Abu Dhabi residential capital values jump 4% in first quarter

Al Reem Island, Al Muneera Island, Al Reef, Hydra Village and Saadiyat Island record highest gains

Capital values in Abu Dhabi’s residential investment zones rose 4.1 per cent in the first quarter, according to ValuStrat. Ravindranath K / The National

Capital values in Abu Dhabi’s residential investment zones rose 4.1 per cent in the first quarter on the prior three-month period as the economy rebounds from the coronavirus pandemic, property consultancy ValuStrat said.

This was only the second time the company's valuation-based ValuStrat Price Index witnessed consecutive quarters of growth since 2016. However, capital values remain 3 per cent below the same period last year.

Al Reem Island, Al Muneera Island, Al Reef (villas), Hydra Village and Saadiyat Island recorded the highest gains in valuation during the quarter, according to the report.

Residential rental values, on the other hand, were stable quarterly but fell 2.8 per cent annually. Gross yields across the city's investment zones averaged 7.4 per cent, with apartments earning 7.7 per cent and villas 6.9 per cent.

Asking sale prices for apartments stood at Dh12,070 ($3,286.50) per square metre, unchanged from the previous quarter. Asking prices for villas was Dh9,691 per square metre, up 0.5 per cent on the previous quarter.

Abu Dhabi’s economy is poised to grow by 6 per cent to 8 per cent over the next two years, driven by the oil sector, government spending, financial services and foreign direct investment, Mohammed Al Shorafa, chairman of the emirate's Department of Economic Development, said last month.

The report also said a total of 3,600 residential units were completed in Abu Dhabi during the quarter  – 3,175 apartments and 425 villas and townhouses. The bulk of these were at Al Reem Island and Al Raha Beach.

In 2021, more than 12,000 residential properties are expected to be completed including 11,223 apartments and 961 villas and townhouses, according to the report.

Some of the more sizeable schemes expected to complete include Maryah Plaza at Al Maryah Island (1,450 units), Oasis Residence in Masdar City (600 units), Water’s Edge at Yas Island (549 units), and Yas Acres Phase 3 (923 units).

“Despite Covid-19 related challenges, 2020 saw transactions leap 28 per cent when compared to 2019, as 3,427 unit sales were recorded worth Dh5 billion, this is in addition to 933 home mortgages worth Dh1.2bn,” the report said.

During the first quarter of this year, Abu Dhabi recorded real estate transactions worth Dh11.5bn including 3,847 pieces of land, buildings and real estate units, according to Abu Dhabi's Department of Municipalities and Transport.

The average occupancy rate among a sample of more than 44,000 residential units in Abu Dhabi city stood at 80 per cent, ValuStrat said.

In a separate report, Chestertons on Wednesday said average villa prices in Abu Dhabi increased 2.2 per cent quarter-on-quarter and 0.5 per cent year-on-year, while apartment prices rose 0.2 per cent on a quarterly basis but dropped 2.5 per cent annually.

“Overall, the first quarter saw a marked improvement in real estate sentiment, with anticipated economic growth, coupled with federal visa and residency reforms, broadly expected to support Abu Dhabi real estate over the year ahead,” Chris Hobden, head of strategic consultancy at Chestertons MENA, said.

“With work-from-home practices, along with more flexible workplace policies remaining in place across the private sector, we expect villas to outperform the wider residential average.”