Villa prices and rents in Abu Dhabi could stabilise and even increase in 2021, with apartments likely to follow suit towards the end of the year, according to new research.
Real estate consultant ValuStrat said market sentiment is expected to pick up and could head towards bottoming out during 2021 as the vaccination rollout continues.
Abu Dhabi non-oil GDP is forecasted to modestly rebound by 2.2 percent this year, according to Fitch Ratings.
ValuStrat’s data showed that the average residential value in the UAE capital was AED772 per sq ft in the fourth quarter of 2020, down 9.5 percent year-on-year.
“With balanced new supply coming to Abu Dhabi in the coming years, rents and capital values in established villa locations could stablise and perhaps witness gradual appreciation, apartments could follow suite towards the end of 2021,” ValuStrat said in the report.
It added that the office market in Abu Dhabi is likely to be bolstered by new government initiatives including visas for expatriate retirees and the expansion of the 10-year golden visa scheme to attract foreign professionals to settle in the UAE.
According to ValuStrat, the estimated workspace supply for 2021 stands at 1.5 million sq ft.
“The UAE also reformed its commercial companies’ law and annulled the requirement for some onshore companies to have an Emirati shareholder, which is expected to boost foreign direct investment in the country… Office capital values and rents are expected to bottom out after reaching 10-year lows,” ValuStrat added.
On the prospects of retail in Abu Dhabi this year, the report said about four million sq ft of retail space is up for completion during 2021, including Reem Mall and Red Crescent Shopping Mall.
ValuStrat said rentals in malls and shopping centres could continue to face downward pressure this year as retailers re-focus to push more digital trading following the impact of the coronavirus pandemic.
ValuStrat’s data showed that the average residential value in the UAE capital was AED772 per sq ft in the fourth quarter of 2020
“Establishing a strong e-commerce presence will remain as one of primary strategic move for major retailers including F&B consortiums,” it added.
Tourism is expected to rebound this year, the report noted, with Abu Dhabi benefitting from an “expected overflow” from Expo 2020 in Dubai.
The city is expected to receive 1,723 hotel keys during 2021, with a gradual improvement for key performance indicators as global travel sentiment improves after the pandemic.
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