Abu Dhabi rents surge up to 12%: What is driving soaring rental prices in 2025?

Khaleej Times

25-05-2025

Abu Dhabi's residential market has rapidly absorbed new supply over the past 18 months, driven by exceptionally high occupancy and surging demand, pushing rents up by as much as 12 per cent.
Around 1,200 residential units, including 700 apartments and 500 villas, were delivered during Q1 2025 in Jubail Island, Bloom Living, and Al Raha Beach. Yet, occupancy levels remain robust, exceeding 95 per cent in many investment zones, according to Asteco.
The development pipeline remains active, projecting nearly 5,500 further residential handovers by year-end, concentrated in key areas such as Yas Island, Masdar City, Saadiyat Island and Al Reem Island.
A sharp rise in population, reaching 3.789 million as of September 2023, has significantly boosted demand from both tenants and buyers.
"High occupancy rates were maintained across all Investment Zones, effectively absorbing the steady delivery of new supply over the past 18 months. Exemplifying this trend, newly constructed developments in areas such as Al Raha Beach report occupancy levels surpassing 95 per cent and achieving strong rental rates,' said the real estate consultancy.
'This widespread positive performance, characterised by increasing rents and high occupancy, underscores the fundamental strength and consistency of demand within Abu Dhabi's residential sector throughout the last three years,' it said.
In the first quarter of 2025, average apartment rental rates increased by 4 per cent quarter-on-quarter and showed a significant 10 per cent rise year-on-year.
'Growth was particularly strong in the high-end segment, which experienced average rental increases between 8 per cent and 12 per cent. The mid-tier market also saw notable growth, with rents increasing between 5 per cent and 8 per cent, on average,' Asteco added.
In the villa market, the luxury segment continued to lead rental growth, especially in prime locations such as Saadiyat and Yas Islands. Rental rates in some communities surged by as much as 15 per cent compared to last year. High-end villa communities also recorded significant gains, with average rental rates rising between 4 per cent and 7 per cent.
Haider Ali Khan, CEO of Bayut, said Abu Dhabi's real estate sector in 2025 continues to build on last year's strong momentum, remaining an attractive destination for global investors.
'The influx of capital from sovereign wealth funds and the growing entrepreneurial landscape drive renewed interest in the emirate. With over 30 new projects launched, Dh7.8 billion in foreign investment recorded in 2024, and an increased focus on transactions, Abu Dhabi is establishing itself as a smart, future-ready hub for property investment,' he said.
Recently, developer confidence remained evident throughout the first quarter, reflected in several significant residential projects' launches and/or announcements.
With many developments encompassing residential and mixed-use components currently in the planning and early development phases, additional new project announcements are anticipated throughout 2025, said property brokerage firm Asteco.