Residents in Dubai and Abu Dhabi are taking a closer look at their rental options, with some choosing to delay lease renewals or explore shorter-term arrangements as early indicators suggest the rental market may be leaning in their favour.

Although rental rates remain high overall, experts in the real estate sector say growing uncertainty and recent changes in the short-term rental segment are prompting tenants to adopt a more cautious approach—and in some cases, creating opportunities for negotiation.

“The rental market has shifted from a landlord-dominated environment to one where tenants have more leverage,” said a senior real estate advisor.

Flexibility Over Long-Term Commitment

Many tenants are opting to “wait and watch” instead of locking into standard 12-month contracts at current prices. Those with flexibility are delaying decisions to observe how rental trends develop over the coming months.

“If tenants have time, many are choosing to postpone renewal to see if prices stabilise or decrease,” the advisor added. Sentiment and market uncertainty are currently major influences on tenant behaviour.

This cautious approach comes amid a slowdown in short-term rentals, including holiday homes, prompting some property owners to reconsider leasing strategies.

Short-Term Rental Weakness Influences Long-Term Rates

Experts note that lower occupancy in the short-term rental market can indirectly affect long-term rental rates.

“As more landlords move their properties from short-term to mid- or long-term leases, supply increases, which can moderate rental prices,” the advisor explained. He added, however, that these market dynamics are still evolving.

“It’s too early to predict exact rental trends, as the current softening is influenced by sentiment and external factors,” he said.

From Rent Hikes to Negotiation

A few weeks ago, tenants faced a different reality. One Abu Dhabi resident in the oil and gas sector said he had little choice but to accept a rent increase when renewing his lease in February.

“My lease renewal coincided with the maximum allowed increase, and negotiation wasn’t an option,” he explained. “It was either accept the new rate or move out.”

Despite signs of potential softening in the market, he emphasised that stability remains his priority.

Short-Term Extensions Offer Alternatives

Recently, some tenants have negotiated short-term lease extensions to avoid committing to full-year contracts. Tenants have requested two- to three-month extensions to monitor market conditions before making long-term decisions.

Some landlords are open to these arrangements but often at adjusted rates. “Owners are willing to grant extensions, but the new rental rates apply even for shorter terms,” said a local property specialist.

This trend highlights a market that is stabilising rather than declining sharply. “We expect a slowdown, not a crash,” she added.

Outlook: Balanced Market, Not a Downturn

Industry experts agree that demand fundamentals remain strong, driven by population growth and long-term interest in residential properties. At the same time, rising supply and seasonal fluctuations could soften conditions in specific segments.

Tenants may start to see incentives such as discounts, maintenance packages, or flexible lease terms as landlords compete to retain occupancy.

“The main development is a transition from a landlord-dominated market to a more balanced one, giving tenants the chance to secure better rental terms,” the advisor concluded.