Sorouh, Abu Dhabi's second-largest developer, has taken a chunk out of the increasingly competitive rental market by leasing 287 apartments in its Alrayyana development to a French government-owned company.
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The deal was for 30 years at "prevailing market rates", Sorouh said in a statement filed with the Abu Dhabi Securities Exchange.
A Sorouh spokesman declined to provide further details.
Alrayyana is a development of 33 low-rise buildings with 1,537 apartments under construction near the Abu Dhabi Golf Club.
The project is expected to open for residents in the first quarter of next year.
Sorouh plans to lease all the apartments in Alrayyana. When finished the project will "significantly strengthen" Sorouh's recurring income portfolio, the company said in its statement to the exchange.
The Alrayyana development will also add to a fast-growing supply of apartments for rent in Abu Dhabi.
The project is targeting "mid-level income residents", according to promotional materials.
Large companies often tie up large blocks of apartments for their employees.
Etihad Airways and the Tourism Development & Investment Company have been looking for blocks of apartments for employees in recent weeks, local agents say.
But they reacted with surprise to the terms of the Alrayyana deal, in particular the 30-year lease.
With rents falling, it does not make sense to lock in to long-term rates, said one agent, who asked not be identified.
The corporate market has slowed recently, now that more apartments are becoming available, agents say.
"In a general sense, corporations are taking a step back and letting staff find their own accommodations," said Paul Maisfield, the general manager of the Abu Dhabi office for Asteco.
The average rental rate for a two-bedroom apartment in the capital has fallen more than 40 per cent since the peak in 2008, according to local research.
Rates are expected to continue to fall in some neighbourhoods, as more than 50,000 homes are scheduled to be built in Abu Dhabi by the end of 2013, creating additional competition for tenants, according to Jones Lang LaSalle, the property consultancy.
Of the supply of homes coming on to the market, 69 per cent is apartments, Jones Lang LaSalle reports.
