Differences in Real Estate Markets of Abu Dhabi and Dubai: Prices, Profitability, Obtaining a Residence Permit

11:50 pm  |  11.09.2023

Among investors, Dubai and Abu Dhabi are the two largest and most famous cities in the UAE. Foreigners make up 85% of Dubai’s population, due to its attraction to expats. Abu Dhabi is often invested in by Emirati and neighboring Arab citizens. However, the Abu Dhabi property market may also be of interest to foreign investors.

In this article, we will compare the key parameters of the markets of the two emirates: We will talk about residential real estate prices, average profitability, and return on investment. We will also compare residency programs in these two emirates.

Dubai Leads

As data from the Dubai Land Department shows, construction volumes in the emirate are growing every year and have not even decreased much due to the coronavirus pandemic. In Dubai, 15,441 units were completed in Q1 2022. In 2020, 30,019 units were built, and in 2021 – 29,180.

The Abu Dhabi Land Department is moving forward with the government’s urban development plan. The plan aims to develop urban planning, construction, and transportation.

In Abu Dhabi, construction volumes are not so high. Accordingly, the number of objects on the market is limited. Less than 200 units were completed in the first quarter of 2022, according to CBRE. By the end of the year, it is planned to complete construction of another 9,588 units. The emirate saw the construction of 4,182 new housing units in 2021.

READ: Top 3 Developing Areas in Dubai: Buying Property

Also, the government of Dubai has ambitious plans for the development of the emirate: by 2040, the following is planned:

  • The population will double.
  • The area of land occupied by hotels and the tourism sector will increase by 134%.
  • The area allocated for commercial activities will increase to 168 km².
  • The area of land for educational and medical institutions will increase by 25%.
  • The length of public beaches will increase by 400%.
  • Nature reserves and green areas will account for at least 60% of the emirate’s area.

The economy of Abu Dhabi is still more dependent on oil production than Dubai, so the main goal of the emirate’s authorities is to overcome economic dependence on oil and develop other sectors.

Real Estate Cost

Both Dubai and Abu Dhabi have urban areas where foreigners are allowed to buy property.

In May 2022, the increase in prices for apartments in Dubai was 9.6%, and the cost of villas increased by 19.8% compared to May 2021. This was reported by the consulting company CBR to CBRE E calculations.

The average cost of apartments in Dubai at the beginning of this year was $3,229 per square meter. The company’s analysts estimate the average cost of villas at $3,832 per square meter.

READ: Rental Features: Price Increase

The average apartment price in Abu Dhabi was US$2,969 per sqm. meter, according to the latest CBRE report. The average price of a villa is $2,409 per sq. m. meter. 

The increase in residential property prices in Abu Dhabi amounted to 1.5%. At the same time, the cost of apartments increased by 1.6%, and the prices of villas by 1.1%.

Rent Price

Dubai view

Rental prices in Dubai have increased by 19.1% over the past year. At the beginning of this year, the average price for an annual apartment rental was $22,729, while a villa averaged $67,976 for a year, according to CBRE calculations.

In Abu Dhabi, the average annual rent for a two-bedroom villa in 2021 was $30,492 (or $2,541 per month), while for three- and four-bedroom villas it was $36,481 and $57,172 respectively, reports ValuStrat.

The average annual rent for a studio apartment in the capital last year was $13,885 (or $1,157 per month), and for a one-bedroom apartment it was $21,780. For two- and three-bedroom apartments, residents paid $31,581 or $43,560, respectively.

READ: Renting Property in Dubai: Current Features

Residence Permit for Investments in Dubai and Abu Dhabi

In both emirates, foreigners can obtain a residence permit for the purchase of real estate – in the UAE this is called a resident visa. Dubai issues several types of residence permits for the purchase of real estate:

  • For the purchase of real estate starting from $205,000, a residence permit for 3 years is granted. The permit can be renewed indefinitely as long as the owner holds the property.
  • For a purchase of $545,000 or more – a residence permit for 5 years, is also called the “Golden Visa”.
  • In Abu Dhabi, there is only one residence permit program for investment. For the purchase of real estate in Abu Dhabi, a foreign investor can receive a “Golden Visa” for 5 years – for real estate valued at 545 thousand US dollars.
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