Abu Dhabi‘s real estate market continues to show resilience despite fluctuations in sales volume, with property prices experiencing a substantial rise of 7.2% year-on-year in Q1 2025. This upward trend signifies strong capital gains in the emirate, highlighting the contrasting dynamics between price increases and declining sales. As the property market evolves, various factors contribute to this trend, including limited supply and increasing rental values, which reflect the overall economic landscape of the region.
The ValuStrat Price Index (VPI) for residential properties noted a significant increase, rising 2.1% quarterly and 7.2% annually to a total of 125.6 points, based on a Q1 2021 benchmark of 100.
In this segment, villa prices showed stronger performance than apartments, climbing 2.7% quarterly and 9.7% annually to reach 134.7 points. Conversely, apartment prices registered an increase of 1.5% quarterly and 4.5% annually, reaching 116.9 points.
“Abu Dhabi records strongest capital gains in three years, while sales volumes slow due to constrained supply,” stated Haider Tuaima, Managing Director at ValuStrat.
The weighted average home value in Abu Dhabi reached AED 10,226 per square metre (AED 950 per square foot), with apartments averaging AED 10,979 per square metre and villas at AED 8,407 per square metre.
Saadiyat Island reported remarkable annual capital gains for villas, with a surge of 21.2%, followed by Al Raha at 8.2% and Mohammed Bin Zayed City at 4.7%. Among apartments, Al Reef led with annual gains of 7.5%, while Saadiyat Island followed with 6.2% and Al Muneera Island with 5.7%.
Rental Values Surge
In addition to property prices, rental values also experienced a sharp rise, with the residential rental VPI climbing 2.2% quarterly and 9% annually to hit 121 points.
Apartment rents outpaced those of villas, growing 3.4% quarterly and 11.6% annually, while villa rents increased by 6.3% annually but remained unchanged quarterly.
Average annual asking rents for apartments stood at AED 114,000, with studios at AED 63,000, one-bedroom units at AED 89,000, two-bedroom apartments at AED 125,000, and three-bedroom units at AED 180,000.
Villas commanded an average annual rent of AED 245,000, with three-bedroom properties at AED 180,000, four-bedroom homes at AED 244,000, and five-bedroom villas at AED 312,000.
The gross yields averaged 7.8%, with apartments delivering 8.3% and villas at 6.7%. Meanwhile, the estimated average residential occupancy rate reached an impressive 88.1%.
Current Landscape of Abu Dhabi‘s Residential Market
In the first quarter of 2025, Abu Dhabi saw the completion of only 90 apartments and 189 villas, making up 2% of the anticipated residential pipeline of 13,941 units for the year.
Despite the limited completions, several prominent developers are pushing forward with new projects. Aldar launched 72 apartments and townhouses at Mamsha Gardens on Saadiyat Island, while IMKAN introduced Naseem Al Jurf, a development comprising 111 villas, eight apartment towers, and 60 townhouses in Ghantoot.
Other notable projects included Bloom Holding’s Carmona in Zayed City and Burtville Developments’ Bab Al Qasr Resort Residence 18 and 19 in Masdar City, which will provide 483 new units. Taraf, in collaboration with Marriott International, proudly launched W Residences Abu Dhabi on Al Maryah Island, a high-profile 37-storey development.
Dramatic Decline in Off-Plan Sales
Sales trends present a different picture, with total sales volume reaching 1,301 transactions, marking a 42.9% drop quarterly.
The average sales ticket size saw a rise of 8.8% quarterly, reaching AED 2.88 million. Off-plan sales, which accounted for 28.5% of the overall sales, plummeted by 57.7% quarterly and a staggering 79.2% annually, totaling 371 transactions, largely due to fewer project launches.
Nevertheless, the average off-plan price stood at AED 1,585 per square foot, which decreased by 8.8% quarterly but surged by 8.7% annually.
The average off-plan ticket size increased to AED 3.56 million, up 19.2% annually. In contrast, ready property transactions totaled 930 units, showing a decline of 33.6% quarterly but an increase of 13.6% annually.
Average prices for ready homes reached AED 1,146 per square foot, reflecting a 5.8% annual increase and 7.9% quarterly growth. The average ticket price for ready homes was AED 2.6 million, up by 28.9% quarterly and 23.8% annually.
Mortgage transactions took the lead in the market, with 2,846 deals valued at AED 9 billion, while cash transactions amounted to 1,375, worth AED 5 billion.
Robust Growth in Office Rents
“The office market showed strong performance, with rising prices and rents amid high occupancy levels, particularly in central business districts. Retail remained resilient, supported by robust foot traffic and tenant sales. Meanwhile, the hospitality sector saw exceptional results, with occupancy and revenue metrics showing significant year-on-year growth, backed by strong tourism activity,” Tuaima added.
The office market’s strong performance was marked by an 8% quarterly increase and a 31.8% annual rise in asking rents, reaching AED 811 per square metre. Median asking prices also grew 6% to AED 2.25 million, with average occupancy in central business districts reaching 90.5%.
Office stock totaled 3.9 million square metres of gross leasable area, with projections for the completion of Aldar Properties’ HB Office Tower on Yas Island by year-end and the addition of 50,000 square metres to Masdar City Square in Q2.
Shopping centre stock reached 1.95 million square metres, with Aldar’s retail assets achieving a 90% occupancy rate in 2024. Yas Mall reported an impressive 97% occupancy alongside a 10% rise in tenant sales and an 18% increase in footfall. My City Centre Masdar registered an 81% occupancy rate.
Exceptional results in the hospitality sector were evidenced by a hotel occupancy rate of 86.9% during the first two months of 2025, an increase of 1.2% from the same period in 2024. The Average Room Rate reached AED 683, a rise of 37.1% annually, and the Revenue Per Available Room hit AED 594, increasing by 38.7% year-on-year.
Abu Dhabi welcomed 5.2 million guests in 2024, marking a 28.7% uptick. The emirate had 34,372 hotel rooms available as of February 2025, with expectations for supply to exceed 50,000 by 2030.
Mondrian Hotels is set to open its first UAE property in Downtown Abu Dhabi, while Hilton and Aldar are preparing to welcome Abu Dhabi’s first Waldorf Astoria at the former Anantara Eastern Mangroves site.
Industrial property prices also saw increases, with asking prices rising 14.8% annually and 1.5% quarterly.
Warehouse prices fluctuated between AED 152 and AED 430 per square foot, with premium rates for modern cold storage facilities. Annual rental rates rose by 12.3% at the lower end and 17.9% at the higher end, ranging from AED 25 to AED 54 per square foot.
AD Ports Group inaugurated the Al Faya Dry Port between Abu Dhabi and Dubai.
In another notable development, Bisconni Middle East Manufacturing has secured a 50-year lease with the KEZAD Group for a 37,000 square metre facility, investing AED 110 million. AquaChemie also opened a 25,804 square metre manufacturing facility in KEZAD.
The UAE’s economy is anticipated to grow by 5% to 6% in 2025, driven by progress in technology, renewable energy, trade, financial services, and infrastructure sectors. Abu Dhabi’s economy recorded a growth of 3.8% in 2024, primarily fueled by the non-oil sector, with manufacturing contributing 9.5% to GDP and construction accounting for 11.3%.
The Abu Dhabi Consumer Price Index stood at 106.4 points in February 2025, reflecting year-on-year stability. Housing and utilities increased by 2% annually to 101.9 points, the highest rate seen in two years.
As of March 2025, the US Federal Reserve maintained interest rates at 4.25% to 4.5%. The price of Abu Dhabi’s Murban crude oil was recorded at AED 277.1 ($75.5) per barrel.
The UAE’s foreign trade crossed AED 3 trillion for the first time by the end of 2024, marking a 14.6% increase. Additionally, the UAE aims to double annual foreign direct investment inflows to AED 240 billion and nearly triple its total FDI stock to AED 2.2 trillion by 2031.