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Global Market Insight 01 April 2020

Abu Dhabi Market Report, Q1 2020

S&P Global Ratings affirmed Abu Dhabi’s AA/A-1+ longterm credit rating at the end Q1, citing strong fiscal buffers, a healthy net asset position and proactive policymaking as factors enabling the Emirate to weather recent external pressures.

While expressing confidence on a governmental level, S&P simultaneously revised its outlook, from stable to negative, for five UAE banks, including First Abu Dhabi Bank and Abu Dhabi Commercial Bank. S&P’s decision was largely a result of concerns that subdued economic activity caused by Covid-19, coupled with the recent sharp fall in oil prices, could drive an increase in loan defaults, and challenge bank profitability, over the coming 12 months.

Sales Prices

Abu Dhabi saw moderate declines in residential values over Q1, with average apartment and villa prices falling by 1.2% and 1.8%, respectively, q-o-q. On an annual basis, average apartment prices fell by 8.9%, with villas seeing more moderate average declines of 6.8%.
The reduction in the pace of annual value declines is encouraging and, while we expect sales values to face pressure over the second quarter, we do not anticipate a sharp fall in average prices near-term.

Rental Rates

Rents saw a tapered rate of decline over Q1, with average rents down by 1% for apartments and 0.6% for villas, on a quarterly basis. This compares to declines of 2.7% and 2.4%, respectively, over Q1 2019. On an annual basis, apartment rents fell by 7.7% on average, from Q1 2019, while villa rents fell by 4.8%.


Less than 1,000 residential units were handed over during Q1, with over 9,000 units still scheduled for completion over 2020. Apartments make up over 80% of scheduled 2020 completions, with upcoming supply focused on designated investment zones such as Al Reem, Al Raha Beach and Yas Island. As witnessed in previous years, and with social distancing policies set to affect labour capacity across construction sites, we expect a minority of planned completions to delay handover until 2021.


Total Abu Dhabi real estate transaction and mortgage values rose by 22% over Q1, reaching AED 19.2 billion, compared to AED 15.8 billion during Q1 2019. Transactional activity continued to be driven by off-plan sales, with Al Reem Island, Saadiyat Island and Al Reef collectively accounting for over half of total transaction value.