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Bayut’s End of Year market report

2019 has been a dynamic year for Abu Dhabi’s real estate sector, with significant developments from the government to create more viable conditions for investors, buyers, sellers and tenants. The UAE’s leading property website, Bayut, has released a comprehensive report on the evolution of property prices for apartments and villas in the emirate over the course of 2019, compared to 2018. Bayut’s data reveals that Abu Dhabi’s property sector has followed the trend seen in the Dubai real estate market for 2019, with sales and rental prices becoming more competitive across popular areas in the emirate. Abu Dhabi has also taken steps to position itself as a cosmopolitan hub with a world-class business infrastructure and lifestyle, which has attracted more residents and entrepreneurs to settle in the city. This is reflected in the first bi-annual report by Abu Dhabi’s Department of Urban Planning and Municipalities, which reports that AED 31B worth of real estate transactions have taken place in the emirate in the first half of 2019.

Freehold areas such as Al Reem Island, Saadiyat Island, Yas Island and Al Reef have continued to lead the sales segment for the secondary market with competitive prices. These island communities have also held the attention of buyers in the primary market. Potential homeowners who would have been hesitant to invest in these prime areas because of the initial financial outlay required for secondary properties, can take advantage of the flexible payment plans in the off-plan projects here.

Al Reem Island has also remained a favourite with tenants, along with affordable neighbourhoods such as Mohammed Bin Zayed City and Khalifa City A.

Bayut’s report on real estate trends confirms that there have been declines in average sales price across the board for apartments and villas in 2019, compared to 2018.

Following the trends seen across the year, the luxurious waterfront neighbourhood of Al Reem Island has remained the most popular area for apartment sales while the suburban location of Al Reef has also maintained its position as the top area for villa sales. Newer locations such as Al Ghadeer and Al Maryah Island have also picked up in popularity, indicating confidence in the emirate’s newer developments where several projects were handed over in phases throughout 2019.

Bayut’s data on the average sales price per square foot for apartments reveals that Al Reef has witnessed a decline of 15.1% from AED 768 in 2018 to AED 652 in 2019. On the other hand, upscale neighbourhoods such as Yas Island and Saadiyat Island have remained stable with marginal decreases around the 1.5% mark.

In terms of the average sales price per square foot for villas, Al Raha Gardens has experienced a decline of 11.2% from AED 807.7 to AED 717. This decline reflects the current competitive nature of the market, with sales prices for more luxurious residential developments becoming more affordable. When it comes to ROI, Al Maryah Island has the highest rental returns for apartments at 10% while Al Reef offers a healthy ROI of 7.1% for villas.

Haider Ali Khan, CEO of Bayut, commented on the performance of the Abu Dhabi real estate market: “Over the years, we have seen Abu Dhabi’s real estate sector grow as a key contributor to the capital’s economy. According to the Abu Dhabi Department of Economic Development, the property market has been an important asset to Abu Dhabi’s GDP and FDI, growing by 4.6% over the last five years. This has been a direct result of the proactive steps taken by the government to firmly position the emirate as a global investment hub. Opening up of the freehold market to foreign investment has exposed the real estate sector in Abu Dhabi to a whole new set of interested investors and buyers. We have seen the positive impact of these policies at Bayut, too, with interest holding strong for established freehold areas such as Al Reem Island and Saadiyat Island and for newer developments like Al Maryah Island.”

Abu Dhabi’s rental market has also continued to be tenant-friendly with moderate decreases in rental costs for apartments and villas in popular areas in 2019. Al Reem Island has remained the favourite for apartment rentals in Abu Dhabi while Mohammed Bin Zayed City has generated the most demand for villa rentals. Other suburban communities on the mainland such as Khalifa City A, Al Reef and Al Samha have also become sought after by potential tenants who are keen to save on rental costs.

Bayut’s report on rental trends for apartments in Abu Dhabi reveals that prices in Al Reem Island have experienced modest declines under 10% for all bed-types while Khalifa City A has seen prices decrease between 7% - 15%, compared to 2018. Other established neighbourhoods such as Al Khalidiyah, Corniche Area, Al Muroor and Airport Street have also experienced declines in line with prevailing market expectations between 5% - 16%.

For villa rentals, affordable neighbourhoods such as Mohammed Bin Zayed City, Khalifa City A, Shakhbout City (Khalifa City B) and Al Reef have taken the lead while lower rental prices have led to upscale areas such as Al Mushrif, Al Bateen, Yas Island and Saadiyat Island garnering interest from potential tenants. Most of the popular areas for renting villas in Abu Dhabi have seen declines between 7% - 14%.

In the off-plan market, buyers and investors are leaning more toward freehold island developments, with Yas Island, Al Reem Island, Saadiyat Island and Al Maryah Island drawing the most interest. The slew of recent handovers such as the highly anticipated Park View and Soho Square on Saadiyat Island and the timely progress of projects on Yas Island and Al Reem Island have further bolstered confidence while flexible payment plans and fee discounts are incentivising deals for buyers. The upcoming villa development of Al Jurf is also attracting off-plan buyers for its strategic location at the Abu Dhabi-Dubai border.

 
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