Abu Dhabi to see ‘spike’ in new residential supply in 2021


Residential supply handovers in Abu Dhabi is expected to hit their highest level in approximately half a decade, as several projects are slated for completion before the end of 2021, real estate consultancy CORE said on Monday.

Compared to other markets, Abu Dhabi historically has had relatively fewer apartments and villas handed over each year, averaging around 4,000 to 5,000 units in the last five years. However, in 2021 the market will see a “spike” with over 7,000 units expected to be completed, said Prathyusha Gurrapu, head of research and advisory at CORE.

Most of the residential units are likely to be delivered in Al Reem Island and Al Raha Beach, two of the locations in the UAE capital that have seen substantial construction activity, followed by Yas Island.

Gurrapu said the number of actual handovers may be lower, but existing and future inventory is expected to face “relative absorption challenges given the current softening in demand”.

The UAE’s property market was hit hard during the lockdown in March last year. Developers held back on new project launches, while construction activity slowed down. However, sales transactions started to pick up after the coronavirus restrictions eased and jurisdictions around the world opened their borders.

Dependent on buyer sentiment

The UAE has seen a spike in infections this year, but with the COVID-19 vaccine rollout and the hosting of the World Expo in October, there has been a sense of optimism in the market.

While handovers are likely to increase in the UAE capital in 2021, it may not be a strong indication that the market has recovered. According to Gurrapu, the properties that are likely to be handed over in 2021 also include units that were not completed on time last year.

“The projects that are expected to be delivered in 2021 include some handovers of 2020 that have been pushed to 2021, along with ongoing construction activity that was already in the pipeline before the pandemic hit,” Gurrapu told Zawya.

“While 7,000 units are estimated in Abu Dhabi over 2021, further revisions are expected on supply forecasts as they will inherently depend on buyer confidence and an uptick in market sentiment as developers continue to adjust to ongoing market conditions,” she added.


According to CORE, the property market in Abu Dhabi showed resilience in 2020 due to “previous optimisation measures” implemented in 2016 and 2017, particularly in the hydrocarbon and banking sectors. The sentiment has been further supported by state-led measures, including various stimulus packages, rebates and limited supply-side deterrents.

Apartment and villa prices, as well as rents “displayed stability” in 2020, according to CORE, especially those in the premium category. Some communities even posted some increases, particularly villa units that were priced approximately 2 percent higher last year compared to 2019.

However, apartment prices saw a nominal drop of four percent due to limited transaction activity. According to Gurrapu, buyers were taking a wait and see approach.

“While COVID-19’s impact is expected to continue affecting demand, we foresee the residential sales market to show continued signs of recovery in 2021 with prices stabilising, provided the broader economy improves,” Gurrapu added.

(Reporting by Cleofe Maceda; editing by Seban Scaria)


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