Q OBSERVER

Transcription

1 C H E S T E R T O N S M E N A Q OBSERVER Q R E P O R T 1

2 Report Highlights Chestertons MENA Services Valuations Mortgage and Secured Lending Portfolio Valuations Plant and Machinery Appraisals Advisory and Research Financial Feasibilities Highest and Best Use Studies Market Research Conceptual Advisory and Project Positioning Studies Project Redevelopment/Repositioning Advisory Investment Strategies Acquisition and Disposal Sales and Leasing Commercial Industrial Residential Retail Property/Facilities Management Commercial Mixed-Use Residential International Properties London Off-Plan Residential International Homes and Investments International Relocations Prices: Q4 brought additional correction to sales prices with apartment and villa prices falling by 2% and 6%, respectively. It is interesting to note the significant differences between the declines in areas such as The Greens (-12%) and Dubai Sports City (-3%) for apartments, or Jumeirah Park (-13%) and The Meadows/The Springs (-3%) for villas. The previous quarter saw the launch of several residential projects; with some innovative payment options such as MAG s offer to purchase using the Sharia-compliant OneGram crypto-currency, or the option to pay as little as 2 on booking and the remaining 8 upon delivery for some other developers. Some notable launches included: Symphony by Gemini Properties, Banyan Tree Residences by Banyan Tree, the third tower at Park Gate Residences, and a high-rise development by Dar Al Salam at the Dubai Canal. Rents: Rental rates for both apartments and villas fell 3%, highlighted by 14% and 19% declines in Dubai Sports City and the Arabian Ranches, respectively. Residential Market Q Price Movements QoQ Rental Movements QoQ On average, three-bedroom apartments declined the most quarter-to-quarter at 4%, while fivebedroom villas at Arabian Ranches and Al Furjan fell 14% and 1, respectively. In line with these, two-bedroom villa and apartment units saw an average decline of 2% Transactions: Overall, the volume of transactions fell by 1% while the value of transactions also fell by 6%. Despite the flexible and attractive payment plans offered by developers, the volume of off-plan transactions decreased by 8% whereas transactions for ready units grew by 17%. Dubai Marina (474), International City (370), and Emirates Living (233) were some of the most transacted areas. In terms of transaction values, Emirates Living,, and Downtown Dubai were the most popular communities. Outlook: In spite of an already lower materialization rate (47% in 2017 versus 52% in 2016), Dubai s residential prices and rents are projected to face further downward correction in Off-plan sales transactions are also expected to decline and stabilize while ready unit transactions are estimated to rise. Short-term demand is expected to be buoyed as the Expo draws closer. Ready Units Transactions Off-Plan Units Transactions -3% 17% Apartments Apartments Volumes Volumes -3% 15% -16% Villas Villas Values Values 2 3

3 Sales Prices & Quarterly Change APARTMENTS Q Q QoQ Movement 4% 2% AED SALES PRICES 1,278 1, ,703 1, ,470 1, ,018 1, ,199 1, ,352 1,192 1,427 1, % -14% Discovery Gardens Downtown Dubai Motor City Dubai Silicon Oasis Dubai Sports City International City JLT JVC JVT The Greens The Views Figures in AED/Sq Ft VILLAS Q Q QoQ Movement Market Commentary 6% AED SALES PRICES 1, , ,535 2,398 1,349 1,279 1,040 1,069 Arabian Ranches Jumeirah Park Palm Jumeriah The Lakes The Meadows/ The springs 1,105 1,004 Victory Heights 2% -1-12% -14 Overall, sales prices of apartments and villas in Dubai weakened by 2% and 6%, respectively. Softening demand due to the economic uncertainty combined with the excess supply of residential brought further correction of the prices during Q However, the volume of ready units transacted rose in Q4 compared to the previous quarter. Nonetheless, off-plan transactions dominated the market with emerging as the most transacted community while Emirates Living ranked first in terms of transaction values. Apartment prices in the Greens saw the steepest downward correction at 12%. However, prices remained robust in Dubai Sports City, The Views, and JVC owing to their relative affordability. On the other hand, prices across all villa communities except The Springs registered a decrease. Off-plan transactions surged by 6 in 2017 compared to This overarching theme for the year could potentially trigger a further decline in the value of the ready unit, as investors have shown to be more inclined to invest in off-plan properties with favorable payment options. Additionally, the market is more focused on affordable housing as 45% of the upcoming supply over the next five years is priced below AED 1,000 per sq. ft. Figures in AED/Sq Ft 4 5

4 Market Rent & Quarterly Change APARTMENTS Studio 1BR 2BR 3BR QoQ Change 250,000 1% 200,000-1% AED RENTAL 150, ,000-3% -5% 50,000-7% 0 DIFC Discovery Gardens Downtown Dubai Dubai Silicon Oasis Dubai Sports City Dubailand International City JLT JVC The Greens The Views Dubai Motor City VILLAS AED RENTAL 500, , , , , , , , ,000 50,000 0 Arabian Ranches 2BR The Springs The Meadows 3BR The Lakes Victory Heights 4BR 5BR Al Furjan JVT Jumeirah Island AVG Jumeirah Golf Estates Palm Jumeirah 2% -1 Market Commentary Rents for apartments in villas reported a 3% drop. The introduction of new stock, by way of the delayed 2015 and 2016 projects and the addition of attractive lettings incentives such as rent-free periods and multiple cheques, encouraged tenants to seek better deals causing rents in most communities to further spiral downwards. Despite the increased demand for smaller units due to their relative affordability, rents for studios and one-bedroom fell across all communities by 2%. Rents in Dubai Sports City recorded the steepest decline at 7% whereas there was no change in rents for apartments in JVC. In terms of villas, all communities experienced falling rents with the exception of The Springs. Arabian Ranches witnessed a precipitous drop in rents during Q compared to Q3 as the community s average rents fell by 9%. In contrast, rents remain unchanged in Jumeirah Islands while they increased by 1% in The Springs. Softening of rents is expected to continue during 2018 as tenants pressure landlords to offer more preferential leasing terms. Additionally, other factors such as new stock entering the upper and mid-prime residential segments, coupled with the flat economic sentiment, will also exert downward pressure on Dubai s rents. 6 7

5 Sales Transactions Volume of Residential Property Transactions Q Value of Residential Transactions Q Ready Properties Off-plan 7,000 6,000 5,000 4,000 3,000 2,425 6,233 2,839 5,754 AED 7.19 BILLION AED 4.6 BILLION Ready Properties Off-plan 2,000 1,000 - Q Q

6 Sales Transactions READY UNITS Top 10 areas based on transaction volumes OFF - PLAN UNITS Top 10 areas based on transaction volumes International City Emirates Living Dubai Sports City Dubai Sports Jumeirah Village Circle Palm Jumeirah Downtown Al Furjan Jumeirah Village Circle The Lagoons MBR City Dubai south Meydan City Dubai Healthcare City Top 10 areas based on transaction values (in million AED) Top 10 areas based on transaction values (in million AED) Emirates Living Palm Jumeirah Arabian Ranches Jumeirah Lake Towers Dubai Sports City Jumeirah The Lagoons MBR City Palm Jumeirah Al Furjan Jumeirah Village Circle Dubai South

7 OBSERVER Contact Us Nick Witty, BSc (Hons) MRICS Managing Director-MENA Adam Wilson BSc (Hons) MRICS ACIArb Director, Head of International Valuations Vladimir Cvetinovic, MRICS Associate Director, Valuations & Advisory-AUH Ivana Gazivoda Vucinic Head of Consulting Head of Valuation & Advisory Operations Ellen Sleutjes Head of Property Management-UAE MENA HEAD OFFICE 1802, Blvd. Plaza Tower 1 Sheikh Mohammed Bin Rashid Blvd., P.O. Box Dubai, United Arab Emirates Office Fax uae.enquiry@chestertons.com DUBAI OFFICE 106, Rasis Business Center Al Barsha 1, PO Box Dubai, United Arab Emirates Office uae.enquiry@chestertons.com ABU DHABI OFFICE Office M01, Mezzanine Floor, Al Ghazal Building Khalifa Park, P.O Box Abu Dhabi, United Arab Emirates Office Fax abudhabi@chestertons.com Disclaimer: All articles and data presented herein is intended for information purposes and has been compiled from sources deemed reliable including the Valuations and Research Department of Chestertons, sales and leasing staff, published data, and secondary sources. Though information is believed to be correct, materials presented is subject to errors, omissions, changes, or withdrawal without notice. 12