In the first quarter of 2025, Abu Dhabi’s real estate market experienced its most significant capital gains in three years, with property prices rising by 7.2% annually, despite a drop in sales volume due to constrained supply.
According to ValuStrat’s latest report, the ValuStrat Price Index (VPI) for residential properties increased by 2.1% quarter-on-quarter, reaching 125.6 points, based on a Q1 2021 baseline of 100.
Villa Market Outperforms Apartments
Villas led the market with prices climbing 2.7% quarterly and 9.7% annually to 134.7 points. Apartments also saw growth, with prices rising 1.5% quarterly and 4.5% annually to 116.9 points.
The weighted average home value in Abu Dhabi stood at AED 10,226 per square metre (AED 950 per square foot), with apartments averaging AED 10,979 per square metre and villas at AED 8,407 per square metre.
Top Performing Areas
Saadiyat Island led annual capital gains for villas, recording a 21.2% increase, followed by Al Raha at 8.2% and Mohammed Bin Zayed City at 4.7%. Among apartments, Al Reef saw the highest annual gains at 7.5%, followed by Saadiyat Island at 6.2% and Al Muneera Island at 5.7%.
Rental Market Trends
Rental values also increased, with the residential rental VPI rising 2.2% quarterly and 9% annually to 121 points. Apartment rents outpaced villas, growing 3.4% quarterly and 11.6% annually, while villa rents rose 6.3% annually but remained flat quarterly.
Average annual apartment asking rents stood at AED 114,000, with studios at AED 63,000, one-bedroom units at AED 89,000, two-bedroom apartments at AED 125,000, and three-bedroom units at AED 180,000. Villa rents averaged AED 245,000 annually, with three-bedroom properties at AED 180,000, four-bedroom homes at AED 244,000, and five-bedroom villas at AED 312,000.
Gross yields averaged 7.8%, with apartments delivering 8.3% and villas 6.7%. The estimated average residential occupancy rate reached 88.1%.
Market Outlook
Despite a decline in sales volume attributed to limited supply, the Abu Dhabi property market demonstrates resilience and strong investor confidence. The significant price appreciation, especially in prime areas like Saadiyat Island, indicates a robust demand for high-quality residential properties.
As the market continues to evolve, stakeholders anticipate sustained growth, driven by strategic developments and a focus on enhancing the emirate’s real estate offerings.
Source: Arabian Business
