Abu Dhabi real estate sees robust growth in prices and rental yields in H1 2025: Cavendish Maxwell report

Prices and rental rates in Abu Dhabi’s residential market continued their upward climb in the first half of 2025, underscoring the resilience of demand against a backdrop of constrained supply, according to the latest report by real estate consultancy Cavendish Maxwell.

Citywide property prices rose 8.5% compared with the second half of 2024 and 14.4% year-on-year, with apartments leading the trend. Apartment prices were up 14.4% on an annual basis, while villas recorded an 11.1% gain.

“This trend reflects a supply-constrained market, where limited availability of desirable units is putting upward pressure on prices. Buyers are increasingly focusing on high-quality, well-located apartments,” the report said.

Rental rates followed a similar trajectory, rising 6.7% over the previous half year and 13.9% year-on-year. While growth varied across submarkets, the consultancy highlighted that communities such as Yas Island and Al Reem Island experienced double-digit increases in apartment rents. “Tenants continue to be willing to pay a premium in certain segments of the market, where location, property quality and amenities are key differentiators,” the report said.

The first half of 2025 saw approximately 3,300 sales transactions in Abu Dhabi City, comprising around 2,300 ready and just over 1,000 off-plan sales. With limited new launches constraining off-plan activity, ready properties gained market share. “Although overall sales volumes were 27.6% lower than in the previous half, ready transactions were still 26.9% higher than in H1 2024, illustrating enduring end-user and investor demand,” the report said.

In terms of residential sales value, transactions totalled approximately Dh8.9 billion in H1 2025. Average transaction prices for ready properties climbed from Dh2.1 million to Dh2.5 million in the same period. Ready villas and townhouses were standout performers, with transaction volumes rising 13.3% from H2 2024 and an impressive 72.2% year-on-year, reaching their highest levels since 2021.

“This growth was driven by buyers seeking larger, family-oriented homes with amenities. Investors were attracted not only by the yields offered by villas and townhouses but also by potential long-term capital appreciation,” the report said.

Residential supply rose gradually, with 2,400 units delivered in H1 2025. A further 10,400 units are scheduled for completion by year-end, followed by over 11,000 units in 2026. However, Cavendish Maxwell cautioned that “on-the-ground deliveries are expected to progress more slowly than planned, keeping supply below near-term demand”.

In H1 2025, Abu Dhabi City registered around 1,700 mortgage transactions, down 29.2% from the previous half and 26% year-on-year. The total value of residential mortgage transactions reached Dh3.5 billion, with villas and townhouses contributing Dh2.5 billion. Although overall mortgage values fell 11.6% compared with H2 2024, they rose 11.8% year-on-year, supported by a sharp 47.4% annual increase in villa and townhouse mortgage values, the report said.

The report noted that “the government’s Vision 2030 economic diversification strategy, combined with steady population growth driven by international migration, continues to fuel robust demand for family-oriented, quality homes with modern amenities.”

Looking ahead, Cavendish Maxwell said ready transactions are expected to remain steady in the second half of 2025, supported by strong demand across buyer groups.

The performance of the off-plan segment will depend on the timing and scale of upcoming project launches, with early signs suggesting that activity could gain momentum later in the year.

Andrew Laver, Associate Director for Commercial Valuation in Abu Dhabi, said the first half of 2025 presented a nuanced picture. “While overall activity has moderated compared to the same period in 2024, demand for completed projects remains robust. This sustained interest has driven continued price appreciation across both apartment and villa segments, underscoring the resilience of end-user and investor appetite,” he said.

Property developers such as Aldar and Modon are expected to make continued market moves in the coming months, complemented by a growing presence of smaller private developers initiating new projects around the H1/H2 threshold.

“Together, these dynamics set a strong foundation for H2 2025, with promising prospects across both off-plan and completed segments. The market continues to show depth and adaptability, positioning itself well for sustained growth in the months ahead,” Laver said.

This article was originally published in Aletihad.