ValuStrat issue Q1 2021 Abu Dhabi real estate market report - Residential capital values on the rise, rents stable

The first quarter 2021 Abu Dhabi real estate review issued by leading local consulting firm ValuStrat - reported that Abu Dhabi's residential capital values were 4.1% higher than the previous quarter. Residential rental values stabilised

  

The ValuStrat Price Index (VPI) is a valuation-based index that tracks change in capital values for a representative fixed basket of properties. The residential VPI for Abu Dhabi’s investment zones for the first quarter 2021, expanded 4.1% quarterly to 65.8 points. This was only the second time the index has witnessed consecutive quarters of growth since 2016, as the previous quarter saw a 1% increase. Annually, capital values were just 3% lower than the first quarter 2020.

The weighted average residential value in Q1 2021 was AED 8,643 per sq m (AED 803 per sq ft), apartments stood at AED 9,451 per sq m (AED 878 per sq ft), and villas at AED 6,706 per sq m (AED 623 per sq ft).

All properties monitored by the VPI saw quarterly growth in capital values ranging from 1.8% to 5.6%.

Locations with the highest gains were Al Reem Island, Al Muneera Island, Al Reef (villas), Hydra Village, and Saadiyat Island. The first quarter VPI – Residential Rental Values was stable quarterly, however, fell 2.8% annually to 69.7 points. The citywide rental stability was a result of softening apartment rentals versus increases in villa rentals.

Abu Dhabi’s gross yields averaged 7.4%, for apartments at 7.7% and villas with 6.9%. Residential occupancy for Abu Dhabi city was estimated at 80%.

 “…No doubt, investor confidence has grown countrywide, and Abu Dhabi is leading the rest of the emirates in terms of real estate market performance, despite Covid-19 related challenges, 2020 witnessed a 28% annual leap in the number of sales transactions. It comes to no surprise that the VPI saw its highest increase since 2016, as every location monitored by the index enjoyed capital appreciation…” said Haider Tuaima, Head of Real Estate Research at ValuStrat.

As far as residential supply was concerned, Abu Dhabi City had an estimated 241,289 residential homes stock as of 2020. A total of 3,600 residential units were confirmed to have been completed, 3,175 apartments and 425 villas/townhouses. For 2021, the preliminary estimate of upcoming units stood at 12,184 properties. These are 11,223 apartments and 961 villas/townhouses.

“…Interesting to see positive momentum in Abu Dhabi’s residential property market carry-over from last year, as both investors and owner occupiers appear to feel the time is right to buy. The housing sector in the capital has been more resilient, given a well-managed supply pipeline in recent years and buyer incentives such as reduced municipality transfer fees on property sales…” said Declan King MRICS, Managing Director & Group Head of Real Estate at ValuStrat.

An estimated 111,518 sq m (1.2 million sq ft) of office Gross Leasable Area (GLA) was confirmed as completed during 2020, bringing the total GLA in Abu Dhabi city to 3.8 million sq m (41 million sq ft). Initial supply projection for 2021 stood at 142,778 sq m (1.54 million sq ft) GLA.

Office asking rents in primary commercial districts fell 3.5% since Q4 2020 but were 8.3% higher than the same period last year. The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) stood at AED 840 per sq m (AED 78 per sq ft).

Industrial property prices remained relatively unchanged QoQ with no changes observed during the first quarter of 2021 from the fourth quarter of 2020. Rental rates also remained relatively unchanged QoQ with new built and modern specification facilities pursuing higher rentals.

-Ends-

About ValuStrat

ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. Offices in the UAE, UK, Saudi Arabia and Qatar serve over 1,000 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.

About the ValuStrat Price Indices

The ValuStrat Price Index for Abu Dhabi’s residential capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The ValuStrat Price Index for Abu Dhabi’s residential rental values is constructed to represent the quarterly rental change experienced by typical residential units within Abu Dhabi City. The VPI applies weighted averages using data samples representing more than 90% of all property types across the city’s investment zones and is built by our expert RICS Registered Valuers.

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