The Emirate of Abu Dhabi is the United Arab Emirates (UAE) capital. The name Abu Dhabi translates in Arabic as the “Land of the Gazelle”. The name is inspired by the fact that the emirate was founded due to the tribe being led to an island with fresh water by a young antelope.
Abu Dhabi is an archipelago due to the 200 islands stretching along the coastline.
There are three different regions.
The first one is the capital and its surrounds, the second one is the Easter Region – Al Ain and the third one is the Western Region – Al Dhafra.
It is a modern and vibrant capital which combines elements of tradition and modernity. It is characterized by its “geographically diverse scenery, rich culture and history”. “It maintains a more distinctly Arabian ambiance than glitzy Dubai”.
Abu Dhabi is a world-class destination with a diverse range of leisure, entertainment, and cultural attractions.
The Abu Dhabi Department of Culture and Tourism recorded 11.35 million international visitors in 2019 which is 10.5% increase from 2018. Also, according to the Department of Culture and Tourism of Abu Dhabi, the bigger number of tourists came from United Arab Emirates (1,165,071) India (403,457), China (210,089) and United Kingdom (188,720) (Figure).
The Emirate’s government investments, total of 5.8 billion AED, to the Emirate’s leisure, entertainment, and cultural assets, resulted in becoming more attractive to current and potential visitors, as well as to residents from all backgrounds.
Furthermore, many high-profile international events, international exhibitions, conference and live events are being organized in this multi-awarded tourist destination as: Special Olympics World Games, Abu Dhabi showdown Week along with Formula 1 Etihad Airways, Grand Prix, ADNEC etc.
In addition to that, Abu Dhabi’s win of prestigious international awards, the events taking place in the city and the investments placed in advertising and promotion, resulted in expanding even more the awareness of Abu Dhabi and made it a renowned destination for business and leisure. In fact, the awareness increased by 5% from 2018 scoring a 77% in 2019.
Moreover, according to Abu Dhabi’s Department of Culture and Tourism, Abu Dhabi had 73% hotel occupancy which is 1.6% higher than 2018. What is more, the total revenues from the hotel sector reached the 5.8 billion AED with 67% being from 5-star hotels, 17% from 4-star hotels and the rest 9% and 7% from apartments and 1-3-star hotels respectively (figure).
It is also important to mention that the visitors’ main purpose of visit was: Leisure (58%) Business (16%), VFR (11%), Transit (11%) and Other (4%).
Abu Dhabi’s experience records showed 84% overall satisfaction, and 89% willingness to visit again.
On top of that, in 2019 Abu Dhabi accommodated more than 250 business events which attracted hundreds of thousands of professionals from a wide variety of industries. At the same year, Abu Dhabi won the ‘Middle East’s Leading Business Potential’ at the World Travel Awards which is a solid indication that Abu Dhabi has the capabilities to welcome an array of world known corporate and non-corporate type of events, conferences and exhibitions.
Furthermore, the Emirate’s Culture and Tourism Department developed several customized campaigns promoting Abu Dhabi to key trade and industry partners, in order to enhance even more the destination awareness growth and acquire higher inbound tourism. Some of the key trade and industry partners are Russia, India, China, Australia etc.
The Emirate of Abu Dhabi’s ‘Economic Vision 2030’ aims at achieving economic growth using New Zealand and other countries ‘transformation economies’, as a benchmark to assess and evaluate the city’s economic performance.
The “Economic Vision 2030” focuses on recognizing key areas that the city needs to utilize, in order to achieve economic development.
In addition, according to the “Economic Vision 2030”, “Abu Dhabi has core commitment to build sustainable and diversified, high value-added economy by 2030.”
Similarly, the city’s 2030’s vision is not only focusing on developing a sustainable economy, but it is also concentrating on social and regional improvement for the Emirate’s population wellbeing.
Seven Pillars of Emirates of Abu Dhabi “Economic Vision 2030”
|1. Build an Open, Efficient, Effective and Globally Integrated Business Environment|
|2. Adopt a Disciplined Fiscal Policy that is Responsive to Economic Cycles|
|3. Establish a Resilient Monetary and Fiscal Markets Environment with Manageable Levels of Inflation|
|4. Drive Significant Improvement in the Efficiency of the Labour Market|
|5. Develop a Sufficient and Resilient Infrastructure Capable of Supporting the Anticipated Economic Growth|
|6. Develop a Highly Skilled, Highly Productive Workforce|
|7. Enable Financial Markets to Become the Key Financiers of Economic Sectors and Projects|
Further to this, the Abu Dhabi’s plans for the sustainable economic, social, and regional growth is forecasted to have a positive impact on the Emirate’s GDP. By 2030 the GDP is expected to reach 6.7% with an economy being significantly less dependent on Oil and more dependent on the private sector.
Moreover, the unemployment rate in the United Arab Emirates was 2.64% in 2019 which is higher than 2018 by 0.7%.
According to the Trading Economics, unemployment rate is predicted to increase to 3% by the end of 2020, then fall back to 2.80% in 2021 and drop even further in 2022 to 2.70%.
According to the Department of Municipalities and Transport (DMT) in its 2019 report, the Emirate of Abu Dhabi “recorded $15.8 billion (58 billion AED) worth of real estate transactions”.
The transactions were consisted of lands’, buildings’ and real estate units’ sales and mortgages.
Also, the report of DMT indicates that the increase in transactions is directly connected to the growing demand of investors seeking for an environment which has investment potential and provides safety and stability.
Furthermore, the specific report indicates that $18 billion worth of real estate transactions were in Al Reem Island making it the highest on the list.
Yas Island comes second on the list with $925.6 (3.4 billion AED) worth of real estate transactions followed by Al Reef, Al Shanka city with $626.2 million (2.3 billion AED) and $299.5 million (1.1 billion AED) respectively.
In addition, lower in the list comes Khalifa City with real estate transactions worth of $187 million (687 million AED) and Al Faqa with $82.5 million (303 million AED).
Furthermore, according to AmeInfo, the real estate market of Abu Dhabi has seen a decrease in sales prices and rents during the second quarter of 2020; the average sales prices for villas dropped by 1.4% and 1.3% for rent prices. Whereas in the second quarter of 2020, the rental prices dropped by 2.2% for apartments and 2% for villas.
However, the market is confident that the sales volumes will increase in the remaining months of the 2020 due to the incentives provided by developers (i.e.: extended post-handover payment plans, initial service charge waivers and discounted prices) and the proactive public policy response.
In March 2020, the Abu Dhabi government unveiled several measures to support businesses in the Emirate, including the exemption of Tawtheeq real estate registration fees for commercial and industrial entities for the rest of the year.
Apart from that, according to AmeInfo (2020), Abu Dhabi’s residential sector was supported by the “rise in loan to value ratio for first-time buyers introduced by the Central Bank of the UAE (CBUAE), coupled with the cancellation of the Abu Dhabi Municipality fee, equivalent to 2% of a property’s purchase price, in March 2020.”
The loan-to-value ratios decreased by 5%, meaning that the asking price for deposit to purchase a new home declined from 25% to 20% for first time expatriate buyers and from 15% to 10% for Emiratis. The experience of Covid-19 pandemic, the increase of unemployment rates and the lower demand for real estate, there have been significant learning outcomes for the real estate sector of Abu Dhabi.
Based on the figures provided by Bayut for the Q1 of 2020, Al Reem Island remains at the top of the list for being the most attractive area in Abu Dhabi to purchase apartments. In fact, this area experienced one of the lowest drops in average price per square feet. Also, Al Reem island is not only the most popular area for purchasing apartments, but it is also the most popular area for renting apartments.
Likewise, according to Bayut’s figures, Al Ghadeer might not be the area with the highest average price per square or the most popular area to purchase apartments, but it is the area with 8.6% in Return on Investment (ROI); the highest ROI of all Abu Dhabi’s areas. Also, it was the only area with a positive increase of 0.8% in the average price per square feet for the Q1 2020.
What is more, according to Bayut’s figures for the Q1 of 2020, the Return on Investment for Abu Dhabi’s areas were ranging between 6.5% the lowest and 8.6% the highest.
Moreover, based on Bayut’s real estate market analysis, the Al Reef is the favorite option for potential buyers seeking to purchase budget friendly villas situated at a convenient location near the Abu Dhabi’s airport and with great connectivity.
Actually, it is one of the areas that saw an increase in the price per square feet since the Q4 of 2019.
Last but not least, in Q1 2020, Mohammed Bin Zayed city proved to be the most desirable area for renting villas in Abu Dhabi followed by Khalifa City A and Al Reef. Mohammed Bin Zayed city is an affordable suburban area with spacious family villas and an array of amenities. It is noteworthy to say that most areas for renting villas and/or apartments, have seen a decrease in the Q1 of 2020 since the Q4 of 2019.
According to Chris Hobden, the Head of Strategic Consultancy Chestertons MENA, the growing numbers of the unemployment rates, the ongoing reductions in the workers’ salaries and the growing numbers of expatriates leaving the emirate are some of the most significant reasons affecting negatively the rental sector and by extent the prosperity of Abu Dhabi’s real estate market.
However, Chris Hobden concluded: “With Abu Dhabi’s economy forecast to rebound next year, we expect to see greater stability across residential prices and rents over 2021,”.
Although there have been fluctuations in the Emirate’s economy and in the real estate market over the last year, it is strongly believed that Abu Dhabi’s economy and real estate market will revive and prosper in the next couple of years.
This assumes that the government will achieve the completion of all areas covered in the 7 pillars mentioned in the Economic Vision 2030.