The Abu Dhabi real estate market is growing rapidly and breaking records. The Emirate's authorities are announcing new zones where expats and investors can acquire title to real estate. As of 2023, there are already 25 such districts. We will tell you about the most popular projects and property developers of the UAE capital, the terms governing a purchase and the profitability of real estate in Abu Dhabi.
Situation on the Abu Dhabi Real Estate Market
The Abu Dhabi real estate market has been growing assuredly since 2021. In 2022, over 19,000 property deals were concluded in the capital of the UAE, with investments totalling USD 21 billion. This represented a 27% increase in the number of real estate transactions, while the average price rose by 8.5%.
In 2023 Abu Dhabi is breaking records again. According to the Abu Dhabi Department of Municipalities and Transport, the number of transactions and mortgages in the first quarter of the year rose 65% compared to the same period of 2022. In monetary terms this represented a rise of 153% - AED 27.9 billion against 11.3 billion AED (USD 7.6 billion against USD 3.1 billion). For the first time non-resident investors accounted for 10.7% of the total, which attests to the appeal of the capital for foreigners.
Return on Investment in Real Estate in Abu Dhabi
The return on investment averages from 5% to 7.3% per annum, depending on the chosen area and type of real estate. Some property developers promise a yield of 10-11%. The profitability of property depends to a large extent on its proximity to the coast and the city's sights. The location can in turn affect the decision on the specific investment strategy to choose: a long-term or short-term let or resale.
One bedroom and two bedroom flats and family villas are most popular with investors in Abu Dhabi. If investors opt for a buy-to-let property, they can recoup their investments in seven to nine years owing to regular increases in rent and real estate prices.
New buildings in the UAE
Best Areas for Real Estate Investments
Buyers in Abu Dhabi tend to invest in real estate in five locations. They are the artificial island of Yas developed by the famous company Aldar Properties, the natural islands of Al Reem and Saadiyat, the districts of Al Shamkha and Zayed City. Combined, these five destinations accounted for USD 10.3 billion, equivalent to about half the volume of all real estate transactions in 2022.
Foreign investors can only obtain title to real estate (freehold) in zones specified by the local authorities. According to Arabian Business, which cites the Abu Dhabi Department of Municipalities and Transport, the number of such zones increased to 25 by the end of 2022. The list is compiled in such a way as to offer investors variety in terms of shape, design and price. As a rule, in freehold zones investors are offered residential complexes with different types of real estate and all the necessary amenities, including offices, shops, service providers, swimming pools, etc.
We present here some of the projects available to foreigners:
This project by Aldar Properties has been under construction since June 2019 and was added to the freehold list in 2022.
The community is being built in several stages. The first stage involved the development of 496 plots, while the second stage will end with the completion of over 1,100 villas of different layouts and designs by the end of 2025. The floor area of the villas ranges from 304 to 494 square metres, while prices start at USD 789,652. You can choose from villas with three or four bedrooms, fully furnished or semi-furnished. Each house has a swimming pool and a green lawn in the courtyard.
Buyers are also eligible for instalment options. First of all, they need to contribute 10% to sign a contract, and then pay the remainder in several instalments as the construction project progresses.
This is a project being implemented by the property developer Bloom Holding, which is currently developing several Abu Dhabi districts. At Bloom Living, located near the capital's airport, buyers can select from 4,500 villas and townhouses. The properties are being built around an artificial lake, while the architectural solution is based on Spanish motifs. The project is being built in two stages. The first stage will be completed by the end of 2024, and the second stage by mid-2025.
Three bedroom villas in this elite gated community cost on average AED 2.8 million (USD 762,300). Townhouses ranging from 120 to 171 square metres cost from USD 462,899 to USD 707,964. Two instalment options are available for two and four years. In the case of two years, the down payment is 10%, and in the case of four years, the down payment is 5%.
Yas Golf Collection on Yas Island
This project by Aldar Properties is being built in a resort - the artificial island of Yas, and boasts premium residences ranging in size from 42 to 279 square metres. The cost of studios starts at USD 203,861 and two bedroom flats at USD 571,610. The windows overlook the pond and golf courses. The community is scheduled for completion in Q1 2025.
An instalment plan is also available. First of all, you need to contribute 10% to sign a contract, and then pay the remainder in several instalments as the construction progresses.
Abu Dhabi Property Developers
When choosing a project for real estate investments in Abu Dhabi, you can start by deciding on the location or on the property developer. Several companies in the capital are developing vast areas and offer entire districts and communities which include, in addition to housing, offices, hotels and shopping centres.
To choose the right developer, it is advisable to study the projects they have already completed on the market. It is worthwhile reading customer reviews, finding out about the complaints of buyers regarding the quality of construction, whether there were any delays and whether the developer fulfilled all its promises. You can assess the level of renown of the property developer by the number of awards that it has received and the frequency of mentions of the company in the news. Before making a purchase, it is also advisable to consult with the experts of several real estate agencies and compare their recommendations.
Aldar Properties is one of the major property developers in the Abu Dhabi market. It has been operating in business for almost 20 years and building housing, commercial and office property, hotels, entertainment and educational facilities. Aldar’s portfolio includes such outstanding projects as the Louvre Abu Dhabi, Saadiyat Lagoons, Reeman Living, and Alghadeer.
IMKAN, which is based in Abu Dhabi, but has also implemented projects in Morocco, Egypt, Montenegro, Sri Lanka and the Seychelles, is also worth a mention. It focuses on residential housing, office and commercial property, and hotels. The property developer has a large-scale Al Jurf community in its portfolio, with villas over an area of 756 square metres and prices starting at USD 878,904. The villas are located on the coast between Abu Dhabi and Dubai.
Investors are also interested in projects by SAAS Properties which builds and lets boutique premium complexes. In Abu Dhabi the company has erected Reem Five and One Reem, which have already been completed. Reem Five sells flats from 43 to 215 square metres for a minimum price of USD 474,807. In One Reem, properties ranging in size from 143 to 381 square metres are available, with the asking price starting at USD 711,759.
Is It Safe to Invest in Abu Dhabi Real Estate?
Regardless of the developer that you select, it is in your interest to study the detailed development plan. The developer is also required further to the client’s request to present a construction permit from the emirate’s authorities.
Most investors buy real estate in the UAE at the construction stage. This enables them to save money on the purchase of flats or villas for subsequent letting or from resale after completion. Such an investment is considered safe as the funds of investors are protected by law in the UAE. The money is stored in an escrow account in a bank that the developer will not be able to access until it completes the project. The property developer finances the works, using its own funds or taking out a loan instead of using the buyers' money. The bank keeps 5% of the value of the funds for another year after the completion as insurance in case of possible defects and only then transfers the funds to the developer.
Usually, buyers of real estate under construction in Abu Dhabi are offered instalment plans. As a rule, when concluding a contract, it is enough to pay 5 to 20% of the value of the property, with the remainder paid in several instalments. Read more about the real estate purchase process in Abu Dhabi here.
There is another reason why investors choose real estate in the UAE: access to an extensive toolkit for generating income without unnecessary hassle. Namely, you don’t have to look for a tenant - the developer or property management company will take care of this. This system is operational not only in Dubai, which has been heavily promoted, but also in Abu Dhabi.
In a Nutshell
The Abu Dhabi real estate market attracts investors from different countries and is seeking to compete with Dubai. In 2022, the number of deals increased by 27%, and the average cost of purchased real estate increased by 8.5%, while 2023 is setting new records. In Abu Dhabi, foreign buyers can choose from flats, villas and townhouses in 25 freehold areas. Depending on the area and type of real estate, the rate of return ranges from 5% to 7.3%. Investors prioritise one bedroom and two bedroom flats, as well as family villas.
Cover photo: Suji Su (Pexels)