The real estate market in Abu Dhabi has experienced consistent growth and development, showing strong performance in both residential and commercial sectors. According to ValuStrat’s quarterly report, the continuous increase in rental rates and transaction volumes indicates a steady demand and investor confidence in Abu Dhabi’s real estate market.
The robust residential sector
In the latest findings from the ValuStrat Price Index (VPI), residential capital values experienced a slight increase, particularly in the villa sector. The index showed a quarterly growth of 1.3% and an annual increase of 4.4%, reaching a total of 118.7 points compared to the 100 base points recorded at the beginning of 2021. Villa prices saw a quarterly rise of 2.2% and an annual growth of 7.3%, achieving a total of 125.5 points.
On the other hand, apartment prices stabilised with a slight quarterly increase of 0.4% and a year-on-year rise of 1.4%. The weighted average home value for the quarter was AED 9,817 per square meter (AED 912 per square foot), while apartments stood at AED 10,559 per square meter (AED 981 per square foot), and villas at AED 8,030 per square meter (AED 746 per square foot).
Buyers favoured villas
The VPI for rental values in Abu Dhabi showed consistent growth of 4.4% annually and 1% quarterly, reaching 112.1 points compared to 100 points in Q1 2021. Villas reached 118.3 points with an annual increase of 5.7% and a quarterly increase of 0.8%. Apartments reached 106.7 points, up 3.2% year-on-year and 1.2% quarter-on-quarter. Gross yields averaged 7.3%, with apartments at 7.8% and villas at 6.2%.
In Q2 2024, the average annual asking rent for apartments in Abu Dhabi City was AED 103,700. The highest quarterly rental growth was seen in Al Reef (3.8%) and Al Muneera (3%), while Saadiyat Island and Al Reem experienced stable rents. On average, annual asking rents for apartments were as follows: studios at AED 53,000, 1-bedrooms at AED 78,000, 2-bedrooms at AED 117,000, and 3-bedrooms at AED 167,000.
The average annual rent for villas across the city was AED 233,700. Quarterly data showed that the highest growth in villa rents was seen in Mohammed Bin Zayed City at 2.5% and in Al Reef at 2.4%. However, Al Raha experienced a decrease in asking rents by 1.1%, while Saadiyat Island’s rents remained stable. The annual rents for 3-bedroom villas were AED 167,000, 4-bedroom villas were AED 234,000, and 5-bedroom villas were AED 299,000.
During the quarter, Saadiyat Island experienced the highest annual capital gains, with villas seeing an increase of 17.7%. Villas in Al Raha also saw growth of 6.7% year over year, while Mohammed Bin Zayed City saw an increase of 3.3% year over year. Prices for villas in Hydra Village and Al Reef remained stable compared to last year. The top-performing apartments in terms of annual capital gains were located on Al Muneera Island (3.9%), Saadiyat Island (3.8%), and Al Reef (3.6%).
Off-plan vs ready properties
The average cost of off-plan properties in Abu Dhabi was AED 13,875 per square meter (AED 1,289 per square foot), showing an 11.6% decrease from the previous quarter but remaining stable annually. The average size of off-plan homes decreased by 18.4% annually to AED 2 million. Transactions for off-plan properties in Abu Dhabi, which accounted for 56.8% of total sales, decreased by 34.1% from the previous quarter and 41% year-over-year due to fewer new project launches.
The average price for ready homes stood at AED 11,937 per sq m (AED 1,109 per sq ft) during the period, showing a 2.5% quarter-on-quarter (QoQ) and year-on-year (YoY) increase. In contrast, the average ticket size of ready homes decreased by 2.7% annually to AED 2.3 million. Moreover, transaction volume for ready properties experienced a 9.4% QoQ and 44.1% YoY growth.
The demand-supply dynamics
In the first half of 2024, Abu Dhabi successfully completed construction on 852 apartments and 593 villas, accounting for 16.5% of the projected residential developments for the entire year. A total of 8,732 residential units are expected to be completed by the end of 2024.
For a detailed perspective on the property market, visit: Abu Dhabi - Real Estate Review Q2 2024
