Real Estate

Abu Dhabi house prices 25% lower than 2014

August 10, 2023, 8:53 AM

Apartments and villas cheaper
Average home costs 6 times annual salary
Saadiyat Island most popular location

Average house prices in Abu Dhabi are 25 percent cheaper than they were during the 2014 peak.

One area that bucks the trend is Saadiyat Island, one of the most popular locations in the emirate.

Known as the cultural island and home to the Louvre Abu Dhabi and Guggenheim Abu Dhabi museums, house hunters will need to save 24 times their yearly wage in order to buy a villa in a lump sum, according to the latest figures from real estate consultant Knight Frank.

“While Saadiyat Island continues to offer excellent relative value for money at around AED1,300 per square foot (psf), particularly when compared to similar Dubai neighbourhoods, there is a clear price sensitivity threshold here, beyond which buyers appear nervous to commit,” Faisal Durrani, partner, head of research, Middle East and North Africa at Knight Frank, said.

Saadiyat Island was the second most active market in Q2 with sales totalling AED1.2 billion ($320 million).

On average, Abu Dhabi housebuyers need to save roughly six times their annual income to purchase a property in the emirate.

That remains at the global threshold for what is considered affordable and sits around the limit most banks are willing to extend mortgages.

Durrani said average prices in the UAE capital were AED871 psf for villas and AED1,035 psf for apartments, making them 16.1 percent and 27.2 percent more affordable than 2014 levels.

The stability in prices across Abu Dhabi’s freehold areas was a result of the limited number of new homes being built, he added.

A total of 33,700 homes are expected to be delivered by the end of 2027, 59 percent of which will be villas.

According to Knight Frank’s Abu Dhabi Residential Market Review, 12,700 units are still at their launch stage.

In the second quarter 15 residential projects were unveiled, split equally between villas and apartments.

Abu Dhabi real estate enjoyed a record 363 percent rise in purchases by foreign buyers in the first half of 2023, according to data from the emirate’s Department of Municipalities and Transport.

Foreign buyers spent AED834.6 million ($227.2 million).

The emirate’s executive council signed off on a budget of $23 billion in May for a string of neighbourhoods with new homes and development sites.

Earlier this month Indian hospitality chain Oyo said it planned to add 2,000 apartments to its offering in Abu Dhabi to meet the growing demand for expat housing.

The furnished units will be available for long-term rent and many will be located in business districts such as Khalifa City, Al Zeina, Al Raha, Al Reem Island, Al Reef and Al Mushrif.

Other apartments will be close to city landmarks such as the Sheikh Zayed Grand Mosque, the Emirates Palace, the Louvre and Ferrari World.