ValuStrat: Abu Dhabi’s real estate market accelerated in second quarter
Abu Dhabi’s real estate sector continued its growth in the second quarter of 2025, according to research from ValuStrat, reporting gains across most key segments of the sector.
The ‘Abu Dhabi Real Estate Review for Q2’ report by ValuStrat presents a detailed analysis of the emirate’s real estate markets across residential, office, retail, hospitality, and industrial sectors.
The report highlights that the market has seen accelerated growth in Q2, driven by strong demand, improving economic conditions, and strategic developments.
Residential buyer market
In Q2, the ValuStrat Price Index, which tracks capital values of Abu Dhabi’s freehold residential market, accelerated by 2.2% vis a vis the previous quarter. The increase is primarily driven by robust performance in the freehold apartment market. Apartment prices increased by 1.7 percent quarterly, while villa prices also saw a higher increase of 2.6 percent quarter-on-quarter.
Demonstrating the growth seen in Abu Dhabi’s residential market over the years: the index now stands at 128.3 points, against a 100-point base set in Q1 2021.
Residential rental market
The ValuStrat Price Index for residential rental grew by 1.5 percent quarterly and 9.5 percent annually to reach 122.8 points, with apartment rents outpacing villa rents, rising by 2 percent quarter-on-quarter and 12.5 percent year-on-year. Villa rents increased by 7 percent year-on-year but remained stable in the first half of the year.
On average, renters now pay AED 65,000 for a studio, AED 91,000 for a 1-bed apartment, AED 128,000 for a 2-beds apartment, and AED 183,000 for a 3-beds apartment. The highest growth in rental prices over the last quarter was seen in Al Reef (5.4%), Al Bandar (2.9%) and Al Reem (1.3%).
In comparison, villas in Abu Dhabi now on average cost between AED 185,000 (3-beds) to AED 313,000 (5-beds).
Office market
The office market in Abu Dhabi is experiencing strong demand, with asking rents increasing by 28.3 percent annually and 6.1 percent quarterly. The average asking rent reached AED860 per square metre, driven by high occupancy levels in central business districts.
The total office stock in the city stands at approximately 3.9 million square metres, with Masdar City Square recently completed, adding 50,000 square metres to supply.
Retail sector
The retail sector also showed resilience, with shopping center stock at 1.95 million square metres Gross Leasable Area (GLA). Notable expansions, such as the redevelopment of Al Jimi Mall, are set to increase total built-up area significantly. Aldar’s retail assets reported a 12 percent year-on-year growth in revenue, with Yas Mall maintaining a high occupancy rate of 98 percent.
By 2028, the UAE’s e-commerce market is projected to exceed AED 48.5 billion, further enhancing Abu Dhabi’s retail landscape.
Hospitality sector
As of April 2025, Abu Dhabi’s hospitality sector reported an occupancy rate of 83.7 percent, reflecting a 1.5 percent increase from the previous year, found ValuStrat.
The Average Daily Rate (ADR) for hotels was AED 623, up 25.1 percent annually, with Revenue Per Available Room (RevPAR) increasing by 26.8 percent to AED 521. The sector is further set to benefit from a new Disney theme park resort on Yas Island, which is expected to boost demand in tourism and hospitality.
“The hospitality sector delivered exceptional results, with significant annual growth in occupancy and revenue metrics, underpinned by strong tourism activity. The recent announcement by Walt Disney and Miral to develop a new Disney theme park resort on Yas Island is expected to further boost long-term demand in the hospitality and tourism sectors,” remarked Haider Tuaima, Managing Director & Head of Real Estate Research at ValuStrat.
Abu Dhabi currently has around 34,380 hotel keys, according to the Department of Culture and Tourism. ValuStrat forecasts that total hotel supply will surpass 50,000 by 2030.
Industrial market
Additionally, the industrial sector in Abu Dhabi is thriving, with industrial property asking prices experiencing double-digit annual growth, averaging 15.9 percent. Warehouse prices range between AED 1,668 and AED 4,736 per square metre, influenced by facility specifications.
“The recent establishment of a vaccine distribution hub at KEZAD underscores the sector’s growth potential,” said Tuaima.
