The average cost of buying an apartment in Abu Dhabi's investment areas has risen 13.2 per cent since the start of the year as government employee relocations and an influx of teachers and nurses help the hard-hit property market to recover from the global financial downturn.
According to the property broker Cluttons, an influx of tenants caused by the decree requiring all Abu Dhabi Government employees to live in the emirate as well as an increase in the number of teachers and nurses flocking to the UAE is prompting investors back to the market and pushing up prices.
However, prices per square foot remain at roughly half their peak 2008-2009 levels.
A Cluttons index that measures hundreds of house sales across the emirate showed villa prices in the capital up by 22 per cent during the first half of the year.
Al Reef Villas registered price growth of 15.1 per cent in the six months to June, positioning it as the strongest performing villa submarket.
Golf Gardens and Hydra Village were the weakest performing villa submarkets, with no capital value increases recorded between January and June.
The Cluttons index findings come in marked contrast to the first half of the previous year when average apartment prices dropped 4.4 per cent and villa prices remained flat.
"This [government housing decree] requirement has certainly contributed to the rising tenant demand that we have been recording," said Steven Morgan, the head of Cluttons Middle East.
"We expect that the ruling, which comes into force today [September 1] for 20,000 public sector workers and their families, will continue to place downward pressure on vacancy levels."
The news confirms data released by Jones Lang LaSalle in July that found that average property prices in investment areas rose 5 per cent during the three months to June following an 8 per cent increase during the first quarter of 2013.
"It looks like Abu Dhabi house prices have turned a corner and prices are now starting to increase," said Craig Plumb, the head of research at Jones Lang LaSalle's Dubai office.
"The reasons for this include the housing decree as well as the influence of the Dubai market. However, prices remain at the sort of levels seen in 2010 and we do not expect them to reach anywhere near boom levels again for the next few years."