Abu Dhabi’s property market experienced remarkable growth in 2024, with residential rents soaring by 20%, sales prices increasing by 11%, and prime office occupancy reaching 95%. A shortage of available properties heightened competition, contributing to price hikes across the sector.

To enhance pricing transparency and assist with lease negotiations, the Abu Dhabi Rental Index was introduced in 2024. Meanwhile, upcoming developments are expected to ease supply constraints in the years ahead. Despite an anticipated increase in housing supply in 2025, demand remains robust, fueled by economic expansion, foreign investment, and government-led initiatives. As part of the UAE’s Vision 2030, Abu Dhabi continues to attract businesses and talent, particularly in the finance, technology, and tourism industries, further reinforcing its status as a key global investment hub.

Key Insights:

Residential Market:

·         Limited supply: Only 3,004 residential units were completed in 2024, falling 46% short of projections.

·         Rising prices: Property sales increased by 11%, with villas leading the market.

·         Rental spikes: Rents climbed 20% on average, with Saadiyat Island apartments experiencing a 31% rise.

·         Resale market growth: Transactions in the secondary market surged by 54% as buyers gravitated toward ready-to-move-in homes.

Office Sector:

·         Near-full occupancy: Prime office spaces were 95% occupied, while overall citywide occupancy stood at 89%.

·         Rent increases: Office rental rates rose by 11% across the city.

·         Demand from finance sector: Banking and financial institutions accounted for 24% of all office leasing inquiries.

Housing Demand Surges Amid Rising Prices

Demand for housing in 2024 far exceeded the available supply, leading to significant price and rental increases. A limited number of newly completed properties contributed to an 11% rise in overall sales prices, with villas witnessing the highest growth. In Khalifa City, property prices jumped by 30%, reflecting the growing preference for suburban communities. The rental market also tightened, particularly in premium locations. Saadiyat Island saw a 31% increase in rental rates, while Reem Island and Al Raha Beach saw rises of 24% and 21%, respectively. As prices in central areas continue to rise, more tenants are shifting toward suburban and mid-range communities.

With 8,500 new residential units expected in 2025—nearly three times the number delivered in 2024—there will be some relief. However, demand is projected to remain high, keeping upward pressure on pricing. According to Cushman & Wakefield Core’s research team, the supply shortage in 2024 played a key role in driving price hikes. While additional housing options in 2025 may help stabilize the market, demand is still expected to outpace supply, influencing both sales and rental prices.

Office Market Sees Record Occupancy and Rising Rents

The office sector in Abu Dhabi recorded one of its strongest years, with prime spaces nearing full occupancy. Citywide, occupancy rates reached 89%, while prime office spaces saw even higher demand at 95%. The scarcity of available office units contributed to an 11% increase in rental prices. Additionally, most of the office space set for completion in 2025 is already pre-leased. With limited availability, businesses have been securing office space quickly, particularly in key districts like Abu Dhabi Global Market (ADGM) and Reem Island. Companies unable to find space in prime locations are now exploring newer business districts or optimizing their existing offices.

Future Outlook

While the increase in new developments will provide some relief, Abu Dhabi’s property market is expected to remain highly competitive. The Abu Dhabi Rental Index will play a crucial role in improving transparency and helping tenants and buyers navigate the market more effectively. Meanwhile, ongoing expansions in freehold ownership will continue attracting investors.

The real estate sector is poised for sustained growth in 2025, with key investment zones set to welcome new residential developments. Office space, particularly in premium and Grade A segments, will remain in high demand. As Abu Dhabi continues its economic diversification efforts—focusing on finance, technology, and infrastructure—the city will attract more residents, businesses, and investors, ensuring continued momentum in the property market.

Original source: https://www.zawya.com/en/press-release/research-and-studies/abu-dhabi-real-estate-hits-record-highs-as-demand-outpaces-supply-ogpfchj9