Population and Housing Demand in Abu Dhabi
Abu Dhabi is booming with a population expected to reach 5.4 million by 2040. This rapid growth is putting immense pressure on the property market. The mismatch between luxury housing supply and the actual needs of the population is getting more apparent.
This growth is driven by various economic initiatives including the influx of financial firms to Abu Dhabi Global Market (ADGM) and large scale infrastructure developments. However many new residents fall into middle or lower income brackets where options are limited.
Abu Dhabi housing experts are sounding the alarm on this growing gap. Projects launched since 2020 have been priced above Dh10,000 per square metre. Leaving a big chunk of the population relying on older, more affordable housing stock or unregulated shared accommodation.
Affordability in the UAE Capital
The Abu Dhabi Property market is at a crossroads. While luxury developments cater to the top of the pyramid, they don’t address the need for affordable housing. Most new real estate projects are targeting high-end buyers, leaving lower income groups with fewer options.
Ben Crompton, Managing Partner at Crompton Partners notes that “upper mid-market to super-luxury” is dominating recent launches. He highlights the lack of delivery at the lower price point and warns that the scarcity will soon push prices up especially with population growth accelerating.
Adding to the challenge is the economics of housing. High land values and increasing construction costs make affordable housing less attractive for developers. As Crompton says “most of the profit is in more expensive projects”.
This gap between supply and demand is already being felt in the rental market. In 2024 alone, only 3,000 new housing units were delivered despite a population growth of approximately 300,000. That’s about 100 new residents per available unit – an unsustainable ratio that will put more pressure on rents and prices.
Legal Partitions: A Solution?
One possible solution to Abu Dhabi’s affordability crisis is to formalise legal partitions in existing buildings. Crompton says legalising and regulating shared housing could be a better alternative to unregulated informal arrangements.
Currently shared housing is in a legal grey area. While some residents split villas or apartments to reduce costs, these setups often breach the rules. With Dubai’s recent crackdown on illegal partitions as a warning, Abu Dhabi must decide to embrace or ban this trend.
Legal partitions have many benefits:
- Safety and compliance: Regulations ensure units meet minimum living standards.
- Efficient use of space: Older stock can be repurposed to suit multiple households.
- Affordability: Low income residents can access housing without resorting to unsafe or illegal options.
With proper oversight this can turn existing underutilised buildings into housing assets, alleviating the shortage without new construction.
Abu Dhabi Real Estate Market Implications
If done correctly legal partitions can change the Abu Dhabi Property market. By addressing the lower end of the market authorities can ease rent inflation, support social inclusivity and promote more sustainable urban development.
Renovation over new builds is gaining traction. Crompton says repurposing older stock for legal shared housing can deliver faster and more cost effective relief than new developments. This will also align with environmental goals by reducing the need for new construction.
Plus allowing legal partitions will stabilise the market. As more affordable units come on the market pressure on illegal setups will reduce and developers can focus on long term planning instead of rapid speculative launches.
But not all population growth is in the affordable segment. The move of hedge funds and asset managers to ADGM means there will still be demand for luxury real estate. So a dual approach – servicing both ends of the market – is required.
Suburban expansion and satellite communities like Reem Island and the Northern Islands may be the areas for affordable housing projects. These areas have more land for horizontal development and can have legally partitioned units that meet safety and zoning requirements.
Conclusion
Abu Dhabi’s growing population has exposed the affordability gap. While new luxury projects dominate the skyline many residents are turning to older properties and informal shared living to meet their needs.
Legal partitions if done right can be the solution to bridge the gap. They can repurpose existing spaces, reduce financial burdens and housing standards.
In the end, it will all come down to bold policy making, collaborative planning and inclusivity. As the Abu Dhabi Property regulations change they must serve not just the elite but everyone who lives in the capital.
