Residential, commercial, and hospitality sectors in Abu Dhabi real estate saw significant gains in 2024, according to the latest ValuStrat report.
The ValuStrat Price Index (VPI) for Abu Dhabi's key residential investment zones reached 123 points in Q4 2024, based on a baseline of 100 points established in Q1 2021. Villa prices rose 8.9% annually and apartment values were up 3.5%.
Demand for ready properties surged by 56%, fuelled by tenants transitioning to homeownership. However, off-plan sales dropped by 40.3% compared to 2023 due to fewer project launches.
Rental values continued their upward trajectory, with villa rents climbing 6.7% and apartment rents increasing 9% year-on-year. The city-wide residential occupancy rate stood at 86%, reflecting sustained demand.
Abu Dhabi’s office sector remained robust, with rental rates soaring 25.9% annually and occupancy rates exceeding 90%. The demand for premium office spaces drove rental growth, making Abu Dhabi a competitive commercial hub. Meanwhile, major shopping malls maintained a high occupancy rate of 89%, reinforcing the strength of the retail sector.
The hospitality sector saw a 79% hotel occupancy rate, supported by a 19% year-on-year increase in Revenue per Available Room (RevPAR). The emirate’s tourism push, including new attractions and hotel expansions, contributed to this positive trend.
Looking ahead to 2025, the UAE Central Bank has revised its GDP growth forecast to 6%, citing continued non-oil sector momentum and rising hydrocarbon production. In the real estate market, residential capital values are projected to increase by 6%, with villa communities seeing a 4% rise. Office rents are expected to remain strong due to sustained demand for Grade-A commercial spaces.
The introduction of Abu Dhabi’s first residential rental index is set to enhance market transparency, aiding both tenants and landlords. Additionally, upcoming developments such as Saadiyat Grove and Yas Canal residential projects will further bolster Abu Dhabi’s property landscape.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat, in special comments to Aletihad, said: “An increasing number of tenants shifted toward home ownership, spurred by high rents and declining home loan costs.The cost of home financing has also come down after three interest rate cuts during the year. The average price of homes sold was just above Dh1,000 per square feet, which is relatively affordable.”
When asked if the decline in off-plan sales is an indication of shift in buyer sentiment, Tuaima said the fall is solely due to fewer off-plan launches this year.
Referring to the rentals, he said residential rentals are expected to see only slight increases in both apartment and villa segments this year. Tuaima noted a strong shift towards the affordable segment. Regarding office rents, he said the surge will continue as strong demand outpaces the supply of high-standard Grade A office space.
For a detailed perspective on the property market, visit: Dubai - Review 2024 - Outlook 2025
