Abu Dhabi rents at their most attractive since 2016

Abu Dhabi residential property rents fell to their lowest since 2016 in the second quarter, according to a new report from property consultancy ValuStrat.

The ValuStrat Price Index (VPI) for Abu Dhabi Rental Values dropped 3.4 per cent quarter-on-quarter to 72.3 points, 27.7 per cent below 2016 levels. The index is based on five apartment and five villa locations.

Annually, rents were nearly 7 per cent lower than last year, it said. Villa rents were down 2.3 per cent quarter-on-quarter and 6.8 per cent year-on-year, while apartment rents were down 4.3 per cent quarterly and 7 per cent annually.

“Exceptions to the negative trends included apartments in Al Reef which saw an upward adjustment … while moderate increases were observed in villa listings in MBZ City, Al Reef, and Al Raha,” ValuStrat said in its Q2 report.

It added that the average occupancy rate among a sample of more than 48,000 homes in Abu Dhabi city stood at 80.9 per cent.

An earlier report from property consultancy Asteco stated that rents were largely the same across the city in the second quarter, compared with the first three months of the year.

See Asteco's latest data in the slideshow below:

Average yearly apartment asking rents in the second quarter were Dh47,800 ($13,016) for one-bedroom units, Dh70,500 for two-bedroom units and Dh152,000 for three-bedroom units, according to ValuStrat. Annual villa rents were Dh62,100 for two-bedroom properties, Dh137,600 for three bedrooms and Dh192,150 for four-bedroom units.

Four projects were completed in the quarter — Central Park Towers, Shams Abu Dhabi with 301 units, Al Seef Central and two apartment blocks in Al Raha Beach development with 278 units.

Off-plan projects announced during the quarter included Mayan Yas Island with 512 units, Grove Museum Views Saadiyat Island with 102 units, Alreeman II Al Shamkha with 554 units and AlJurf Gardens 2 with 98 units.

ValuStrat recorded moderate growth for residential capital values during the quarter.

The VPI has increased less than 1 per cent per quarter so far this year, with villas up 1.5 per cent quarter-on-quarter and apartments witnessing stability in prices in the April-June period.

“Annually, the VPI grew 6.2 per cent to reach 71.4 points, as villas increased 8.1 per cent year-on-year and apartments improved 4.3 per cent year-on-year,” it said.

“All properties monitored by the VPI saw annual growth in capital values ranging from 3.9 per cent to 9 per cent.”

Villas in Saadiyat Island recorded the highest annual capital gains at 9 per cent, while Al Muneera Island had the best performing apartments at 6 per cent.

The UAE property market has grown sharply during the past year amid the broader economic recovery from the coronavirus-induced slowdown. Dubai especially has been performing strongly, with a 12-year high in terms of number of sales for July.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer