Abu Dhabi’s residential real estate sector is gathering strong momentum in 2025 propelled by robust demand, record-high sales prices, and a visible shift toward ready homes and spacious family residences.
Despite a scheduled delivery of 11,900 new homes by year-end, experts warn that surging population growth, rising investor confidence, and a scarcity of new off-plan projects could cause demand to outstrip supply across several key neighbourhoods, market watchers say.
Cavendish Maxwell’s latest market report shows that the UAE capital added 600 residential properties in the first quarter, setting the stage for 12,500 new homes to be completed by year-end, with another 7,000 units already in the pipeline for 2026. Yet, analysts suggest this may fall short of meeting the growing needs of end-users and investors, especially as the city continues to attract residents and capital on the back of infrastructure development, social reforms, and long-term residency initiatives.
Average residential property prices in Abu Dhabi hit Dh2.5 million in the first quarter—the highest figure in three years—while total sales reached Dh3.7 billion across 1,300 transactions. Ready properties, which comprised 900 of these deals, dominated market activity, underlining a preference shift towards completed homes over off-plan developments. Apartments continued to lead in transaction volume, but villas and townhouses recorded stronger price growth and increasing buyer interest.
Year-on-year, apartment prices jumped 12.3 per cent, with a 4.1 per cent gain from the previous quarter. Villas rose 12.5 per cent annually and 2.4 per cent quarter-on-quarter, with Yas Island leading the price rally. Villas there climbed 15.5 per cent from Q1 2024, followed by Al Reef (4.4 per cent) and Saadiyat Island (1.0 per cent). These increases are being driven by a growing segment of family buyers looking for larger spaces, gardens, and long-term living options.
The report noted a drop in overall transaction volumes from the previous quarter, which analysts attribute to seasonal slowdowns during Ramadan and Eid. Nevertheless, the strength of the market was visible in the record-high average sale price of Dh2.5 million, alongside mortgage activity totalling Dh1.7 billion across 800 loans. Lending for villas and townhouses surged nearly 60 per cent from a year earlier, while mortgage uptake for apartments declined—further highlighting the pivot in buyer preferences.
Andrew Laver, associate director at Cavendish Maxwell – Abu Dhabi, noted that the capital’s real estate sector is showing resilience, with price appreciation expected to continue. “There is sustained demand for ready homes and a clear reduction in off-plan launches. We are also seeing encouraging signals in secondary market activity and bank financing, which reflect healthy investor sentiment and end-user confidence,” he said.
Beyond pricing and transaction dynamics, the Abu Dhabi market is benefiting from structural support. The emirate’s government has introduced a range of investor-friendly initiatives—from long-term Golden Visas and retirement visas to enhanced urban planning and lifestyle infrastructure. New public transport projects, international school openings, and cultural landmarks have made Abu Dhabi more attractive for both expatriate families and institutional investors.
A recent report by CBRE corroborates these trends, noting that Abu Dhabi’s residential rents have also risen significantly. Average apartment rents increased by 5.5 per cent in the first half of 2025, while villa rents jumped by 6.3 per cent, further boosting yields and adding appeal for investors. With residential occupancy rates also climbing, developers are increasingly looking to fast-track the delivery of high-demand inventory.
According to ValuStrat, transaction volumes in premium communities like Al Raha Beach and Al Reem Island are growing steadily, with off-plan inventory becoming scarce. As a result, the secondary market has taken centre stage, benefiting sellers and landlords alike as prices firm up and listings shorten.
While some analysts remain cautious about over-exuberance, citing global inflation concerns and fluctuating interest rates, the outlook for Abu Dhabi’s housing market remains largely upbeat. Strong economic fundamentals, consistent oil revenues, and the UAE’s broader economic diversification strategy continue to provide stability and investor reassurance.
Relay experts argue that given the current demand surge, the real challenge may not be selling homes—but building enough of them. With fewer new launches and escalating interest in move-in-ready properties, the current trajectory suggests that supply constraints could intensify in 2026 unless more projects are greenlit soon. “For now, Abu Dhabi’s real estate market is in a sweet spot: undersupplied, competitively priced, and bolstered by confidence. The next 18 months will test how well developers and policymakers can sustain this delicate balance of growth and affordability,” they said.
issacjohn@khaleejtimes.com