Abu Dhabi End of Year Market Report 2019: Abu Dhabi’s real estate sector remains competitively-priced while freehold areas are in demand with buyers

As we step into an exciting year of new changes for the UAE in 2020, Bayut looks back and analyses the evolution of property prices in Abu Dhabi in 2019, compared to those in 2018.

2019 has been a year of change in Abu Dhabi. The amendments to the freehold ownership law opened up Abu Dhabi’s real estate sector to foreign investment, widening the pool of buyers and investors in the emirate. Coupled with the introduction of the long-term residency visas, interest in the Abu Dhabi real estate market has risen, with the Department of Urban Planning and Municipalities (now known as the Department of Municipalities and Transport) reporting that AED 31B worth of real estate transactions took place in Abu Dhabi, in the first half of 2019. The handovers of recently completed projects such as Mamsha Al Saadiyat, Soho Square and Park View have also further bolstered the confidence of buyers.

Abu Dhabi has also taken significant steps to strengthen its position as a cosmopolitan hub with superb business infrastructure and lifestyle. The introduction of record-breaking recreational facilities such as the upcoming snow park and world-famous museums, new economic policies such as reduced work permit fees and significant investment in infrastructure is creating positive sentiment and inviting more residents and entrepreneurs to settle in the emirate.

In light of these developments, freehold areas such as Al Reem Island, Al Reef, Saadiyat Island and Yas Island lead the sales segment while communities like Mohammed Bin Zayed City, Khalifa City A and Al Reem Island are at the forefront of the rental market. Newer areas such as Al Maryah Island and Al Samha are also picking up in popularity, indicating confidence from investors and tenants in the Abu Dhabi property sector.

Overall the real estate market has remained competitive with property prices in Abu Dhabi showing a natural correction throughout 2019, following the trend observed in Dubai, as well. The increased affordability of properties in Abu Dhabi has led to greater interest from investors and homebuyers, as evidenced by the DPM’s report.

Similarly, rental prices in the emirate have also remained in tenants’ favour with budget-friendly neighbourhoods being consistently popular.

Bayut offers a closer look at the change in property price trends in Abu Dhabi for buying and renting apartments and villas in 2019 when compared to those in 2018.

For an accurate representation of Abu Dhabi property price changes, the report compares the average price per square foot for an area when it comes to properties for sale. Please note that these prices are subject to change based on multiple factors including the list of amenities available, the developer involved in the project, location and other key factors.

AL REEM ISLAND IS MOST POPULAR IN ABU DHABI PROPERTY MARKET 2019 FOR APARTMENT SALES

PROPERTY PRICES IN ABU DHABI FOR BUYING APARTMENTS

Connectivity to the main Abu Dhabi island, healthy ROI and a large portfolio of ready and off-plan properties continue to strengthen Al Reem Island’s popularity amongst investors and homebuyers. The first biannual report released by Abu Dhabi’s Department of Urban Planning and Municipalities (DPM), also reveals that Al Reem Island was the foremost area in terms of sales transactions, worth AED 4.37B in the first half of 2019.

When comparing property prices in Abu Dhabi from 2019 to 2018, the average price per square foot in Al Reem Island has declined by 9.1%, from AED 1,116 to AED 1,014 in 2019. This could be due to the launch of new off-plan projects with flexible payment plans, such as Azure Al Reem, which, in turn, are keeping prices competitive in the ready market. Thus, the average prices to buy studio apartments in Al Reem Island have dropped from AED 600k to AED 577k, while 1-bedroom apartments have declined from AED 950k to AED 850k. When it comes to Al Reem Island’s 2-bedroom apartments, sales prices have become more affordable, dropping from AED 1.5M to AED 1.4M. According to real estate trends in Abu Dhabi, the most popular sub-communities to buy apartments in Al Reem are Marina Square, City of Lights and Shams Abu Dhabi.

Al Raha Beach has also been consistently popular with buyers interested in apartments for sale in Abu Dhabi, mainly due to its waterfront location and accessibility to the E10 highway. An analysis of the property prices in Al Raha Beach reveals that the price per square foot has declined by 7%, averaging at AED 1,223 in 2019. This could be the result of newer or more affordable areas picking up in popularity, such as Al Ghadeer and Al Reef, offering more options for buyers in the property market in Abu Dhabi 2019. Thus, prices to invest in apartments in Al Raha Beach have declined across the board, averaging at AED 930k for studio apartments, AED 1.04M for 1-bedroom flats and AED 1.7M for 2-bedroom units.

Other changes for property price trends in Abu Dhabi include a 15.1% decline in the price per square foot for apartments in Al Reef, from AED 768 in 2018 to AED 652 in 2019. Most other areas have seen declines in price per square foot between 7% – 11%, except Saadiyat Island and Yas Island, where the price per square foot has declined marginally by 1.6% and 1.3% respectively. On the other hand, the average sales prices saw increases across the board in Saadiyat Island, while Yas Island also experienced stability or slight increases for certain bed-types. Al Maryah Island is also a new addition to the list of popular areas in the Abu Dhabi house price index 2019, gaining traction with buyers over the last year.

MASDAR CITY HAS THE BEST ROI FOR APARTMENTS IN ABU DHABI

The sustainable location of Masdar City has emerged as the area with the best rental returns in Abu Dhabi for apartments. Investors can expect an average rental yield of 8.7% for apartments in Masdar City, although this can differ based on the sub-community or tower. Other areas with good Abu Dhabi rental yields are Al Ghadeer and Al Reef, which have an average ROI of over 8%, according to Bayut’s report on real estate statistics in Abu Dhabi.

AL REEM ISLAND TOPS ABU DHABI PROPERTY PRICE INDEX FOR RENTING APARTMENTS

PROPERTY PRICE TRENDS IN ABU DHABI FOR RENTING APARTMENTS

Similar to investors and homebuyers, potential tenants also turn to Al Reem Island as their preferred choice for renting apartments in Abu Dhabi. The family-friendly amenities, upcoming leisure attractions and waterfront homes continue to make Al Reem Island sought-after on the rental market. This is also reflected in the rental costs in Al Reem Island, which have seen moderate declines under 10%. The rental cost for studio flats in Al Reem Island have dropped by 3.8%, falling from AED 52k to AED 49.9k. The 1-bedroom apartments in Al Reem Island have seen rental costs decline by 7.1% from AED 70k to AED 65k, while 2-bedroom flats have seen costs decrease by 10% from AED 100k to AED 90k. Renters also prefer the same sub-communities when renting in Al Reem, such as Shams Abu Dhabi, Marina Square and City of Lights.

With malls, parks, hospitals and easy access to the Corniche Abu Dhabi, apartments in the central location of Al Khalidiyah are also popular with renters. The rental costs for Al Khalidiyah apartments have seen moderate declines, with prices dropping from AED 37.5k to AED 35k for studios and AED 70k to AED 60k for 1-bedroom apartments. Meanwhile, the 2-bedroom rental apartments in Al Khalidiyah have gone from AED 89.9k in 2018 to AED 65k in 2019.

Other areas such as Khalifa City A, Airport Street, Al Muroor, Corniche Road, Corniche Area and Mussafah have had consistent demand from renters. Tenants looking to capitalise on attractive prices should note that the rent for apartments for rent in Al Muroor went from AED 60k in 2018 to AED 50k in 2019. This could be due to areas closer to the Corniche Abu Dhabi becoming more affordable, as well. Similarly, 1-bedroom apartments in Mussafah, a budget-friendly neighbourhood close to the industrial area, have also seen rental costs drop by 16%, from AED 50k to AED 42k.

AL REEF LEADS THE ABU DHABI REAL ESTATE MARKET 2019 FOR VILLA SALES

REAL ESTATE TRENDS IN ABU DHABI FOR BUYING VILLAS

Continuing the trend from 2018, Al Reef remains the most popular location for buying villas in Abu Dhabi, attracting buyers due to its affordability and strategic location. When comparing property prices in Abu Dhabi from 2019 to 2018, the average price per square foot for villas in Al Reef has dropped by a moderate 7.3% from AED 676.9 to AED 627.2 in 2019, contributing to the increasing interest in the area. The bi-annual report by Abu Dhabi’s DPM revealed that Al Reef had the second-highest sales transactions, after Al Reem, worth AED 1.59B.

The average prices for freehold property in Abu Dhabi’s Al Reef community have also seen modest declines across all bed-types, as per Bayut’s Abu Dhabi real estate market report. The sales prices for 3-bedroom villas in Al Reef dropped from AED 1.58M to AED 1.45M, while the 4-bedroom villas went from AED 2.1M to AED 1.98M. Larger units, such as 5-bedroom villas for sale in Al Reef, experienced a decline from AED 2.36M to AED 2.12M in 2019.

On the other hand, the luxurious destination of Saadiyat Island is the second-most popular area in the Abu Dhabi real estate market that attracts high-profile investors. The average price per square foot for villas in Saadiyat Island became more affordable in 2019, declining from AED 1,492.5 to AED 1,407. According to real estate trends in Abu Dhabi, the average price to buy 3-bedroom villas in Saadiyat Island increased from AED 6M to AED 6.3M. However, the average sales price for 4 and 5-bedroom villas in Saadiyat Island dropped to AED 6.69M and AED 8.7M, respectively.

Other areas that have remained popular for villas for sale in Abu Dhabi are Yas Island, Al Raha Gardens and Khalifa City A, the latter of which was a new addition in 2019. While the price per square foot for villas in Yas Island has remained stable, the same for villas in Al Raha Garden have dropped by 11.2% from AED 807.7 to AED 717.

Al REEF HAS THE HIGHEST ROI IN ABU DHABI FOR VILLAS

As per Bayut’s Abu Dhabi real estate market report, the neighbourhood of Al Reef has the best rental returns in Abu Dhabi for villas, averaging at a healthy 7.1%. Al Reef is well-known for being close to the Abu Dhabi International Airport, Yas Island and key highways. Following Al Reef is Al Raha Gardens, which offers average rental yields in Abu Dhabi of 6.4%.

MBZ CITY PREVAILS AS MOST POPULAR AREA FOR VILLA RENTALS

PROPERTY PRICE TRENDS IN ABU DHABI FOR RENTING VILLAS

The budget-friendly location of Mohammed Bin Zayed City continues to remain the most popular for renting villas in Abu Dhabi. Located on the mainland with easy access to the Abu Dhabi – Al Ain highway, MBZ City attracts renters with a wide portfolio of affordable rental villas and handy amenities.

When analysing Abu Dhabi real estate trends, rental costs for villas in MBZ City have seen slight decreases across the board. The 3-bedroom villas for rent in MBZ City saw costs fall from AED 105k to AED 90k while the 4-bedroom villas fell from AED 140k to AED 130k. Finally, MBZ City’s 5-bedroom villas also dropped from AED 160k to AED 145k. This could be in part due to the rising popularity of similar neighbourhoods such as Manazel Al Reef 2, which also offer budget-friendly villa living, thus, keeping prices competitive. The most popular sub-community to rent villas in MBZ City is Mohamed Bin Zayed Centre, which is followed by Zones 1 and 2.

Khalifa City A is another area on the Abu Dhabi mainland that has continued to gain interest from renters for its spacious homes and convenient location. Following a similar trend to MBZ City, villas in Khalifa City A have seen marginal decreases in rental costs in 2019. The prices to rent Khalifa City A villas average at AED 130k for 3-bedroom villas, AED 150k for 4-bedroom villas and AED 165k for 5-bedroom villas.

Other notable areas for renting villas in Abu Dhabi are Al Reef, Shakhbout City (Khalifa City B), Al Mushrif, Yas Island and Saadiyat Island. A new neighbourhood that potential tenants have been paying attention to is Al Samha, which is home to the popular Manazel Al Reef 2 community, with 3-bedroom villas averaging at a budget-friendly AED 85k. Similar to apartment rentals, tenants should note that villa rentals in Al Muroor have also become more affordable, with average costs for 5-bedroom villas falling from AED 200k to AED 170k. On the other hand, Bayut’s report on property rental prices in Abu Dhabi revealed that 5-bedroom villas in Saadiyat Island saw a slight jump in rental costs of 1.3% to AED 405k. This could be attributed to the recent handovers of more expensive sub-communities in this still-developing area, which could result in the slight fluctuation of prices.

TOP OFF-PLAN PROJECTS IN ABU DHABI FOR 2019

The Abu Dhabi real estate market has several upcoming off-plan projects for investors and buyers who want to take advantage of competitive prices and flexible payment plans. In line with the trend observed throughout 2019, Yas Island is most popular with buyers for off-plan properties in Abu Dhabi, with the Yas Acres villas receiving the most attention. The prices to buy villas in Yas Acres starts from AED 2.25M.

There is a clear leaning towards island living when it comes to off-plan projects in Abu Dhabi. Saadiyat Island, Al Reem Island and Al Maryah Island are amongst the most popular locations with off-plan properties that homebuyers and investors were interested in. Jawaher Saadiyat is the top off-plan project in Saadiyat Island while Shams Abu Dhabi and Al Maryah Vista are the most popular in Al Reem Island and Al Maryah Island, respectively.

Rounding up the list of top areas with off-plan properties in Abu Dhabi is Al Jurf, where the villas in Al Jurf Gardens have received the lion’s share of attention from buyers. Located close to Ghantout, Al Jurf Gardens is around 30 minutes from Jebel Ali, ideal for those looking to commute to Dubai frequently.

Please note that the areas mentioned above may have multiple projects or phases, some of which may have been completed and handed over.

Haider Ali Khan, CEO of Bayut, commented on the performance of the Abu Dhabi real estate market: 

“Over the years, we have seen Abu Dhabi’s real estate sector grow as a key contributor to the capital’s economy. According to the Abu Dhabi Department of Economic Development, the property market has been an important asset to Abu Dhabi’s GDP and FDI, growing by 4.6% over the last five years. This has been a direct result of the proactive steps taken by the government to firmly position the emirate as a global investment hub. Opening up of the freehold market to foreign investment has exposed the real estate sector in Abu Dhabi to a whole new set of interested investors and buyers. We have seen the positive impact of these policies at Bayut, too, with interest holding strong for established freehold areas such as Al Reem Island and Saadiyat Island and for newer developments like Al Maryah Island.”

Forecasting about the Abu Dhabi real estate sector’s performance for 2020, Bayut’s CEO said:

“The Abu Dhabi real estate market has set itself apart with a growing portfolio of unique residential developments that cater to specific audiences. There has also been a steady flow of announcements coming out of the emirate, in terms of infrastructure, development and legal transparency in 2019, a trend which we can expect to see in the coming year too, leading to a sustained interest in the Abu Dhabi market.

“2020 is going to be an important year to observe as Abu Dhabi’s real estate market matures further. With the interesting supply of both affordable and luxury properties that are available in the market and prices becoming more competitive in the sales and rental segments, we are likely to see more first-time buyers, as well as seasoned global investors taking the step to invest, buy and live in the capital city.”

That concludes Bayut’s review of Abu Dhabi property prices in 2019 for apartments and villas in the emirate’s most popular areas. Read up on property price trends in Dubai for 2019 with Bayut’s in-depth market report and discover the best areas for buying and renting. 

Keep following MyBayut’s Market Trends section for more articles on property trends in the UAE!