Abu Dhabi: New Homes Coming, Demand May Outstrip Supply

Abu Dhabi is on track to see a significant expansion in its residential real estate landscape, with 11,900 new homes expected to be added by the end of 2025. However, this projected growth might still fall short of meeting the accelerating demand, driven by a rising population and growing investor interest. The analysis, published by property consultancy Cavendish Maxwell, suggests that the emirate could face a supply-demand imbalance as housing needs increase.

Quarterly Supply and Upcoming Developments

In the first quarter of 2025, the capital city introduced 600 new residential units to the market. This puts the total number of new homes expected in 2025 at around 12,500. Looking ahead, an additional 7,000 units are projected for delivery in 2026, further expanding the city's residential stock. Despite these developments, the report indicates that surging demand, particularly from end-users and investors, might absorb the new inventory faster than expected.

Performance of the Residential Market in Early 2025

According to Cavendish Maxwell’s quarterly findings, Abu Dhabi’s residential real estate market recorded strong activity between January and March 2025. The total value of residential transactions reached AED 3.7 billion across 1,300 sales. On average, buyers paid AED 2.5 million per property, marking the highest average since the beginning of 2022. Apartment prices rose by 12.3% annually and 4% over the previous quarter, while villa prices climbed 12.5% year-on-year and 2.4% quarter-on-quarter.

Ready Properties in High Demand

Ready-to-move-in homes were the primary driver of transaction volume, accounting for 900 deals with a total value of AED 2.3 billion. These properties saw more activity compared to the same period last year, although there was a modest decline from the previous quarter. This dip is attributed to a seasonal slowdown following the festive period and reduced market activity during Ramadan and Eid.

Andrew Laver, Cavendish Maxwell Associate Director – Abu Dhabi, said: “The UAE capital is seeing a notable shift towards the secondary residential market, with sustained demand for ready homes and fewer off-plan project launches compared to previous quarters. The average sales transaction reached a record AED 2.5 million in Q1, with encouraging signs of broader price appreciation – a trend we expect to continue in the months ahead. Robust bank activity and strong project delivery during the early part of the year underscore the resilience and dynamism of the Abu Dhabi real estate sector.”

A Closer Look at Transaction Patterns

The first quarter saw 1,300 overall property transactions, of which 900 were ready homes and 400 were off-plan units. Off-plan sales experienced a drop both annually and quarterly, largely due to fewer project launches. Ready homes, on the other hand, continued to show robust performance, with demand growing on a year-on-year basis. Although transaction volumes and total sales dipped slightly, the average selling price of ready homes rose to AED 2.5 million, the highest in over two years.

Rising Sales Prices Across the Board

Property values across all segments, including apartments, villas, and townhouses, showed double-digit growth every year. Apartments saw a 4.1% price increase from the previous quarter, while villas and townhouses rose by 2.4%. This upward trend reflects strong market sentiment fueled by confidence among investors, favourable economic conditions, and attractive rental returns. Various government-led incentives and developer-backed initiatives, such as infrastructure upgrades, long-term residency options, and flexible payment schemes, have also played a pivotal role in supporting sales and sustaining price growth.

Leading Locations for Villa Price Appreciation

Certain districts in Abu Dhabi experienced more pronounced growth in villa prices. Yas Island topped the list with a 15.5% annual increase and a 3.5% gain over the last quarter. Saadiyat Island also performed well, with prices rising by 1% year-on-year and 2.3% quarter-on-quarter. Al Reef recorded moderate but consistent appreciation, with prices climbing 4.4% annually and 2.6% sequentially.

Shift Towards Villas and Townhouses

Though apartments continue to dominate in terms of volume, their share in the overall residential market has started to decline. This shift reflects a growing appetite for villas and townhouses, which are capturing a larger portion of buyer interest. Much of this demand is being driven by end-users, particularly families, who are prioritizing more spacious homes with private outdoor areas and a long-term living environment.

Mortgage Uptake Suggests End-User Dominance

The value of mortgages issued in Q1 reached AED 1.7 billion, spread across 800 loans. Loans secured for villas and townhouses jumped nearly 60% compared to the same period last year, and increased by 3.5% from the previous quarter. This surge in financing activity highlights the preference for larger, family-oriented properties and further underscores the rise in end-user activity. Conversely, mortgage uptake for apartments declined, suggesting a subtle re-balancing of demand within the housing market.