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Knight Frank report highlights growing investor appetite for Abu Dhabi & Ras Al Khaimah

Global HNWIs are willing to spend an average of $3.4 million on a home in the UAE capital, while they plan to allocate an average of $2.9 million towards purchasing a home in Ras Al Khaimah

According to Knight Frank’s second annual ‘2024 Destination Dubai’ report, high-net-worth-individuals (HNWI) globally have expressed a readiness to invest $408.3 million in residential real estate in Abu Dhabi and an additional $388.5 million in Ras Al Khaimah.

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Abu Dhabi

There is a modest appetite among HNWIs to purchase real estate in Abu Dhabi, with 23% expressing a desire to do so. The likelihood of purchasing property in the UAE capital increases as personal net worth rises, with 57% of those with over $15 million keen on buying residential property in Abu Dhabi. The success of the ‘Visit Abu Dhabi’ campaign is also highlighted, with 50% of GCC-based expat HNWI and 67% of global HNWI with a net worth of over $20 million indicating that they have been positively influenced to visit the city as a result of the global advertising efforts of the Department of Culture & Tourism, Abu Dhabi.

Shehzad Jamal, Partner – Strategy & Consultancy, MEA, explains, “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 AED 1,000 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.”

During 2023, Abu Dhabi registered a record 15,653 property deals (up 73.7% in 2022) totalling AED 87.1 billion in property deals, across all sectors, up on the AED 61 billion figure reached in 2022. Notably, the capital welcomed 1,098 non-resident investors in 2023, which represents a 175% increase on 2022.

Faisal Durrani, Partner – Head of Research, MENA, adds, “While 40% of HNWIs plan to purchase in Abu Dhabi purely for investment reasons, 8% are keen on a primary residence in the city, while a further 15% would consider buying a second home in the UAE capita.”

According to Knight Frank, Abu Dhabi Island (21%) attracts the most interest from HNWIs for property acquisitions, despite not being an investment zone for international buyers. Saadiyat Island (16%) is the second preferred location, known for hosting the F1 Grand Prix race in November, as well as housing the Louvre and Guggenheim Museum.

Jamal stated, “Villas on Saadiyat Island have performed well over the last 12 months, with prices rising by 10% over the last 12 months. However, prices have been hovering at a glass ceiling of around AED 1,500 per square foot for over three years, which may indeed be why buyers are so keen on this location. By contrast, villa prices on the Palm Jumeirah in Dubai currently stand at around the AED 7,000 per square foot mark.”

GCC-based expat HNWI’s top choices in Abu Dhabi are Saadiyat Island (32%) and Maryah Island (24%), while global HNWI prefers Saadiyat Island (33%).

Ras Al Khaimah

Away from the UAE capital, Knight Frank has found that the UAE’s northernmost emirate, Ras Al Khaimah (RAK) has been named as the fourth most likely property investment destination in the country for global HNWIs, behind Dubai (67%), Abu Dhabi (23%), Sharjah (5%).

According to Knight Frank, the planned arrival of the Wynn Resort, including its responsible gaming venue, is playing a significant role in transforming the fortunes of RAK.

Jamal mentions, “Ras Al Khaimah’s rugged natural landscape and adrenaline-fuelled attractions stand in stark contrast to Dubai’s hyper-urban, skyscraper-studded skyline. RAK has quietly carved out a niche for itself over the last 10 years, emerging as an alternative tourist magnet to Dubai. And the Wynn Resort is adding to the long list of growing attractions.”

Knight Frank has found that 46% of global HNWI view RAK more favourably as a result of its economic transformation and increasing level of tourism infrastructure. This figure climbs to 75% of those with a net worth of over $20 million.

30% of global HNWIs are willing to spend $500,000 on property in RAK, which is lower than the budget for property in Abu Dhabi at $3.4 million. However, as personal net worth increases, budgets for property in RAK rise significantly. For those with a net worth of more than $15 million, 37% are willing to spend $2-4.9 million on real estate in RAK, while 21% are prepared to spend over $5 million.

According to Knight Frank’s survey, East Asian HNWIs are most interested in investing in tourism and hospitality offerings in RAK, with 28% willing to spend between $2-4.9 million on property. GCC-based expats have the lowest budgets at $700,000, while global HNWI budgets range from $1.2 million for those with a net worth less than $5 million, to $3.9 million for UHNWIs with a net worth exceeding $20 million.

Durrani concludes, “What’s fascinating is that not only have we managed to unearth $388.5 million in private capital that is poised to move into the RAK property market, but that this figure is just 4.8% 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.”