Real Estate Market in Abu Dhabi in 2020

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One of the main issues of the year 2020 is the impact of the coronavirus pandemic on the world economy and the well-being of the population. It is needless to say that the consequences of the pandemic have affected all sectors of the world economy in one way or another, even in countries with a developed and stable economic situation.

The government of the United Arabian Emirates has taken all necessary preventive measures to avoid spreading of coronavirus infection, measures to support the population and economy of the country. In this way, they managed not only to minimize losses, but also to keep the economic situation stable and at a level no lower than before the pandemic.

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 looks quite 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.

Property market

According to Abu Dhabi market report for H1 2020 published by UAE’s leading property website Bayut, the Abu Dhabi real estate market has largely remained competitive, with property prices for sale and rent predictably falling by an average of 1-6% in the most popular areas of Abu Dhabi in the first half of 2020 compared to the last six months of 2019.

From a popularity perspective, upmarket and suburban areas such as Al Reem island, Al Raha beach, Saadiyat island and Yas island attract more investors, while established areas such as al Khalidiya, Khalifa city and Mohammed bin Zayed city, which offer greater privacy, are popular with renters. Generally prices in the top districts remain attractive, but in most areas they are slightly reduced.

According to the Department of municipalities and transport (DMT), the Abu Dhabi real estate market has kept a good dynamic of real estate transactions in the city, despite mobility restrictions. The DMT report also confirmed that the value of real estate transactions in Abu Dhabi increased by 34% and reached AED 6.3 billion by the end of April 2020 due to 2 617 real estate transactions, compared to AED 4.6 billion, which were facilitated by 1840 transactions in the same period last year.

DMT officials also said that the incentive packages launched by the UAE to deal with the economic impact of the pandemic were a major factor in maintaining the viability of the Abu Dhabi real estate market.

Bayut’s analysis of Abu Dhabi real estate trends in the first half of 2020 also revealed similar directions, as investors and tenants turn to areas with competitive property prices, wide range of property portfolio, high ROI and good infrastructure.

Real estate experts note that the interest of foreigners 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 till 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.

Sale trends

As for the sale of apartments, Al Reem island continues to attract the greatest attention of investors. The average price per square foot on Al-Reem island experienced a slight drop of 2.9%, from AED 998 in the second half of 2019 to AED970 in the first half of 2020. On the other hand, Al Reef is still the most popular choice among potential buyers looking for villas with an average price per square foot, experiencing a slight 3.1% decrease from AED616 to AED596 which increases the appeal of the area with a competitive price among buyers.

Average ROI

When it comes to ROI, Al Reef has the highest rental yield for villas at 7.1%, while Al Ghadeer offers the most attractive rental yield in Abu Dhabi at 8.5% for apartments.

Off-plan market

In the off-plan market, freehold development on the Yas Island, Saadiyat island and Al-Maryah island keep on attracting the interest of investors and potential end-buyers. In these areas, Yas acres on Yas island and Jawaher Saadiyat on Saadiyat island were the most popular options for buyers interested in villas and townhouses.

As for off-plan apartments investors mostly lean towards off-plan developments such as Shams Abu Dhabi on Al Reem island, Al Maryah Vista on al Marya island and The Gate in Masdar city

Mortgage

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%.

Property rental

In the rental market, Al Reem island remains the top choice for renters looking for apartments, followed by Al Khalidiya. Rents for apartments on Al Reem island have also remained relatively steady with 1 and 2-bedroom apartments averaging at AED 63k and AED 90k respectively. Only the rent for studios on Al Reem island decreased by 6.1% from AED 49K in the last six months of 2019 to AED K46 in the first six months of 2020.

As for villas, accessible neighborhoods such as Mohammed bin Zayed City and Khalifa city attracted the most interest from tenants. In the first half of 2020, rents in these areas remained affordable. Rents for 3-bedroom villas in Mohammed bin Zayed City decreased by 6.3% from AED 95Kin the second half of 2019 to AED 89K currently, while prices for 4-and 5-bedroom villas remained unchanged at AED121K and AED143K respectively.

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.

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.

Conclusions

According to the Abu Dhabi market report for Q3 2020 published by Bayut the things on the real estate market mostly remained stable. Villas in well-known areas such as al-RIF, Saadiyat island and Yas island have even seen a slight increase in prices, indicating a healthy interest in family homes in the capital. Apartments in most popular communities became more affordable in the third quarter of 2020, maintaining their popularity with both buyers and renters.

The easing of restrictions on movement within the Emirate temporarily further restored confidence in the market. Vacant areas continued to be favorites among potential buyers, while potential renters were more inclined to older areas on the main island of Abu Dhabi and suburban areas.

So we can safely say that the real estate market in Abu Dhabi in 2020 remains stable, attractive, busy and fast developing.

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