Prices for villas in Abu Dhabi rose for the first time in five years during 2020 amid higher demand for larger properties as the coronavirus pandemic forced people to spend more time at home.
Prices for single-family homes, known locally as villas, rose 2% in Abu Dhabi, the richest and largest of the seven sheikhdoms that make up the United Arab Emirates, real estate consultancy Cushman & Wakefield Core said in a report on Monday. Prices for apartments, which make up the vast majority of residential properties in the city, dropped 4% last year.
Rental rates continued to decline for both villas and apartments as the pandemic forced companies to cut jobs. Residency permits in the UAE, where expatriates make up the majority of the population, are usually tied to employment and many residents who lose their jobs leave the country.
Average rents for villas fell 3% in 2020, compared with a 5% drop on average for apartments, according to the report.
Abu Dhabi’s housing market has fared somewhat better than neighbouring Dubai, where values have been hammered by a supply glut and faltering demand.
Prices in Dubai have slumped more than 30% since the market peaked seven years ago. In Abu Dhabi, prices for villas are 22% below a 2014 peak, while apartment values have dropped 30%, according to Prathyusha Gurrapu, head of research and advisory at Cushman & Wakefield Core.
“While Covid-19’s impact will continue to affect demand, we expect the market to show early signs of recovery in 2021 with the pace of price reductions stabilizing provided the broader economy recovers,” Gurrapu wrote in the report.
To spur demand in 2021, developers in the city offered incentives, including attractive post-handover payment plans and fee waivers, and partnered with banks to provide preferential mortgage rates, according to the report.
More than 4,500 homes were completed in Abu Dhabi in 2020 and supply is expected to rise this year to more than 7,000 homes, according to Cushman & Wakefield Core.