Real Estate Market Overview

Transcription

1 Dubai Abu Dhabi Real Estate Market Overview Q2 2013

2 Market highlights Q The first half of 2013 witnessed modest signs of recovery evidenced by growth in the residential, retail and hospitality sectors and further stabilisation of the prime office market. Recovery is restricted to prime sectors of the market, with secondary subsectors continuing to decline. For most asset classes, in spite of market-wide over supply, there is also a shortage of high quality stock in terms of design and construction quality, property management and suitability to end-user requirements. This continues to drive product differentiation, with two-tier performance between high grade and low grade property. The future outlook remains positive with short-term demand growth fuelled by the government progressing major new projects (such as the Airport expansion, Etihad Rail, the Saadiyat Island museums and other major infrastructure, economic development and social development projects). Long-term market recovery growth is dependent on the government s ongoing economic development initiatives to diversify the economy and generate sustainable demand growth. Sustainable recovery is also dependent on the government implementing supply controls: a key trend during the first half of 2013 has been developers re-looking at schemes that had been placed on hold following the market downturn. During Q1 2013, total office stock increased by approximately 49,000 sq m GLA to reach 2.95 million sq m. New completions included Nation Towers and Al Bustan Complex. Significant further additions to office supply are expected during the second half of the year which will continue to place downward pressure on rents, particularly for the secondary market. Over the last quarter Grade B office rents declined, while Grade A office rents remained stable. Residential stock increased by almost 2,300 units over Q2. Additions to supply included AD One Tower at Capital Centre, Eastern Mangroves Promenade Apartments, Saadiyat Beach villas and apartments, Hydra Village (Phase 1), Al Wifak Tower and Tala Tower on Reem Island and the Rosewood Residences on Al Maryah Island. During Q2 prime residential rents remained unchanged after 8% growth during Q1, whereas secondary residential rents continued to fall. Demand growth driven by government spending and regulations to reduce commuting from Dubai has been partially offset by continued additions to supply. The residential sales market witnessed 5% price growth during Q (prime product in Investment Areas), following 8% growth in Q1, with a significant increase in transaction volumes in the first half of the year. Increased demand is driven by regional investors from countries affected by the Arab Spring seeing the UAE as a safe haven, together with longer term Abu Dhabi residents choosing to buy rather than rent, as the market begins to recover and job security returns. Retail stock has not significantly changed this quarter. An estimated 349,000 sq m of retail GLA could be delivered over the remainder of The retail supply pipeline is dominated by super regional malls including Yas Mall, Sowwah Central, Saadiyat Mall and Reem Mall. In the near-term there will also be significant additions to retail supply from the likes of The Collection at the Saadiyat St. Regis, the Galleria at Sowwah Square, Nation Towers and the Emporium at Central Market. The hotel sector continues to witness increases in occupancy and averagelength-of-stay due to government tourism initiatives. Two new hotels, the Rosewood and Dusit Thani, have added approximately 600 rooms, placing continued downward pressure on Average Daily Rates (ADRs). 2

3 Talking points Q Government spending initiatives Abu Dhabi s real estate sector remains heavily reliant on the Government investing revenue surpluses into infrastructure and economic development initiatives to generate growth in population, jobs, tourism and spending and therefore demand for real estate. The government continues to progress its previously announced spending plans during Q The Executive Council approved capital budgets for the cultural district on Saadiyat Island to include the Louvre Abu Dhabi Museum, Sheikh Zayed National Museum and Guggenheim Abu Dhabi Museum which are expected to be completed within the next five years. Construction has commenced for the Louvre and the tender process has been initiated for the Sheikh Zayed National Museum. In May, the Government issued a new federal law to create a financial free zone under the name Global Marketplace Abu Dhabi at Al Maryah Island, aimed at strengthening Abu Dhabi s position as a global financial hub. The Abu Dhabi Department of Economic Development signed cooperation agreements with ZonesCorp and KIZAD to facilitate and develop procedures for obtaining business and industry licences and improve services for investors in KIZAD and ZonesCorp. Social development and infrastructure Other government announcements relating to social development and infrastructure improvements included: In April 2013 the Sheikh Zayed Housing Programme approved names of beneficiaries of housing loans and grants worth AED 165 million. Also on housing, a national strategy has been announced by the Ministry of Public Works to meet the housing needs of Emirati citizens over the next 20 years, to solve current housing issues. In May 2013, Abu Dhabi s Executive Council announced the injection of more than AED 1.5 billion into major infrastructure projects across the Emirate, including the upgrading of infrastructure for Khalifa City A. Mubadala has also invited expressions of interest from contractors to build three bridges to improve connections to Al Maryah. Bidding closed for the first phase of the Abu Dhabi metro and light rail project and the award for the USD 7 billion project is due to be made by March Etihad railway has been granted clearance from the Abu Dhabi Environment Authority to lay tracks on a 49-kilometre stretch of railway that will pass through the Bainunah nature reserve. 3

4 Talking points Q New real estate projects announced during Q include: TDIC is to commence construction of the third phase of its Saadiyat Beach Villas during the third quarter of Tasweek is to launch a AED 500 million villa project in September, which will include 400 detached and semi detached villas as well as retail and community amenities in phase one, Abu Dhabi Housing Authority has awarded Aldar a contract to build 996 villas in the Al Falah area of Abu Dhabi. Eshraq plans to re-start work on the Gateway mixed-use scheme between the bridges and plans to start work on up to 500 apartments on Reem Island by the end of the year. Work has begun on the USD 1 billion Al Maryah Plaza project being developed by Farglory comprising residential, hotel, offices and serviced apartments. The project will be developed in three phases with the first tower expected to be completed by early Al Jaber Group signed a contract worth USD 480 million to build the Saadiyat Point or Hidd Al Saadiyat development on the tip of Saadaiyat Beach, a villa development on the northerly most tip of Saadiyat Island, owned by Saadiyat Investment and Development Company (SDIC). The project will include 462 luxury villas along with two community centres. Al Nahda Investment has named Pivot as the main contractor for the construction of a new USD 43.6 million residential tower located at Al Saraya development in Abu Dhabi. The building will comprise 175 apartments and duplexes. Key transactional activity during Q includes: TDIC has sold the first phase of its Saadiyat Beach Residences, comprising of 285 apartments, to the 50/50 Mubadala Pramerica Real Estate Investors joint venture. Arabtec signed a long-term agreement with Aldar Properties to move into the 59 storey Trust Tower, the office building in the developers downtown World Trade Centre project. The merger between Aldar and Sorouh became effective on the 27 th of June and the new Aldar shares have been listed and admitted to trading on the Abu Dhabi Securities Exchange. Policy development: On the policy side, following an announcement by the Urban Planning Council (UPC), the maintenance of new buildings across Abu Dhabi will soon be guided by mandatory sustainability requirements. UPC s Estidama Pearl Rating System requires all new buildings, villas and communities to achieve a one-pearl rating during building, design and construction and a two-pearl rating for government facilities. 4

5 Abu Dhabi prime rental clock Q Q Rental Growth Slowing Rents Falling Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Rental Growth Accelerating Rents Bottoming Out Retail Residential Office Hotel * *Hotel clock reflects the movement of RevPAR. Note: The property clock illustrates where Jones Lang LaSalle estimates each prime market is within its individual rental cycle as at end of the relevant quarter. Source: Jones Lang LaSalle 5

6 Abu Dhabi office market overview

7 GLA (In 000's) Office supply Q witnessed the handover of Nation Towers on the Corniche and the office component of the Al Bustan Complex on Airport Road. These completions added approximately 49,000 sq m of office GLA to the Abu Dhabi metropolitan area bringing the total office stock to approximately 2.95 million sq m. Several major projects are expected to be handed over before the year end, including Capital Tower and Finance HQ at Capital Centre and the Landmark Tower on the Corniche. An additional 174,000 sq m of office GLA could be delivered during 2013 bringing the total supply to 3.13 million sq m. However, it is likely that some of these projects will experience further delays due to a combination of construction overruns, contractual issues and delays in obtaining final development approvals. As much as 960,000 sqm of office GLA could enter the market by the end of 2015, increasing the total office stock to approximately 3.9 million sq m. This new supply is primarily within masterplanned areas. Abu Dhabi Office Stock ( ) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Source: Jones Lang LaSalle, Q Completed 474 2,877 2,952 3,126 Future Supply 315 3,

8 Major office developments ADIB HQ Al Bustan Complex Office Landmark Tower Nation Towers Capital Tower Capital Centre ADNOC HQ Completed Q Awaiting handover 8

9 Office demand Government-backed entities remain the principal source of demand. Many government organisations have committed to purpose built headquarters, such as the Finance House HQ at Capital Centre, with other major HQ buildings in the pipeline for banks and governmentbacked corporates such as ADIB HQ and ADNOC. In a number of speculative schemes significant space has been leased by government entities, while Arabtec (partly controlled by Aabar) committed to lease the whole of the World Trade Centre office scheme. Many companies already located in Abu Dhabi are now moving to newer buildings in a flight to quality. This includes Aecom and Aafaq moving to International Tower, and Abu Dhabi Tourism Authority, Ernst and Young and Wintershall moving to Nation Towers. This flight to quality will place further pressure on secondary office buildings that will struggle with the oversupply of new office buildings and will consequently face declining rentals. Approximately 64% of current occupied office space is occupied by local companies, mostly financial companies and government entities. The majority of private sector requirements remain for relatively small areas of between 300 sq m and 400 sq m. The lack of fitted out options in this size range is proving a real inhibitor to transactions. Office Floor Space Occupied by Nationality 30% 64% 6% Source: Jones Lang LaSalle International Regional Local 9

10 Average Rents (AED / sq m) Office rental performance Average net effective rents for Grade A Office space have remained stable for the last four quarters at AED 1,540 per sq m. Average Grade B office rents have declined slightly to AED 1,200 from AED 1,250 per sq m in Q Tenants are clearly in a strong negotiating position, which is likely to strengthen even further as supply increases over the remainder of This dynamic is expected to drive secondary rents down even further, while Grade A rents appear to have stabilised. Average Grade A Office Rents* (Q Q2 2013) Office vacancy rates increased slightly from 37% in Q to 38%, with the handover of Nation Towers and Al Bustan Complex. Vacancies are expected to increase further over the next 12 months as handovers continue. A large portion of vacant space is now in recently completed buildings, which will attract tenants looking to upgrade. This will leave higher vacancies in older, poorly managed buildings. Rents and vacancy trends are expected to continue to diverge based on quality, increasing the performance gap between prime and secondary buildings in ,000 3,800 3,500 3,000 2,500 2,000 3,190 3,000 2,800 2,800 2,500 2,200 2,200 2,000 1,900 1,850 1,750 1,700 1,700 1,600 1,540 1,540 1,540 1,540 1,500 1,000 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q * Average Grade A Effective rents Source: Jones Lang LaSalle, Q

11 Office market summary Indicator Level Comment / Outlook Current Office Stock 2.95 million sq m The majority of existing office space is Grade B and Grade C. Future Supply (by end 2015) 960,000 sq m The proportion of Grade A office space is increasing significantly as new stock is delivered to the market. Current Vacancy Rate 38% Vacancy rate increased by 1% this quarter and is expected to rise further as new supply is expected to exceed demand, notwithstanding more price driven absorption. Average Grade A Rent Average Grade B Rent AED 1,540 per sq m per annum AED 1,200 per sq m per annum Grade A rents have remained stable for the last four quarters and are expected to remain stable. Grade B rents decreased by 4% from last quarter and are expected to decrease further. 11

12 Abu Dhabi residential market overview

13 Number of Units (In 000's ) Residential supply Approximately 2,300 residential units were delivered in Abu Dhabi during Q2. The majority of these units were in AD One Tower at Capital Centre, Eastern Mangroves Promenade Apartments on Salam Street, Saadiyat Beach villas and apartments on Saadiyat Island, Rosewood Residences on Al Maryah Island, Hydra Village (phase 1) on Abu Dhabi Dubai highway and Al Wifak and Tala Towers on Reem Island. These deliveries bring the total residential stock to approximately 211,000 units at the end of Q An additional 10,000 units are scheduled to be delivered to the market during These include additional apartments in Eastern Mangroves Promenade on Salam Street, Rawdhat and Danet on Airport Road, Al Bustan Complex on 29 th Street, the Khor Al Raha apartments by ADNIC at Al Raha Beach, the Gate Towers and the Mangrove Place on Reem Island. As with other projects, completions may be subject to delay. There are also a number of units scheduled for handover during 2013 within National Housing communities including Al Falah and Watani developments. Although a large proportion of the residential pipeline announced prior to 2008 has since been delayed, the aggregate supply could still reach 254,000 units by the end of The majority of this additional supply is located within masterplanned areas such as Reem Island, Saadiyat Island, Danet, Saraya and Rawdhat. Abu Dhabi Residential Stock ( ) Completed Future Supply Source: Jones Lang LaSalle, Q Residential Units by the end of % 42% 32% Note: Including Units scheduled for completed in 2013 Source: Jones Lang LaSalle, 2013 Villa Apartment 13

14 Major residential developments 6 Saadiyat Beach Residences Hydra Village (phase 1) Rosewood Residences The Mangrove Place Reem Island Tala Tower Reem Island The Gate Towers Reem Island Al Bustan Complex Eastern Mangroves Promenade Al Wifak Tower Reem Island AD One Tower Capital Centre 3 Completed Q Awaiting handover 14

15 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Prime Sales ('000 AED / sq m) Residential performance sales price Average residential asking prices within Investment Areas have increased during Q to reach approximately AED 11,500 per sq m. This represents an increase of 5% from AED 11,000 sq m in Q Average asking prices for apartments are approximately AED 13,500 per sq m while the average prices for villas are approximately AED 10,000 per sq m. These increases are restricted to prime buildings within Investment Areas and do not represent a market-wide recovery. The price growth is also accentuated by the limited stock available for purchase. The growth in sales prices and transaction volumes over the past two quarters can be attributed to various factors including: - Both Abu Dhabi and Dubai are benefiting from the UAE s status as a safe haven following political unrest in the wider region; - As job security returns due to government spending initiatives, and as the market starts to recover, some longer-term Abu Dhabi residents are choosing to purchase residential units for own occupation rather than continuing renting; - Investors looking to capture price growth from a potential future upswing. Sales Price* of Residential Units (Q Q2 2013) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,222 15,070 13,455 11,840 11,840 11,840 11,840 11,000 11,000 10,900 10,500 10,200 10,200 11,000 11,500 *Asking prices Source: Jones Lang LaSalle, Q Note: Sales prices pertain to Investment Areas only. 15

16 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Average Rent ( 000 AED per annum) Residential performance - rents Average asking rents for prime two bedroom apartments remained unchanged at AED 130,000 per annum in Q2, due to strong demand and a relatively restricted supply of high quality units that are well suited to end-user requirements. Demand has remained strong due to a variety of factors including: - Government spending initiatives leading to job growth such as the airport expansion - Government entities requiring Dubai-based employees to relocate to Abu Dhabi in response to the new regulations - Companies expanding their presence in Abu Dhabi for instance Drake & Scull has moved up to a thousand of its employees to Abu Dhabi to service new projects While high quality developments have performed well, secondary stock has been affected by major increases to supply, with rents continuing to decline as people move to newer developments. Divergence of the residential market performance is expected to continue in 2013 with prime developments performing the best. Residential projects that provide amenities, facilities, support retail, sufficient parking and have established a critical mass have achieved a premium over other developments. - The rental differential between Abu Dhabi and Dubai reducing, making Abu Dhabi more cost competitive, combined with continual improvements to Abu Dhabi s urban offering Average Two-bedroom Rents* (2008 Q2 2013) *Asking rents Source: Jones Lang LaSalle, Q

17 Residential market summary Indicator Level Comment / Outlook Current Residential Stock Future Supply (by end 2015) 211,000 units 43,000 units Good quality residential stock is set to increase further, with the delivery of additional units in Saadiyat Beach Residences and Eastern Mangroves Promenade. Concentrated within master developments such as Rawdhat, Danet, Reem Island and Saadiyat Island in addition to sizeable National housing developments. Average Prime 2 Bed Apartment Rent AED 130,000 per annum Rents for prime apartments remained stable this quarter, while rents for poorer quality properties continued to fall. Average 2 Bed Apartment Sale Price Average 3 Bed Villa Rent AED 13,500 per sq m AED 170,000 per annum Sale prices for 2 bedroom apartments continued to increase in selective projects, particularly in investment areas, but not across the whole market. Rents for 3 bed villas remained stable this quarter and are expected to remain relatively stable in most locations 17

18 Abu Dhabi retail market overview

19 GLA in '000s sq m Retail supply As of Q2 2013, total retail space across the Abu Dhabi metropolitan area stands at approximately 1.78 million sq m. The retail stock remained unchanged with no major deliveries in Q However, over 349,000 sq m of retail GLA is expected to enter the market by the end of This includes a number of major new malls expected to be delivered later in 2013 including Deerfields Town Square in Bahia, Emporium Mall at Central Market and Capital Mall in Building Materials City. In addition to these new malls, a number of other projects are expected to enter the market. These include units at Nation Towers, The Collection at the St. Regis and The Galleria on Sowwah Square. Aldar Properties has also announced that Yas Mall on Yas Island is expected to open in March 2014 with 78% of the construction work already complete. When open, Yas Mall will be the largest shopping mall in Abu Dhabi and the second largest shopping mall in the UAE after Dubai Mall. Some shops opened at The Collection at the St. Regis this quarter, including Spinneys and Shakespeare Café, along with some small groceries and restaurants that opened within the Al Reef development. By the end of 2015, total retail space across Abu Dhabi is expected to reach around 2.6 million sq m of GLA. Abu Dhabi Retail Stock ( ) Completed Future Supply ,422 2,131 1,770 1, Source: Jones Lang LaSalle, Q

20 Major retail developments The Galleria Sowwah Square The Collection at the St.Regis Saadiyat Island (Partly handed over) Deerfields Townsquare Emporium Mall Central Market Nation Towers Capital Mall Awaiting handover 20

21 Composition of retail supply No major mall completions took place in Q2 2013, only a few shops opened at The Collection at the St. Regis on Saadiyat Island and in Al Reef retail component. By the end of 2013 non-mall space and Super Regional and Regional Malls are expected to dominate the Abu Dhabi retail market, accounting for approximately 44% each of the total supply. Upcoming supply will increase the proportion of mall based retail space in Abu Dhabi over the next few years as multiple community and regional malls are delivered. The retail landscape is expected to change in Abu Dhabi over the next five years, both in terms of supply and quality. Retail Supply by the end of % 44% Super Regional and Regional Malls Community Malls Convenience retail and F&B offerings within mixed use schemes have helped attract demand. The retail market in Abu Dhabi is still developing in terms of the amount of quality space and the diversity of its retail offering. Pending delivery of upcoming regional malls, Marina Mall is currently the main destination mall in Abu Dhabi There remains substantial demand for high quality Super Regional and Regional retail space. This will be addressed by the significant level of supply of Super Regional malls in the pipeline including Yas Mall, Saadiyat Mall, Sowwah Central and Reem Mall. Type of Centre Range of GLA (sq m) Convenience Less than 3,000 Neighbourhood 3,000-10,000 Community 10,000-30,000 Regional 30,000-90,000 Super Regional 90, ,000 4% 8% Neighbourhood & Convenience Malls Non Malls Source: Urban Land Institute (ULI) Source: Jones Lang LaSalle,

22 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Retail Rent (AED/sq m/annum) Retail performance A continuous growth in retail spending (derived from both the resident population and higher tourist levels), is supporting demand for retail space in Abu Dhabi. Due to the increase in retail spending some retail centres have increased their asking rents for selected units during Q such as Marina Mall. This resulted in an increase in the average rents of retail centres which have increased by approximately 5% to AED 2,887 / sq m per annum from AED 2,750 / sq m per annum in Q However, this is due to an increase in rents for premium space in prime centres and does not represent a market wide increase in rents. Vacancies remain minimal within established centres on Abu Dhabi Island, such as Marina Mall and Abu Dhabi Mall. Vacancies are much higher in newly completed centres, with some opening with significant levels of vacant space. While there are a number of large malls in the supply pipeline, the majority are expected to materialise between late 2014 and They are not therefore expected to have a significant impact on the level of rents in the short term, however could cause rents to soften in the medium term as developers compete to secure the best operators. Retail Rental Performance* (Q Q2 2013) 3,500 Rental Rates: Regional and Super Regional Malls - Abu Dhabi F&B (AED / sq m) Casual Dining: 2,000 to 3,000 Food Court: 2,500 to 4,500 Line Shops (AED / sq m) 1,500-4,000 Anchor (AED / sq m) 500-1,500 Kiosk (AED/per annum) 60,000 to 180,000 3,000 2,500 Source: Jones Lang LaSalle, Q *Average retail rents for line shops in regional and super regional malls on Abu Dhabi Island Source: Jones Lang LaSalle, Q

23 Retail sector summary Indicator Level Comment / Outlook Current Retail Space (GLA) 1.78 million sq m The proportion of high quality retail is increasing as a percentage of total GLA. Additional Supply (by end 2015) 844,000 sq m There are a significant number of retail projects expected to open by the end of 2015, although some delays are expected. Current Vacancy Level (Regional and Super Regional malls on Abu Dhabi Island) 2% Malls on Abu Dhabi Island have very high occupancy rates which are expected to decrease in line with new supply. Average Rents (Regional and Super Regional malls on Abu Dhabi Island) AED 2,887 per sq m per annum Over the long term, rents may decrease due to increased competition from new high quality malls. However, rents are expected to remain stable in the short to medium term. Average Rents (outside Abu Dhabi Island) AED 1,900 per sq m per annum Average rents have remained stable this quarter outside Abu Dhabi. However, asking retail rents have increased slightly on Yas Island. 23

24 Abu Dhabi hotel market overview

25 Number of Rooms Hotel supply The second quarter of 2013 witnessed the opening of two internationally branded hotels providing almost 600 additional rooms comprising the Dusit Thani on Muroor Street and the Rosewood at Sowwah Square. These additions continue the significant levels of new supply seen in recent years. About 1,400 rooms have been added to the Abu Dhabi market in the first half of There remain a number of major projects scheduled to open later in These include St. Regis Nation Towers, Novotel and Adagio Al Bustan. About 4,500 additional rooms are expected to enter the market by the end of 2015, which reflects a reduction in the previous pipeline planned for the city. Many of the planned projects have experienced delays and the recent over supply has resulted in no major new hotel projects being announced recently. Overall supply is expected to reach about 21,500 rooms by the end of 2015 representing a CAGR of 8%. Expected Future Stock ( ) 25,000 Current Supply Future Additions 1,650 20,000 1,800 1,050 15,000 10,000 19,919 15,700 17,069 18,119 5, F 2014F 2015F Source: Jones Lang LaSalle 25

26 Major hotel developments Rosewood Al Maryah Island Dusit Thani Novotel and Adagio Al Bustan Complex Capital Centre Arjaan by Rotana St. Regis - Nation Towers Completed Q Awaiting handover 26

27 ADR (AED) Trading performance Abu Dhabi received more than 1 million hotel guests in the first five months of 2013 building upon the growth in arrivals seen in 2012 when the city received 2.3 million guests. However, the impact of the increase in visitor arrivals on the hotel trading performance has been offset by the significant increase in supply experienced between 2009 and While occupancy levels have witnessed an 8% increase during the first five months of 2013; average daily rates have continued to remain under pressure, declining by 2%. Within the last four years, hotels have resorted to heavy discounting in order to push up occupancy levels across the city. Due to the positive growth in occupancies, RevPAR levels in the YT May 2013 have experienced an increase of nearly 11% compared to the same period last year. While tourism in Abu Dhabi continues to be driven by the corporate and MICE (Meetings, Incentives, Conferencing, Exhibitions) segments, several efforts are being made to diversify the tourism demand base by focussing on the leisure segment. Hotel Performance YT May 1,000 68% 70% 62% % ADR (AED) Occupancy Source: STR Global 80% 60% 40% 20% 0% 27

28 Hotel sector summary Indicator Level Comment / Outlook Current Hotel Supply 17,100 rooms Two internationally branded hotels opened in Q2 2013, including the Rosewood at Al Maryah Island and Dusit Thani on Muroor Road. Future Supply (by end 2015) 4,500 rooms Notable openings scheduled for 2013 include St. Regis Nation Towers and Novotel & Adagio Al Bustan amongst others. Supply pipeline for the city in the short term has experienced a reduction with a number of projects having been delayed or put on hold indefinitely YTD Occupancy 70% 2013 YTD ADR AED 592 Occupancy levels have witnessed a notable increase during YTD 2013 period, owing to a much improved performance in the months of February - May. ADR levels continued to contract, declining by 2% in YT May 2013 as compared to the same period last year. However, the negative growth rate was reduced and with the increase in occupancy; RevPAR levels improved by 11% in January May 2013 over the same period last year. 28

29 Definitions and methodology Residential: Residential buildings are considered handed over once they are ready for tenant occupation. This data excludes labour accommodation. Residential performance data is based on asking prices from a basket of selected developments. Retail: Retail space is considered handed over once it is open and operational. Classification of Retail Centres is based upon the ULI definition as published in Retail Development, 4th Edition published by ULI. Prime Rent Shopping Centre represents the top open market net rent that could be expected for a notional standard line unit shop situated in a specified shopping centre - preferred in a inner city location -, as at the survey date (normally at the end of each quarter period). Office: Office buildings are considered handed over once they are ready for tenant fit-outs. Average Grade A Office rents represent the average effective rents taken from a basket of selected buildings defined as superior in the current market. The Average Rent reflects values captured in occupational leases that is standard for the local market. It is an effective rent that accounts for rent free periods only (and not the financial impact of any other tenant incentive/s) and excludes service charges and local taxes. Hotels: Hotels are considered handed over once they are open and operational. Hotel room supply is based on existing supply figures provided by ADTCA as well as future hotel development data tracked by Jones Lang LaSalle Hotels. Room supply includes all graded supply and excludes serviced apartments. Hotel performance data is based on monthly survey conducted by STR Global on a sample of international standard midscale upscale hotels. 29

30 Contacts: David Dudley Head of Abu Dhabi Office Peter Stebbings Head of Valuation Advisory Abu Dhabi Gabriel Matar Director, MEA Hotels & Hospitality Group Andrew Williamson Head of Retail MENA Barry McGettigan Senior Agent, Agency Abu Dhabi Craig Plumb Head of Research MENA Dunia Joulani Senior Analyst Abu youtube.com/joneslanglasalle linkedin.com/company/jones-lang-lasalle joneslanglasalleblog.com/emearesearch COPYRIGHT JONES LANG LASALLE IP, INC This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.