Supported by a solid economic forecast and strategic government initiatives, Abu Dhabi’s real estate sector is poised for significant growth in 2024. This is according to the report “Abu Dhabi – Review 2023-2024 Outlook” released by consulting and advisory group ValuStrat.
Residential market on the rise
According to ValuStrat’s forecast, the UAE capital’s residential capital values will rise between 3 to 5 percent in 2024. This steady growth is underpinned by a strategic phase of expansion. This year, they also anticipate that freehold villa communities, in particular, will see modest increases while apartment prices will remain stable.
The new year could also witness an increase in the number of homeowners, attributed to lower mortgage rates.
“Lower mortgage rates in 2024 could motivate aspiring homeowners to embrace ownership, potentially leading to a boost in mortgage transactions while off-plan transactions decelerate,” noted the report.
In terms of residential rents, both villa and apartment sub-markets could also achieve modest gains. This reflects the sector’s overall positive momentum.
Demand for office spaces
Along with the rise in the residential market, the Abu Dhabi real estate sector could also experience a boost in office property demand. Specifically, the ValuStrat report shows that there is surging demand for Grade-A office spaces.
Providing support to this particular segment is the government’s efforts to implement visa programs tailored for remote workers. Coupled with enhanced transparency, this move can entice foreign investors and professionals to invest in an office space in the UAE capital.
Hospitality and retail segments to also benefit
According to Statista, the UAE’s travel and tourism market could grow by 2.99 percent from 2024 to 2028. Backed by this growth, Abu Dhabi’s hospitality and retail segments are also positioned to reap benefits.
In the city, one of the most anticipated attractions is the Surf Abu Dhabi. The world’s biggest man-made surf park is located on Hudayriyat Island. Miral also plans to expand Yas Waterworld, an Emirati-themed waterpark, by 16,900 square meters.
Big hotel developments are also on the horizon to accommodate tourists and locals alike. For instance, the Mondrian Hotel in downtown Abu Dhabi is set to open with 221 rooms and suites and 80 serviced apartments. Meanwhile, the Airside Hotel near Midfield Terminal Building will have 140 room keys.
In the retail sector, the emergence of new shopping centers like the Marsana extension on Hudayriyat Island and the Tivoli Dome Food & Beverage Facility signals growth.
Nonetheless, ValuStrat provides caution. In the report, the firm stated, “Brick and mortar mall operators could continue to suffer from downward pressures from burgeoning e-commerce sector causing higher vacancies and lower rents.”
Solid foundation
Abu Dhabi’s robust economic backdrop for 2024 provides a fertile ground for its real estate sector. The UAE Central Bank foresees a 4.3 percent growth rate this year. Additionally, the International Monetary Fund (IMF) estimates a GDP increase of 4 percent. This development is further bolstered by the UAE Cabinet’s approval of a substantial AED192 billion federal budget for the 2024-2026 period.
In the last quarter (Q4) of 2023, the city’s real estate market saw continued growth and recovery. In its report, ValuStrat shared that the Q4 2023 ValuStrat Price Index (VPI) grew 1 percent from the previous quarter, hitting 76.2 points. Annually, it increased 4.2 percent.
VPI is “a valuation-based price index constructed to represent a periodic change in capital values and rental values experienced by typical residential and commercial properties.”
The Residential Rental Index also reflected positive trends, standing at 81.4 points, with citywide rentals experiencing a 6.4 percent annual increase and a 1 percent quarterly rise. Villa rents increased by 7.3 percent year-on-year and 0.6 percent quarter-on-quarter. Meanwhile, apartment rents saw a 5.5 percent annual growth and a 1.5 percent quarterly growth.
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