Abu Dhabi property market report for Q1 2020: Abu Dhabi’s real estate market sees prices stabilise in key areas

• Apartment sales
• Apartment rentals
• Villa sales
• Villa rentals
• Off-plan projects

As we move into the second quarter of 2020, it’s important to look at how the capital city’s real estate market performed in the first quarter of this year. We will be presenting a comprehensive analysis of property prices in Abu Dhabi for apartments and villas for rent and sale, in Q1 2020, compared to those from Q4 2019. In the first quarter of 2020, there are encouraging signs of property prices bottoming out for both sale and rental listings in Abu Dhabi. Property seekers should also note that consistently popular areas such as Al Reef, Saadiyat Island and Yas Island have seen a slight uptick in prices for Q1 2020.

While the current pandemic has created some amount of uncertainty about how the market conditions will evolve in the coming months, the property trends in Abu Dhabi so far in Q1 2020 have largely followed the patterns we observed in 2019. When it comes to the popular residential communities in Abu Dhabi, freehold areas are a firm favourite with prospective buyers, while suburban areas and older districts on the main island continue to be sought after by potential tenants.

For an accurate representation of Abu Dhabi property prices, our Q1 2020 Market Report compares the average price per square foot for an area when it comes to properties for sale, to help buyers make informed decisions. 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. When it comes to the prices for rental units, we have compared the annual asking rents for Q1 2020 to Q4 2019.

Keep reading for a detailed analysis of Abu Dhabi real estate sales and rental prices in Q1 2020.

Al Reem Island is the top area for buying apartments in Abu Dhabi

Property prices in Abu Dhabi for buying apartments

Staying consistent with the trends observed for apartment sales in Abu Dhabi throughout 2019, Al Reem Island retains the first spot as the most popular area to buy apartments in Abu Dhabi for Q1 2020. The island community’s enviable location, steady stream of upcoming leisure projects and recent freehold status have continued to hold the attention of investors and buyers in Abu Dhabi. It’s also reflected in the data released by the Department of Municipalities and Transport, which stated that Al Reem Island has seen the highest value of real estate transactions in 2019, worth AED 6.52B.

The consistent demand for apartments in Al Reem Island is also reflected in the area’s average price per square foot, which has only experienced a minimal decline from AED 1,011 in Q4 2019 to AED 911 in Q1 2020. Thus, the average prices for Al Reem Island apartments for sale also remain competitive, standing at AED 559k for studio flats, AED 843k for 1-bedroom apartments and AED 1.35M for 2-bedroom units. Our data also reveals that flats in Al Reem Island offer a healthy ROI of 7.2%, which appeals to investors looking to benefit from high rental returns.

Another one of Aldar Properties’ notable developments, the trendy and upscale Al Raha Beach ranks as the second-most popular community for apartments for sale in Abu Dhabi. Aside from boasting a large inventory of spectacular waterfront apartments, Al Raha Beach is also strategically located near other popular neighbourhoods such as Al Raha Gardens, Yas Island and Khalifa City A. Al Raha Beach has also experienced a slight dip in its average price per square foot by 3.6% to AED 1,225. As per Bayut’s data on real estate trends in Abu Dhabi, the price to buy studio flats in Al Raha Beach averages at AED 937k. The average prices for 1-bedroom apartments in Al Raha Beach went from AED 1.19M to AED 1.14M, while prices for 2-bedroom flats marginally went down from AED 1.79M to AED 1.71M in Q1 2020.

Consumer behaviour in the first quarter for the Abu Dhabi market shows that other popular locations to purchase flats in the emirate include freehold areas like Saadiyat Island, Al Reef, Masdar City and Yas Island, along with Baniyas and Al Ghadeer. The average price per square foot in these prominent areas have experienced marginal decreases under 4%. Al Reef also showed promising signs of recovery with price per square foot rising on average for apartment sales.

Al Ghadeer has the highest ROI for apartments in Abu Dhabi

Our analysis of property price trends in Abu Dhabi for Q1 2020 reveals that Al Ghadeer has the best ROI for apartments in the emirate based on projected rental yield, averaging at a high 8.6%. The up-and-coming location of Al Ghadeer is located at the Abu Dhabi-Dubai border and appeals to residents who commute between the emirates frequently.

Other areas that offer good rental yields in Abu Dhabi include Al Raha Beach, which has an ROI of 6.8%, followed by Masdar City and Baniyas, which offer rental returns up to 6.5%.

Al Reem Island ranks as the most popular neighbourhood for rental apartments in Abu Dhabi

Abu Dhabi property price trends for renting apartments

Al Reem Island is also the most preferred area for prospective tenants interested in renting flats in the capital. the swanky neighbourhood boasts family-friendly amenities such as schools, parks, malls and commercial hubs, making it an ideal choice for families and working professionals alike.

As per our analysis of property prices in Abu Dhabi for Q1 2020, rental costs in Al Reem Island are largely stable. While studio apartments in Al Reem Island are showing a slight dip in rents from AED 50k to AED 48k, 1-bedroom flats remain unchanged at AED 64k. On the other hand, 2-bedroom flats for rent in Al Reem Island have seen an uptick in costs, rising from an average of AED 89k to AED 91k in the first quarter of the year.

Potential renters are also paying attention to Al Khalidiyah, one of the older districts in Abu Dhabi. With easy access to the corniche, malls, parks and restaurants, Al Khalidiyah is one of the most coveted addresses in the housing market in Abu Dhabi. The average rental costs for apartments in Al Khalidiya also reflect the demand for these properties, with both 1-bedroom and 2-bedroom flats witnessing slight increases in Q1 2020. The average cost for renting 1-bedroom flats in Al Khalidiyah stands at AED 59k while 2-bedroom apartments cost around AED 67k. The average rental cost for Al Khalidiyah studio apartments remained stable from Q4 2019 to Q1 2020 at AED 35k.

Abu Dhabi real estate trends for Q1 2020 show that many of the emirate’s established neighbourhoods such as Hamdan Street, Al Muroor and Al Nahyan as well as suburban areas like Khalifa City A and Mussafah continued to draw interest from renters. Most of these areas witnessed modest decreases in rental costs which are under 5%. Al Nahyan, Mussafah and Airport Street also showed an uptick in prices with slight increases for certain bed types.

Another area in the Abu Dhabi real estate market that is popular with renters is the Tourist Club Area (TCA), also known as Al Zahiyah. It’s possible that the area’s proximity to the up-and-coming Al Maryah Island and Mina Zayed, which is also undergoing major redevelopment, has boosted the Tourist Club Area’s popularity.

Al Reef is the most popular choice for villas in the Abu Dhabi property market

Abu Dhabi Property Prices for villas for sale

The affordable development of Al Reef, backed by Al Manazel Real Estate, continues to attract the interest of prospective buyers looking to invest in villas in Abu Dhabi. Its proximity to the airport and easy access to the E11 adds to the appeal for buyers looking at budget-friendly properties with good connectivity.

The average price per square foot for villas in Al Reef experienced a slight increase in Q1 2020, rising by 1.1% to AED 614. The average house prices in Abu Dhabi to buy villas in Al Reef average at AED 1.37M for 3-bedroom houses, AED 1.93M for 4-bedroom villas and AED 2.14M for 5-bedroom units.

Another freehold area that is drawing the interest of prospective buyers is the luxurious development of Saadiyat Island. Saadiyat Island, in particular, has seen phased handovers throughout 2019 for high profile projects such as Jawaher Saadiyat, Park View and Mamsha Al Saadiyat. The progress and completion of these projects as per schedule has further strengthened the confidence of investors in the property market in Abu Dhabi, encouraging them to explore more upscale options for villas.

The average price per square foot for villas in Saadiyat Island has also held steady at AED 1,430 in Q1 2020. Our analysis of property prices in Abu Dhabi indicates that the average sales prices for Saadiyat Island villas witnessed slight decreases across the board, which could be attributed to the recent handovers of smaller sized units. The prices to buy 3-bedroom villas in Saadiyat Island are now more affordable, going from AED 6.28M to AED 5.88M, while prices for 4-bedroom villas have gone from AED 6.59M to AED 6.55M. Average prices for 5-bedroom villas for sale in Saadiyat Island also decreased from AED 10.74M to AED 10.69M.

Other areas that are popular for investing in Abu Dhabi villas include Yas Island and Al Raha Gardens, which have also experienced increases around the 2% mark in the average price per square foot.

Villas in Al Reef offer the best rental returns in Abu Dhabi

The villas for sale in Al Reef are not just sought-after for the community’s family-friendly environment. These budget-friendly properties also offer investors with attractive rental yields of 7%. Another area that investors keen on buy-to-let properties can consider is Al Raha Gardens, which have a healthy average ROI of 6.1%, although this can vary depending on the sub-community.

Mohammed Bin Zayed City is the top area for villa rentals in Abu Dhabi

Real estate trends in Abu Dhabi for renting villas

Prospective tenants looking at villas for rent in the capital are turning to Mohammed Bin Zayed City as their first choice, according to property trends in Q1 2020 for Abu Dhabi. This suburban area is best known for its affordable and spacious family villas with various amenities in the vicinity.

The average cost for rental villas in MBZ City remains steady across the board, with marginal declines of under 3%. Tenants can expect to pay around AED 88k for a 3-bedroom villa in MBZ City while 4-bedroom houses will cost around AED 123k. The larger 5-BHK villas in MBZ City saw prices dip from AED 147k to AED 143k in Q1 2020.

Khalifa City A, which ranks second for renting villas in Abu Dhabi, has also seen minor declines in rental costs. The prices to rent Khalifa City A villas average at AED 131k for 3-bedroom villas, AED 150k for 4-bedroom villas and AED 164k for 5-bedroom villas.

Our report on Abu Dhabi real estate trends indicate a clear leaning towards suburban, off-island communities for villa rentals in the emirate. In the Abu Dhabi housing market, areas such as Khalifa City A, Al Reef and Shakhbout City dominate the interest of potential renters. These communities have seen minor decreases in prices, under 3% across the board, increasing their appeal to budget-conscious renters. On the other hand, Shakhbout City has seen prices remain steady for 3 and 5-bedroom units.

Established neighbourhoods such as Al Mushrif, Al Muroor and Al Karamah as well as waterfront areas like Yas Island, Saadiyat Island and Al Bateen are also making a mark in the top areas to rent villas in Abu Dhabi. Most of these areas have seen average costs climb marginally for certain bed types by up to 6%, echoing the overall positive trend of stability in the Abu Dhabi real estate market in 2020. In particular, Saadiyat Island saw average costs for 4-bedroom villas for rent rise by 5.6% from AED 339k to AED 358k, as per our report on real estate prices in Abu Dhabi.

Top areas with off-plan properties in Abu Dhabi

When it comes to the most popular off-plan projects in Abu Dhabi, prospective buyers are predictably showing a clear interest towards freehold areas, such as Yas Island, Saadiyat Island and Masdar City, which offer integrated lifestyles with a variety of amenities and attractions. These off-plan projects also offer attractive payment plans as well as discounts on service charges and property management fees, encouraging a wider pool of potential buyers to transition to home ownership.

The luxury villa and townhouse development of Yas Acres in Yas Island is the most popular option for off-plan villas in Abu Dhabi, with prices for buying villas in Yas Acres starting from AED 2.19M, as per current listings. For off-plan apartments in Abu Dhabi, buyers are keen on 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, which has easy access to the main island of Abu Dhabi and Masdar City, a unique community that offers a sustainable lifestyle for residents.

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, the CEO of Bayut and the Head of MENA for EMPG, commented on the performance of Abu Dhabi’s property market: 

“In the first three months of 2020, before our community was impacted by the unfortunate global incident, the Abu Dhabi real estate market was showing healthy signs of stability which is clearly visible from our Q1 report. The effects of the current situation on consumer interest in the capital’s property market have not been too drastic thanks to the timely measures and economic stimulus packages introduced by the government, and now that the restrictions are easing up further, we’re hopeful things will start going back to normal fairly soon.”

That concludes our Abu Dhabi property market report for Q1 2020. You can also read up on our analysis of the Dubai property market in Q1 2020 to get an insight on the popular areas and evolution of property prices in the emirate. And follow the Market Trends section on MyBayut for our in-depth reports on the Ajman and Sharjah real estate markets as well.

Disclaimer: The above report is based on prices advertised by real estate agencies on behalf of their clients on Bayut.com, and not representative of actual real estate transactions conducted in Abu Dhabi.