Whether it's foresight or fortunate timing, the legalization of Abu Dhabi's short-term rental market coincided with a period of steady growth in both resident and tourist populations in the UAE's capital. New regulations introduced in 2020 by the Department of Culture and Tourism have paved the way for Abu Dhabi to welcome business and leisure tourists, as well as a surge of new expatriates settling in the city.
The market's low entry barrier, characterized by a straightforward permit application process with the DCT, which can be completed online in just 30 minutes, makes short-term letting an appealing and profitable investment opportunity for both current and prospective Abu Dhabi homeowners.
Abu Dhabi's maturing yet undersupplied rental market, with an annual population growth of approximately 1.68 percent (source: UN World Urbanisation Prospects) and a projected tourist season exceeding last year's 24 million visitors (source: DCT), continues to attract new properties and deliver high returns for early investors. Frank Porter, for instance, has acquired 10 short-term rental properties in Abu Dhabi, achieving an occupancy rate of over 90 percent, which remains stable as the market strives to meet demand.
According to AirDNA, Abu Dhabi's total active listings have surged to 962, marking a 381 percent increase from just 200 listings in June 2021. The regulatory changes have also attracted a new wave of holiday homeowners looking to capitalize on their properties when they are abroad. Seasonal fluctuations show no signs of slowing the market, with 33 percent of active listings available for 1-90 nights per year and another 30 percent for 91-180 nights.
In contrast to other destinations where holiday rentals are seen as cost-saving alternatives, trends in Abu Dhabi indicate a preference for luxury and larger units to accommodate family and friends. AirDNA reports that the majority of active listings are three-bedroom and two-bedroom properties, almost exclusively entire homes (94 percent), commanding high daily rates averaging Dh537.50 per night, comparable to many hotel rooms.
As demand continues to outpace supply, properties with beautiful views are likely to command higher premiums. Frank Porter's portfolio highlights strong interest in locations like Al Reem Island, Saadiyat, and Downtown.
With a high-season event calendar featuring the Formula 1 Grand Prix, Coldplay concerts, and winter festivals, all accessible via the newly opened Abu Dhabi International Airport, the short-term rental market is poised for significant growth. Additionally, significant tax changes in the UK, including rises in capital gains and inheritance taxes, are expected to drive more high-net-worth individuals to the UAE, further boosting the market.
The average annual revenue for a short-term rental in Abu Dhabi has risen to Dh70,400, up 32 percent year-on-year. For those looking to protect their wealth, a part-time property in Abu Dhabi offers both luxury and a reliable investment.
Celebrity endorsements from figures like Tom Cruise, Ryan Reynolds, and Shaquille O'Neal have further spotlighted Abu Dhabi, enhancing its appeal. With tax advantages, world-class healthcare, and an aspirational lifestyle, Abu Dhabi's property market, particularly in short-term rentals, is set to grow.
