Abu Dhabi is fast emerging as the sought-after destination for leading real estate players, with leading international players such as Sotheby’s International Realty and regional companies such as ARA Real Estate Development and DECA Properties figuring among the companies which are either currently finalising plans or have recently expanded into the UAE capital city.
The city government’s aggressive plans to attract global and regional talent by creating a hub for knowledge-based industries, along with the development of Saadiyat, Ramhan and Al Reem islands for high-end properties aimed at cash-rich international investors and buyers are luring realty majors to spread their footprints into the emirate.
A surge in expat influx and the impressive pipeline of mega entertainment and infrastructure projects coming up in the emirate to add to the emirate’s charm for tourists and investors alike are also aiding in attracting realty majors to the emirate, industry experts said.
Property rental companies are also following suit by either making entry plans or stepping up operations in Abu Dhabi to tap the emerging opportunities.
The Harry Potter-themed land at Warner Bros., Natural History Museum, Zayed National Museum, Guggenheim and Velodrome are among a slew of mega projects slated to be opened in Abu Dhabi, commencing from early 2025.
“We’re expanding the Sotheby’s brand into Abu Dhabi,” George Azar, Chairman and CEO of Dubai Sotheby’s International Realty, told Arabian Business.
“We see significant potential in the Abu Dhabi market and aim to guide developers on project focus and strategy,” he said.
Azar, who is also Chairman and CEO of UK Sotheby’s International Realty and Saudi Arabia Sotheby’s International Realty, said the company will be mainly aiming to cater to UK buyers, getting them drawn to the emirate’s tranquillity.
Karan Luthra, a senior executive with Dubai-based Foremen Fiefdom said Abu Dhabi is attracting an increasing number of prominent developers to its thriving real estate market, driven by luxury developments and landmark mega-projects in the emirate.
Industry insiders said with appealing returns on investment and high rental yields, the Abu Dhabi real estate market is quickly becoming a prime choice for international buyers seeking both value and growth potential.
ARA Real Estate Development and DECA Properties recently announced a joint initiative, involving multi-billion dollars, to launch a slew of massive residential projects in Abu Dhabi and elsewhere in the UAE.
Industry insiders said a few other companies are also expected to announce their Abu Dhabi expansion plans soon.
ADQ investment boosts Sotheby’s reach
Significantly, Sotheby’s plans to expand its footprint in the region comes in the wake of Abu Dhabi’s sovereign wealth fund ADQ acquiring a minority stake in the auction house for a reported investment of $1 billion.
The investment is also expected to propel Sotheby’s to expand its presence in the art and luxury market in the Middle East.
Azar said the investment will help the company to reach new clients, solidifying its position further in the region.
“We collaborate closely with Sotheby’s auction house, sharing a permanent desk in their London office and sponsoring key sales. We also actively cross-sell and refer clients, creating a synergistic relationship,” he said.
Azar said Abu Dhabi’s commitment to art, evident in the Louvre Abu Dhabi, aligns perfectly with the Sotheby’s brand.
“This close collaboration, combined with ADQ’s investment, strengthens our position and reach in the region,” he said.
The top executive of Sotheby’s International Realty in Dubai, the UK and Saudi Arabia, however, said the company is not in talks with any sovereign funds or large family offices for further fund infusion.
“We are not currently involved in such discussions,” Azar said.
Diversification boosts Abu Dhabi market
Industry players said Abu Dhabi’s real estate market is experiencing robust growth, propelled by its economic diversification into finance, tourism, and technology sectors, providing a resilient foundation for real estate investments.
The city’s emergence as a ‘Capital of Capital’, attracting global financial institutions and technology, hospitality and entertainment majors setting up operations in the city, will further boost both residential and commercial real estate prospects, they said.
“This shift underscores the dynamic evolution of Abu Dhabi’s economic landscape,” Karun Luthra, Vice President Operations at Foremen Fiefdom, told Arabian Business.
“Areas like Yas Island and Reem Island are witnessing considerable interest in both affordable and luxury rental properties, revealing notable shifts in residential market trends during the third quarter of 2024.”
Luthra said the 31 per cent increase in company registrations at the Abu Dhabi Global Market in early 2024 reflects a surge in business activity and highlights the emirate’s growing investment potential.
The surge in the entry of developers is already pushing up the emirate’s construction sector, estimated to have expanded by 7.6 per cent in 2022, currently contributing 7.8 per cent to its GDP (gross domestic product).
Shubham Hunda, Business Head, Money Plant Real Estate, said infrastructure projects, like the expansion of Al Maktoum International Airport and the addition of iconic cultural landmarks like the Opera House, are enhancing Abu Dhabi’s appeal to global investors.
“These developments underscore Abu Dhabi’s commitment to attracting international interest strategically,” Hunda told Arabian Business.
“With residential capital values projected to rise between 3 per cent and 5 per cent in 2024, the villa market, particularly near attractions on Yas Island, is seeing strong demand due to its ‘value-for-money’ proposition,” he said.
The influx of expat employees and tourists, along with the rising supply in residential properties is also leading to a remarkable growth in Abu Dhabi’s short-term rental market.
“The emirate’s rental market, especially the short-term rental segment, has experienced remarkable growth, driven by a surge in both business and leisure tourism,” Patrick Weiss, Sr. Director of Real Estate – GCC at Silkhaus, a leading UAE company in rental services, told Arabian Business.
He said the capital’s position as a hub for large-scale sporting, entertainment, and business events has solidified its reputation as a leading destination for short-term rentals in the region.
“At Silkhaus, we believe Abu Dhabi will continue to attract a diverse range of travellers, enhancing its appeal as a key player in the short-term rental industry,” Weiss said.
Family offices follow developers to Abu Dhabi to increase investment exposure
With Abu Dhabi’s favourable conditions and increasing global interest in the realty sector, family offices are also turning their gaze toward the emirate, setting the stage for a new era in wealth growth through strategic real estate investments.
The Family Office Summit in Abu Dhabi, slated to be held this December, is expected to give a major fillip to this trend, with the event bringing together family offices from across the globe, introducing them to the opportunities within the emirate’s real estate landscape.
“The summit will act as a crucial FDI platform, attracting international family offices inspired by figures like Ray Dalio and Leon Black, who are keen to establish a presence in this thriving capital,” Obediah Ayton, Director; Dhabi Hold Co, which is playing a key role in organising the summit, told Arabian Business.
“These events and summits also serve as powerful networking platforms, attracting investments and elevating the region onto the global stage,” he said.
Ayton said niche markets like family offices, with their untapped potential, are now coming to light, driving interest and positioning Abu Dhabi as a premier hub for strategic wealth and investment growth.
“As family offices strive to preserve and grow multi-generational wealth, real estate remains a cornerstone of their investment strategies,” he said.
Globally, family offices continue to allocate a significant portion – around 12 per cent – of their portfolios to direct real estate investments, according to a recent survey by Citi.
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