New tenancy contracts are on the rise in Abu Dhabi as tenants move to newer buildings due to the influx of fresh supplies. Real estate consultancy CBRE analysts noted that while total rental registrations dipped slightly in the third quarter of 2024 compared to the previous year, the number of new contracts rose by 2 percent. This increase is attributed to tenants preferring newly completed projects over older, established properties, which likely contributed to the decline in renewal registrations.
Similar to other emirates, Abu Dhabi is experiencing a significant influx of new residents, driving up both rental and property prices. The UAE capital's population has reached 3.8 million this year, making it the most populous city in the country. According to Cushman & Wakefield Core, areas such as Yas Island are becoming increasingly popular among tenants, leading to higher rental rates. Meanwhile, established luxury communities like Saadiyat Island are spearheading rental market growth.
Apartment rents in Abu Dhabi increased by 9 percent year-on-year in the third quarter of 2024, while villa rents grew by 4 percent during the same period, according to CBRE. Following a surge in project launches, a new wave of developments is expected to come online in the coming years, which should help ease rental pressures.
"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 expand. A spike in annual deliveries is likely to occur from 2025 to 2027, as the increased development activity during Covid-19 starts to impact the market," CBRE analysts stated.
End-user demand is also growing. Cushman & Wakefield Core reported that 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 expected to be handed over later this year, bringing the total for 2024 to around 4,300 units, with most upcoming deliveries anticipated in Reem Island and Yas Island.
Although off-plan transactions still dominate the market in Abu Dhabi, demand for existing properties has shifted in 2024. Cushman & Wakefield Core’s data revealed that ready property transactions increased by 54 percent compared to the same period in 2023, reflecting a growing number of end-user buyers seeking move-in-ready homes. 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.
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