UAE leasing market is anticipated to project robust growth in the forecast period on account of increasing demand for car leasing, rising number of commercial activities, government initiatives, etc. A lease is a contract wherein the owner (lessor) of an asset (leased asset) grants the lessee access to the asset for a consideration (rent). The consideration could either be fixed or based on variables, for a time period (lease period), or could also  be fixed or flexible, with the understanding that, subject to the embedded options of the lease the asset will either be returned to the lessor or disposed of in accordance with the lessor's instructions at the end of such period. Lease financing is gaining popularity in the country since it offers several advantages such as lower monthly payments, tax benefits, fixed rate of financing, etc. Also, less initial cash investment is required in leasing which makes it more convenient for individuals.

However, in 2022, there has been a rapid increase in rent by around 25% in the majority of districts, making it unsustainable. This has been a huge impact on affordability and has made it harder for tenants to renew their lease. This factor could hamper the market growth.

On Demand Mobility Aiding the Market Growth

Companies are focusing on offering car leasing financial services where consumers can lease a brand-new car for a year. They could also exchange those vehicles for a new one each year. It is now simpler for customers to subscribe to vehicles since companies have acknowledged the viability of having on-demand services and have in many ways equated it to car ownership and its liabilities. For instance, in 2022, Self-Drive, the smart mobility application, announced a new “drive a new car every year” program under the name ‘Neos,’ which aims at offering UAE customers flexibility and the option to drive a new car every year. Local dealers will subsequently send the vehicle to their used car division. To provide this program, the company has teamed up with automobile manufacturers and car dealerships all around the nation. As all the services are included in a single monthly charge, there are no down payments. These financial leasing services claim to be a hassle-free alternative to car ownership. Such factors are anticipated to further expand the market growth of the leasing market in the forecast period.

Government Initiatives Boosting Market Growth

The UAE government has been taking several initiatives to improve the leasing services, which is further encouraging consumers to opt for such services. This is significantly contributing to the overall growth of the market. For instance, in 2022, The Dubai Land Department confirmed its agreement with Emirates NBD to start the process of taking annual lease payments directly out of tenants' bank accounts. Previously, big developer-landlords charged an extra cost to tenants who requested direct debit. This change also offers support for the UAE's proposal to decriminalize most components of a bounced check. This factor is projected to fuel the market growth of leasing during the forecast period in UAE.

New Players Entering Market Fueling the Market Growth

The UAE leasing market has been observing an increase in the number of market players over the past couple of years. For instance, in 2022, a new fintech startup was launched in UAE and Saudi Arabia markets, named Five FS. The company aims to offer customers free access to five financial services, including loans, mortgages, deposits, insurance, and leasing. Hence, this factor is anticipated to further boost the market growth during the forecast period.