In the second quarter of 2025, the ValuStrat Price Index recorded accelerated growth, driven by rising capital gains in the freehold apartment market in Abu Dhabi.
According to consulting and advisory group ValuStrat, the VPI for the residential sector in Abu Dhabi accelerated by 2.2 percent quarterly and 8.1 percent annually. This marked an increase from 1.3 percent QoQ and 4.4 percent YoY a year earlier, reaching 128.3 points against a 100-point base set in Q1 2021. Villa prices experienced a sharper increase, rising by 2.6 percent QoQ and 10.1 percent YoY to 138.2 points. In comparison, apartment prices grew by 1.7 percent QoQ and 5.9 percent YoY to 118.9 points, achieving the highest apartment annual growth rate in three years.
Rental values also recorded notable growth, as reflected by the residential rental ValuStrat Price Index (VPI), which rose 1.5 percent quarterly and 9.5 percent annually to reach 122.8 points. Apartment rents outpaced villas, rising by 2 percent QoQ and a record 12.5 percent YoY, while villa rents grew by 7 percent YoY and remained stable during the first half of the year.
New housing supply remains limited, with only 7.1 percent of the projected 2025 pipeline delivered in the first half of the year. However, approximately 33,000 new residential units are scheduled for delivery over the next five years.
Read more | Abu Dhabi real estate: Top luxury properties in Q1 2025
Surge in off-plan transactions
Sales activity rebounded following a subdued first quarter. Off-plan transactions, which accounted for nearly 30 percent of all home sales, rose by 53.1 percent on a quarterly basis but remained 51.8 percent lower compared to the same period last year, according to ValuStrat.
Average prices and transaction values increased by 12.3 percent annually and 38.1 percent quarterly. Meanwhile, ready home sales grew by 6.4 percent QoQ and 3 percent YoY, with an average ticket size of AED2.4 million.
Mortgage-backed purchases accounted for 50 percent of the market, totaling AED8.3 billion.
Office asking rents grew 28.3 percent annually and 6.1 percent quarterly, driven by high occupancy levels, particularly in central business districts. Meanwhile, the hospitality sector delivered exceptional results, with significant annual growth in occupancy and revenue metrics, underpinned by strong tourism activity. The recent announcement by The Walt Disney Company and Miral to develop a new Disney theme park resort on Yas Island is expected to further boost long-term demand in the hospitality and tourism sectors.
