Abu Dhabi’s real estate market saw remarkable growth in the first quarter (Q1) of 2025, a new report suggested. According to a recent ValuStrat report, Abu Dhabi recorded robust performance across various sectors, with the ValuStrat Price Index (VPI) showing notable capital gains and rental increases. While Abu Dhabi recorded its strongest capital gains in three years, sales volumes have slowed due to constrained supply.
In Q1 2025, the overall VPI for the residential sector rose by 2.1 percent quarterly and 7.2 percent annually, reaching 125.6 points, with a baseline of 100 established in Q1 2021. This growth is particularly remarkable given the current economic climate. Valustrat attributes the surge in residential capital values to a combination of limited new housing supply and sustained demand from domestic buyers.
Villa prices were particularly strong, appreciating 2.7 percent quarter-on-quarter (QoQ) and 9.7 percent year-on-year (YoY), climbing to 134.7 points. Apartment prices also saw an increase, rising 1.5 percent QoQ and 4.5 percent YoY, reaching 116.9 points. This upward trend in property values is a clear indicator of the market’s resilience and the confidence of investors and homeowners alike.
Rental values on the rise
Rental values in the residential sector also witnessed substantial growth, with the residential rental VPI increasing by 2.2 percent QoQ and 9 percent YoY, reaching 121 points. Notably, apartment rents experienced a remarkable rise of 3.4 percent QoQ and 11 percent YoY, while villa rents grew by 6.3 percent YoY but remained stable over the quarter. Valustrat’s insights suggest that the demand for rental properties continues to outpace supply, contributing to these notable increases.
Despite the positive trends in prices and rents, new housing supply has been limited, with only 2 percent of the anticipated pipeline for 2025 delivered during the quarter. However, major developers are progressing with significant residential projects across key areas such as Saadiyat Island, Zayed City, Ghantoot, and Masdar City, reflecting ongoing confidence in the market.
Sales activity in Abu Dhabi’s real estate market presents a mixed picture. Off-plan sales saw a significant decline, dropping 57.7 percent QoQ and 79.2 percent YoY, primarily due to fewer new launches. In contrast, ready home sales were down QoQ but showed an annual increase in values. The report reveals that mortgage-backed purchases dominated the market, indicating stable domestic end-user demand and confidence among buyers.
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Strong office market performance
The office market in Abu Dhabi also exhibited strong performance, with rising prices and rents, particularly in central business districts where occupancy levels remain high. Valustrat reported that office asking rents grew by 8 percent quarterly and 31.8 percent annually, showcasing the demand for quality office space in the emirate.
Retail performance has remained resilient, bolstered by robust foot traffic and tenant sales. Valustrat’s analysis indicates that shopping centers are thriving, with strong demand supporting occupancy rates. The hospitality sector is experiencing exceptional results, with hotel occupancy and revenue metrics showing significant YoY growth, driven by increased tourism activity.
According to the Department of Culture and Tourism – Abu Dhabi (DCTAD), the capital welcomed 5.2 million guests in 2024, marking an overall increase of 28.7 percent. The average room rate for hotels reached AED683, reflecting a notable 37.1 percent annual increase, while the Revenue Per Available Room (RevPAR) rose 38.7 percent to AED594. These figures underscore the ongoing recovery and growth of Abu Dhabi’s tourism sector.
Positive outlook for 2025
Valustrat’s report also highlights macroeconomic factors contributing to the real estate market’s success. The UAE economy is projected to grow by 5 percent to 6 percent in 2025, with key sectors such as technology, renewable energy, and infrastructure driving this growth. Abu Dhabi’s economy alone grew by 3.8 percent in 2024, supported by the non-oil sector and significant contributions from manufacturing and construction.
As the market outlook remains positive, Valustrat anticipates that modest price increases for residential properties will continue throughout 2025. The interplay between demand, limited supply, and ongoing development projects positions Abu Dhabi’s real estate market for sustained growth.
