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Global HNWIs ready to spend $408.3m on residential real estate in Abu Dhabi, reveals report

Future Outlook
  • With continued interest from wealthy investors, Abu Dhabi's residential real estate market is set for robust growth and increased international prominence.

Abu Dhabi is giving Dubai a run for its money as it emerges as the new playground for high-net-worth individuals (HNWIs), reveals the latest report from real estate consultancy Knight Frank

According to the consultancy’s second annual 2024 Destination Dubai report, HNWIs around the world are prepared to spend $408.3m on residential real estate in Abu Dhabi and a further $388.5m in Ras Al Khaimah (RAK).

Knight Frank surveyed 317 HNWIs – 217 around the world and 100 GCC-based HNWI expats – to explore their appetite and aspirations concerning investing in real estate in Dubai, Abu Dhabi and Ras Al Khaimah.

These HNWIs have a net worth of $ 5.4bn and own 1,149 homes around the world between them.

In the report, Knight Frank said that while Dubai was still at the top of the list (67 per cent), there was a shot in the arm for Abu Dhabi too: 23 per cent of HNWIs worldwide would now like to invest in property in the UAE capital. For those whose wealth is in seven decimal figures (over $15m), the figure jumps to 57 per cent.

Factors driving Abu Dhabi’s growing popularity

A steady market, exclusive yacht clubs and vibrant beaches are some of the reasons why Abu Dhabi is fast becoming a sought-after turf among these discerning industrialists, bankers and aristocrats.

Stability is the big selling point in Abu Dhabi’s residential market. The capital’s property prices have held steady, with no wild swings for the past four years.

Shehzad Jamal, partner – Strategy & Consultancy, MEA, Knight Frank, shared: “Residential values in Abu Dhabi have remained relatively stable for the last four years, which has played a significant role in encouraging domestic buyers to transition from renting to owning. And with homes in Abu Dhabi trading for around Dhs1,000 per square foot, they remain about one-third cheaper than Dubai, which is further adding to the appeal of home ownership in the city amongst domestic buyers. International buyers too have become increasingly active, contributing to the rising deal volumes now being recorded in the emirate.”

This creates stability, combined with very successful tourism campaigns, which are starting to attract international attention. For example, 50 per cent of expat HNWIs based in the GCC and 67 per cent of global HNWIs worth more than $20m were inspired to come to Abu Dhabi by its tourism campaigns.

The report highlights a watershed moment for Abu Dhabi. While traditionally trailing Dubai in luxury real estate, the capital is now attracting investors seeking not just returns, but also a primary residence or a second home.

A recent record-breaking sale of a Nobu-branded penthouse further underscores this shift. The property not only fetched the highest price ever for an Abu Dhabi property but also signifies the city’s emergence as a magnet for global capital.

Additionally, international buyer activity has skyrocketed, with sales to non-resident investors jumping from 3 per cent in 2021 to 28 per cent in 2023.

During 2023, Abu Dhabi registered a record 15,653 property deals (up 73.7 per cent in 2022) totalling Dhs87.1bn in property deals, across all sectors, up on the Dhs61bn figure reached in 2022. Notably, the capital welcomed 1,098 non-resident investors in 2023, which represents a 175 per cent increase over 2022.

Abu Dhabi Island reigns supreme as the most desired location for property acquisition among HNWIs (21 per cent), despite not being designated as an investment zone for international buyers.

Saadiyat Island, home to the F1 Grand Prix, Louvre Abu Dhabi, and Guggenheim Abu Dhabi, follows closely as the second-favourite target neighbourhood.

With villa prices on Saadiyat Island hovering around $1,500 per square foot – a far cry from Dubai’s Palm Jumeirah’s $7,000 per square foot mark – it’s no wonder this location is a hot commodity.

The rise of RAK

The report also unveiled an interesting trend: the emergence of Ras Al Khaimah as a serious contender in the UAE’s luxury real estate market.

With nearly $388.5m in private capital poised to enter RAK, the emirate is rapidly closing the gap with Abu Dhabi and establishing itself as a global destination for both tourism and property investment.

Ras Al Khaimah, known for its rugged landscapes and adventurous activities, has captured the attention of 2 per cent of global HNWIs as a potential investment destination.

The planned arrival of the Wynn Resort, including its integrated casino, is seen as a game-changer for RAK, transforming its fortunes and attracting a new breed of tourists.

Interestingly, 46 per cent of global HNWIs view RAK more favourably due to its economic transformation and growing tourism infrastructure.

While investment budgets for RAK properties are lower than Abu Dhabi ($3.4m), they cater to a broader range of investors.  Additionally, 37 per cent of HNWIs exceeding $15m in net worth are willing to invest $2-4.9m in RAK real estate, and a further 21 per cent are prepared to spend over $5m.

East Asian HNWIs appear most enthusiastic, with 28 per cent willing to commit $2-4.9m for property in RAK – the highest across all regions.

Faisal Durrani, partner – head of research for Knight Frank MENA, said:  “What’s fascinating is that not only have we managed to unearth $388.5m in private capital that is poised to move into the RAK property market, but that this figure is just 4.8 per cent lower than we’ve uncovered for Abu Dhabi, highlighting how quickly RAK’s appeal has grown globally both as a tourist destination and a property investment location.”

Source
https://gulfbusiness.com/

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