This report provides a chronological analysis of the development of the mid-range residential real estate market in Al Reem and Al Raha areas in Abu Dhabi during the period from 2018 to 2024. The report focuses on annual changes in prices and investment returns, with an analysis of influencing factors such as new laws and legislation, economic developments, global events, and government initiatives.
Executive Summary
The real estate market in Al Reem and Al Raha areas in Abu Dhabi has undergone a significant transformation over the past seven years, influenced by a combination of local and global factors:
- 2018–2019: A period of correction and price decline with important legislative amendments
- 2020: The market was affected by the COVID-19 pandemic with relative stability in prices
- 2021–2022: The beginning of recovery and sustainable growth despite global challenges
- 2023–2024: Strong prosperity and a notable rise in prices with continued supportive policies
Detailed Annual Analysis
2018: A Buyer’s Market with Declining Prices
Main Causes:
- Declining oil prices affected the local economy
- Imbalance between supply and demand in the real estate market
- Beginning of discussions on amendments to freehold laws for foreigners
Effects in Al Reem and Al Raha Areas:
- Al Reem: 6.5% decrease in studio prices
- Al Raha: Significant 10% decrease in two-bedroom apartment prices
- Both areas remained attractive to investors due to good investment returns (6.8% for Al Reem and 7% for Al Raha)
2019: Opening the Door to Foreign Investment with Continued Price Correction
Main Causes:
- Amendment of the freehold law, opening Abu Dhabi’s real estate market to foreign investment
- Introduction of long-term residence visa system (Golden Visa)
- Reduction of work permit fees
- Significant investments in infrastructure and recreational facilities
Effects in Al Reem and Al Raha Areas:
- Al Reem: 9.1% decrease in average price per square foot
- Al Raha: 7% decrease in average price per square foot
- Al Reem: Top area in terms of transaction value in H1 2019 with AED 4.37 billion
- Stable investment returns in both areas at 7%
2020: Impact of COVID-19 with the Beginning of Price Stabilization
Main Causes:
- Impact of the COVID-19 pandemic on the global and local economy
- Changes in work and lifestyle habits due to the pandemic
- Stimulus packages from the UAE government to support the economy
- Reduction in loan-to-value ratios and lower interest rates
Effects in Al Reem and Al Raha Areas:
- Al Reem: Slight decrease in average price per square foot (from AED 1,011 to 991)
- Al Raha: Slight decrease in average price per square foot by 3.6%
- Al Reem: Investment return improved to 7.2%
- Al Raha: Stable investment return at 6.8%
2021: Recovery from the Pandemic and the Beginning of Price Increases
Main Causes:
- Rapid vaccine rollout contributing to economic recovery
- Expansion of the Golden Investor Visa program
- Supportive economic reforms from the government
- Easing of pandemic-related travel restrictions
Effects in Al Reem and Al Raha Areas:
- Al Reem: 1.8% increase in average price per square foot (from AED 975 to 993)
- Al Raha: Slight increase in average price per square foot by 0.3%
- Al Reem: Slight decrease in investment return to 6.62%
- Al Raha: Relative stability in investment return at 6.71%
2022: Sustainable Growth Despite Global Challenges
Main Causes:
- Continued impact of the Golden Investor Visa program in attracting investors
- Clear government policies and supportive initiatives
- Investment-friendly promotional offers from Aldar Properties
- Impact of global inflation and economic uncertainty
Effects in Al Reem and Al Raha Areas:
- Al Reem: 1.99% increase in average price per square foot (from AED 993 to 1,011)
- Al Raha: 3.92% increase in average price per square foot (from AED 1,170 to 1,226)
- Al Reem: Slight increase in investment return to 6.65%
- Al Raha: Decrease in investment return to 5.88%
2023: Record Year for the Real Estate Market
Main Causes:
- Continued impact of the Golden Residence program and investment facilitations
- Government initiatives to promote economic growth
- Increased demand and favorable market conditions
- Over 14,000 residential real estate transactions worth more than AED 52 billion
- Increased international interest in Abu Dhabi’s real estate market
Effects in Al Reem and Al Raha Areas:
- Al Reem and Al Raha: Increase in luxury apartment prices by up to 13%
- Al Reem: Stable investment return for luxury apartments at 6.65%
- Al Raha: Al Raha Gardens offers an investment return of 6.04% for luxury villas
2024: Continued Growth and Prosperity
Main Causes:
- Continued supportive policies for real estate investment
- Enhancement of infrastructure and services in key areas
- Continued growth in Abu Dhabi’s real estate market
- Active and diverse investment environment
- Increased demand for luxury and mid-range properties
Effects in Al Reem and Al Raha Areas:
- Al Reem: Significant increase in average price per square foot (from AED 1,011 to 1,119)
- Al Raha: Increase in average price per square foot (from AED 1,226 to 1,302)
- Al Reem: Improvement in investment return to 7.00%
- Al Raha: Slight increase in investment return to 6.09%
Key Factors Affecting Market Development (2018–2024)
1. Legislation and Government Initiatives
- Amendment of the Freehold Law (2019): Opened Abu Dhabi’s real estate market to foreign investment
- Golden Investor Visa Program: Started in 2019 and expanded in 2021, attracting more foreign investors
- Reduction of Work Permit Fees (2019): Contributed to improving the business environment
- Stimulus Packages during COVID-19 (2020): Supported the economy during a difficult period
- Reduction in Loan-to-Value Ratios (2020): Facilitated the property purchase process
2. Economic Factors
- Oil Price Fluctuations: Affected the local economy, especially in 2018–2019
- COVID-19 Pandemic (2020): Affected the global and local economy
- Global Inflation (2022–2023): Affected real estate prices
- Investments in Infrastructure: Enhanced the attractiveness of key areas
3. Demographic Factors
- Increased Interest from Foreign Investors: Especially after legal amendments and the Golden Residence program
- Changes in Work and Lifestyle Habits: Increased demand for larger homes
- Increased Demand for Areas with Low Population Density: Especially during and after the pandemic
General Trends in Al Reem and Al Raha Areas (2018–2024)
Al Reem Area
- Prices: Decrease in 2018–2020, then continuous increase from 2021 to 2024
- Average Price per Sqft: From AED 1,014 in 2019 to AED 1,119 in 2024 (10.4% increase)
- Investment Return: Ranged between 6.62% and 7.2%, stabilizing at 7.00% in 2024
- Status: Maintained position as one of the most popular areas for luxury and mid-range apartments
Al Raha Area
- Prices: Decrease in 2018–2020, then continuous increase from 2021 to 2024
- Average Price per Sqft: From AED 1,223 in 2019 to AED 1,302 in 2024 (6.5% increase)
- Investment Return: Ranged between 5.88% and 7.0%, stabilizing at 6.09% in 2024
- Status: Continued as a preferred destination for luxury apartments in Abu Dhabi
Conclusion and Future Outlook
After a period of correction and stabilization (2018–2020), the real estate market in Al Reem and Al Raha areas in Abu Dhabi experienced sustainable growth (2021–2022) and then strong prosperity (2023–2024). Government initiatives, especially the amendment of the freehold law and the Golden Residence program, significantly contributed to attracting foreign investors and strengthening the market.
Growth is expected to continue in both areas, with the possibility of prices stabilizing at higher levels, especially with the continuation of supportive policies for real estate investment and the enhancement of infrastructure and services in key areas.
Sources
- Bayut Annual Real Estate Market Reports for Abu Dhabi (2018–2024)
- Department of Municipalities and Transport in Abu Dhabi Reports
- Aldar Properties Reports
- Emirates News Agency (WAM) Reports
- Property Finder Reports
- Dubizzle Reports
- Source: quanta.ae
Author: Ayman Sadieh
