According to the latest market update from Asteco, rentals in Abu Dhabi’s mid-market and affordable residential neighbourhoods have barely changed over the past 12 months to September, and even in the more upscale districts, rises have been kept to a few percentage points.
A one-bedroom lease in an older building would typically cost between Dh35,000 and Dh45,000 in locations like Al Khalidiya and Al Bateen, compared to Dh42,00 to Dh45,000 in central Abu Dhabi.
If you go to Khalifa City and MBZ City, a one-bedroom apartment will typically cost between $32,000 and $42,000.
If you expand your search to include high-end properties, a one-bedroom on the Corniche would typically cost between Dh60,000 and Dh70,000. The general residential leasing market in Abu Dhabi has been seeing rates that are almost stagnant, in contrast to Dubai, where average rent hikes have exceeded 20% and Sharjah, where increases in new and existing rental contracts have been approximately 5-8%.
Rents are remaining stable because there hasn’t been a significant influx of recently finished structures in Abu Dhabi. 5,100 units are expected to be finished in the first half of 2022, according to Asteco, and 1,000 in the phase from July to September. Expectations are for an extra 2,350 units for the current quarter.
In fact, “there have been marginal rental rate declines for several lower-quality buildings located on the Abu Dhabi main island,” says the Asteco report. “This is predominantly due to the increase in relocations from the city to areas that have seen the delivery and handover of a significant amount of new supply over the years, including Al Reem Island.”
How do Al Reem Island rentals stack up?
Al Reem Island currently has one-bedroom flats available starting at Dh47,000, with several advertisements citing Dh50,000–Dh52,000 as the price range. However, new super-premium structures even cost more than Dh70,000 and have the same format. One-bed apartments in comparable upscale structures may be found at Saadiyat Beach or Yas Island for an average price of Dh70,000–Dh80,000 and Dh65,000–Dh75,000, respectively.
“Whilst average apartment rental rates remained more or less unchanged over the last three months, Asteco recorded marked rental growth for a selection of prime and high-quality developments,” the report adds.
Similar events occurred in Dubai last year when the first rent increases in 5 years began in the Downtown, DIFC, and Palm neighbourhoods before quickly spreading to Dubai Marina, Business Bay, and JLT.
Watch out for job creation trends
It will depend significantly on the addition of new employees and residents as to whether upper-mid- and mid-market districts in Abu Dhabi would also experience such rent increases. If rents lose their no-change status, it will depend on new hires in the energy and financial services sectors. How soon will that be if it does?
According to Asteco research, relocations are still happening for the time being as households take full advantage of the present rental trends. More structures will be delivered the following year, which will also take up a large portion of that.
Once more, similarities are made to what the Dubai real estate market saw starting in early 2021 when the huge relocation trend started. Tenants at the time want to relocate to larger areas, ideally those with plenty of opportunities for green space and living space. After that period stabilised, there was significant demand in the upper-to-mid-market neighbourhoods including JVC, Arjan, some of Dubailand, and Midriff. At this point, rentals also began to experience large increases.
Make those decisions fast
Tenants in Abu Dhabi who haven’t decided whether to move or renew must do so right away. The rental market’s market characteristics could soon change.