Dubai landlords are opting to retain and lease their properties as long-term tenants show willingness to pay premium rents for ultra-luxury homes.
Dubai’s rental market reached a record high in June, with rising demand from new tenants and existing residents renewing leases pushing contract volumes to their highest level ever. Property sales also recorded growth across all market segments.
According to a market analysis by fäm Properties, Dubai registered 40,022 rental contracts in June, marking the strongest monthly performance on record. New rental agreements surged 48.6% year-on-year to 19,245, while renewed contracts increased 28.5% to 20,777.
“It would be inaccurate to view the surge as simply tenants shifting between properties. The key trend is that renewals remain equally strong. We are seeing fresh demand entering the market while existing demand continues to strengthen at the same time,” said Firas Al Msaddi, CEO of fäm Properties.
Al Msaddi attributed the strong market activity to renewed confidence following a period of regional uncertainty.
“What people witnessed was a reflection of the UAE’s resilience, agility and wise leadership, which helped restore confidence at an even stronger level than before,” he said. He added that market conditions had also become more favourable for tenants due to the delivery of a number of new projects.
Al Msaddi highlighted the rise of long-term leasing as one of the most notable trends in Dubai’s property market, with the shift now extending into the ultra-luxury segment. He said annual rental agreements, which were previously more common in affordable and mid-market housing, are increasingly gaining traction among high-end properties.
He noted that Dubai’s ultra-luxury villa market is seeing a significant change, with more owners choosing to retain their assets and generate rental income rather than sell.
In the past two months, fäm Properties has secured two-year lease agreements for two villas in Al Barari. One property was leased for Dh14 million over two years, equivalent to Dh7 million annually, while the second was leased for Dh7.2 million over the same period, or Dh3.6 million per year.
“This demand is no longer limited to affordable housing. The strongest signal emerging from the market is the growing appetite for long-term annual leases in the ultra-luxury property segment,” he added.
Al Msaddi said the trend reflects a broader change in how property owners view the market. Many of the villas now entering the rental sector were originally developed for sale, but owners are reassessing their strategies based on expectations of sustained long-term growth.
“The owners of these villas — assets that were originally built for sale rather than rental — have confidence in the market’s future direction. That confidence is leading them to reconsider their plans,” he said.
“Instead of selling under current market conditions, many owners are choosing to retain their properties and lease them out, as committed long-term tenants are prepared to pay premium rents for these homes. Owner confidence is now influencing supply in the same way tenant demand is shaping the market,” Al Msaddi added.
