewals need a practical, market-led approach
Landlord strategy in this phase should not be based on whether a tenant asks for less rent. It should be based on what makes the most sense over the next 12 months.
A vacant townhouse, villa, or apartment, a delayed renewal, or an unrealistic asking price can become more costly than a measured adjustment.
Where tenants have been in place since 2020 or 2021, landlords may have a stronger position. Because of RERA caps on rent increases, many longer-term tenants are often still sitting below today’s open-market rent, even after several years of movement. In those cases, landlords may reasonably push back and ask for evidence before agreeing to any reduction.
But where a tenant entered recently at higher market pricing, the conversation is different. If the broader market has softened, landlords should think beyond the current negotiation and consider what is likely to happen at renewal anyway.
This is where advice matters. The question is not just “Can I get more?” but “What is the most commercially sound outcome from here?”
Rental supply is rising and that is changing the balance
Another important factor discussed during the webinar was supply. More landlords are returning stock to the long-term market, including owners who may previously have favoured short-term rental strategies.
As more inventory comes back to the market, tenants have more choice and landlords face more competition.
This change in supply is helping explain why the Dubai real estate market feels different even though demand is still active. More listings, combined with fewer enquiries per property, create a more balanced environment and give tenants more negotiating power than they had at the height of the rental surge.
That does not mean tenants control the market entirely. It means landlords have to compete more deliberately, through pricing, presentation, responsiveness, and strategy.
For owners who are comparing long-term and short-term rental models, this shift matters. The webinar noted that many landlords are now finding long-term leasing more stable than short-term rental in the current environment, particularly as holiday-letting occupancy assumptions become harder to justify.
Could softer rents actually support future demand?
One of the more constructive points raised during the discussion was that softer rental pricing is not necessarily bad news for Dubai overall.
If leasing costs ease, the city becomes more accessible, which can support population growth and future demand.
As Rupert pointed out, one of the biggest inflationary pressures in Dubai over the past few years has been rental cost. If that pressure moderates, it lowers the cost of entry for people considering a move to the city.
That matters because Dubai’s rental market does not exist in isolation. It sits within a wider story about mobility, affordability, and demand. A more stable leasing environment can improve confidence and broaden access, which in turn supports occupancy and longer-term market health.
So while landlords may need to reset expectations in the short term, a more sustainable rental market can still be positive in the bigger picture.
What landlords should focus on now
The leasing market is still moving, but success now depends less on momentum and more on discipline.
The landlords performing best in this market are the ones making realistic, well-informed decisions.
That means focusing on:
1. Pricing realistically
Tenants are comparing more options and pushing harder on value. Overpricing is more likely to create delay than upside.
2. Presenting properties properly
When fewer enquiries are coming through per listing, the quality of the listing itself matters more. Photography, readiness, cleanliness, and responsiveness all affect performance.
3. Understanding vacancy cost
A small concession may be cheaper than a longer void period, especially when combined with maintenance or reletting costs.
4. Reviewing tenant quality
Reliable tenants with good payment history are valuable in a more competitive market. Retention is often worth protecting.
5. Taking a medium-term view
The leasing cycle is shorter than the sales cycle. Missing a peak on one renewal is not the end of the investment case. Good decisions now can still position landlords well for future recovery.
The bigger takeaway: softening is not the same as breaking
Dubai’s rental market is clearly softer than it was at its most aggressive point, but the market is not breaking. Demand is still active, enquiry levels are improving week on week, and landlords are still securing tenants, particularly when they price well and act pragmatically.
This is not a frozen market. It is a more selective one. That distinction matters.
The current phase is less about chasing maximum rent and more about understanding what the market will support today. For landlords, that means moving from expectation-led decisions to advice-led decisions. For tenants, it means more room to compare and negotiate. For the wider market, it points to a healthier and more sustainable balance than the one seen during the sharpest phase of rental inflation.
As discussed during the webinar, the question is no longer whether leasing conditions have changed. They already have. The real question is how landlords respond.
Watch the webinar and speak to a betterhomes expert
The leasing segment in betterhomes’ latest Dubai property market webinar covered the questions landlords and tenants are asking most right now, from rent reductions and renewals to demand, supply, and pricing strategy.
Watch the full video for more insights, or speak to a betterhomes expert for advice tailored to your property, tenant, and area.
