2018 Abu Dhabi Real Estate Market

Transcription

1 st QUARTER REVIEW 2018 Abu Dhabi Real Estate Market

2 Real Estate Performance VPI Market Intelligence. Simplified. ValuStrat Price Index ValuStrat Price Index Residential -7.5% Key Indicators Apartment Asking Price Villa Asking Price Apartment Asking Rent Villa Asking Rent 0.8% -2.3% -1.3% -7.4% Office Asking Price Office Asking Rent Hotel ADR Hotel Occupancy -10.2% 0.3% -14.6% Jan-Feb YoY Jan-Feb YoY Sources: ValuStrat, REIDIN, DCTAD 1 Abu Dhabi Real Estate Market 1st Quarter 2018 Review 2.6%

3 VPI ValuStrat Price Index Residential The ValuStrat Price Index (VPI) is based on a representative sample of key residential locations in Abu Dhabi City. The VPI Residential, with a 100-point base set as at Q1 2016, now stands at 85.5 points. Abu Dhabi s residential capital values are 14.5% lower than the same period in 2016, 7.5% down on last year and 1.8% less than the previous quarter. The weighted average residential value this quarter was AED 11,614 per sq m (AED 1,079 per sq ft), apartments stood at AED 12,884 per sq m (AED 1,197 per sq ft), and villas at AED 8,600 per sq m (AED 799 per sq ft). Abu Dhabi s gross yields averaged 6.6%, apartments at 6.7% and villas with 6.3%. All ten locations monitored by the VPI witnessed quarterly capital value losses. Apartments in Al Reem Island and Al Reef saw QoQ declines of 2.4% and 1.9%, respectively. Al Reef and Hydra Village villas fell 2% while Mohammed Bin Zayed City declined 2.3%. The remaining areas declined quarterly between 0.9% - 1.4%. ValuStrat Price Index 5 Villa and 5 Apartment Locations in Abu Dhabi [Base: Jan 2016=100] Q1 Q2 Q Q4 Q1 Q2 Q3 Q4 Q Source: ValuStrat 2

4 MacroEconomicSnapshot Standard and Poor s estimated Abu Dhabi s Gross Domestic Product (GDP) at current prices to accelerate 4.7% from AED 850 billion in to AED 890 billion in 2018 Abu Dhabi Department of Economic Development announced non-oil activities took 68% share, while oil related activities make up the other 32% of the emirate s GDP October data as per Statistics Centre Abu Dhabi (SCAD), total imports improved 0.6%, in value terms to AED billion. However, non-oil exports and re-exports falling 23% to AED 18.8 billion and 7% to AED 17.8 billion, respectively Total population in metropolitan Abu Dhabi is estimated to be at 1.9 million 1,441,000 1,537, ,640, ,720, ,807, ,906,000 Abu Dhabi City Population Source: Statistics Centre Abu Dhabi Consumer Price Index vs. Housing Index January 2016 YTD General Index (2014=100) Housing, Water, Electricity, Gas and Other Fuels Source: Statistics Centre Abu Dhabi 3 Abu Dhabi Real Estate Market 1st Quarter 2018 Review Jan Feb Dec Oct Nov Sep Jul Aug Jun Apr May Mar Jan Feb Dec Oct Nov Sep Jul Aug Jun Apr May Mar Jan Feb Abu Dhabi International Airport (AUH) handled 21.5 million passengers during January to November, seeing a 3.7% YoY decline As of February 2018, YoY inflation rate was 4.3% and the monthly rate declined 0.28% Housing and Utility Expenses inflation dipped 2.7% YoY but stabilised MoM, reflecting a citywide softening of house rents VAT implementation rolled out as scheduled, capped at 5% The UAE Central Bank followed suit after the US Federal Funds rate was increased by another 25 basis point, coming after a series of hikes last year. Borrowing cost expected to increase further

5 ResidentialSupply Approximately 12% of the projected 5,330 units for 2018 have been completed year to date Abu Dhabi Residential Supply ( 000 UNITS) More than 82% of the 623 units completed during the first quarter were in Yas Island 201 Al Reem Island could receive 35% from the remaining residential units under construction, which includes Hydra 55 (550 units), Meera Residence (408 units) and M Tower (232 units) Three projects were announced to add 3,361 units during the next five years 230 8E 201 Notable announcements included Saadiyat Grove (a JV between Aldar Properties and Emaar Properties - 2,000 units), Reflection in Al Reem (374 units) and Al Marsa Phase 1 (987 units) located between Yas and Saadiyat Islands Existing New Apartments* New Villas* E *May be subject to significant downward adjustment Source: Urban Planning Council, REIDIN, MEED Projects, ValuStrat ResidentialSales The median residential asking price declined 6% YoY and stabilised QoQ The median asking price for ready apartments stood at AED 13,000 per sq m (AED 1,208 per sq ft), down 6.4% YoY and marginally increased by 0.8% QoQ For ready villas, the median asking price was AED 10,021 per sq m (AED 931 per sq ft), falling 5.0% YoY and 2.3% QoQ Residential Asking Prices -12.0% Last 2 Years -2.7% Last 6 Months -6.0% Last Year 0.0% Last Quarter *Ready Properties Only 4

6 ResidentialRents Overall median residential asking rents fell 8.0% when compared to the same period last year Residential Asking Rents On a quarterly basis, citywide median asking rents declined moderately by 2.7% Median apartment asking rents retreated 8.1% YoY and 1.3% QoQ Steeper YoY and QoQ declines were seen in median villa asking rents at 9.1% and 7.4%, respectively -19.5% Last 2 Years -6.3% Last 6 Months -8.0% Last Year -2.7% Last Quarter OfficeSupply Al Shafi Tower at Hamdan, Abu Dhabi was the only major completion during Q1, adding 6,408 sq m (68,975 sq ft) Gross Leasable Area (GLA) to the city s office stock Abu Dhabi Office Supply (Million sq m GLA) Above completion constitutes 5% of expected deliveries for Upcoming office space GLA for the rest of the year is estimated at 131,590 sq m (1.4 million sq ft) 3.10 Under-construction offices are distributed in three areas, Najmat Abu Dhabi (44%), Al Manhal (38%) and Danet Abu Dhabi (18%) E 2019E Existing Stock Expected Supply Source: REIDIN, MEED Projects, ValuStrat 5 Abu Dhabi Real Estate Market 1st Quarter 2018 Review

7 OfficeSales After a relatively stable, the first quarter 2018 began with a notable drop in office asking prices The asking price for a typical office stood at AED 11,140 per sq m (AED 1,035 per sq ft) Market prices were 5% lower than last year and 10.2% less compared to the previous quarter The median size of office space offered is located in Al Reem Island City of Lights currently stands at 156 sq m (1,679 sq ft) priced at AED 10,645 per sq m (AED 989 per sq ft) Office Asking Prices -15.0% Last 2 Years -9.3% Last 6 Months -5.0% Last Year -10.2% Last Quarter OfficeRents Asking rents saw a marginal decline of 0.3% QoQ but fell sharply by 10% YoY The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) stood at AED 937 per sq m (AED 87 per sq ft) Abu Dhabi island offices averaged AED 915 per sq m (AED 85 per sq ft), while office rents in Al Reem Island were 7% higher, averaging AED 980 per sq m (AED 91 per sq ft) Office Asking Rents -22.9% Last 2 Years -10.0% Last Year -2.7% Last 6 Months -0.3% Last Quarter 6

8 RetailSupply Total shopping mall Gross Leasable Area (GLA) stood at 2.15 million sq m (23.14 million sq ft) distributed in a mix of convenience (3), neighbourhood (9), community (11), regional (13) and super regional (7) retail centres Bin Butti Int l Holding announced to build two community markets in Abu Dhabi, one in Al Nahda and the other at Al Samha. Both projects will cost a total of AED 85.5 million to build and will be on plot areas measuring 11,818 sq m (127,208 sq ft) and 10,432 sq m (112,289 sq ft), respectively 17 brands are set to open this year in The Mall at World Trade Centre Abu Dhabi, as it aims to attract a wider client base Miral s Al Bahar beachfront in Abu Dhabi Corniche, set to open during Q announced 80% of units intended for F&B outlets has been leased out. It will soon occupy an estimated total area of 80,000 sq m (861,100 sq ft) featuring 48 retail and F&B units complemented by sports and outdoor facilities Marina Walk, an expansion plan for Marina Mall was announced by National Investment Corporation. The expansion project measures 300,000 sq m (3.2 million sq ft) with a GLA of 19,500 sq m (209,900 sq ft) and will feature high-end retail and fine dining experiences. It will also add 900 parking spaces and the city s first skate park Retail Malls & Shopping Centres ( 000 sq m GLA) 7 Convenience < 3k sq m 56 Regional 30k-90k sq m 181 Neighbourhood 3k-10k sq m Super Regional > 90k sq m 706 1,196 Community 10k-30k sq m RetailPerformance Aldar s retail assets held an average occupancy of 90% in Number of Malls and Shopping Centres The UAE retail sector contributed 16% to the country s overall GDP and reached an estimated amount of AED 205 billion in, as per IMF data Euromonitor estimated the country s consumer electronics market to grow 7.7% to AED 14 billion for Countrywide credit card transactions amounted to AED 105 billion in and is forecasted to grow by another 12.6% this year, Euromonitor estimates Super Regional > 90k sq m Regional 30k-90k sq m Community 10k-30k sq m Neighbourhood 3k-10k sq m Convenience < 3k sq m 7 Abu Dhabi Real Estate Market 1st Quarter 2018 Review

9 HotelSupply As of February 2018, Abu Dhabi City had a total of 27,043 rooms within 130 establishments Hotel Room Supply ( 000 KEYS) 1.3 Ten hotels are expected to complete this year to add 3,104 rooms to total stock These includes Jumeirah Resort (297 rooms), Rixos Hotel (361 keys), Saadiyat Rotana (350 rooms), Saadiyat Luxury (366 keys), Al Ameri Hotel (182 rooms), Park View (217 keys), Fairmont Marina (563 rooms), The Hotel at Al Maryah Central (200 keys), Biltmore Bateen (218 rooms) and W Hotel Al Bateen Wharf (350 keys) E E Hotel & Service Apt Rooms New Supply Source: DCTAD, MEED Projects, ValuStrat HotelPerformance Total international guests as of February 2018 jumped 10.4% YoY to 727,925 Source of Abu Dhabi Visitors by Region Jan-Feb 2018 The average occupancy rate improved by 2.6% to 79% as compared to the same period in However, the Average Room Rate (ARR) and Revenue per Available Room (RevPAR) retreated 14.6% YoY and 12.4% YoY, respectively 42% 25% The top source markets for Abu Dhabi City guests came from the rest of UAE (25%), followed by China (11%) and India (8%) 4% 5% 6% 8% 11% With the recent opening of tourism drivers such as The Louvre Abu Dhabi and upcoming large-scale tourism projects, the capital city s hospitality performance is expected to improve over time UAE China India UK KSA US Others Source: DCTAD 8

10 IndustrialInvestment/Supply Abu Dhabi was able to attract industrial sector investments worth AED 6.2 billion in Overall industrial licensing transactions in rose 8.3% YoY to 28,404 Khalifa Industrial Zone Abu Dhabi (KIZAD) welcomed two new industrial facilities including an aluminium plant and a food packaging unit, adding a total 73,000 sq m (785,765 sq ft) to occupied industrial space A chemical production complex worth AED 4 billion in KIZAD was announced by Shaheen Chem Investments to cover an area of 330,000 sq m (3.55 million sq ft), expected to open in 2020 An estimated total of 59,000 sq m (635,000 sq ft) of Built Up Area (BUA) intended for manufacturing and warehousing activities is subject for completion this year 3,000 2,000 1,000 2,583 1,938 Mussafah 2,368 ICAD 1,722 IndustrialPerformance Property prices in Mussafah industrial area being the main established industrial zone in Abu Dhabi have remained relatively stable during Q from Q4. Prices are generally in a range between AED 1,722 per sq m to AED 2,583 per sq m (AED 160 per sq ft to AED 240 per sq ft) Asking prices for large and older warehouse properties being offered at prices slightly under AED 2,045 per sq m (AED 190 per sq ft) Rentals for industrial properties in four principally established industrial zones in Abu Dhabi (Mussafah, ICAD, Al Mafraq and Al Mina) have also remained relatively stable during Q from Q4. Rentals are generally in a range of AED 194 to AED 452 per sq m (AED 18 to AED 42 per sq ft) depending on factors such as facility size/configuration, built specification, age and location Low rents continue to be observed for older properties and in long established locations such as Mussafah and Al Mina 194 Mussafah No leasing activities amongst third parties in areas such as Khalifa Industrial Zone Abu Dhabi (KIZAD) have been observed with the leasing of pre-built/readymade warehousing units and land parcels being directly offered for lease by the KIZAD Authority Industrial Rental Rates (AED/sq m) ICAD Al Mafraq Al Mina 452 Rent - Upper Range Source: ValuStrat Rent - Lower Range 9 Abu Dhabi Real Estate Market 1st Quarter 2018 Review

11 ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Due Diligence and Divestment services across a diverse range of industry sectors since Offices in the UAE, UK, Saudi Arabia, Pakistan and Qatar serve over 800 corporate clients in the Middle East Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program. Dubai Dubai@valustrat.com London London@valustrat.com Riyadh Riyadh@valustrat.com Jeddah Jeddah@valustrat.com ValuStrat is a firm regulated by RICS Karachi Karachi@valustrat.com Doha Doha@valustrat.com VPI ValuStrat Price Index VPI Online The ValuStrat Price Index for Abu Dhabi s freehold residential sector is constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The VPI uses a weighted sample representing more than 90% of all property types across the city and is built by our expert RICS Registered Valuers. Research Methodology Every effort has been made to ensure the accuracy of this document. New supply data covers 24 defined areas in Abu Dhabi City including non-freehold investment areas. Only completed and under construction projects are included. The new supply data does not include announced projects and projects in design phase. The new supply database does not take into account most private building projects. Both the price and rental data are calculated and derived from carefully chosen listings that have been properly cleansed to exclude duplicates and outliers within predetermined areas and districts for office and residential properties. Director - Commercial Valuations Copyright ValuStrat Consulting FZCo This document is the property of ValuStrat Consulting FZCo and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat Consulting FZCo. We welcome your constructive feedback and any corrections that may need to be made to this document. ValuStrat Consulting FZCo does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.