Dubai: Up to 20% drop in rents 'healthy' for property market, says top developer

A 10-20 per cent drop in rents is healthy for the following a four-year rally, said a top developer.

Rizwan Sajan, founder and chairman of Danube Properties, expects a correction in rents next year after a double-digit increase since the Covid-19 pandemic.

“Rental correction might come around 10-20 per cent next year, which is required and healthy because rentals have gone very high. A 10-20 per cent rental correction will help the market as investors are coming here what is happening around the world. Dubai benefits whenever there is uncertainty in the world. But at the same time, prices and rents should not go too high,” Sajan told Khaleej Times in an interview.

Rizwan Sajan

As reported last week, some properties in Dubai have started to see a due to growing competition among landlords, the impact of the Smart Rental Index on older properties and the supply of new units pressuring rents down. But a wider drop in rents across more communities is expected to be felt next year.

Danube Properties chief also attributes a strong pipeline of new supply which will hit the market next year for a drop in rents.

According to Property Monitor, Dubai saw 7,848 units handed over in the first quarter of 2025. A total of 71,251 for the whole of 2025, 80,015 in 2026 and 58,766 in 2027.

“This substantial influx of new supply over the medium term will be a key factor to watch, alongside ongoing demand dynamics, as it may influence both property prices and rental rates,” said Betterhomes in its first quarter report released on Monday.

“We should see some next year when deliveries happen. Prices might also see some correction, but there is nothing to worry about for good developers who offer good quality and amenities,” Sajan said, adding that a lot of investors from the US and Canada are coming to UAE.

“Dubai always benefits whenever there is uncertainty globally,” he said.

Shortage of quality contractors

Danube Properties is among the top 10 developers in Dubai, delivering thousands of units so far. It delivered three projects ahead of schedule since the first half of 2024.

The private developer has launched 34 projects, successfully delivered 18, with another 16 currently in various stages. Last week, it unveiled its latest residential project Sparklz by Danube, a 358-unit tower coming up in Al Furjan.

Currently, Danube holds an impressive book value with construction spanning over 25.5 million square feet.

Sajan said there is a shortage of quality contractors in Dubai as the emirate has seen a good influx of new foreign developers as well as local ones.

“Finding a good contractor is going to be very, very challenging. Selling properties will not be as big a challenge as finding a contractor because there are too many developers but the number of contractors is the same. Also, contractors like to work with only developers with good reputations because the property market is cyclical and this market has seen its share of ups and downs. And contractor could face a challenge if developer’s reputation is good,” said Sajan

“There are not as many new contractors coming here as the number of developers. There is plenty of space for contractors to grow – more space for contractors than developers. More contractors from Oman, Bahrain, Saudi Arabia and India should come here because there is a lot of work here in Dubai and UAE,” he said.

Danube's chief suggested that developers coming from other countries should bring in contractors as well to meet growing demand.

For contractors, he noted, it is very easy to set up a company, hire workers, process visas for labourers and get approvals.

“Dubai is one of the to do business and work,” he added.