Global HNWIs to spend ‘$2.8 million on average’ on Abu Dhabi property

Global high-net-worth individuals (HNWIs) plan to spend $2.8 million on average on Abu Dhabi property amid strong economic growth and world-class infrastructure, a survey has found.

About 58 per cent of HNWIs are prepared to allocate more than $1 million for a property in Abu Dhabi, with the average allocated budget being $2.8 million, according to the report by global property consultancy Knight Frank.

East Asian buyers have a higher spending propensity, with many prepared to spend more than $5 million to buy Abu Dhabi property, the consultancy said.

“Abu Dhabi as a destination has been slowly rising in global prominence, particularly as large-scale cultural and entertainment projects such as the Louvre, Qasr Al Wattan, Ferrari World, Sea World and the Warner Bros theme park start to capture the attention of global travellers,” said Faisal Durrani, head of Middle East Research at Knight Frank.

“And it’s paying off, with 45 per cent of global HNWI indicating that the emirate’s development plans are positively influencing their views of the emirate as an investment destination.”

The Knight Frank report polled 183 HNWIs globally, each with a net worth of more than $3 million, excluding their main home or primary residence.

Combined, the group owns 851 homes globally and have a combined net worth of $3.2 billion.

“Those with a net worth in excess of $10 million view Abu Dhabi even more favourably, with 57 per cent of this cohort keen on investing in the city. Among East Asian HNWIs, the figure rises further to 70 per cent,” Mr Durrani said.

The UAE property market has continued to recover from the coronavirus-induced slowdown on the back of government initiatives, higher oil prices and other measures to support the economy.

Abu Dhabi recorded 5,472 real estate transactions worth Dh27.9 billion ($7.59 billion) in the first quarter of 2023, according to the latest data from the Department of Municipalities and Transport.

The value of the deals more than doubled during the three-month period to the end of March while the volume of transactions, which include property sales and mortgages, rose by 66 per cent.

The value of property sales more than tripled to Dh16.2 billion while mortgage deals were up 70 per cent at Dh11.7 billion, the data shows.

About 74 per cent of respondents are interested in making a property investment in Abu Dhabi, with the residential sector emerging as the most popular, closely followed by branded residences and the hospitality sector, according to Knight Frank.

At 19 per cent, Abu Dhabi Island is the most common choice for a property purchase in Abu Dhabi, followed by Al Reem Island at 13 per cent.

When asked where in Abu Dhabi they would most probably make their property purchase, 26 per cent of East Asian respondents named Abu Dhabi Island as their most preferred location in the emirate, with their second choice being Saadiyat Island at 18 per cent.

“One of the most fascinating findings has been the influence Dubai has on the perceptions of Abu Dhabi in the minds of HNWI around the world,” Mr Durrani said.

“The appetite of frequent visitors to Dubai to purchase real estate in Abu Dhabi stands at 73 per cent. Fifty per cent of them are willing to allocate over $2 million for a property in Abu Dhabi, with the average allocated budget being $3.7 million.”

Abu Dhabi is the second most popular UAE real estate investment destination, after Dubai, for the world's super rich, the survey results show.

The emirate's economy rebounded strongly from the pandemic.

Its gross domestic product exceeded Dh1.1 trillion last year, an estimated 9.3 per cent growth over 2021, with the non-oil sector accounting for half of it, said Ahmed Al Zaabi, chairman of the Abu Dhabi Department of Economic Development.