Abu Dhabi real estate market up 160%: how geopolitics is reshaping investment risks
In Q1 2026, Abu Dhabi’s real estate market recorded a sharp increase, updating key indicators in transaction volume and investment activity, according to Zawya citing data from the Abu Dhabi Real Estate Centre (ADREC). However, this positive performance was recorded before the outbreak of the war in the Middle East, which has already reshaped the region’s image. The UAE is increasingly being perceived as a less stable and less secure investment jurisdiction.
Abu Dhabi real estate market indicators
The number of real estate transactions in Abu Dhabi rose to 13,518 in Q1 2026. Total value reached AED 66 billion ($18 billion), up 160.7% compared to the same period in 2025, when 6,896 transactions worth AED 25.31 billion ($6.8 billion) were recorded.
The main contribution came from sales and purchases, which increased to 8,940 (+134%), with a total value of AED 50.97 billion (around $14 billion, +228.6%). The mortgage segment also grew by 50% to AED 15.03 billion ($4 billion).
The highest activity was recorded on the emirate’s islands. Hudayriyat led with AED 11.97 billion ($3.26 billion), followed by Reem at AED 9.45 billion ($2.57 billion), Saadiyat at AED 8.8 billion ($2.39 billion), and Yas at more than AED 5.5 billion ($1.50 billion).
New projects and foreign investment in Abu Dhabi real estate
The market continues to expand amid an imbalance between supply and demand. The repeat rental index rose 16% year-on-year as of March 2026. Sixteen new projects were launched over three months, 60% more than in Q1 2025. By December, the emirate’s housing stock is expected to increase by 10,272 units, reaching 325,248 properties. By 2027, the figure could rise to 333,564.
Investment from individual investors reached AED 8.27 billion ($2.2 billion), up 423%. Investors from 99 countries participated in transactions. Around 84% of total investment is concentrated in designated investment zones. Key investor countries include the United Kingdom, India, Russia, China, Jordan, France, and Egypt.
Middle East war: escalation and impact on the UAE
Current dynamics do not reflect rising risks linked to the escalation of conflict in the Middle East. Since late February, Abu Dhabi and other parts of the UAE have been regularly targeted by Iranian missile and drone attacks, with reports of casualties and injuries.
Following strikes and fires on April 3, the Habshan gas facility temporarily suspended operations. On April 5, Abu Dhabi authorities reported damage to the Borouge petrochemical plant after falling debris caused three fires. Incidents were also recorded near airports, hotels, commercial and financial centres. One missile reportedly landed near a cruise ship carrying more than 3,000 passengers.
In total, UAE air defence systems intercepted 520 ballistic missiles, 26 cruise missiles, and more than 2,200 drones.
How the conflict is affecting the UAE real estate market
UAE developer bonds have declined sharply, despite efforts to reassure investors that the war will not undermine the fundamentals of the Dubai and Abu Dhabi property markets. Goldman Sachs analysts reported that real estate transaction volumes in the UAE fell by 37% year-on-year and 49% month-on-month in the first 12 days of March.
At the same time, targeted discounts have emerged in the market, with some agents reporting price reductions of 12–15% on certain properties.
The sector is facing the risk of an abrupt end to a rapid credit and construction cycle. One of the country’s key advantages — its reputation as a safe haven for capital, family offices, expatriates, and international buyers — has been weakened. The conflict has reduced the stability premium that underpinned Abu Dhabi and Dubai investment narratives.
Strikes on airports, ports, and residential areas have undermined perceptions of security. The market, heavily dependent on foreign capital, has become sensitive not only to prices and interest rates, but also to geopolitical risk.
On March 18, the Central Bank of the UAE introduced measures to support liquidity and lending amid the shock and deteriorating investor sentiment. Banks were allowed to use up to 30% of reserve buffers to support liquidity, and certain rules for classifying non-performing loans were eased. Meanwhile, authorities and major businesses continue efforts to maintain investor confidence.
The market is not showing signs of a repeat of the 2009 crisis, but investors are demanding higher risk premiums and paying closer attention to liquidity, project timelines, and reliance on external buyers.
Alternative real estate investment destination: Georgia
Georgia and the UAE follow different investment risk models. Georgia lacks the scale of Dubai and Abu Dhabi’s financial and development ecosystem, but it is not involved in the Middle East conflict influencing perceptions of the Emirati market.
The economy continues to grow: in 2025, real GDP increased by 7.5%. The number of visits to Georgia reached 7.8 million (+5.9%), while tourist trips rose by 8.4% to 5.5 million, supporting demand for housing and resort developments.
Security profiles also differ. In the Global Terrorism Index 2025, Georgia scored zero. In the Global Peace Index, it ranked 109th out of 163 countries — not among the most peaceful nations, but not in the high-risk category typical of active conflict zones.
In the premium hospitality segment, demand in Georgia exceeds supply, with a shortage of high-quality projects supporting prices and occupancy rates. New luxury developments are gradually emerging in Batumi, reflecting expanding supply amid rising tourism and foreign buyer interest.
In the UAE, developers are defending an established luxury system from geopolitical repricing. In Georgia, the luxury real estate segment is still forming and relies heavily on limited high-quality supply.
Experts at International Investment note that the UAE and Georgia are not competing destinations but represent different investment models. The UAE real estate market is undergoing repricing due to geopolitical risks, while Georgia is emerging as an alternative destination for capital driven by tourism growth, strong economic performance, and safety. An additional factor is the shortage of high-quality luxury supply in certain niches, which continues to support upside potential.