Abu Dhabi’ Real Estate Market – Report 2021

Abu Dhabi is ranked as one of the best destinations to reside in and conduct business, as it has earned the status of the most liveable city in the region for the second year in a row, according to the 2021 Global Liveability Index. In addition to the widespread vaccination drive and the proactive containment measures of COVID-19, the UAE capital is also on the way to developing an extensive real estate portfolio of budget-friendly sustainable projects combined with luxury island facilities. These factors have allowed Abu Dhabi to attract the attention of foreign clients and investors who account for a high number of real estate sales in the city. In fact, in H1 2021, the Emirate witnessed 7,046 transactions worth AED 23.57B (USD 6.4B), as reported by the Department of Municipalities and Transport. Let’s take a closer look at current consumer trends, the most popular areas and price levels in the capital city.

According to new data by Bayut & Dubizzle, Abu Dhabi is on a stable course of recovery from the pandemic with property price increases of up to 9% in the first half of the year as compared to the second half of 2020. In Q1 2021, the Abu Dhabi Real estate market witnessed high transaction activity of completed villas, as the Emirate has an undersupply of these types of properties, which puts the seller at advantage especially in areas such as Yas Island and Saadiyat Island. In contrast, Al Reem Island has an oversupply of units, which has created a buyers’ market, leaving more space for price negotiation. Meanwhile, apartment sales prices in Q1 2021 remained unchanged due to limited interest in the sector, especially in earlier projects located in different areas of Abu Dhabi, with annual prices down an average of 2%.

These trends continued throughout Q2 and Q3 2021, as average villa prices rose by 3.1% to reach AED 806 (USD 220) per sqft in the year to August 2021, according to the UAE Market Review Q3 2021 by CBRE. End users are looking for more spacious homes, as the pandemic normalized trends of remote working and home-schooling. There are great examples of this from Aldar’s 480-villa Noya development, which sold out in 48 hours in April, as well as the recent sale of all 83 villas at The Dunes Saadiyat Reserve. It’s worth noting that apartment prices rose just 1.9% over the same period to AED 1,000 ( USD 272) per square foot, as the preference for private, open and extra space continues to be maintained across the board.

As shown by Property Finder proprietary data, the average apartment sales listing price for a property in the UAE capital increased from AED 1,100,000 (USD 299,500) in January to AED 1,330,000 (USD 362,200) in February. This did, however, remain consistent throughout 2021, falling to AED 1,260,000 (USD 343,100) in June and back again in July. At the same time, the average villa/townhouse sales listing prices have shown a steady increase, growing from AED 4,100,000 (USD 1,116,000) in January to AED 4,500,000 (USD 1,225,000) in July. Lynette Sachetto, Director of Research and Data at Property Finder, says that the top searched terms both for apartments and villa/townhouses were – beach, parking, brand new, sea view, high floor and furnished.

Top Luxury Areas

According to the Abu Dhabi Sales Report H1 2021 by Bayut & dubizzle, luxury apartments and villas have witnessed a boost in sales price between 1% and 4%. At the beginning of the year, Al Reem Island had a ROI of 6.59% and still remains the most in-demand choice in terms of luxury apartments in Abu Dhabi. The price of 1 sq.ft. in Abu Dhabi has been averaging at AED 999 (USD 272) during H1 2021, steadily rising to 1.6% from H2 2020. Besides excellent transport connectivity and numerous amenities, Al Reem Island boasts the ultimate leisure options, with Reem Mall opening in Q1 2022. The mall will feature 85 fine eateries, over 450 stores and Snow Abu Dhabi, which will be one of the world’s largest snow parks, becoming a must-visit destination.

The second most sought-after option among property buyers is Saadiyat Island, which has an average price of AED 1,482 (USD 404) per sq.ft. after a 3.5% increase from H2 2020. This development attracts investors since it is home to several world-renowned museums and academic institutions, including the Louvre Abu Dhabi, Guggenheim Abu Dhabi, the Zayed National Museum, New York University Abu Dhabi and Cranleigh University.

Other popular destinations include Al Raha Beach with the price of 1 sq.ft. set at AED 1,161 (USD 316) and an ROI of 6.71%, as well as Yas Island with 1 sq.ft. priced at AED 1,207 (USD 329) and offering the best yield for luxury apartments at 7.1%.

In terms of luxury villas, the TOP 3 areas are Saadiyat Island, Yas Island and Al Raha Gardens with an ROI of 4.96%, 5.26% and 5.79%, respectively. The price of 1 sq.ft. in Saadiyat Island has seen a slight uptake of 0.99% averaging at AED 1,357 (USD 370), while Yas Island villas have witnessed an outstanding boost of 8.65% with a current average value of AED 1,075 (USD 293) per sq.ft. Meanwhile, Al Raha Gardens offers the highest ROI for upscale villas, with the price of 1 sq.ft. set at AED 830 (USD 226) with a 2.15% increase compared to H2 2020. Located within a 15-minute drive from Abu Dhabi International Airport, Al Raha Gardens is the first freehold area in Abu Dhabi and it is very popular with families thanks to its adjacency to a range of healthcare and academic facilities, along with supermarkets and shopping malls.

Top Affordable Areas

Masdar City was the prime option for end-users and investors searching for affordable apartments to purchase in Abu Dhabi. Besides its close proximity to Abu Dhabi International Airport, the first planned sustainable city in the world houses the Mohammed bin Zayed University of Artificial Intelligence, the world’s first university dedicated to artificial intelligence, and one of the largest COVID-19 testing and diagnostics laboratories, along with being home to 900 businesses and start-ups. Masdar City offers a yield as high as 8.7% with the price of 1 sq.ft. amounting to AED 1,884 (USD 513), which is a slight decline of 3.1%.

Following Masdar City, Al Reef is another sought-after development option with the price of 1 sq.ft. at AED 664 (USD 181). Offering quality homes for mid-income buyers, the community offers an 8.05% ROI, which is the second-highest indicator in Abu Dhabi. The third most popular area is Al Ghadeer which is only 30 minutes’ away from the Expo 2020 site. The area has an ROI of 6.55% with the price-per-square foot amounting to AED 704 (USD 192), which is a small decrease of 0.89%.

Speaking of affordable villas, the top choices among home buyers are Al Reef, Hydra Village and Shakhbout City. The average sales price of 1 sq.ft. for villas in Al Reef has witnessed an increase of 5.18% during H1 2021, which points to the growing demand for affordable, family-friendly villa communities. Currently, the price stands at AED 658 (USD 179) and property buyers can benefit from a 6.47% ROI.

Hydra Village, which is part of the multi-scale master plan of the government of Abu Dhabi – Vision 2030 comes second, offering a yield of 7.76%. Meanwhile, its price per sq.ft. stands at AED 488 (USD 133) with a decline of 2.5% compared to H2 2020. The community which offers the highest ROI for affordable villas is Shakhbout City, which houses numerous international academic and healthcare facilities, perfect for families with children of any age. The price of 1 sq.ft. at Shakhbout City stands at AED 435 (USD 118) and its yield is as high as 8.05%. Other popular communities include Khalifa City A and Mohammed Bin Zayed City with a ROI of 5.84% and 5.07%, accordingly.

Top Off-Plan Projects

As for top-off-plan projects, the situation has not changed much since the beginning of 2021. The most popular budget-friendly apartment developments remain Diva and Oasis Residences, with the addition of Al Ghadeer II. Diva is the most affordable option out of these three developments, as the starting price for a 1-bedroom apartment is AED 427,000 (USD 116,300), while Al Ghadeer II comes second with a minimum cost of AED 480,000 (USD 131,000). Oasis Residences offers 1-bedroom apartments for a minimum of AED 550,000 (USD 150,000).

At the same time, Saadiyat Cultural District, Water’s Edge and Makers District are the prime options for luxury apartments. Water’s Edge offers 1-bedroom properties for a minimum price of AED 755,000 (USD 206,000) and the starting price of Makers District is set at AED 855,000 (USD 233,000). One can purchase a 1-bedroom residence at Saadiyat Cultural District for a minimum of AED 2,100,000 (USD 572,000).

Investors and end-users, opting for affordable off-plan villas, have been choosing units located in Noya and Al Ghadeer Phase II throughout H1 2021. Meanwhile, the most popular areas for luxury villas are Yas Acres and Saadiyat Cultural District. The starting price for a 2-bedroom villa in Noya is AED 1,500,000 (USD 408,400), meanwhile, Al Ghadeer II offers 4-bedroom residences for AED 2,000,000 (USD 545,000). One can acquire a 2BR villa in Yas Acres for AED 2,300,000 (USD 626,200), and in Saadiyat Cultural District the minimum price is AED 9,400,000 (USD 2,560,000).

According to ValuStrat, the average occupancy rate in Abu Dhabi, among a sample of more than 44,000 residential units, stood at 82%. Overall, the average residential asking rent prices grew 4.5% in Q2 2021 when compared to the same period last year. In particular, apartment rent prices increased 3% YoY and were up 4.9% QoQ, while villa asking rent prices grew 6.2% YoY and 3.6% QoQ. Notable increases in average asking rents were in the following Abu Dhabi communities: Al Bandar with a quarterly increase of 16.5%, Saadiyat Island – 7.5%, and MBZ City – 7.4%. Meanwhile, the top areas for lease listings are Al Reem Island, Khalifa City, Al Raha Beach, Corniche Road, Saadiyat Island and Yas Island.

In order to increase the demand for rentals, landlords continue to offer discounted rates, flexible payments (up to 12 cheques and credit card payments) and various incentives. The latter includes rent-free periods, waived commission fees and redeemable retail mall vouchers.

As of Q2 2021, the average annual rental prices for apartments are as follows:

Studio – AED 50,000 (USD 13,613)
1-bedroom – AED 74,000 (USD 20,150)
2-bedroom – AED 118,000 (USD 32,200)
3-bedroom – AED 165,000 (USD 45,000)
Average annual rental prices for villas can also be found below:

2-bedroom – AED 117,000 (USD 31,900)
3-bedroom – AED 140,000 (USD 38,200)
4-bedroom – AED 214,000 (USD 58,300)

In terms of new property supply, as reported by CBRE, it remains limited with only 1,853 residential units being delivered to date, including units in Water’s Edge and Mayan, as well as several buildings on Al Raha Beach. An additional 9,583 units are scheduled for delivery by the end 2021, however, it is highly unlikely that all of them will be completed on time.

In August 2021, Reportage Properties announced the launch of Maryah Vista 2 on Al Maryah Island, which comes after the tremendous success of Maryah Vista 1. The development offers 588 apartments, a commercial area, an office area and covered parking. Residents will be able to benefit from a gym, a children’s play area, a mosque and a swimming pool. Maryah Vista is due for handover in H1 2024.

The year of 2021 has been particularly productive for Aldar Properties, as it has released numerous villa and land plot projects, including The Magnolias at Yas Acres, Al Gurm Phase 2 and The Dunes at Saadiyat Reserve, just to name a few. All new developments were quick to sell out, and Aldar is preparing to launch the next phase of Yas Acres; The Dahlias, by the end of 2021.

As well as all the above, in June 2021, JIIC released a range of Mediterranean-inspired 2 to 4 bedroom townhouses on Jubail Island, which will feature ample interior space and the utmost privacy for its residents. Just recently, on 10 October 2021, the master developer announced the release of 100 villas to be built on the island in response to the increasing market demand, as 70% of all units have sold out already. There are 13 different villa types available for purchase to UAE Nationals and foreigners. Jubail Island is set to provide premium sustainable living and will be home to over 5,000 residents.

Abu Dhabi has taken a range of measures to support its economy, including providing rent rebates and reducing business set-up costs by over 90% to appeal to more investors. According to Mohammed Al Shorafa, Chairman of the Abu Dhabi Department of Economic Development, the Emirate’s economy is predicted to grow by 6% to 8% over the next 2 years, driven by the direct foreign investment, oil sector, financial services and government spending.

In September 2021, the Abu Dhabi Department of Municipalities and Transport obliged developers and companies to get prior approval before fixing or increasing service charges for their commercial and residential properties. The new regulation not only contributes to a more competitive economy but also guarantees the rights of investors who may wish to buy for the purpose of residence or investment. As well as that, the entire system will become more detailed and precise to inform every owner of all the details and purpose of the fees they pay.

Moreover, in order to facilitate the set up of businesses, the Abu Dhabi Department of Economic Development reduced all license issuance and renewal entities to AED 1,000 (USD 272) and more than 93% of economic activities can now receive a commercial license in 6 minutes. ADDED also introduced a professional license that will allow foreigners full ownership of businesses related to 604 activities. The latest initiatives are supposed to encourage investors, boost business development for foreign companies and attract businesses related to technology and advanced industries, allowing for economic diversification.

1. Al Raha Gardens offers the highest ROI for luxury villas in Abu Dhabi, set at 5.79%.
2. In H1 2021, Al Ghadeer Phase II was in high demand for both affordable apartments and villas.
3. Abu Dhabi provides a highly favorable business climate with reduced fees and a simplified process of obtaining a commercial license.
4. Currently, this is a beneficial period for renting a property, as landlords are offering an array of incentives to attract more tenants.
5. Villas and townhouses continue to receive a strong response in Abu Dhabi amid the new real estate trends set by the pandemic.