Rents in Abu Dhabi have surged faster than property prices as demand continues to outstrip supply, according to industry executives. City-wide residential rents in Abu Dhabi experienced the steepest increase in over ten years, with a 15 percent year-on-year rise, driven by the prime segment, according to Cushman and Wakefield Core. Meanwhile, sale prices saw a more modest 9 percent growth year on year in the UAE capital.

“The rental market is seeing demand outpace supply, resulting in higher rents, particularly in prime areas such as Saadiyat Island and Yas Island. We have also observed a 54 percent increase in secondary market transaction volume, indicating strong end-user demand as tenants consider purchasing,” said Prathyusha Gurrapu, head of research and consultancy at Cushman & Wakefield Core.

“Abu Dhabi has seen the sharpest annual increase in rents over the past decade. The rental market in Abu Dhabi has seen robust growth, with villa rents rising by 10 percent and apartment rents by 16 percent compared to the previous year,” she added.

Villas on Saadiyat Island saw a significant rental increase of 14 percent, followed by Yas Acres with 13 percent and Al Reef Villas with an 8 percent rise. In the apartment segment, Yas Island led with a 15 percent increase in rental prices, followed by Saadiyat Island at 14 percent and Reem Island at 12 percent.

Areas like Yas Island are becoming increasingly attractive to tenants, driving rental increases, while established luxury communities like Saadiyat Island are spearheading rental market growth, according to Cushman and Wakefield Core.

Abu Dhabi's average apartment rents rose 6.6 percent year-on-year in the second quarter of 2024, while average villa rents grew by 2.5 percent, according to CBRE data. Average annual apartment and villa rents in Abu Dhabi stood at Dh66,375 and Dh166,261, respectively.

In August, the Abu Dhabi Real Estate Centre (ADREC) launched the first official rental index for the emirate to enhance market transparency, provide indicative rental values, and support market stability. “The rental index can serve as a guideline for both tenants and landlords to assess ongoing rentals in preferred districts. We anticipate the index will contribute to further market stabilization. Typically, new leases reflect the open market, with rents agreed upon by the landlord and tenant,” said Gurrapu.

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. An additional 1,950 units are expected to be handed over later this year, bringing the total for 2024 to approximately 4,300 units, with most upcoming deliveries anticipated on Reem Island and Yas Island.

Prathyusha Gurrapu noted that while off-plan transactions still account for a significant portion of total volumes, there has been a growing interest in existing properties in 2024. “Ready property transactions increased by 54 percent compared to the same period in 2023, indicating a growing share of end-user buyers seeking ready-to-move-in homes,” she added. Conversely, off-plan sales transactions saw a 19 percent decrease year-to-date in 2024 compared to the same period in 2023, due to limited new project launches and lower launch volumes.