Dubai Q3 rents: 1 in 5 new contracts signed at a lower rent

Dubai tenants gained more room to negotiate in the third quarter of 2026, with a growing share of leases signed at lower rents, according to property consultancy Cavendish Maxwell, as reported by Khaleej Times on 2 November.

Rent cuts become more common

Cavendish Maxwell found that 21.4% of rental transactions in the third quarter recorded a lower rent than the previous contract, up from 4.8% in the first quarter. About 38.7% of contracts renewed at the same rent, while 40% carried an increase, down from 59.4% over the same period.

Average rents were AED 77.3 per square foot per year in September, 5.5% higher than a year earlier. That compares with annual growth of 11.5% in September 2025, so rents are still rising but at a slower pace.

New leases overtake renewals

More than 172,000 rental contracts were registered in the quarter. Renewals totalled about 94,300, down 10.6% year on year, while new contracts rose 18.2% to roughly 77,700. In other words, more tenants are moving rather than staying put.

Gross rental yields averaged 6.6% for apartments and 4.9% for villas and townhouses, according to the same report.

Supply is the driver

Around 38,000 homes were delivered between January and September, up 41.4% on the same period last year. Cavendish Maxwell said scheduled deliveries are 136,100 units in 2027 and 155,700 in 2028, although it noted that actual completions usually fall short of schedules.

The consultancy said the shift points to weaker landlord pricing power and expects downward pressure on prices to persist into 2027, with rental growth slowing further.

What it means for residents

Tenants approaching a renewal may have more bargaining power than in recent years, particularly where comparable new listings are cheaper. Landlords and investors should note the slower rent growth when assessing returns. Any rent increase on renewal remains subject to Dubai's rental rules and the tenancy contract, so residents should check their own contract and the official rent calculator before negotiating.

The figures come from a single consultancy report, and market data can differ between providers.