Abu Dhabi Real Estate Market Review 2023: Insights and Analysis

In 2023, the Abu Dhabi real estate market was actively developing. The population in the emirate increased and the number of foreign and state companies in the market grew, leading to an increase in property sales and a larger volume of investments. According to the Department of Municipalities and Transport (DMT), in 2023 the number of real estate transactions in Abu Dhabi reached a record level - more than 13,000 transactions were recorded. Growth was 75% higher compared to the previous year. This speaks to the confidence and trust of investors in the Abu Dhabi real estate market.

Influences on the Abu Dhabi real estate market in 2023: key factors and statistics

In 2023, saw important events which affected all spheres of the UAE, including the Abu Dhabi real estate market. These key factors attracted a large number of new investors, businessmen, specialists, expats and tourists to Abu Dhabi:

1. Completion of the UAE National Railway Network (Etihad Rail). All seven emirates are now connected by a railway system with a length of 559 mi.
2. UN climate negotiations. This large-scale climate summit was attended by 65,000 participants - 80% more than the previous event. COP28 ended with the UAE Consensus which is aimed at achieving the goals of the Paris Agreement, namely by limiting the increase in the global average temperature this century to 2°C (35.6°F) and reducing carbon dioxide emissions released into the atmosphere.
3. Increase in investments in the UAE investment technology sector by 2025. The volume of investments will increase by 145% and reach AED 1.2B (USD 325M).
4. Opening of the new terminal A at Zayed International Airport. This increased the number of international flights and passenger traffic into the capital to 4.5 million between November and December of 2023, thus confirming the UAE capital's status as one of the main tourist hubs in the Middle East. In the coming years, the emirate plans to receive upwards of 45 million people per year.
5. Attracting startups in the field of artificial intelligence to Abu Dhabi for the purpose of automation and personalization of the technology industry, including tax incentives and licensing in free zones. Thus, in Masdar City, companies of any size can start their activities with a custom package, including licence and office rental priced from AED 12K (USD 3.3K) per year.
6. The Abu Dhabi government is implementing a strategic plan for economic development - Abu Dhabi Economic Vision 2030. Special attention is given to the spheres of economy, ecology, and transport. The goal of the initiative is to shift the focus from the oil refining industry to creating a thriving business environment.

Abu Dhabi Real Estate Sales in 2023

The government is investing in the development of tourism, infrastructure, innovative and sustainable technologies, among other areas. This attracts people of differing income levels from around the world, and real estate is being built in the emirate in response to this trend in order to meet the needs of both budget and premium-class buyers. 2023 saw an increase in demand for luxury real estate, especially luxurious villas and complexes with exclusive apartments. Such housing attracts wealthy buyers and investors who wish to preserve and multiply their capital.

Key events in 2023 in the Abu Dhabi real estate market:

• According to the annual Property Finder report, a record number of sales transactions were concluded in 2023. Totaling 13,298 trasnactions, of which 10,151 were off-plan real estate transactions, their total value was AED 44B (USD 11.98B) - 120% more than in 2022.
• The real estate and construction sector in Abu Dhabi grew by 13.4% (5.7% of which was in real estate) in the first half of 2023 and accounted for 12% of the country's total GDP.
• The three popular areas for buying mid-range apartments in 2023 were Al Reef, Masdar City and Al Ghadeer. The average price per sq. ft for apartments in these areas decreased - in Al Reef and in Masdar City by 2.05%, and in Al Ghadeer by 0.33%. The highest ROI remained in Al Reef, in 2023 at 8.04%.
• Wealthy buyers prefered luxury apartments on Al Reem Island, Al Raha Beach, Yas Island and Saadiyat Island. Here prices rose on average by 1.5%, and on Saadiyat Island by 8.73%. The highest ROI in 2023 was noted in the Al Reem Island area - 6.65%.
• Mid-range villas were most often bought in Al Reef, Khalifa City, Al Samha, Al Ghadeer and Hydra Village. According to Bayut, the price per sq. ft in these areas increased on average by 1.7%. The most popular area in 2023 wasAl Reef with an investment yield of 6.15%. The highest payback indicator in Abu Dhabi is Hydra Village - 6.78%.
• Premium villas were bought on Yas Island, Saadiyat Island and in Al Raha Gardens. The highest price increase was recorded on Saadiyat Island, where the cost per sq. ft increased by 12.9% compared to 2022. However, the highest yield is from the villas in Al Raha Gardens, where the ROI was 6.04% with prices increasing by 0.95%.

As for the Metropolitan Capital Real Estate company:

The volume of Metropolitan Capital Real Estate sales in Q1 2023 amounted to AED 1.2B (USD 326.7M), approaching the volume of sales for the entire year of 2022.

In 30 days, the company sold all available premium real estate in the Ohana by the Sea community - 45 luxury villas. Of these, 80% of the residences were sold to VIP clients of Metropolitan Capital Real Estate from European and CIS countries. Sales volume amounted to AED 240M (USD 65.3M).

Rent in Abu Dhabi in 2023: Market Changes

The rental market in Abu Dhabi continued to grow steadily in 2023 due to an increase in the number of tourists and foreign workers interested in long/short term rentals. Most often, tenants chose residences with 1-3 bedrooms and less often - with four.

In 2023, the average cost of annual rent for apartments in Abu Dhabi increased by 8.7% compared to the previous year. For example:

‍

The cost of renting apartments in the emirate increased by AED 4-8K (USD 1-4K) depending on the number of bedrooms. Despite the price increase, the demand for rental housing continues to grow steadily. This indicates that offering housing for rent to tenants in Abu Dhabi is profitable.

According to the Property Finder portal report, the most popular areas for renting apartments in 2023 were:

• Al Reem Island
• Al Raha Beach
• Khalifa City
• Corniche Road
• Al Khalidiya

At the same time, the highest return on investment in Al Khalidiya is 7.7%. On Al Reem Island, the ROI was 7.7% for 2-bedroom apartments and 7.1% for 1-bedroom apartments.

Among villa rentals, the most popular areas in 2023 were:

• Al Reef
• Yas Island
• Saadiyat Island

These areas are distinguished by developed infrastructure, premium services, proximity to beaches and a wide variety of entertainment. The highest rent increases were recorded on Yas Island and Saadiyat Island, at 16% and 14% respectively.

The highest return on investment was recorded in the Al Reef and Yas Island areas. The yield of 3-bedroom villas on Al Reef was 6.25%, 4-bedroom villas - 6.14%, and 5-bedroom villas - 6.2%. On Yas Island, the ROI for villas with three, four, and five bedrooms was 5.6%, 5.3%, and 4.7% respectively.

Conclusion

In 2023, the Abu Dhabi real estate market demonstrated steady growth. Investments in tourism, technology, and innovation have led to economic growth and an improved standard of living in the emirate. As a result, more tourists and expats are chosing to come here.

A record number of purchase and sales transactions were concluded in Abu Dhabi, mainly with off-plan real estate. In 2021 there were 2,734 transactions in under-construction real estate and 5,095 in 2022. In 2023 this number reached 10,151. Given this trend, it is safe to predict that the number of transactions in 2024 will reach new records.

In 2024, the Abu Dhabi real estate market will continue to gain momentum. The volume of investments in the emirate's infrastructure development will increase, the diversification of the economy will continue and further investments will be attracted. Many analysts predict additional growth in demand for premium-class real estate, new project launches and a recovery in office space rental demand.