Abu Dhabi property prices rise amid strong start to the year for UAE market

Rents also rose slightly in the capital as the economy rebounds from the pandemic-induced slowdown

Marina Square on Abu Dhabi's Reem Island. Residential property prices in the UAE capital increased 1.5 per cent in the 12 months to March. Ravindranath K / The National

Residential property prices in Abu Dhabi increased 1.5 per cent in the 12 months to March, as the wider UAE market made a strong start to the year, according to a report by property consultancy CBRE.

Average apartment prices increased 1.6 per cent in the year to March, to Dh10,904 ($2969) per square metre, while average villa prices rose 1.1 per cent to Dh8,850 per square metre.

The capital also saw average rents rise 0.6 per cent during the period. However, while apartment rents were up 1.1 per cent, villa rents fell by 1.6 per cent.

New supply in Abu Dhabi "remains limited", with less than 200 new units delivered in the first quarter of 2022, the report said.

A further 9,588 units are scheduled for delivery during the remainder of the year, mostly in Al Raha Beach, Al Maryah Island and Reem Island.

In the office sector, visitation to workplaces in Abu Dhabi sits 25.3 per cent above its pre-pandemic baseline, according to Google mobility data. CBRE estimates visitation to workplaces is up 4.1 per cent in the year to date.

The majority of demand in the private sector has been for flexi-work solutions, while demand for more traditional office space "continues to stem largely from organisations with direct or indirect government links", the report said.

"Average rents, in the year to Q1 2022, have decreased in the Prime and Grade A segments of the market by 7.9 per cent and 3.9 per cent respectively," it said.

"Over the same period, Grade B rents remained stable."

Abu Dhabi’s “best [office] buildings continue to demonstrate rental resilience”, with average rents in the Corniche area climbing 7.2 per cent annually to Dh1,675 per square metre, an earlier report by Knight Frank said.

The UAE's property market has improved on the back of the broader economic recovery in the country amid the easing of pandemic-related restrictions, travel curbs and high oil prices.

The country's gross domestic product for 2021 beat the World Bank's forecast at 3.8 per cent, surpassing the growth that it registered in 2019, before the coronavirus pandemic, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said earlier this month.

The UAE's economy is expected to grow 5.7 per cent in 2022, helped by an increase in oil production, according to Emirates NBD Research.

"While higher oil and food prices pose upside risks to inflation globally, higher oil prices will generate budget surpluses," the report said.

The UAE’s property market has also recovered on the back of government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme.

Meanwhile, residential property prices in Dubai also surged 11.3 per cent annually in the first quarter of this year, CBRE said.

"Total transaction volumes in the year-to-March 2022 reached 19,009, and this is the highest total ever recorded in the first quarter of the year," it said.

Average rental rates during the period also rose 13.1 per cent, marking the highest rate of growth recorded since December 2014.

The UAE property market is expected to receive an influx of buyers following an overhaul of the visa residency system.

The changes, set to come into effect by September, include parents being able to sponsor their male children until the age of 25, and property investors able to obtain Golden Residence when purchasing a property worth no less than Dh2 million.