UAE Experts say the broader rental market remains fundamentally strong, supported by long-term demand and population growth
Residents in Dubai and Abu Dhabi are beginning to rethink their rental decisions, with some delaying lease renewals or exploring short-term options amid early signs that the market may be shifting in their favour.
While rents remain elevated overall, industry experts say growing uncertainty and recent changes in the short-term rental market are prompting a more cautious approach among tenants — and, in some cases, opening room for negotiation.
“The rental market right now has gone from a landlord’s market to a tenant’s,” said Mario Volpi, senior vice president advisory at Allegiance Real Estate.
Flexibility over long-term commitment
Some residents are increasingly opting to “wait and watch” rather than lock into 12-month contracts at current rates.
According to Volpi, if tenants have flexibility, many are choosing to delay decisions in the short term to better understand how the market evolves.
“If tenants have time, they are definitely delaying and waiting to see what prices do,” he said, adding that sentiment and uncertainty are currently key drivers of behaviour.
This shift comes as the short-term rental segment — including holiday homes — has seen a sudden slowdown in recent weeks, prompting some landlords to consider alternative leasing strategies.
Short-term pressure spilling into long-term market
Volpi explained that weakness in the short-term rental market can indirectly impact long-term rents.
As occupancy drops, some landlords may shift their properties into mid-term or annual leasing, increasing supply and putting downward pressure on prices.
However, he stressed that this dynamic is still evolving.
“It’s too early to say how the market will react in rentals,” he said, noting that the recent drop in short-term occupancy is a broad-based estimate driven largely by sentiment and external factors.
From rent hikes to negotiation
For many tenants, the experience just weeks ago was very different.
An Abu Dhabi-based project manager in the oil and gas sector, who renewed his lease in February, said he had little choice but to accept a rent increase.
“My lease was up for renewal in early February. The rent increase matched the maximum allowable (5%),” he said, adding that attempts to negotiate were unsuccessful.
“Essentially, I had no choice: either renew at the new rate or move out.”
Despite recent discussions around potential softening, he said he would still prioritise stability over speculation.
“Personally, I value stability, so I’d likely renew under similar terms,” he added, noting that market direction remains uncertain due to ongoing regional developments.
Extensions, short-term deals emerge
More recently, however, some tenants are attempting to negotiate short-term extensions instead of committing to full-year contracts.
Simriddhi Singh, an off-plan sales specialist and Abu Dhabi resident, said she has seen cases where tenants are requesting two- to three-month extensions to delay long-term commitments.
“People are asking for two to three months’ extension… to wait and see what happens,” she said.
In some cases, landlords are open to shorter terms — but at revised rates.
“Owners are willing to extend, but they are asking for the new rental price even on a monthly basis,” she said.
This reflects a market that is not necessarily declining, but becoming more nuanced.
“It will slow down, but it will not crash,” Singh added.
Outlook: Balanced market, not a downturn
Experts say the broader rental market remains fundamentally strong, supported by long-term demand and population growth. However, increased supply, seasonal trends, and shifting sentiment could lead to softer conditions in certain segments.
Volpi noted that tenants may begin to see added incentives, such as discounts, maintenance packages, or flexible terms, as landlords compete to secure occupancy.
“The real story is that Dubai is moving away from a runaway landlord market to a more balanced market that some tenants can use to lock in better rates,” he said.
Source: Khaleejtimes
