The capital city of Abu Dhabi is emerging as the hot areas to buy and rent property in the UAE real estate market. This month, as we complete the first quarter of 2018, let’s look at how the Abu Dhabi real estate market fared from a rental and investment perspective with respect to Q4 of 2017.
Property Prices in Abu Dhabi Decline Across Apartments for Rent
On evaluating the data from Bayut.com users, the top ten areas to rent apartments are more or less similar to what we saw in the Abu Dhabi real estate market report for 2017. Al Khalidiya takes the top spot in popular areas to rent apartments in Abu Dhabi. The apartments in Al Khalidiya start at 1-bedroom units with average rents of AED 75k, followed by 2-bedroom flats at AED 95k. Although, rents for 1-bedroom apartments in Al Khalidiya have reduced significantly 9.4% since the last three months of 2017, 2-bedroom units have remained stable in the area.
Coming in at a close second is the ever-popular Al Reem Island, where studios are averaging at AED 55k, 1-bedroom flats are at AED 75k, and 2-bedroom apartments are slightly more expensive than Al Khalidiya at AED 105k. There has been a significant dip in prices for apartments in Al Reem Island, with 1-bedroom units going down by 11.7% and 2-beds by 16%. This may, in part, be because of the addition of more reasonably priced apartments in the area in this quarter of 2018.
At third place, is the most affordable area in the capital, Mohammed Bin Zayed City. The asking rents for studios in MBZ city are the lowest in the emirate at AED 28k, 1-bedrooms command AED 48k and 2-bedrooms go for an average of AED 62k. On the flip side, the highest annual rents are recorded for the apartments for rent in the Corniche area. Rent for studios average at AED 75k, 1-beds go for AED 95k and 2-bedroom apartments will set you back by AED 125k.
Other notable areas to rent apartments in Abu Dhabi include Hamdan Street, Al Muroor, Khalifa City A, Airport Street and Al Mushrif. The most significant dip in prices for apartments in Abu Dhabi is for 2-bedroom units in Hamdan Street, which have reduced by 15.7% since 2017. Overall the property prices in Abu Dhabi seems to be on the decline in this quarter. The price of Abu Dhabi properties may stabilise over the course of the year as more people renew tenancy contracts or move homes.
Al Reem Island A Favourite for Buying Apartments in Abu Dhabi
The most popular area with apartments for sale in Abu Dhabi is predictably Al Reem Island, which has built up a reputation for spacious, reasonably priced flats that are consistently popular with both renters and buyers. Prices for studios here average at AED 690k and 1-bedroom flats are going for AED 1M. These prices, however, could be because of new properties being added to the market, so they are not true representations of the overall trend. The 2-bedroom apartments in Al Reem Island, however, have shown a slight decrease from 2017 and are averaging AED 1.55M.
Coming in a close second are the apartments in Al Raha Beach where studios are at AED 990k and 1-bedroom flats have gone down by 3.3% to AED 1.37M. The decreasing prices trend continues into the 2-bedroom flats here, averaging at AED 2M.
The most wallet-friendly area to buy apartments in Abu Dhabi is Al Ghadeer, where studios average AED 480k, 1-bedroom units go for AED 700k and 2-bedroom apartments are at AED 906k. On the flip side, the high-end apartments can be found in cultural hotspot Saadiyat Island, with the average asking price for 1 BHK units at AED 2.3M and 2 BHK units at AED 2.57M.
Other notable areas to buy apartments in Abu Dhabi include Masdar City, Al Reef and Yas Island. In terms of ROI, there has been a slight decline of 0.5% in the rental yields for apartments in Abu Dhabi. The current return rate is 6.2%, but this could be because of a number of reasons; including increased supply in properties because of the handover of new projects.
Slight Decline in Rent For Villas in Abu Dhabi
Those looking for a more spacious and private living arrangement will be happy to note that prices on average have gone down to rent villas in Abu Dhabi. Khalifa City A is the most popular on the list, with 3-bedroom villas averaging at a steady AED 130k, 4-bedroom villas slightly down to AED 165k and 5-bedroom houses also down to AED 180k in comparison to Q4 of 2017.
The only notable increase in rent has been in the second most sought-after location to rent villas in the capital, Mohammed Bin Zayed City, where 3-bedroom villas went up by 9.1% to AED 120k, and 5-bedroom villas went up by 3% to AED 170k. The prices, however, decreased marginally for 4-bedroom villas which are at AED 140k.
The most affordable villas in Abu Dhabi can be found in Hydra Village, where 3-bedroom villas average an extremely competitive AED 85k. The other in-demand areas for villa rentals in Abu Dhabi are Al Mushrif, Al Reef, Al Muroor, Al Raha Gardens and Al Bateen.
Al Reef Emerges as the Sought-After location to buy Villas in Abu Dhabi
One of the most budget-friendly developments in the Abu Dhabi real estate market, Al Reef retains the coveted position as the most popular area to buy villas in Abu Dhabi in the first quarter of 2018. Prices across the villas have reduced on average by less than 10%. The 3-bedroom villas for sale in Al Reef average at AED 1.6M, 4-beds are at AED 2.15M and 5-bedroom flats are at AED 2.45M.
Coming in at second place are the upscale villas in Saadiyat Island, which echo the trend in Al Reef with prices on average coming down. It’s incidentally also the most expensive area to buy apartments amongst the in-demand locations in the capital, with 3-bedroom villas averaging at AED 5.7M, 4-beds at AED 6.7M and 5-beds at AED 9.2M. The overall investment potential of the district is clearly attracting investors in the Abu Dhabi real estate market to this upscale area.
The only properties to show an increase in prices are 3-bedroom villas in Yas Island and Al Salaam Street at AED 3.2M and AED 3.7M respectively. When it comes to the ROI for villas in Abu Dhabi, they have reduced by 1.6% since 2017, with current rental yields at 5.2%. The impact of VAT needs to stabilise before we can really comment on the ROI on a longterm basis.
Off-Plan Projects Peak in Abu Dhabi
There has definitely been a renewed interest in off-plan properties since the start of 2018. Several high-profile projects have been announced by reputed builders, adding to the appeal of investing in off-plan projects.
Notable off-plan developments in Abu Dhabi include the waterfront properties of Maryah Plaza in Maryah Island, Al Bandar in Al Raha Beach, Shams Abu Dhabi in Al Reem Island, Jawaher Saadiyat in Saadiyat Island and Ansam in Yas Island.
The fact that off-plan developments have caught the attention of the public once again signals a positive turn of events for real estate in Abu Dhabi. It’s still too early to tell how things will progress in the coming months, so keep an eye out for more news and updates from the best property blog in the UAE to see how the Abu Dhabi property market will fare in the coming months.
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.