Rents are on the rise again in Abu Dhabi, but landlords – at least some of them – continue to sweeten their demands with rent-free periods and incentives such as allowing multiple cheques. But they could soon wind down these incentives as tenant demand records a sharp recovery, particularly in upmarket locations such as Saadiyat Island and Al Raha Beach.
Much the same has already happened in Dubai. Rent-free offers - typically of one- to two months - and the practice of allowing six cheques or more have come down significantly in Dubai since the second half of 2021, as landlords started seeing marked improvements in demand and, with it, an increase in rents in high-demand and upscale areas. More communities and neighbourhoods in Dubai are now feeling the rise after three straight years of rental declines.
In Abu Dhabi, Khalifa City A and Al Reem Island continue to offer more affordable rental options, with a two-bedroom apartment lease available at above Dh50,000 and Dh75,000 levels, on average, according to a new update from Cushman & Wakefield Core the property consultancy.
In-demand spots “Select new projects with superior built properties on Al Reem Island and in Al Raha Beach, although being offered at above-average market rents, are achieving strong absorption,” said David Short, who heads the Abu Dhabi operations at Cushman & Wakefield Core. “While the recovery is gradual, improvements in rental rates recorded in 2021 are expected to continue in 2022.”
According to the report, Al Reem Island generated the highest number of rental enquiries, at 18 per cent, last year, while Khalifa City came in second with 7 per cent. What these trends show is that these two spots have become the choice for budget-conscious residents.
In the third spot when it comes to rental enquiries is Al Raha Beach (7%) closely followed by Corniche Road (6%). Market sources say these were generated as Abu Dhabi’s energy and financial services sectors made a return to full form during 2021, brushing off the pandemic-enforced declines. This year, Yas and Saadiyat islands should see more of this demand.
What's in store for Abu Dhabi's property market?
Continued success' for off-plan residential sales, especially in the prime and super-prime locations of Al Reem, Saadiyat and Yas islands. Villa sales and city-wide rentals are expected to show marginal increases, continuing with last year's trends. Demand for Al Reem Island apartment sales and the rental market is likely to "improve due to the upcoming Al Reem Mall", according to Cushman & Wakefield Core.
Offplan push In recent weeks, Bloom Properties and Aldar have come out with off-plan releases, including high-profile ones such as the Louvre on Saadiyat Island. Among all of Abu Dhabi’s residential locations, Saadiyat Island homes recorded the highest increase in prices last year. And yet, Abu Dhabi will need to see more off-plan launches * only 6,000 homes were delivered in all of 2021.
“The villa market in Abu Dhabi remains relatively undersupplied with limited new deliveries expected in 2022,” said Short. “Prominent apartment projects expected in 2022 are mainly concentrated on Al Reem Island.”