London: Abu Dhabi’s top addresses on Saadiyat Island have shed more than a quarter of their value since 2015 new research has found.
Despite the opening of the Louvre on the island in November, prices remain under pressure according to Cluttons even as the sider market shows signs of stabilization.
Sea-facing villas on Saadiyat Island, which are some of the most expensive in the emirate at 1,700 dirhams ($463) per square foot, have seen no movement in prices for the past two consecutive quarters, Cluttons found.
The cost of buying the luxury Saadiyat properties had fallen significantly since 2015, with prices dropping by an average of 26.1 percent, Cluttons said, as the emirate’s economy faltered due to declining oil prices.
Faisal Durrani, head of research at Cluttons, said confidence in the economy is starting to return, encouraging buyers to invest in property again.
“2018 looks set to be a better year for the UAE economy as a whole, with GDP expected to expand by 2.6 percent, from a seven year low growth rate of 1.7 percent last year. This is, in turn, expected to help support more stable rates of job creation and increased government spending as confidence levels improve,” he said.
He added that news at the end of last year that the national oil company Adnoc was planning to spend 400 billion dirhams over the next five years to boost growth is likely to further bolster economic growth.
Edward Carnegy, head of Cluttons Abu Dhabi, said the stabilization of prices is likely to continue this year. “In fact, we have noted a marginal uptick in demand from Emirati buyers predominantly, looking for second homes, or expanding their buy-to-let investment portfolios on Saadiyat Island,” he said.
Other property experts are also noting that the market is beginning to stablize.
Taimur Khan, senior analyst at Knight Frank said: “The short term trends seems to be that the residential market is improving but we are still very likely to see further price falls across the market in 2018. Economic activity in the capital is beginning to recover both in the oil and non-oil sector and this may help spur demand and support the market somewhat.”
Rents across Abu Dhabi’s residential areas have decreased by 2.3 percent in the first quarter of this year, marking a slower rate of decline that the 4.3 percent drop during the final quarter of 2017.
This means rents are 11.5 percent lower than this time last year.
The Cluttons report said that the continued decline in rents reflects some lingering concerns among tenants about potential job losses coupled with the rising cost of living. The introduction of value-added tac (VAT) at the beginning of the year and the increase in inflation, has placed additional pressure of household budgets.
Tenants are more likely to attempt to negotiate more favorable rates with their landlords, said Carnegy.
“As a result, tenants are negotiating reductions at renewal, while landlords are increasingly receptive to meeting the expectations of tenants by agreeing to close deals below headline asking rates, and they are offering flexible rental payments in multiple cheques to attract tenants as well as other incentives such as zero commission payable and rent free,” he said.
Abu Dhabi Saadiyat pads need more than Louvre opening to lift prices
Abu Dhabi Saadiyat pads need more than Louvre opening to lift prices
- Despite the opening of the Louvre on Saadiyat Island in November, prices remain under pressure according to Cluttons even as the sider market shows signs of stabilization.
- The cost of buying the luxury Saadiyat properties had fallen significantly since 2015, with prices dropping by an average of 26.1 percent.
UAE’s residential real estate market to see softer home sales
- Moody’s sees mild softening of prices over the next 12 - 8 months as rising completions add supply
RIYADH: The UAE’s residential real estate market is expected to see a modest decline in developer sales and a mild softening of prices over the next 12 to 18 months as rising completions add supply, Moody’s said.
Despite near-term easing, the credit ratings agency noted that developers are supported by strong revenue backlogs and solid financial positions, while regulatory measures have reduced banks’ exposure to the construction and property sectors, helping to preserve robust solvency and liquidity buffers across the financial system.
The broader trend is reflected in the UAE’s real estate market, which recorded a strong performance during the first three quarters of 2025, according to Markaz.
In Dubai, transaction values increased 28.3 percent year on year to 554.1 billion Emirati dirhams ($150.88 billion), while Abu Dhabi recorded total sales of 58 billion dirhams, up 75.8 percent year on year. The number of transactions in Abu Dhabi rose 42.3 percent to 15,800.
The report said: “After five years of extraordinary growth in the UAE’s residential real estate market, particularly in Dubai, we expect developer sales to decline modestly and some price softening over the next 12 to 18 months as rising completions add supply.
“From 2026 to 2028, around 180,000 new units will be completed in Dubai, a significant increase from prior years that is likely to weigh on demand and slow price growth.
“However, fundamentals remain supportive, underpinned by continued population growth and an influx of high-net-worth individuals. Rated developers’ credit quality will remain resilient, supported by strong revenue backlogs, front-loaded payment plans and solid financial positions.”
Munir Al-Daraawi, founder and CEO of Dubai-based Orla Properties, told Arab News the Moody’s report underscores what the firm is seeing on the ground, namely “a market that is successfully transitioning from a period of extraordinary growth to one of sustainable stability.”
He added: “While a mild softening of prices and a modest decline in sales are anticipated over the next 12 to 18 months, these are natural adjustments for a maturing global hub like Dubai.”
Al-Daraawi believes the the projected delivery of 180,000 units between 2026 and 2028 is not a cause for concern, but “a reflection of the UAE’s long-term appeal to high-net-worth individuals and a growing population.”
The CEO added: “The report rightly points out that fundamentals remain supportive, underpinned by Dubai’s 2040 Urban Master Plan and a significant influx of global talent.”
He went on to note that the resilience of the sector is further bolstered by the solid financial positions of developers and the strong regulatory measures that have shielded the banking sector from excessive exposure.
“This creates a robust ecosystem where credit quality remains high, even as we navigate a more competitive landscape. For boutique and luxury-focused developers, the current environment emphasizes the importance of quality, execution, and strategic capital allocation — factors that will continue to define the UAE’s real estate success story,” said Al-Daraawi.
The current environment emphasizes the importance of quality, execution, and strategic capital allocation.
Munir Al-Daraawi, Founder and CEO of Orla Properties
Riad Gohar, co-founder and CEO of BlackOak Real Estate, told Arab News that while Moody’s is correct to say that supply is rising, the conclusion of a broad slowdown ignores the structure of this current economic cycle.
He added: “First, this is not a debt-fueled market. Around 83 percent of Dubai residential transactions in 2024 and 2025 were non-mortgaged. That means the market is equity-driven, not credit-driven. When cycles are not built on leverage, corrections are typically shallow and segmented, not systemic. “
He added that the macroeconomic backdrop is stronger than in past cycles, driven by sustained non-oil gross domestic product increase, structural reforms, population growth, and capital inflows aligned with long-term national plans.
“Demand is not purely speculative; it is driven by migration, business formation, and wealth relocation,” the CEO said.
“Third, prime vs. non-prime must be separated. Any pressure from increased completions is more likely to affect marginal locations, not established prime areas supported by global HNWI inflows. Historically, prime assets in Dubai have shown resilience even during broader market pauses,” Gohar added.
He continued to clarify that for smaller developers, some may feel margin compression if sales moderate, but this becomes a consolidation phase, not a systemic risk.
“Banks’ real estate exposure has already declined to around 12 percent of total loans — from 19 percent in 2021 — and NPLs (non-performing loans) are low at 2.9 percent, meaning financial contagion risk is limited. Regulatory escrow structures and stricter oversight further reduce spillover,” the CEO said.
“We are in a capital-rich, cash-driven cycle, regulated market with strong GDP and population growth. If anything, weaker fringe players exiting would strengthen the core not destabilize it,” he said.
The Moody’s report highlighted that while most developers it rates will generate “substantial excess cash” over the next two to three years, there will be fewer opportunities to make significant investments, especially within the Dubai real estate market.
As well as prompting a shift toward corporate governance and, in particular, how developers deploy their rising liquidity, some firms are looking to diversify beyond their core business models.
“For instance, Binghatti has recently launched its first master-planned villa community, marking a departure from its historical focus on single-plot high-rise developments, as demand for villas continues to outperform that for apartments,” said the report.
It continued: “Others are looking beyond Dubai and the UAE for growth, whether through geographic diversification or expansion into unrelated sectors.
“For example, Damac’s owner, Hussain Sajwani, has announced significant planned investments in data center development across the US and Europe.
“Emaar continues to develop actively in Egypt and India and is evaluating potential entry into China and the US. Aldar has started development projects in the UK and Egypt, while Arada has begun building in Australia and the UK and Sobha is expanding into the US.”
