Abu Dhabi Landlords Adjust Rents Following Launch of New Rental Index

Landlords in Abu Dhabi are responding to the introduction of the UAE capital’s first official rental index by adjusting rental rates, with some areas experiencing increases of up to 30%. The new index, launched by the Abu Dhabi Real Estate Centre (ADREC), provides indicative rental values based on location and property size, helping tenants and landlords negotiate fair rental terms.

Real estate experts have noted that the rental adjustments are largely due to a shortage of available properties and high demand from new tenants. In areas where current rents are below market average, tenants could see significant increases as landlords align with the new index.

Conversely, the index is expected to help tenants secure more favorable deals in areas where rents are higher than the market average, creating a more balanced and transparent rental market.

In July, Abu Dhabi’s rental market saw continued strong activity, particularly in high-end apartment and villa locations. According to real estate consultancy Asteco, average apartment rents recorded modest quarterly and annual increases of 1% and 2%, respectively. However, certain areas experienced more substantial growth, with some developments seeing quarterly increases of nearly 5% and annual growth up to 10%.

For existing tenants, the immediate impact may be less severe due to Abu Dhabi’s 5% cap on rent hikes for contract renewals. This regulation, governed by Law No. 20 of 2006, allows landlords to increase rents by no more than 5% annually, unless otherwise permitted by the Executive Council.

Experts like Evgeny Ratskevich, CEO of Metropolitan Capital Real Estate, believe that the rental index will reduce discrepancies between actual rents and fair market values. “The index is expected to gradually align rents with market averages, potentially leading to slight increases or decreases depending on current rates,” he said.

Svetlana Politova, COO at Whitewill Abu Dhabi, added that the index is more about stabilizing rents than causing dramatic shifts. She noted that areas with significant discrepancies between actual market rents and perceived values, such as emerging neighborhoods or those with recent infrastructure developments, may see modest changes of up to 5%.

The introduction of the rental index is seen as a step towards greater transparency and stability in Abu Dhabi’s real estate market. It provides a standardized measure, reducing the potential for unfair practices and fostering equity in rental transactions. Tenants can now better negotiate rental terms, while landlords can ensure their rates are competitive and aligned with market conditions.

Fouad Bekkar, Vice-President for Data and AI at Property Finder, emphasized that the index will enhance transparency and foster trust in the real estate market, ultimately contributing to Abu Dhabi’s attractiveness as a global destination for real estate inve