Abu Dhabi sees highest rent increase in more than 10 years: Report

Rents rose faster than property prices in Abu Dhabi as demand outpaces supply, industry executives said.

City-wide residential rents in Abu Dhabi witnessed the sharpest increase in over a decade with a 15 per cent year-on-year rise underpinned by the prime segment, according to Cushman and Wakefield Core. Sale prices, on the other hand, witnessed a steady 9 per cent growth year on year in the UAE Capital.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

“The rental market is experiencing demand outpacing supply, leading to higher rents, especially in prime areas like Saadiyat Island and Yas Island. We have also seen a 54 per cent increase in secondary market transaction volume indicating end-user demand as tenants look to purchase,” said Prathyusha Gurrapu, head of research and consultancy at Cushman & Wakefield Core.

“Abu Dhabi has witnessed the sharpest annual increase in rents in the last decade. The rental market in Abu Dhabi saw strong growth in rents with villas rising to 10 per cent and apartments to 16 per cent as compared to the previous year,” she added.

Villas on Saadiyat Island had a significant rental increase of 14 per cent followed by Yas Acres with 13 per cent and Al Reef Villas with an 8-per-cent rise. In the apartment segment, Yas Island witnessed the highest increase of 15 per cent in rental prices followed by Saadiyat Island at 14 per cent and Reem Island at 12 per cent.

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, said Cushman and Wakefield Core.

Abu Dhabi's average apartment rents rose 6.6 per cent year-on-year in the second quarter of 2024 while average villa rents grew by 2.5 per cent, according to CBRE data.

Average annual apartment and villa rents in Abu Dhabi stood at Dh66,375 and Dh166,261, respectively.

New leases

In August, the Abu Dhabi Real Estate Centre (ADREC), the regulator of the real estate sector in the UAE Capital, launched the first official rental index for the emirate to increase market transparency, provide indicative rental values, and support the stability of the market.

“The rental index can be used as a guideline by tenants and landlords alike to check for ongoing rentals in preferred districts. We expect the index to bring further stabilisation in the market. Typically, new leases are as per the open market and the rents can be as agreed by the landlord and tenant,” said Gurrapu.

Growing demand for existing properties

A total of 2,431 units have been handed over in Abu Dhabi so far, 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.