Abu Dhabi saw sales prices and rentals shoot up in 2024 as new supply failed to keep up with soaring demand, according to Cushman & Wakefield’s latest report (pdf). Sales prices rose 11% y-o-y during the year, while rental prices surged 20%, with only 3k new residential units delivered across Abu Dhabi’s investment zones, marking a 46% shortfall from initial forecasts.

Not just an investment destination: The secondary market saw record activity, with transactions rising an unprecedented 54% as buyers favored ready-to-move-in properties over off-plan investments. Off-plan sales, while still significant, declined 29% y-o-y, largely due to fewer new project launches.

Aldar Properties dominated the market, accounting for 48% of off-plan transactions and 45% of secondary market transactions. Other key players included Radiant Real Estate, making up 13% of off-plan sales, followed by Bloom District Properties (8%). In the secondary market, Tamouh Investments led with 14%, followed by Manazel (9%).

The rental market experienced record growth, fueled by employment expansion and corporate relocations. Apartment rents climbed 22% y-o-y. Saadiyat Island led the market, with apartment rents surging 31% y-o-y, followed by Reem Island (24%) and Al Raha Beach (21%).

In the villa segment, rents rose 9% y-o-y. Mid-market and suburban communities saw the highest rental increases, with Al Reef rents rising 12% y-o-y, Al Raha Gardens up 10%, and Khalifa City climbing 8%, the report said, indicating a growing shift toward more affordable living as prime areas became increasingly expensive.

REMEMBER #1- A previous ValuStrat report attributed higher rents in 4Q 2024 to helping sustain Abu Dhabi’s real estate momentum, despite a 60.8% y-o-y drop in off-plan sales. Villa rents increased 6.6% and apartment rents climbed 8.2%. Meanwhile, villa and apartment prices rose 8.9% and 3.5% y-o-y, while the average ticket size for off-plan sales surged 34.8% y-o-y to AED 3.6 mn.

Major new deliveries are expected this year, with 8.5k residential units set for completion, particularly in Yas Island, Reem Island, Saadiyat Island, and Al Maryah Island. New off-plan developments on Hudayriyat Island and Masdar City are also expected to drive further unit deliveries between 2025 and 2027.

New rental index to stabilize the market? Abu Dhabi rolled out a rental index last year — with quarterly updates planned — setting a benchmark for pricing and lease negotiations. The index helps tenants compare rents while enabling landlords to adjust rates based on trends, which is expected to boost market transparency and balance, the report said.

REMEMBER #2- ValuStrat expects rental rates to rise slightly in 2025 across both villa and apartment segments. Apartment prices are projected to increase by 6%, while villa prices are expected to climb 4%, further signaling moderate growth in the market.

THE OFFICE MARKET-

Abu Dhabi’s office market saw record occupancy in 2024, with city-wide levels at 89% and Grade A offices at 95%. Prime business hubs are at full capacity, with ADGM Square fully booked, shifting demand to Reem Island — now part of ADGM’s jurisdiction. Limited Grade A supply has also led to pre-leasing of Masdar City Square and SAAS Business Tower.

Banking and finance dominated office demand, making up 24% of inquiries. Oil and gas followed at 19%, while business services accounted for 11% and tech 10%. Medium-sized offices (200-600 sqm) led leasing activity (53%), while limited availability of larger spaces prompted firms to renew leases rather than relocate.

Demand pushed office rents up 11% y-o-y. The rental surge spanned all office grades, with prime office rents rising 2% y-o-y to approximately AED 2.8k per sqm, Grade A increasing 3% to AED 1.9k per sqm, Grade B rising 5%, and Grade C rising 7%.

Demand will continue to trump supply: Despite 104k sqm of new office space expected in 2025, supply constraints will persist, boosting demand for flexible office spaces, the report said. Businesses may also have to look at secondary market options until 2026/2027, with most upcoming supply pre-leased.

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