Report of Abu Dhabi's Property Market from Q1 2021

Abu Dhabi's real estate market shows strong resilience even against the backdrop of the pandemic in 2020. In fact, its total value of transactions increased to 28% in comparison with 2019, according to Haider Tuama, the Head of Real Estate Research at ValuStrat. The positive momentum has been carried over from 2020 to 2021, as both end-users and investors feel that now is the right time to buy property. Abu Dhabi has attracted many homebuyers because of the good flow of supply in recent years and incentives for buyers such as reduced municipal fees on property sales.

In Q1 of 2021, real estate transactions in the emirate amounted to AED 11.5B (USD 3.1B) across 3,487 unit deals, land plots and buildings, according to the Department of Municipalities and Transport. The demand for villas has been particularly high, which can be attributed to the change in work environment and living habits.

Judging by property sales in Abu Dhabi and all over UAE, the pandemic has done little to discourage potential buyers. However, the latest report by Colliers International suggests that most of the demand has not come from investors. First-time buyers and end-users made up the major part of transactions, while investment management, real estate services and investors are at the bottom end of the list.

At the same time, the number of mortgage purchases are rising, as this is also primarily related to the increased demand from first-time buyers and end-users. Moreover, many tenants intend to invest into the property as the mortgage and rent payment gap narrows. Other significant factors that contributed to this demand include reduced loan to value and fees, low-interest rates and attractive property prices. It is worth noting that mortgages exceeded AED 6.5B (USD 1.7B) in Abu Dhabi, which reflected willingness among financial institutions to support investment in the real estate market of the emirate.

As stated by Dr. Adeeb Al Afeefi, Executive Director of the Real Estate Sector in the Department of Municipalities and Transport, as they work closely with the stakeholders and partners in the private and public sectors, they have managed to launch sustainable initiatives and procedures in the property sector. The environment for homebuyers will continue to be beneficial due to "Plan Abu Dhabi 2030" and the state accelerator programme - Ghadan 21.

According to the Abu Dhabi Q1 sales market report by Bayut & Dubizzle, investors who expressed interest in luxury property prefer waterfront and island developments such as Al Reem Island, Yas Island, Saadiyat Island and Al Raha. These trends continued into Q2 of 2021.

In fact in Q1, Al Reem Island brought in AED 1.6B (USD 436M), which is the highest amount of transactions across Abu Dhabi.

Al Reem Island continues to be a homebuyers favorite for premium apartments in Abu Dhabi. There is currently a price decline of 5.3% for the apartments with an average price-per-foot at AED 942 (USD 257) compared to AED 995 (USD 270) in Q4 2020.

Saadiyat Island, Al Raha Beach and Yas Island, followed in Al Reem's footsteps and have continued to attract wealthy homebuyers, with the price of 1 sqft increasing to 2% on average compared to 2020, from AED 1,255 (USD 342) to AED 1,280 (USD 349).

Yas Island offers the best ROI in the emirate for luxury apartments. It has reached 6.8% while Al Raha Beach and Al Reem Island generate approximately 6.6%, and Saadiyat Island offers a 6.2% ROI.

The average price of 1 sqft for villas in Yas Island has risen by 4.2% from AED 1,015 (USD 276) in Q4 2020 to AED 1,058 (USD 288) in Q1 2021. The key factors for such a surge are most likely the increased interest of buyers in waterfront residences.

Meanwhile, the price of 1 sqft for the villas in Saadiyat Island decreased slightly from AED 1,368 (USD 372) to AED 1,359 (USD 370).

Al Raha Gardens has also seen its price of 1 sqft for villas dropping, currently amounting to AED 833 (USD 227) in 2021. It is worth mentioning that Al Raha Gardens offers an ROI as high as 5.7%, while the villas in Yas Island and Saadiyat Island generate 5.5% and 4.8% respectively.

As for affordable residences, the suburban neighbourhoods such as Masdar City, Al Reef, Al Ghadeer, Khalifa City A, Shakhbout City and Mohammed Bin Zayed City have been in high demand among investors sunce Q1 2021.

The price of 1 sqft for apartments in Masdar City has decreased by 4.8%, from AED 1,221 (USD 305) in Q4 2020 to AED 1,162 (USD 316) in 2021.

As for Al-Rif Island, since the start of this year, the demand for real estate has been stable both among potential investors and end-users. The average price of 1 sqft for apartments in Al Reef saw an uprise of 2.7%, averaging at AED 666 (USD 181) in 2021. Apartments in Al Ghadeer have also seen an increase in the sale price of 1 sqft, which currently stands at AED 709 (USD 193).

Homebuyers of Al Reef will be glad to know that it generates ROI as high as 8.1%. Rental yields of Masdar City and Al Ghadeer have reached 8.1% and 6.6% respectively.

The average sales price of 1 sqft for villas for sale in Al Reef has witnessed an increase of 2.3% during Q1 2021, increasing from AED 640 (USD 174) to AED 661 (USD 180), pointing towards a growing demand for affordable, family-friendly villa communities.

Other suburban areas like Shakhbout City, Mohammed Bin Zayed City and Khalifa City A have also maintained their appeal to potential buyers searching for budget-friendly villas in the capital city.

Shakhbout City generates an average ROI of 9.4%, which is the highest rate in Abu Dhabi for affordable villas. Rental yields in Mohammed Bin Zayed City and Al Reef are 7.4% and 6.5% respectively.

As stated by ValuStrat, Abu Dhabi had a residential supply of 241,289 units in 2020. As of April 2021, a total number of 3,600 residences were confirmed to have been completed. They include 425 villas/townhouses and 3,175 apartments. In 2021, the total number of upcoming units is 12,184, with 11,223 apartments and 961 villas.

As reported by Bayut & Dubizzle, the most popular affordable apartment projects are Diva, Oasis Residences and Shams Abu Dhabi. The starting price for a 1BR apartment in Diva is AED 390K (USD 106K) while the same unit in Oasis Residence (Masdar City) will cost approximately AED 535K (USD 146K). Shams Abu Dhabi offers 1BR apartments at a price of AED 570K (USD 156K).

Residences from the luxury category include, Saadiyat Cultural District, Water's Edge and Makers District. Saadiyat Cultural District offers 1BR units for AED 2.1M (USD 572K), and Waters Edge starts from AED 745K (USD 203K). One can purchase a 1BR apartment in Makers District for around AED 860K (USD 235K).

Noya and Al Ghadeer Phase II have been top choices for affordable off-plan villas. The starting price for a 2BR villa in Noya is AED 1.5M, meanwhile, Al Ghadeer II offers the same for AED 1.1M (USD 300K).

End-users and investors have been showing significant interest in Yas Acres and Saadiyat Cultural District for luxury villas. One can acquire a 2BR villa in Yas Acres for AED 2.3M (USD 627K), and in Saadiyat Cultural District the minimum price starts at AED 9M (USD 2.4M).

According to the director of research and data at Property Finder, the top searched keywords across the UAE were private, chiller free, no commission and standalone for townhouses/villas. Understandably, chiller-free is one of the leading factors, as the electricity bills in the hot summer are higher due to the AC. As the market has a high amount of stock, there are a lot of agencies working directly with developers. They offer no commission structures and profitable deals to attract renters.

The residential capital values in Abu Dhabi have seen a steady rise during Q1 of 2021 with quarterly growth ranging from 1.8% to 5.6%, as stated by ValuStrat. ROI across Abu Dhabi is 7.4% on average, where apartments generate 7.7% and villas – 6.9%. Currently, the residential occupancy of the emirate is about 80%. In Q1 of 2021, the residential value averaged at AED 803 per sqft (USD 219), apartments stood at AED 878 (USD 239) per sqft and villas at AED 623 (USD 170) per sqft.

According to Property Finder, Al Reem Island was the most popular among tenants and ranked first in renting luxury apartments. For those who are interested in renting villas on Al Reem Island, the average annual cost of a 4BR home is AED 251,000 (USD 68,400) and the average rental price for a 1BR apartment is from AED 60,000 (USD 16,400) per year.

Al Raha Beach and Corniche Area both have an average rental price of 1BR apartments in the region of AED 76,000 (USD 20,700), Corniche Road - AED 82,000 (USD 22,400), Al Bateen - AED 71,000 (USD 19,400), Al Khalidiyah - AED 55,000 (USD 15,000) and Khalifa City A - AED 42,000 (USD 11,500). Renters were mostly interested in studio apartments, while 1, 2 and 3BR apartments had a slightly lower response.

Potential tenants who are considering renting a villa in Abu Dhabi but are on a tight budget have shown a steady interest in homes in Mohammed Bin Zayed City at an average rental price of AED 95,000 (USD 25,900) for a 3BR unit. Despite the overall rise in rents around the world, this quiet residential suburb remains popular due to its family nature and proximity to Dubai. The following locations have the current rent prices, Khalifa City A - AED 137,000 (USD 37,300), Al Reef - AED 103,000 (USD 28,000), Shakhbout City (Khalifa City B) and Al Muroor - AED 109,000 (USD 29,800).

Tenants looking for luxury villas to rent in Abu Dhabi have also turned their attention to established waterfront communities like Saadiyat Island. A 4BR villa averages around AED 397,000 (USD 108,100), in Yas Island the same will cost you AED 261,000 (USD 71,000) and in Al Raha Gardens the rent per year will start at AED 155,000 (USD 42,200). According to Property Finder, the top searched terms were parking, no commission, sea view and new balcony.

Q1 of 2021 has been productive regarding property launches in Abu Dhabi. Leading real estate developers, such as Bloom Properties and Aldar have seen the first phases of their latest projects sold out almost immediately after the launch. Moreover, the emirate will have a new addition to its portfolio - AL Mughira Housing Complex.

In April 2021, the leading Abu-Dhabi-based developer, Aldar Properties, announced the launch of the second phase of its Noya project on Yas Island. Initially released in 2020, the first phase with 510 villas sold out immediately- within four hours after the announcement. Following the success of Noya, the second phase, Noya Viva was launched in April 2021, and features 480 villas. This time didn't disappoint either and was completely sold out as well within 48 hours of the announcement. In May 2021, Aldar Properties decided to launch the third phase of the project, Noya Luma, and the response from the investors has been proven to be tremendous once again. 189 standalone villas sold out within four hours, with the project generating AED 560M (USD 95M) for Aldar.

It is worth noting that Aldar Properties are planning to launch an additional five new projects on Reem, Saadiyat and Yas Islands. There will be a collection of villas, plots and apartments, as stated by the CEO of the company.

In April 2021, Bloom Properties announced that the first phase of Aldhay sold out within six hours of the launch. Considering the tremendous demand, Bloom have decided to release the second phase of the residential development. Alday is a part of the upcoming community Bloom Gardens on the Eastern Mangrove Corniche. Due for completion in Q1 2023, the project will offer 181 townhouses with 2-5 bedrooms. It is worth noting that in 2021 Bloom Properties had started working on the fifth phase of Bloom Gardens itself. The community will be located in the vicinity of remarkable locations, such as Zayed Sports City, Sheikh Grand Mosque and Khalifa Park. These factors will guarantee a high ROI for UAE national investors.

In May 2021, Abu Dhabi Housing Authority in partnership with Musanada announced the launch of the Al Mughira Housing Complex, featuring 410 villas. Spread over 2,000,000 sq ft in the Al Mirfa City, the emirate-style residential project offers 5BR residences with key amenities nearby. The master plan of the Al Mughira Housing Complex includes schools, shopping malls, parks and open areas, street lights, rainwater drainage and infrastructure systems. According to the Chairman of the Abu Dhabi Housing Council, the project aims to improve citizens' lives and maintain social welfare in Abu Dhabi.

TMKN Property confirmed in April 2021 that its mixed-use community, Al Jimi Avenue, is now completed. Located in the heart of Abu Dhabi, it boasts close proximity to multiple entertainment, services and tourist facilities. End-users and investors can choose from a range of 600 apartments with 1-3 bedrooms. Al Jimi Avenue also features office spaces, commercial spaces and over 800 parking spaces. Residents of the AED 800M (USD 218M) community will benefit from full access to a gym, health club and a swimming pool.

Amid the successful handling of the pandemic, Abu Dhabi jumped 10 positions in the Global Liveability Index from 73rd in 2019 to 63rd in 2021, according to Khaleej Times. Meanwhile, Dubai holds 74th place this year in the index. Research and analysis are conducted by the Economist Intelligence Unit annually. The Global Liveability Index 2021 includes scores for quality of such life indicators as stability, healthcare, culture and environment, education and infrastructure. Besides efficient Covid-19 measures, another key factor in the position of Abu Dhabi this year is its tight border controls.