ValuStrat issue Q2 2019 Abu Dhabi real estate market report

Freehold Law Announced During Favourable Market Conditions for Buyers as well as Tenants


The second quarter 2019 Abu Dhabi real estate review issued by leading local consulting firm ValuStrat – reports that Abu Dhabi’s residential capital values were 13.3% lower than last year and 3.3% than the previous quarter. Residential rents softened by another 2% over the last 3 months.

Abu Dhabi’s declining residential capital values were 19.5% lower than the same period in 2017, 13.3% lower than last year and 3.3% below the previous quarter. The weighted average residential value this quarter was AED 9,795 per sq m (AED 910 per sq ft), apartments stood at AED 10,861 per sq m (AED 1,009 per sq ft), and villas at AED 7,244 per sq m (AED 673 per sq ft).

All ten locations monitored by the VPI witnessed single-digit quarterly declines in capital values of less than 5% on a quarterly basis. Highest quarterly price falls ranging 3.7% to 4.3% were registered in Hydra Village and Al Reef. On an annual basis, most areas lost an average 12% in capital values, however, two locations were slightly less affected by the negative trend and they were apartments on Saadiyat Island and villas located in Mohamed Bin Zayed City, with capital values for typical units declining 10.2% and 6.9%, respectively.

The residential rental VPI is a 100-index with a base set for Q1 2016, it monitors five apartment and five villa locations within Abu Dhabi’s investment zones and compares similar units within those locations on a quarterly basis. The Q2 2019 residential rental VPI in Abu Dhabi stood at 75.5 points, declining 24.6% since 2016, softening 2% quarterly and 7.9% annually. Abu Dhabi’s gross yields averaged 7.5%, for apartments at 7.4% and villas with 6.7%. The average occupancy rate among a sample of 31,073 residential units stood at 79%.

“…Abu Dhabi city is increasingly becoming more affordable, and with the recently announced freehold law, investing in Abu Dhabi real estate has become more attractive. This is at a time when prices and rents can be further negotiated. Investors can also expect relatively high yields and tenants have the upper hand to upscale their rental property …” said Haider Tuaima, Head of Real Estate Research at ValuStrat.

As far as residential supply was concerned, expected deliveries for this year has been adjusted upwards to 8,872 units. 16% of estimated supply were completed during the first half of the year. These included Leonardo Residence in Masdar City (175 units), Al Qudra Danet Abu Dhabi (228 units) and a thousand villas completed in West Yas. During the 13th edition of Cityscape Abu Dhabi, Lea at Yas Island was sold out.

Office asking rents in primary commercial districts fell of 9.8% quarterly and 17% annually. The average citywide asking rent for offices sized between 93 sq m to 186 sq m (1,000 sq ft to 2,000 sq ft) stood at AED 818 per sq m (AED 76 per sq ft).

As of March 2019, Abu Dhabi City had a total stock of 29,400 keys within a mix of 139 different hospitality establishments. The average occupancy rate during the first three months of 2019 achieved a heathy rate of 81%, which is an uptick of 0.5% from the previous year. The Average Room Rate (ARR) and Revenue Per Available Room (RevPAR) displayed strong performance and jumped 16% and 16.6% YoY, respectively, on foot of various growth drivers during Jan – March 2019.


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.

© Press Release 2019

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