New Residential Launches Gather Momentum in Abu Dhabi in Q1-2023

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New Residential Launches Gather Momentum in Abu Dhabi in Q1-2023

The New residential launches in Abu Dhabi have gained pace during the first quarter of 2023, according to Knight Frank Middle East and North Africa (MENA).

In its Abu Dhabi Residential Market review for Spring 2023, Knight Frank MENA said that the overall supply expected in Abu Dhabi appeared to be relatively low, new project launches are gathering pace and the total number of new homes coming to the city are expected to rise rapidly.

“We are currently tracking approximately 5,600 units that are still classified as being in their launch stage. Some 15 new residential projects were launched in Q1-2023 alone, with villas continuing to be the preferred type of homes for developers,” Faisal Durrani, Partner – Head of Middle East Research at Knight Frank, said.

For instance, Eagle Hills recently unveiled a new development, Ramhan Island worth $3.5 billion off the coast of Abu Dhabi. The project will include 1,800 high-end beach-front villas, 1,000 branded residences, as well as a hotel and marina, he said.

Other recent villa-only launches include Saadiyat Lagoons District phase 1 (820 units), Bloom Living:   Toledo by Bloom Properties at Mohammed Bin Zayed City (520 units), Dahlias villas at Yas Island (120 units) and Al Dhabi at Al Jubail Island (132 units).

Separately, notable apartment-only launches for this quarter included Yas Golf Collection (1,062 units) and the Bay Residence (232 units) at Yas Island. Aldar Properties also launched The Source at Saadiyat Grove (204 units) and this is expected to be delivered in 2026, he said.

The capital’s current average rents stand at $16.33 per sq ft, a -1.1% drop on this time last year. Even apartments (-2.1%) have experienced a year-on-year decline in rents and average lease rates are still -7.8% below the Q1-2020 levels.

In contrast, villa rents are on the rise, with nearly all price points, bar the most affordable locations in Abu Dhabi registering increases over the last 12 months.

As is the case in the sales market, tenants are upgrading their rented accommodation where possible. Furthermore, strong economic growth (7% in Abu Dhabi during 2022 according to Oxford Economics) is driving job creation rates, which is in turn fuelling new demand for rental properties.

Villa Lease Rates Recover

On the other hand, villa lease rates have however recovered to pre-COVID levels and now stand 3.6% above January 2020 levels, he said.

At a submarket level, Saadiyat Island ($22.87 per sq ft) and Al Raha Beach ($18.79 per sq ft) have experienced the strongest growth in rents since the pandemic began, rising by 33.8% and 22.5%, respectively.

Over the course of last year, Saadiyat Island and Al Raha Gardens have seen the steepest rent rises with villas on Saadiyat Island increasing by 15.2% while Al Raha Gardens villas are now renting for 7.0% more than this time in 2022, the report said.

Restricted Supply

The report also said that there has been relative stability in prices across Abu Dhabi’s freehold areas is in large part due to the limited number of new homes under construction.

“Our estimates show that just 29,000 homes are currently under construction and due to be delivered by the end of 2025, 58% of which are villas. This excludes announced projects that are yet to break ground as well as plot sales to individuals,” Durrani explained.

By the end of this year, almost 6,000 homes will be completed, and, on an average, the market can expect around 7,000 units to be completed each year throughout 2025. “

“About 75% of the villas supply is expected in just four submarkets: Khalifa City (4,700 units), Yas Island (2,800 units), Baniyas North (2,800 units) and Al Reeman development in Al Shamkhah (2,200 units),” he averred.

In terms of apartment stock, Yas Island leads the pack with 3,600 units, contributing the lion’s share of new supply here. Following Yas Island is Al Maryah Island with 2,800 units and Saadiyat Island (2,500 units) respectively. Reem Island (1,400 units) and Jubail Island (900 units) are ranked in fourth and fifth place, respectively, the report added.

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