Abu Dhabi: New tenancy contracts increase as residents relocate to new buildings

The UAE capital is witnessing a strong influx of new residents, increasing rental and property prices

Waheed Abbas

Published: Sun 27 Oct 2024, 9:59 AM

Last updated: Sun 27 Oct 2024, 6:34 PM

New tenancy contracts are increasing in Abu Dhabi as tenants relocate to new buildings thanks to fresh supplies coming online.

Real estate consultancy CBRE analysts said that in the rental segment, total registrations fell slightly in the third quarter of 204 as against the previous year, "albeit the number of new contracts increased by 2 per cent as tenants continued to favour newly completed projects against the ageing legacy stock, which probably explains the drop in renewal registration."

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Like other emirates, Abu Dhabi is witnessing a strong influx of new residents, increasing rental and property prices. The UAE capital's population reached 3.8 million this year, making it the most populous city in the country.

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According to Cushman & Wakefield Core, areas like Yas Island are becoming more desirable for tenants, driving rental increases, while established luxury communities like Saadiyat Island are leading rental market growth.

Apartment rents in the UAE capital increased by 9 per cent year-on-year in the third quarter of 2024 while villa rents grew by 4 per cent during this period, CBRE said.

Following a large number of project launches, a new pipeline will come on stream in the coming years which will ease the pressure on rentals.

“With a large number of new off-plan launches recorded during the nine months to September, particularly across locations such as Yas Island, Hudayriyat Island, Ramham Island and Saadiyat Island, the development pipeline is continuing to increase, with a spike in annual deliveries like to occur from 2025 to 2027, as the increased development activity during Covid-19 starts to reflect in the market,” CBRE analysts said.

End-users growing

According to Cushman & Wakefield Core, a total of 2,431 units have been handed over, including 1,315 apartments in Al Raha Beach, Al Maryah Island, and Masdar City, as well as 1,116 villas in Jubail Island, Yas Island, and Saadiyat Reserve. An additional 1,950 units are anticipated for handover later this year, bringing the total for 2024 to approximately 4,300 units, with the majority of upcoming deliveries expected in Reem Island and Yas Island.

Although off-plan transactions still make up a significant portion of total volumes in the UAE capital, demand for existing properties has shifted in 2024.

Cushman & Wakefield Core’s data showed ready property transactions increased by 54 per cent compared to the same period in 2023, reflecting a growing share of end-user buyers seeking ready-to-move-in homes.

On the other hand, off-plan sales transactions saw a decrease of 19 per cent year-to-date in 2024 compared to the same period in 2023. This is due to limited launches of new projects and lower launch volumes.

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