Knight Frank: Abu Dhabi Residential Prices Rise as Office Leasing Slows

ABU DHABI, UAE – Abu Dhabi's residential market continued to record strong price growth in the year to June 2026, while the emirate's office leasing market experienced its first signs of moderation since the current growth cycle began, according to Knight Frank's latest Abu Dhabi Residential and Office Market Review.

The report highlights continued demand for prime residential communities, particularly waterfront locations, alongside a gradual easing in office leasing activity despite historically high occupancy levels.

Residential Market Maintains Strong Growth

Apartment prices across Abu Dhabi's key residential districts continued to appreciate over the 12 months to June 2026.

Yas Island and Al Reem Island both recorded annual price growth of approximately 18%, while Al Saadiyat Island retained its position as Abu Dhabi's most expensive apartment market, with average transaction prices reaching approximately $11,735 (AED43,100) per sqm, representing year-on-year growth of around 21%.

Al Jubail Island led annual villa price growth at approximately 40%, while Al Reem Island recorded a 22% decline over the same period. Al Saadiyat Island remained Abu Dhabi's most premium villa market, with average transaction values reaching approximately $7,215 (AED26,500) per sqm, maintaining a significant premium over all other locations tracked by Knight Frank.

Faisal Durrani, Partner - Head of Research, MENA, said:

"Despite the geopolitical challenges posed by the ongoing regional conflict, Abu Dhabi's residential market continues to be supported by robust domestic demand, with prime waterfront communities such as Al Saadiyat and Yas Island leading the emirate's price growth. The breadth of price appreciation across both apartments and villas reflects this. Aiding this positive momentum of course is the emirate’s relative affordability, when compared to Dubai, with prices on average 10% lower than Dubai."

Nearly 37,000 Homes in the Development Pipeline

Knight Frank's analysis shows Abu Dhabi has approximately 36,900 residential units under construction between 2026 and 2030.

Apartments account for 66% of the pipeline, villas represent 33%, while serviced apartments make up the remaining 1%.

Approximately 70% of the apartment pipeline is scheduled for completion during 2026 and 2027, although Knight Frank notes that rising raw material prices and increasing shipping insurance premiums and costs could result in construction delays.

At community level, Yas Island leads the future supply pipeline with approximately 7,700 units, followed by Fahid Island with 3,550 units and Saadiyat Island with 3,250 units.

Shehzad Jamal, Partner – Real Estate Consultancy, MENA, added:

"With close to 37,000 homes in the pipeline through to 2030, supply is beginning to catch up with several years of sustained demand. Even so, the concentration of new stock in a handful of master-planned communities means well-located, ready properties in areas like Al Saadiyat and Yas Island are likely to retain their premium."

Office Leasing Activity Moderates

Abu Dhabi's office market recorded its first meaningful slowdown after several years of uninterrupted growth.

Office leasing transactions reached approximately 53,200 during full-year 2025, representing an 11% increase over approximately 49,300 transactions in 2024 and extending five consecutive years of annual growth.

However, leasing activity slowed during the first half of 2026.

Approximately 23,616 office leasing transactions were recorded during H1 2026, representing a decline of around 13% compared to 27,152 transactions during the same period in 2025.

The decline in leasing volumes was recorded across most districts, although Al Reem Island bucked the trend by posting an increase of more than 148%.

Musaffah and Al Danah remained Abu Dhabi's busiest office leasing districts by transaction volume, despite recording annual declines of 12% and 20%, respectively.

New Office Supply Set to Enter the Market

Knight Frank expects approximately 428,000 sqm of new office space to be delivered between 2026 and 2028.

The pipeline includes approximately 166,000 sqm scheduled for delivery in 2026, 165,000 sqm in 2027, and 98,000 sqm in 2028.

The consultancy notes that the incoming supply, combined with softer leasing demand, may place upward pressure on vacancy rates over the coming years.

James Hodgets, Partner - Occupier Strategy & Solutions, MEA, said:

"The outlook for Abu Dhabi’s office market is firmly positive. Occupancy stands at around 98% with rental rates up year-on-year, and with only around 166,000 sq. m of new supply due in 2026, Grade A space will remain scarce."