New tenancy contracts are growing at a rate in Abu Dhabi, following the trend of tenants opting for newly constructed buildings instead of their former homes. This is largely because of the increasing population and newly available housing, which in turn pushes up rentals in the UAE capital.
Key Takeaways
- New tenancy contracts in Abu Dhabi are on the increase as tenants prefer newly completed projects.
- The population of Abu Dhabi is 3.8 million and is the UAE’s most populated city.
- Rental apartment rents increased by 9% year-on-year, while rental villas rose 4% in Q3 2024.
- The new supply of housing units is likely to be a significant amount in the years ahead, which will relieve the rental pressures.
Population Growth Fuelling Demand:
The inflow of new population into the UAE capital has significantly driven the demand for rental accommodation. Abu Dhabi is the most populous city in the country with 3.8 million residents. As more people continue to try to find houses in the city, the change in population is driving the prices of rentals and property higher.
Moving Towards New Development:
According to real estate consultancy CBRE, although overall rental registrations declined slightly compared to the same period the previous year in the third quarter of 2024, new contracts were 2% higher. In other words, the figures show that tenants still strongly prefer newly completed projects instead of older properties. Moving to new buildings could probably be a reaction to old legacy stock in the market.
Rental prices will continue to rise.
The rental demand has been highly driving up the rents in the rentals. Apartment rentals in Abu Dhabi in Q3 2024 increased by 9% y-o-y, while the villa rentals increased by 4%. Places like Yas Island are getting highly in demand, which is the primary reason for this rise, and also other well-established luxury communities like Saadiyat Island.
New Housing Supply:
Many new housing projects are coming on stream in the near future and that should ease the demand a little on rental prices. Analysts at CBRE opine that high off-plan launches are witnessed, especially in destinations such as Yas Island, Hudayriyat Island, and Saadiyat Island. This development pipeline will help to accelerate annual shipments from 2025 through 2027, because the market is expected to recover the surge in the period of COVID-19 pandemic.
Demand from the End-User on Increase:
Ready-to-move-in homes are also witnessing an increase. Ready property transactions increased 54% compared to the same period last year, Cushman & Wakefield Core reports. That’s a higher share of end-user buyers seeking occupation on completion compared to the 19% fall in off-plan sales transactions year-to-date in 2024.