Colliers says the restrictions could reduce tenant turnover and provide greater certainty over rental costs, while newly completed homes remain available for lease at market rates.
Tenants in Abu Dhabi could have greater incentive to remain in their homes for longer as rent restrictions limit landlords’ ability to raise prices between tenancies, according to Colliers.
The consultancy said restrictions on rent increases between tenants could reduce the incentive for landlords to replace existing residents with new tenants willing to pay higher rents.
That could lead to higher tenant retention, reduced mobility and greater certainty over housing costs, particularly following a period of strong rental growth in the capital.
For landlords, however, the regulation could limit near-term rental growth and potentially put pressure on yields.
The change comes as Abu Dhabi’s residential rental market has already begun to moderate. Average apartment rents fell 2 per cent in the second quarter of 2026, while villa rents declined 3 per cent, according to Colliers.
Despite the quarterly decline, rents remained above year-earlier levels, with apartment rents up 7 per cent year-on-year and villa rents 5 per cent higher.
New homes remain exempt
A key feature of the regulation is that newly completed properties remain exempt, allowing landlords of new homes to lease them at prevailing market rates.
Colliers said this could create a two-tier rental market in Abu Dhabi. Existing regulated properties would face more limited rental growth, while newly delivered developments would have greater flexibility to set rents according to prevailing market conditions.
For tenants, this could mean greater stability when remaining in an existing property, while those moving into newly completed developments may continue to face rents shaped by current supply and demand.
Less incentive to replace tenants
If landlords have less ability to sharply reset rents when one tenant leaves and another moves in, the financial incentive to replace existing tenants could diminish.
Colliers said this should support stronger tenant retention and reduce residential mobility.
Lease renewals already accounted for most leasing activity in Abu Dhabi during the second quarter, reflecting lower tenant movement as the market entered a softer phase.
The consultancy said an important factor to watch will be when and how the rent restriction is eventually adjusted or removed.
However, if market conditions continue to moderate, Colliers said removing the cap would be unlikely to trigger a sharp increase in rents.
