The property sector in Abu Dhabi recorded solid growth in the first quarter of 2025, a new report has found. The report cited strong performance in residential, office, retail, and hospitality. The VPI shows the highest capital growth rate in three years despite slower transaction activity due to constrained supply of housing.
Performance of the Residential Sector
The VPIfor homes increased by +2.1% from the previous quarter and by +7.2% on an annual basis, which brought it to 125.6 points (100 in Q1 2021). Prices are climbing largely because demand remains strong, but the supply of new housing is limited.
The market was led up by villa prices, which were up by 2.7% quarter-on-quarter and 9.7% year-on-year to 134.7 points. Prices for apartments increased 1.5% QoQ and 4.5% YoY, to 116.9 points. These profits reflect investor confidence and a robust housing market.
Rental Market Trends
Rental rates, too, underwent enormous expansion. Residential rental VPI increased by 2.2% QoQ and 9% YoY, standing at 121 points. Apartment rents increased 3.4% QoQ and 11% YoY, while villa rents grew 6.3% YoY but remained flat QoQ. Demand remains strong, and the availability of rental properties remains low, and that has driven this increase.
But the supply of new housing continues to be low. In Q1 there was around 2% delivered of the planned housing in 2025 as reported by Economy Middle East. Nonetheless, some big developers are still forging ahead with expansion projects in places like Saadiyat Island, Zayed City, Ghantoot, and Masdar City, showing the market is still generating confidence.
Sales Activity
Sales trends were mixed. Off-plan transactions fell steeply—by 57.7% q-o-q and 79.2% y-o-y—primarily because new project launches were fewer. Ready home sales, meanwhile, declined on a quarter-on-quarter comparison; it showed growth in value for year-on-year comparison. The majority of the properties sold were backed with mortgages, representing consistent interest from local buyers.
Office, Retail, and Hospitality Industries
The office market was particularly strong, especially in downtown business centers where space is in high demand. Office was the best-performing sector on both a QoQ and YoY basis, with a rise of 8% and 31.8%, respectively, demonstrating the healthy demand for high-quality office space.
Retail was also firm, underpinned by a strong footfall and robust tenant sales. Occupancy levels and demand remained sound in the shopping centers. The hotel industry had an outstanding show. 5.2 million guests visited the city in 2024, a 28.7% increase, DCTAD said. The average daily rate (ADR) was up by 37.1% to AED 683, and revenue per available room (RevPAR) increased by 38.7% to AED 594. This is clear evidence of tourism’s strong recovery and growth.
Outlook for 2025
ValuStrat projects that the property market will also grow next year. The UAE economy is predicted to range between 5 and 6 percent growth, with sectors such as technology, renewable energy, and infrastructure leading the way. The Abu Dhabi economy expanded 3.8% in 2024, led by the non-oil sector, manufacturing, and construction.
Given continued development and demand, as well as relatively constrained supply, Abu Dhabi’s real estate sector is likely to experience relatively consistent growth over the course of the year.
