Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Rental rates for apartments and villas in Abu Dhabi increased by 13.9% year-on-year (YoY) and 4.7% YoY respectively by the end of the second quarter, according to JLL’s latest Market Dynamics report.
The consultancy noted that tenant preferences are shifting towards contemporary residences offering enhanced amenities and lifestyle features, reducing demand for older developments.
Abu Dhabi’s sales market also strengthened in the second quarter. Transaction volumes rose 9.1% in Q2 2025 compared with the same period last year, supported by a 32.6% surge in secondary market sales, even though off-plan transactions dipped 2.7%. The report said the secondary market has shown consistent growth since the beginning of the year.
Average sales prices for apartments and villas increased 14.4% and 11.1% YoY respectively, in Q2 2025. In key investment locations, the average transacted sales rate per square metre stood at Dh15,182 for apartments, Dh15,523 for townhouses and Dh17,845 for villas.
On the leasing side, rental contract renewals continued to dominate activity. Renewals accounted for 65.7% of total registrations in the quarter, up from 61.6% a year earlier. Lease renewals grew 16.6% while new contracts fell 2.1%.
"This increase is in part being underpinned by tenants opting to maintain their current residences and avoid potential rental increases associated with relocation,” the report said.
Overall, Abu Dhabi’s residential lease volume rose 9.4% YoY, reflecting robust demand supported by steady population growth.
In terms of supply, around 3,400 residential units were delivered in the second quarter, bringing total housing stock to about 292,000 units. A further 10,400 units are scheduled for completion by the end of 2025.
Looking ahead, JLL highlighted rising consumer interest in luxury branded residences in Abu Dhabi, with developers expected to expand offerings in this segment to cater to international demand.
“Investors are opting for branded properties as they generally sell at higher price points than similar non-branded options, potentially yielding higher investment returns,” the JLL report said.
Reacting to the report, Taimur Khan, Head of Research Midde East and Africa, at JLL, said: “Strong activity in the UAE’s dynamic real estate landscape in Q2 2025 has boosted investor confidence, reinforcing the country’s status as a global real estate powerhouse. This sustained momentum, driven by government policies and demand for high-quality developments, underscores the UAE’s ability to adapt to global shifts and create unparalleled opportunities for both regional and international investors.”
Abu Dhabi’s retail sector remained resilient in the second quarter of 2025, with vacancy rate down to around 9.0% as demand for space stayed steady and limited new supply entered the market, according to the JLL report.
The capital recorded 6,145 retail rental contract registrations in Q2, representing a 12.1% decline from the same period a year earlier. The decrease was primarily due to fewer new contract signings, with many retailers opting to renew existing leases amid constrained availability and minimal new space expected in the near term.
Rental performance in Abu Dhabi remained broadly stable, with prime super regional rents climbing 3.4% YoY to Dh5,524 per square metre. Super regional and regional rents also registered increases of 3.9% and 3.8% respectively, while community malls posted a modest 0.5% annual rise.
The emirate’s total retail stock stood at 3.23 million square metres in Q2. An additional 59,000 square metres of new space is scheduled for delivery later this year. “Developers are prioritising neighbourhood and convenience retail projects to serve the expanding master-planned communities,” the report said.
Abu Dhabi’s office market tightened further in the second quarter of 2025, with citywide vacancy rates dropping to just 1.5% amid sustained demand and limited new supply, the JLL report said.
Prime and Grade A segments were especially constrained, with vacancies at 0.1% and 1.7% respectively, underscoring the scarcity of high-quality space in the capital.
Rents in the capital continued their upward trajectory.
Prime office rents surged 31.5% year-on-year to Dh2,905 per square metre per annum. Grade A and Grade B rents also advanced, up 7.8% and 10.9% to Dh1,676 and Dh1,258 per square metre respectively.
Supply expanded modestly, with approximately 78,000 square metres added in Q2, mostly Grade B stock, taking Abu Dhabi’s total office inventory to about 4.6 million square metres. A further 66,000 square metres is expected to be delivered before the end of the year.
However, no major Grade A projects are due until early 2026, when the next wave of premium developments is scheduled.
JLL said that the imbalance between strong occupier demand and limited supply continues to favour landlords. With prime and Grade A space in particularly short supply, lease negotiations remain competitive, allowing landlords to exercise significant control over rental terms.
