Abu Dhabi is driving ‘significant opportunity' amid UAE real estate surge, experts say

Arabian Business

16-06-2025

While the UAE's real estate spotlight has long been focused on Dubai, Abu Dhabi has been crafting a quieter, yet no less powerful, growth story.
In a series of exclusive interviews, leading real estate experts revealed how the capital's property market is becoming a magnet for both domestic and international investors—driven by smart planning, long-term vision, and a wave of infrastructure and lifestyle upgrades.
'Abu Dhabi has surpassed Oslo to become the city with the highest concentration of sovereign wealth,' Ali Ishaq, Head of Residential Agency in Abu Dhabi told Arabian Business.
Abu Dhabi's Reem and Yas Islands 'standout performers'
'This is driving significant opportunity both for individuals and corporate entities and in turn driving growth in Abu Dhabi's real estate market,' he added.
That capital strength is being translated into large-scale urban development. New plans featuring integrated, community-driven environments are emerging, offering a variety of product types not previously available in the emirate.
Infrastructure enhancements — including new bridges and tunnels connecting key districts and islands — are also making the city more liveable and better connected. Rental yields across the capital remain robust.
According to Haider Tuaima, Managing Director and Head of Real Estate Research, 'gross rental yields averaged 7.8 per cent, with apartments in Al Muneera offering the highest yields at 8.8 per cent and villas in Hydra Village showing the strongest yield growth at 7.6 per cent.'
Residential occupancy stood at 88.1 per cent in Q1, he added, noting that supply remains constrained. 'Only 279 units were delivered in the first quarter—just 2 per cent of the nearly 14,000 expected for the full year.'
Ishaq confirmed that Reem Island and Yas Island are standout performers, 'Reem Island and Yas Island are delivering the highest rental yields, owing to attractive pricing and location.'
Both apartments and villas are seeing increased demand, with the latter particularly appealing to families establishing longer-term bases.
Abu Dhabi witnesses diverse and growing investor base
Abu Dhabi is now attracting a broader, more diversified investor demographic. 'We're seeing both short- and long-term investors entering the market,' Ishaq said.
'Abu Dhabi's appeal lies in its position as the capital of the UAE, a hub for talent, and a city committed to innovation and digital transformation.'
Tuaima further pointed to mortgage trends as further evidence of end-user activity. 'In Q1, two-thirds of transactions were mortgage-backed, with just one-third completed in cash — the inverse of what we typically see in Dubai,' he said.
'Abu Dhabi's strong appeal to investors stems from its strategic location, thriving economy, and government support for growth and innovation,' Ishaq added.
'The city's world-class infrastructure, connectivity, and ease of business further enhance its attractiveness to investors.'
Aside from this, sustainability has moved from a trend to a priority in Abu Dhabi's real estate landscape.
'Residential occupiers and younger generations are increasingly mindful of wellness, sustainability and, as a result, are seeking developments that offer more than just housing,' Ishaq said.
'In the commercial market, occupiers are also conscious of how their operations impact the environment, with global occupiers leveraging real estate to off-set operational impacts,' he added.
This trend is complemented by the city's growing lifestyle offerings and family-orientated ecosystem.
Upcoming international schools to boost investor interest in Abu Dhabi
New school openings, including Gordonstoun, Harrow, and King's College School Wimbledon, have added to the city's appeal for long-term residents.
While comparisons with Dubai are inevitable, Abu Dhabi's momentum is based on its own fundamentals.
'The significant price rises in Dubai post-pandemic make Abu Dhabi a much more affordable option in the UAE,' Ishaq noted.
However, affordability isn't the only driver. 'Recent announcements around Disney, a growing entertainment calendar, the concentration of sovereign wealth, and world-renowned school openings are all contributing to the liveability of the city.'
The ValuStrat Price Index for Abu Dhabi rose 7.2 per cent year-on-year in Q1 2025, with villa prices up 9.7 per cent and apartment prices up 4.5 per cent.
According to Tuaima, 'Abu Dhabi's capital values continue to show healthy single-digit growth, supported by constrained supply and steady demand, with prices expected to rise up to 7 per cent by the end of 2025.'
Off-plan prices averaged AED17,061 per sq m — significantly higher than ready property prices — although transaction volumes were down due to fewer new launches.
'Off-plan transactions fell sharply, down 57.7 per cent quarter-on-quarter and 79.2 per cent year-on-year,' Tuaima said. 'Ready home sales declined 33.6 per cent quarter-on-quarter but increased 13.6 per cent year-on-year.'
Echoing the sentiment, Declan King, Senior Partner and Group Head of Real Estate said: 'Great to see the real estate sector in the capital reporting consecutive periods of quarterly growth in sales values of late. It will be interesting to observe if the recent announcement of Disney on Yas Island will act as a further catalyst for the local property market.'
Abu Dhabi is no longer just an alternative, it's becoming a primary destination. Backed by sovereign investment, a transparent regulatory framework, and a future-focused approach to urban living, the capital is steadily winning over investors across the spectrum, and with market fundamentals on its side, the emirate's quiet surge is getting harder to ignore.