The proportion of Dubai rental deals recording lower rents has more than quadrupled since the start of the year, as record property handovers give tenants greater choice, according to Cavendish Maxwell.
More than one in five Dubai tenants are now paying less rent than under their previous contract, as an expanding supply of completed homes gives renters greater bargaining power, according to new research by property consultancy Cavendish Maxwell.
In the third quarter of 2026, 21.4 per cent of rental transactions recorded a reduction compared with the previous contract, up from 4.8 per cent in the first quarter. Another 38.7 per cent of tenants renewed at the same rent, while the proportion facing an increase fell to 40 per cent from 59.4 per cent over the same period.
Cavendish Maxwell said the figures point to a gradual shift in the rental market, with landlords facing less pricing power and tenants gaining more room to negotiate.
Average rents stood at Dh77.3 per square foot annually in September, representing a 5.5 per cent increase year-on-year. This was considerably slower than the 11.5 per cent annual growth recorded in September 2025. Rents declined in the second quarter before recovering in the third quarter to return to their March 2026 level.
More than 172,000 rental contracts were registered in Q3. Renewals fell 10.6 per cent year-on-year to 94,300, while new contracts increased 18.2 per cent to 77,700.
The consultancy expects the growing availability of residential properties to put further pressure on rental growth, particularly in the apartment segment, which accounts for the largest share of new completions.
Gross rental yields averaged 6.6 per cent for apartments and 4.9 per cent for villas and townhouses in Q3. Apartment yields edged down from a year earlier but remained attractive compared with other major global residential markets.
Dubai Investments Park recorded the highest apartment yield at 10 per cent, followed by International City at 9 per cent and Dubai Production City at 8 per cent. For villas and townhouses, Dubai Industrial City led with 6.5 per cent, ahead of Jumeirah Golf Estates at 5.8 per cent and Damac Hills 2 at 5.7 per cent.
Record deliveries
Dubai handed over approximately 38,000 residential units between January and September, a 41.4 per cent increase on the same period in 2025. The total also exceeded the full-year delivery figures for both 2023 and 2024.
Around 12,400 homes were completed in the third quarter alone.
A further 24,400 units are scheduled for delivery during the remainder of 2026. However, based on historical completion rates, actual handovers are expected to range between 7,300 and 12,200 units.
The longer-term pipeline is considerably larger, with 136,100 homes scheduled for 2027 and another 155,700 for 2028, bringing the combined total to 291,800 units.
“The contraction in launches highlights a significant scaling back of development, with caution among developers and regional uncertainty leading to some projects being deferred. Meanwhile, the volume of new units planned for handover in the next two years is considerable, even when materialisation rates are brought into the equation,” said Ronan Arthur MRICS, director and head of residential valuation at Cavendish Maxwell.
He added that the market’s ability to absorb the additional supply would depend on population growth, household formation, employment, and investment demand.
Sales and prices cool
Dubai’s residential property market recorded Dh72.6 billion in sales across 33,900 transactions in Q3. Compared with the second quarter, sales value declined 13.2 per cent and transaction volumes fell 2 per cent.
The year-on-year slowdown was more pronounced, with sales value dropping 47.6 per cent and transaction volumes falling 38.6 per cent. The number of deals was the lowest recorded in a quarter since Q1 2024.
Average residential sales prices stood at Dh1,644 per square foot in September, down 2.2 per cent year-on-year. This marked the first annual decline since the post-pandemic recovery began, with prices turning negative in August. However, prices edged up 0.3 per cent compared with the previous quarter.
Off-plan properties accounted for 72.2 per cent of all transactions, representing 24,500 deals worth Dh47.1 billion. Despite their dominant share, off-plan sales were down 41.9 per cent year-on-year.
Ready-property transactions increased 19.7 per cent quarter-on-quarter to 9,400, although they remained 28 per cent below the level recorded in Q3 2025.
Arthur said: “Following two years of sustained increases in sales activity, transaction volumes have declined over the last four quarters, with Q3 2026 purchases at their lowest level since Q1 2024 and more than 38 per cent down on the peak levels recorded a year ago. Cavendish Maxwell has reported a more measured investment environment over the last few months, and this latest insight highlights how regional tensions continue to affect investor confidence and buyer sentiment.”
Where buyers are active
Dubai South led off-plan apartment sales with 4,776 transactions, more than 2.5 times the 1,865 recorded in second-placed Downtown Jebel Ali. Azizi Milan followed with 1,283 deals, ahead of Jumeirah Village Circle with 1,153 and Dubai Residence Complex with 946.
In the ready-apartment segment, Jumeirah Village Circle retained the top position with 1,111 sales, twice the 555 transactions recorded in Business Bay.
Sobha Sanctuary led off-plan villa and townhouse sales with 282 transactions, while Damac Lagoons topped the ready villa and townhouse segment with 211 deals.
Luxury properties priced at Dh20 million and above recorded 257 sales worth a combined Dh9.6 billion, marking a 40.5 per cent decline year-on-year. In the ultra-luxury segment, homes valued at Dh50 million or more accounted for 42 transactions worth Dh3.4 billion. Nine properties sold for more than Dh100 million each.
Launches slump
Developers launched 48 projects comprising 15,300 units in Q3, representing year-on-year declines of 72.7 per cent in the number of projects and 62.9 per cent in unit launches. However, the number of units launched more than doubled compared with the previous quarter.
During the first nine months of 2026, a total of 190 projects featuring 49,800 units were launched. This was down 67.7 per cent and 65.5 per cent, respectively, compared with the same period in 2025.
Cavendish Maxwell attributed the slowdown to greater caution among developers and regional uncertainty, which prompted several to postpone launches.
The consultancy expects downward pressure on property prices to continue into 2027, while rental growth is likely to moderate further.
