Is 2022 the year to buy a real estate property in Abu Dhabi?
December 1, 2021
Rapid transformation into a global business destination, and recognition as arguably the world’s safest city during the pandemic, is boosting investment in Abu Dhabi real estate
Despite being a short drive away, the Abu Dhabi real estate market has historically been markedly different, though not entirely in contrast to, it’s often high-flying neighbor Dubai.
The most important difference has been the ubiquity of high-rise apartments for rent and sale in Dubai, compared to the prevalence of villa communities in Abu Dhabi.
This isn’t to say that there are no apartments in Abu Dhabi for investors and tenants. The city does offer a stretch of apartment residences along the famed Abu Dhabi Corniche and the relatively new expat-focused developments on Reem Island and Maryah Island. But for the past few decades, the population in Abu Dhabi — a third of the size of Dubai — has preferred suburban living to urban sprawl.
Changing preferences
This trend will soon undergo a transformation as a number of large scale developments in the city progress.
Planned communities were originally clustered in three island and Gulf-front locations in the Al Raha Beach – Al Zeina, Al Muneera and Al Bandar. But the area is quickly transforming into the kind of lively and diverse urban destination more commonly associated with Dubai’s beachfront apartment districts.
Nearby, Yas Island is stepping up its leisure and entertainment appeal. Primarily villa-focused, it featured only one four-building apartment community until the end of 2020. Last year, two high-end apartment-focused communities began handing units over, and will soon be joined by more developments that are expected to be completed in 2022 and beyond. Similarly, Khalifa City and Reem Island are undergoing rapid transformation with infrastructure development works and new projects to be completed in the coming 24 months.
Resilient capital
Owing to a stable economic climate, a solid credit rating, and its position as the UAE capital, Abu Dhabi real estate prices command a premium over similar properties in Dubai ¬– despite experiencing less demand.
This is despite Abu Dhabi experiencing a protracted real estate downturn post-2014 – like Dubai – and seeing prices plunge to record lows at the height of the pandemic in 2020.
However, property price trends in the city are experiencing a reversal in trajectory, following a comprehensive economic stimulus package unveiled in 2021 and concerted efforts to accelerate an investment-friendly environment through the Ghadan 21 initiative. Most importantly, Abu Dhabi gained widespread global recognition as one of the world’s safest cities, if not the safest, during the pandemic, from Deep Knowledge Group, on Kearney’s Global Cities Outlook index, and as part of the UAE on Bloomberg’s Covid Resilience Rankings.
According to results from CBRE. the eight-month period from January to August yielded an average 2.2 per cent increase in real estate prices in Abu Dhabi, with more than AED16.2bn in property transactions recorded in the third quarter.
A fast-transforming economic picture as a global sports and entertainment events and investment hub, the launch of the Abu Dhabi Residents Office to attract and retain high-skilled talent, and the Golden Visa initiative, as well as others to boost the startup scene in the emirate will continue strengthening the re-emergence of Abu Dhabi as a popular real estate investment destination in 2022.
Challenges… and opportunities
Further growth in appetite for real estate investors will be challenged by the influx of new supply, both apartments and villas, coming online in the coming year and beyond. The impending possibility of rising interest rates in 2022 as global monetary policy tightens will also raise costs for investors looking to secure home mortgages.
However, with much more space to play than neighbouring Dubai, and boasting a variety of sustainable and eco-friendly environments, including wetland reserves and mangrove forests, Abu Dhabi has compelling natural advantages it is capitalising on to boost its property market.
The city also plans to complete a new and larger airport to the south of the city, is revising regulations to spur the setting up of new businesses, and is growing its portfolio of world-class cultural and recreational amenities, further signs that more demand for real estate investment is about to follow.
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