(MENAFN- Khaleej Times)

Demand is heavily tilted in favour of villas in Abu Dhabi due to a shortage of apartments and rising demand from the millionaires and qualified professionals, say industry executives.

“Villas have continued to outperform over the past five years, delivering growth of 35 per cent. In Abu Dhabi, villas make up 37.4 per cent of the total supply pipeline, and the rest is apartments. Based on current demand, which is heavily tipped in favour of villas, prices will likely continue outperforming apartments simply because there are not that many villas coming through,” said Faisal Durrani, partner and head of research, Mena, Knight Frank.

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“When you overlay average prices for villas which stand at around Dh1,100 per square foot, compared to double that level in Dubai, it is easy to understand why some buyers view Abu Dhabi as better value for money, which for some also offers a more family-friendly lifestyle,” he said, after the release of the second quarter report about the UAE capital's real estate sector.

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According to Knight Frank, over the long term, villas are the standout for value growth as prices registered a 3.4 per cent quarter-on-quarter rise in Q2, reaching Dh1,103 per sq ft, representing a 42.3 per cent uplift since Q1 2020. Villas on Al Saadiyat Island saw the strongest price appreciation, up 28 per cent year-on-year, followed by Yas Island, where villas experienced a 22 per cent increase.

Between April to June 2025, the UAE capital's residential market saw average prices rising by 6.4 per cent quarter on quarter to Dh1,230 per sq ft, while total annual growth was 17.3 per cent.

Apartments in the UAE Capital saw values increasing by 6.8 per cent to Dh1,296 per sq ft, a 17.3 per cent year‐on‐year uplift and a 28.7 per cent above Q1 2020 levels. Al Raha Beach led the apartment market with price growth of 11 per cent since H1 2024, followed by Al Saadiyat Island at 10 per cent. Both locations epitomise the prime beachfront living available in Abu Dhabi, with Al Raha Beach also benefiting from its proximity to the leisure attractions of Yas Island.

Shehzad Jamal, partner strategy and consulting for Mena at Knight Frank, said around 63 per cent of global high-net-worth individuals interested in buying in Abu Dhabi are doing so for personal reasons.

“They intend to use the property as their main residence, holiday home, or for retirement. The remaining 37 per cent are investment-driven. For buyers who may have been priced out of Dubai, or who want to diversify their UAE portfolio, Abu Dhabi is increasingly attractive, with average residential prices growing by around 17 per cent year-on-year,” said Jamal.

33,000 units under construction

The global real estate consultancy said supply struggled to keep pace with rising demand during the first half of the year, with residential transactions totalling Dh9 billion during H1 2025, 36 per cent lower than the first half of 2024.

Its data showed that 890 new residential units have been delivered in 2025, and 33,074 are under construction and scheduled for delivery by 2029. Apartments comprise 62 per cent of this future supply pipeline.

Yas Island, with its world-class theme parks and beach resorts, is the top location for new supply by some margin, with more than 8,000 units in the pipeline. It is followed by circa 3,000 units planned in the more traditional residential district of Al Shamkha. Meanwhile, new branded residences developed by Aldar for Mandarin Oriental and Nobu bolster the pipeline for Saadiyat Island.

“There is growing interest in Abu Dhabi from international buyers thanks to the emirate's excellent leisure and lifestyle amenities, and supportive business conditions, and we therefore expect strong uptake of the 33,000-plus new units coming to market between now and 2029. Our data shows that seven per cent of buyers are interested in off-plan homes, suggesting an increasing desire to purchase property that can be used immediately, whether as a primary residence or holiday home,” said Will McKintosh, regional partner and head of residential for Mena at Knight Frank.

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