Q1 2020 real estate market in Abu Dhabi

One of the main directions of the UAE economy is the real estate sector, which has developed very quickly in recent years in Abu Dhabi. Despite the global coronavirus pandemic, the real estate market in Abu Dhabi stays stable, and the total cost of transactions has even increased compared to the same period last year and the freehold areas are in demand for purchase, rent and invest. Here is a review for Q1 2020 real estate market in Abu Dhabi.

According to the government release, the total value of real estate transactions in Abu Dhabi increased by 22% and reached $5.2 billion in the Q1 of 2020.

The Abu Dhabi Department of municipalities and transport said that about 7,600 land and real estate transactions concluded in the first three months of this year, which is 5,085 more than in the same period last year. More than half, almost 56% of all transactions concerned land, 44% – real estate.

Opening up of the freehold market to foreign investment has exposed the real estate sector in Abu Dhabi to a completely new set of interested investors and buyers.

Freehold areas still are the most attractive areas for prospective buyers. So Al Reem Island, Saadiyat island, Al Reef and Yas island stay in demand. These island communities hold the attention of buyers in the primary market as well as in the secondary.

Al Reem Island is the top area for buying apartments in Abu Dhabi. The constant demand for apartments on Al Reem Island is also affected by the medium price per square meters in the area, which has only slightly decreased to 2% down compared with Q4 2019. The average prices for apartments on the Al Reem Island also stay competitive, amounting to AED 559K for studio, AED 843K for 1-bedroom apartments and AED1.35M for 2-bedroom units. The average ROI on the island is 7.2%, which attracts investors who want to benefit from high rental returns.

When it comes to buying villas, Al Reef development is a perfect match. Well-located close to the airport with easy access to the E11 highway, the project offers friendly prices and high-standard quality. The average price per square meters for villas increased to 1.1 % in the Q1 of 2020. Average house prices for buying villas in Al Reef are on average AED 1.37M for 3-bedroom villa, AED 1.93M for 4-bedroom villas and AED 2.14M for 5-bedroom apartments. Moreover, villas in Al Reef offer the best rental return in Abu Dhabi.

Real estate experts note that the interest of foreigner’s investors and buyers in the Emirate is growing also because of the fact that prices continue to become more attractive. Therefore, by 2023, an additional 28,000 homes and apartments will be built in Abu Dhabi.
The Abu Dhabi Department of municipalities and transport exempted individuals and companies from 34% fees for real estate registration until the end of 2020, including a two-percent commission for sale and purchase and a two-percent fee for sale at the design stage, as well as fees for land exchange, registration, and early mortgage repayment.

The total cost of mortgages in the first quarter of 2020 reached $2.9 billion, with 3,943 mortgage deals completed – more than half of the total. The share of loans for land from this number was 98%, for real estate-only 2%.

Prospective tenants also choose freehold areas for rent. The most attractive and affordable area to rent an apartment is Al Reem, which was mentioned above, and for villas tenants more often chose Mohammed Bin Zayed City.

Average prices for studio in Al Reem island are AED 48K, than 4% lower than in Q4 2019; rental prices for 1-bedroom apartment stays stable, in average AED 64K for a unit; rental prices for 2-bedroom apartment went 2.2% up compare with Q4 2019, it ts in average AED 91K.

Rental prices for villas in Mohammed Bin Zayed City stay steady. It is expected to be paid AED 88K for a 3-bedroom villa, AED123K for a 4-bedroom villa and AED143K for a 4-bedroom unit.

Developed and well-known neighbourhoods such as Al Mushrif, Al Muroor and Al Karamah, Yas Island, Saadiyat Island and Al Bateen also point out as top areas to rent villas in Abu Dhabi. All of these areas demonstrate a positive tendency of stability in the Abu Dhabi real estate market in 2020.

In general, rental prices for apartments and villas have declined by 2 percent and 3 percent, respectively, compared to Q4 of 2019 and 4 percent and 5 percent compared to the same period last year.

So the rental market is not so busy at the moment, but prices seem to be attractive enough for those one who are looking for property for rent in Abu Dhabi.

When it comes to the most popular off-plan projects in Abu Dhabi, the freehold areas such as Yas Island, Saadiyat Island and Masdar City are again the most attractive for prospective investors. It is quite predictable because of integrated lifestyles with a variety of amenities and attractions, flexible payment plans, discounts on service charges and property management fees.

Yas Acres located in a famous Yas island is in demand for luxury villas and townhouses. For off-plan apartments in Abu Dhabi,prospective investors are interested in Shams Abu Dhabi in Al Reem Island, which offers upscale, waterfront properties.

Other popular areas with off-plan projects in Abu Dhabi include Al Maryah Island and Masdar City.

The first three months of 2020 were impacted by global pandemic, the Abu Dhabi real estate market was also impacted by those circumstances, but already in the beginning of the Q2 the real estate market showed healthy and positive signs of stability which is clearly visible now. The effects of the current situation on the property market have not been too dramatic thanks to the timely measures and economic stimulus packages introduced by the government.