- MPM Q4 2020 Real Estate Market Overview reports that COVID-19 pandemic has continued to affect Abu Dhabi’s property market, with sales rates declining 1.5% quarter-on-quarter and 8.5% annually
- Average residential rents have also dropped by 1.2% quarter-on-quarter and 6.2% year-on-year
- Villa and townhouse performance has remained robust during H2 2020 due to demand for large, open living spaces
Abu Dhabi, UAE; 01 March, 2021: MPM Properties (MPM), the real estate advisory subsidiary of Abu Dhabi Islamic Bank (ADIB), has published its Q4 2020 Real Estate Market Overview for Abu Dhabi, confirming that the property market in the Emirate held well despite the challenges brought by the COVID-19 pandemic.
The average sale rates for properties in Abu Dhabi areas assessed by MPM’s report dropped by 1.5% quarter-on-quarter and 8.5% annually, with the highest decline recorded on Saadiyat Island, which fell 10.8% on the previous year. Residential leasing activity during the year also remained subdued with average rents decreasing by 1.2% quarter-on-quarter and 6.2% year-on-year.
Villa and townhouse performance was more resilient due to higher demand for more space, as well as greener, more open community areas, due to increases in working and educating children from home, with the average sale rates dropping by less than 1% quarter-on-quarter and 4.6% year-on-year. However, a few locations, including West Yas, Yas Acres and Al Raha Gardens, bucked this trend, witnessing an annual increase in the range of 2-5%.
Commenting on the report’s findings, Khalid Ali Al Mansoori, Executive Chairman of MPM Properties, said: “The COVID-19 pandemic continued to affect Abu Dhabi’s property market in the final quarter of 2020 from both a buying and rental perspective. What this means is that valuations are now attractive for those looking to acquire property for the long-term. While there is likely to be deflationary pressure in the near future, due to increases in supply and moderated demand, Abu Dhabi remains a hugely desirable city, with world-class educational, healthcare, infrastructure and recreation assets providing a compelling proposition for those with a long-term horizon.”
“We continue to see positive signs for Abu Dhabi property market supported by long-term fundamentals of the economy, sustained investor confidence in the real estate sector, and proactive measures by the UAE government in supporting communities from the economic impact of the COVID-19 pandemic”, he added.
MPM’s report also examined Abu Dhabi’s commercial office sector, which showed a similar trend to the residential market. The changing work environment has led to many companies looking to consolidate office space in order to minimize costs as remote working has become more prevalent. Leasing activity during Q4 2020 remained subdued, with average rental rates dropping by 3% quarter-on-quarter and 9% year-on-year. Rates are likely to fall further in the short- to medium-term, particularly in older buildings, buildings lacking professional management and assets that are located away from the traditional business districts.
However, the report found that commercial landlords are now more open to accommodate tenant demands on a case by case basis, and the market has seen increased examples of landlords offering rent free periods of 2-6 months, flexible payment terms, and, in some cases, a willingness to absorb the fit-out costs for tenants who are opting for a longer lease term of 3-5 years.
View or download our latest report to read more insights on Abu Dhabi real estate market:
MPM Properties is a multi-disciplined real estate consultancy delivering a comprehensive range of Sharia’a-compliant property services to help clients create value. Established in 2008 and with offices across the UAE, the team has widespread experience covering the entire property lifecycle, from inception and planning through to completion, asset optimization and eventual disposal. Key departments include Valuation, Strategic Advisory, Development Advisory, Asset Management, Sales and Leasing. Combining international qualifications and standards (including RICS, IVS and PMP) with an in-depth understanding of the UAE real estate market across all asset classes, MPM is ideally placed to offer data-driven practical solutions to meet Clients’ needs.