Abu Dhabi Residential Report, Q1 2020

AVERAGE RESIDENTIAL PRICES SAW MODERATE DECLINES, ALBEIT AT A LOWER RATE, OVER Q1

Abu Dhabi witnessed a 22% increase in combined real estate transaction and mortgage values over Q1, totaling AED 19.2 billion, up from AED 15.8 billion in Q1 2019. The majority of transactional activity took place across designated investment zones, with Al Reem Island, Saadiyat Island and Al Reef accounting for over half of total Q1 transaction value, highlighting the impact of changes to freehold ownership laws introduced last year.
While the residential sector saw moderate falls in both average values and rents over Q1, the pace of overall decline tapered on an annual basis. Average apartment values fell by 1.2% quarter-on-quarter (q-o-q) and 8.9% year-on-year (y-o-y), with rents falling by 1% q-o-q and 7.7% y-o-y. Villa prices saw average declines of 1.8% q-o-q and 6.8% y-o-y, with rents declining more moderately by 0.6% and 4.8% on a quarterly and annual basis, respectively.
While government measures introduced to combat coronavirus (Covid-19) came into effect mid-March, their immediate impact on Abu Dhabi’s residential sector was limited, with the Emirate’s hospitality and retail sectors more acutely affected short-term. It is likely that the ongoing pandemic’s impact will be reflected in second quarter figures, with disruption to the transactional process, coupled with subdued economic activity, set to cause challenges moving forward.
The broad economic support packages introduced by both Abu Dhabi and UAE authorities, complemented by various relief measures from private sector landlords, will go some way to support the real estate market near term.
We also expect policy reforms introduced over 2019, such as the Golden Card residency scheme and the granting of foreign ownership rights across 15 investment zones, to further shore up the residential sector. While the aforementioned will continue to positively affect Abu Dhabi residential real estate, Covid-19’s more immediate market impact is set to create headwinds, especially for the rental sector, over the coming months.