Abu Dhabi Rental Market Shifts in 2025

Abu Dhabi's rental market by the second quarter of 2025 has clearly embarked on a growth path, but not in the usual way. More and more tenants in the city are deciding to extend their current lease agreements rather than move to a new property—and the reasons for this are quite understandable. Rising rental fees, premium pricing for new apartments, and the costs associated with moving are prompting many to stay in their current homes.

According to fresh data from international real estate consultant JLL, the rate of lease renewals reached 65.7% in the second quarter of 2025, up from 61.6% a year earlier. This represents a 16.6% increase in renewals, while the volume of new rental agreements decreased by 2.1%.

The costs of moving are holding tenants back.

Abu Dhabi's housing market has undergone significant transformation over the past year. While new developments offer state-of-the-art services and modern living opportunities, their price is often too high for most tenants. According to JLL, rental fees for apartments rose by 13.9% and for villas by 4.7% over the past 12 months. These figures are particularly thought-provoking in a city where the rental market plays a long-term crucial role.

Moving is not only costly because of higher rent. Tenants must account for relocation costs, cleaning, establishing new utility connections, and in many cases acquiring new furniture. All these factors contribute to more people choosing to stay put—even when their current home doesn't provide the same standard as new developments.

Demand for modern apartments is growing, but not everyone can afford them.

New projects—such as the Fahid Beach Residences, Waldorf Astoria Residences Yas, or the St. Regis Al Maryah Island—target the luxury segment of the city. These properties have excellent locations, premier services, and exclusive community spaces that are clearly attractive to those seeking a higher living standard.

The demand for these apartments remains significant, but due to the prices, many renters can only dream about them. According to JLL data, the average cost per square meter for new apartments reached 15,182 dirhams, while for villas it was around 17,845 dirhams. These prices significantly exceed the average tenant's budget.

Significant housing stock growth, but price stability is not expected.

In the second quarter of 2025, Abu Dhabi's housing stock grew by approximately 3,400 new units, reaching 292,000 units. By the end of the year, another 10,400 apartments are expected to be handed over, representing strong supply-side growth.

Forecasts for the next five years indicate about 70,000 new housing units entering the market. This could help moderate prices in the long term, but based on the current supply-demand ratio, price stagnation or reduction is not currently a realistic expectation.

The sales market has also grown, especially in the secondary segment.

It's not only the rental market showing growth in Abu Dhabi. The secondary housing market's activity is also noteworthy: the volume of sales increased by 32.6% compared to the same period last year. Although off-plan transactions continue to dominate the market, the growth in the secondary segment indicates that many buyers prefer ready-to-move-in properties.

Sale prices have adjusted accordingly. Apartment prices rose by 14.4%, while villas saw an increase of 11.1% in the second quarter. This trend impacts not only premium properties but also mid-range homes, intensifying pressure on the rental side.

Population growth keeps demand alive.

The positive macroeconomic environment and continuous population growth continue to support real estate market expansion. According to CBRE analysts, the greatest increase in rental fees was observed around Yas Island in the second quarter of 2025, but price hikes were noticeable citywide.

This trend appears sustained due to the influx of new professionals, families, and investors. However, it's precisely this dynamic growth that traps more existing tenants in their old apartments—since the willingness to pay by new entrants drives prices upwards, making it not an option but a forced compromise for current tenants to renew leases.

Summary

By mid-2025, Abu Dhabi's housing market has entered a new era. Tenants consider not only prices but also quality of life, services, and future opportunities. Moving is no longer just a decision but also a financial and strategic matter. New apartments are tempting, but due to their rental fees and associated costs, many prefer to remain where they are accustomed to the environment and where costs are still manageable. All this suggests a long-term shift in tenant mentality in Abu Dhabi towards rational compromises and conscious decisions.

(The article is based on research by global real estate agency JLL.)