The real estate market in Abu Dhabi showed strong performance in 2023, continuing the rise seen since the beginning of the Covid-19 pandemic. Transaction volumes, values and rents increased over the past year as demand remained robust, according to a report by ValuStrat.
Looking ahead, the outlook for 2024 remains positive, with analysts forecasting further price growth, especially for residential properties, stated ValuStrat in its report which analyses the key trends that shaped Abu Dhabi’s property market in 2023.
It will also examine different sub-markets and asset classes, and provide a forecast for 2024 based on available data and expert opinions.
According to ValuStrat, the transaction data for 2023 shows continued momentum in Abu Dhabi’s real estate sector.
As per official figures, the existing/ready transaction value in Q3 contributed to 13% of the total sales transactions value compared to 36% the yerar before, reaching AED1.873 billion ($510 million), while transaction values witnessed a notable increase of 25% compared to AED1.5 billion ($409 million) in Q3 2022.
Regarding transaction volumes, deals grew by 27.2% annually to reach 16,556. This ongoing growth underscores the strength of underlying demand drivers such as population increases, economic expansion, and wealth accumulation in the emirate.
According to the expert, Yas Island emerged as the capital’s top-performing sub-market regarding transaction values, netting AED4.2 billion deals in 2022 alone followed by other popular locations such as Al Reem Island (AED3.4 billion), Saadiyat Island (AED3.1 billion) and Khalifa City (AED2.7 billion).
In Q3 2023, Abu Dhabi recorded a significant increase in sales transactions which rose to 4,160, up 32% from the previous quarter and 102% over the previous year.
Key projects launched during this period included Gardenia Bay on Yas Island, Vista 3 on Al Reem Island, Perla 3 in Yas Bay, Al Jurf Phase 2 in the Ghantoot area, Murjan Saadiyat on Saadiyat Island, Icon Tower in Yas Bay, and a new phase of Saadiyat Lagoons.
In addition, several new projects, including residential, commercial, and mixed-use developments, are in the planning and design stage, with official announcements expected in the next six months. This shows buyers’ continued appetite for new developments, stated the expert.
According to official data, the average residential prices across Abu Dhabi’s freehold areas grew by 1.2% in the first quarter of 2023, pushing the average to AED 964 per square foot.
Although this increase was modest, it underscores how stable prices have remained despite rising interest rates and global economic headwinds, stated ValuStrat in its report.
Villa values moderated slightly over this period (down 2.2%) but were still 1.2% higher annually. Apartment prices outperformed, rising 0.5% quarter-on-quarter and 1.2% year-on-year to average AED 1,030 per square foot, it added.
Rental rates have been upward for much of 2023 across Abu Dhabi. According to official data, average lease rates stood at AED 60 per square foot in Q1 2023, a decline of just 1.1% year-on-year but an increase of 3.6% versus January 2020 levels at the onset of the health crisis.
Villa rents too have rebounded the strongest, rising 4.2% annually and eclipsing their pre-Covid peak mainly driven by continued demand to upgrade to larger living spaces on long-term leases.
On the 2024 outlook, ValuStrat said the average residential value across Abu Dhabi is projected to jump 5-7% led by continued strong fundamentals.
Thanks to the population growth from expat arrivals and citizens, wealth accumulation, and economic expansion should fuel persistent buyer and renter appetite, the demand will remain robust.
With developers launching new mega-communities, it will drive over AED10 billion in off-plan transactions this year, said the expert.
After correcting this year, prime areas like Saadiyat will stabilise and begin recovering lost ground through 2024, it added.
According to ValuStrat, the UAE capital is well placed to ride global uncertainties during 2024 due to large sovereign wealth reserves, a diversified economy and prudent fiscal policies.
While price corrections cannot be fully ruled out for ultra-luxury areas, the overall property market is forecast to deliver healthy growth led by the residential space. Macroeconomic stability, new project launches, infrastructure spending and population gains will facilitate an upbeat trajectory, it added.
Some of the top areas in Abu Dhabi that are projected to be good investments for buying property in 2024 include Al Reef; Masdar City; Al Reem Island; Yas Island; Al Maryah Island and Saadiyat Island.
According to ValuStart experts, most indicators point to the ongoing rise of Abu Dhabi’s real estate market, strengthening further in 2024 due to strong economic expansion and new project launches.
Prices and rents are set to increase across all major asset classes, led by enduring demand drivers and moderate new supply timelines, they stated.
With infrastructure spending ramping up, emerging suburban hubs will also deliver value upside. Real estate investors can capitalize on the emirate’s positive property market trajectory next year by pursuing a balanced portfolio approach backed by diligent research, they added.-TradeArabia News Service
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