Abu Dhabi rent freeze is welcomed by many, but industry experts reveal a surprising truth. New tenants moving into vacant units stand to gain most significant financial advantage from this policy
Abu Dhabi’s rent freeze has been widely welcomed by the existing tenants, but industry insiders suggest that new tenants would stand to gain the most significant one-off advantage from the policy.
Luis Santos, managing director and co-founder of First Class Property Management, says that while existing tenants enjoy a guaranteed zero per cent increase on renewal, a stable and predictable benefit, the freeze delivers a more dramatic windfall to those moving into a previously rented unit.
“That used to reset to market on vacancy, which is where the real 15-20 per cent jumps were happening. Freezing it at the old rate closes that gap,” Santos explained.
On June 2, the Abu Dhabi government announced a temporary rent freeze after demand continued to exceed supply over the past few years, pushing occupancy rates to record highs and driving up new lease prices across the emirate.
Rents had risen 15 per cent across the UAE capital and 23 per cent in investment zones compared to last year, impacting housing continuity for many residents.
Tenants in Abu Dhabi can relocate without absorbing what Santos describes as a “new tenant premium” – the above-market rates that have historically greeted those entering a new lease on a vacant property.
Shifting to short-term rentals
The policy is also reshaping tenant behaviour in ways that may not have been anticipated.
Santos noted that a growing number of renters are opting out of annual renewals altogether, choosing instead to move to monthly short-term arrangements while they wait for the long-term rental market to stabilise.
“A growing share are choosing not to resign annually at all right now,” he said.
Due to a slowdown in tourism in the summer period and the regional situation, he said, some of the companies’ inventory have rotated toward mid-term residents and is priced very competitively. Therefore, a furnished monthly unit becomes a rational choice and avoids locking into a 12-month lease.
As reported by media earlier, Dubai tenants have already been embracing this trend over the past few months.
In the current post-conflict market, according to Luis Santos, rents are already softening and sitting below the cap, so the zero per cent ceiling only bites on the way back up.
“Its real effect is deferred. It limits how fast rents can rebound once the region stabilises and demand returns. For now it’s less a brake on a rising market than a shock-absorber for the next upcycle,” he added.
