Dubai Real Estate Report Q4 2017

Transcription

1 Historic Review and Outlook Dubai Real Estate Report Q Property map 3 Historic Review 4 Highlights and Outlook In the Middle East for over 30 Years Apartment 5 6 Rentals Villa and Office Rentals 7 Apartment Sales 8 Villa and Office Sales

2 Property Map 17 3 To Abu Dhabi Most Expensive Expensive Mid Priced Affordable Arabian Gulf To Sharjah 1 Akoya 2 Al Barari 3 Al Barsha 4 Al Furjan 5 Al Nahda 6 Al Qusais 7 Al Warqaa 8 Arabian Ranches 9 Bur Dubai 10 Business Bay City Walk 12 Culture Village 13 Deira 14 DIFC 15 Discovery Gardens 16 Downtown Dubai 17 Downtown Jebel Ali 18 Dubai Creek 19 Dubai Design District 20 Dubai Festival City 21 Dubai Healthcare City Phase 2 22 Dubai Hills 23 Dubai Investment Park 24 Dubailand Residential Complex 25 Dubai Marina 26 Dubai Silicon Oasis 27 Dubai South 28 Dubai Sports City 29 Dubailand 30 Emirates Hills 31 Green Community 32 IMPZ 33 International City 34 JBR 35 Jumeirah 36 Jumeirah Golf Estates 37 Jumeirah Islands 38 Jumeirah Park 39 Jumeirah Village Circle 40 Jumeirah Village Triangle 41 Jumeirah Lakes Towers 42 Living Legends 43 Liwan 44 Meydan 45 Mirdif 46 MotorCity 47 Mudon 48 Muhaisnah 49 Palm Jumeirah 50 Pearl Jumeirah 51 Remraam 52 Rigga Al Buteen 53 Sheikh Zayed Road 54 Springs / Meadows 55 Studio City 56 Tecom C 57 The Greens 58 The Lakes 59 The Villa 60 Town Square 61 Umm Suqeim 62 Uptown Mirdif 63 Victory Heights Note: Area classification by affordability is provided for indicative purposes only as many areas in Dubai offer various types of residential units, from affordable to high end. As such, the map colour coding takes into account the most prevalent type 6 of product and exceptions of a lower and / or higher price could be available. 2 DUBAI

3 Historic Review Recession Recovery and Growth Stabilisation Downturn Index Base 100 = March 2010 The Dubai real estate market has gone through significant fluctuations over the years. Following the introduction of a decree allowing International Freehold Ownership in 2002, the market recorded rapid growth up until Q This period was marked by large scale developments and project launches. The real estate market was fuelled by both strong demand from a rapidly expanding economy and workforce (leading to double digit rental growth and Investor returns) and, more problematically, Investor speculation. With the onset of the global financial crisis, loss of confidence, erosion of capital and drying-up of liquidity, speculators were driven from the market. This resulted in significant value contractions and ultimately the collapse of fundamentals underpinning the real estate market. Asteco also recorded noticeable Tenant migration from neighbouring emirates due to decreased rental rates in Dubai. Sales activity remained subdued although transaction levels picked up slightly by the end of 20. Many projects were delayed, put on hold or cancelled The market began to show signs of recovery in 2012 when the Euro Crisis and Arab Spring conflict led to Dubai being an attractive alternative and safe haven to invest and live in. In November 2013, Dubai was awarded to host Expo 2020, which led to growth in market confidence, a rise in new project launches and increased sales prices and rental rates. Established communities and quality buildings experienced increased demand whilst newer developments saw improved take-up in line with enhancements in infrastructure and connectivity. Whilst increased job security and market confidence created demand for Tenants to upgrade, rapid rental growth also restricted Residents to move within Dubai and thus resulted in an upsurge in relocations to the Northern Emirates in search of more affordable housing. In anticipation of the growing Investor demand, the Dubai Government doubled the land registration fee to 4%, and introduced new loan-to-value rules to limit property speculation. The market peaked in Q and corrected thereafter due to a combination of factors such as the reduction in LTV s, low oil prices and a strong US dollar. Due to the substantial number of launches witnessed in the previous years, concerns of an oversupply and lack of demand particularly for high-end properties motivated Developers to focus on the mid and affordable housing sector, and to offer incentives such as extended payment plans during the post completion stage. Lower deposits also made off-plan sales a more attractive option compared to the minimum 25% down payment required for a mortgaged property and 2017 saw a significant amount of new project launches and deliveries resulting in moderate but steady declines in sales prices and rental rates. Tenants and Investors drove the market as more and more people looked for value-for-money options, which resulted in affordable developments outperforming luxury accommodation in terms of transaction activity. The number and range of incentives increased as Landlords tried to retain Tenants and increase take-up. Developers increasingly offered smaller, off-plan units at lower price points with flexible post-completion payment plans, which resulted in an increase in first-time Buyers and End-users as home ownership became more accessible to people who were previously unable to jump on the property ladder due to high down payments. This resulted in a drop in demand for completed properties. 40 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Apartment Sales Villa Sales Office Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis. Asteco Property Management,

4 Highlights and Outlook TRENDS Sales Prices Rental Rates Project Launches Incentives Supply Demand - Off-plan Demand - Completed 2017 Highlights 2018 Outlook Residential Apartment rental rates recorded steady declines throughout 2017 ranging from 2% to 4% per quarter, on average. Drops in sales prices were slightly less pronounced with variations of 0% to 4%. The villa market fared similarly with average quarterly decreases in sales prices and rental rates of 2% and 3%, respectively recorded a significant number of new project launches, particularly targeting the mid-income market, with a marked shift to smaller units offering lower price points, together with a greater choice of incentives such as guaranteed returns, reduced/no commissions, low down payments and post-completion payment plans. This resulted in a rise in End-users and first-time Buyers entering the market. Consequently, off-plan sales far exceeded secondary property transactions, mainly due to the high loan-to-value ratios stipulated by the UAE Central Bank, which make real estate investment difficult to Buyers with limited equity. There has also been a steady rise in project completions, which has put the bargaining power firmly in the hands of Tenants who have taken advantage of the increased choice and competitive rates to relocate to new properties or renegotiate existing contracts. Proactive Landlords looking to secure new leases and/or retain Tenants increasingly offered incentives including, but not limited to rent-free periods of up to two months, increased payment frequency (up to 12 cheques) and all/part of the utilities absorbed. Asteco expects 2018 to follow similar trends as compared with the previous year, although project launches are anticipated to ease off as the market finds a new equilibrium. The centre of Dubai continues to shift away from its traditional core (around the Dubai International Airport and along Sheikh Zayed Road (E)), and towards the new Al Maktoum International Airport and the area surrounding the Sheikh Mohammed Bin Zayed Road (E3), a move encouraged by ongoing infrastructure and development projects in the lead up to the Expo Sales prices and rental rates are expected to continue to come under pressure with a more pronounced drop anticipated for the latter as a result of the sheer amount of supply projected for delivery this year. Investors will continue to be more sensitive to the price point of properties as opposed to the price per square foot, meaning units that were previously advertised below the AED 1,000 per sq.ft., mark will be marketed for instance at below AED 500,000 for studios or AED 1 million for one bedroom apartments to entice take-up. In order to stimulate demand for completed properties and increase transaction activity in this sector, the UAE Central Bank would need to relax their LTV ratios to make home ownership more accessible to a large proportion of the local and overseas population. However, there is no indication of any such changes in the short-term. Although residential sales and leasing is generally exempt, the introduction of the VAT will indirectly affect Tenants and Investors as the tax is applicable to items such as maintenance, utility and agency fees. However, given current market conditions, some of these charges are expected to be initially absorbed by Owners/Landlords. Office Despite recording only marginal quarterly drops in sales prices and rental rates, the office sector has arguably proven the most challenging asset class in 2017 underpinned by a bearish market sentiment, low oil prices and limited business growth. Grade A office space under single ownership, which constitutes a fraction of the overall office space, fared better when compared to strata title properties. In fact, development around the DIFC and Trade Centre area is particularly active due to good levels of demand. Similar to the residential market, Landlords negotiated terms and offered incentives to improve occupancy rates. Although the oversupply situation, particularly in regards to secondary strata stock, will continue in 2018, we expect healthy appetite for quality Grade A commercial properties. Overall, sales prices and rental rates are likely to see further adjustments until market conditions and economic sentiment improve. The newly implemented value-added tax of 5% is likely to affect market sentiment and demand in the short-term; however, it is important to note that the levy is still below the global average of 15% and will ultimately boost the economy through increased Government spending, business development and hiring. Supply 13,900 APARTMENTS 3,600 VILLAS 2.6m SQ.FT. OFFICE SPACE 23,000 APARTMENTS 8,500 VILLAS 2.8m SQ.FT. OFFICE SPACE

5 Apartment Rental Rates -4% (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS YEAR HIGH TO LUXURY END DIFC Downtown Dubai Dubai Marina Jumeirah Beach Residence Palm Jumeirah Sheikh Zayed Road HIGH TO LUXURY END AVERAGE MID TO HIGH END Business Bay Greens Jumeirah Lakes Towers MID TO HIGH END AVERAGE AFFORDABLE Al Barsha Bur Dubai Deira Discovery Gardens Dubai Sports City International City Jumeirah Village AFFORDABLE AVERAGE DUBAI AVERAGE Annual - -42% -16% -7% 15% 39% 7% -1% -6% -13% - -39% -14% -8% 16% 35% 8% 0% -7% -14% - -39% -13% -6% 19% 24% 7% 2% -6% -13% since peak (2008) -38% -35% -34% since market low (20) 39% 35% 32% since 2nd peak (2014) -19% -20% -16% Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/bottomed-out and marginal variations may occur. Asteco Property Management,

6 Villa Rental Rates -3% (All figures in AED 000 s p.a.) TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS YEAR Al Barsha Arabian Ranches Victory Heights Jumeirah Jumeirah Park Jumeirah Village Meadows Mirdif Palm Jumeirah Springs The Lakes Umm Suqeim DUBAI AVERAGE Annual % change - -43% -9% -6% 18% 19% 5% -8% -5% -% - -43% -8% -9% 18% 19% 4% -10% -5% -% - -43% -10% -9% 15% 20% 1% -8% -6% -% since peak (2008) -44% -47% -49% since market low (20) 15% % 9% since 2nd peak (2014) -22% -24% -22% Dubai Office Rental Rates Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/ bottomed-out and marginal variations may occur. 0% (All figures in AED per sq.ft. p.a.) YEAR Barsha Heights Bur Dubai Business Bay DIFC Dubai Investment Park Jumeirah Lakes Towers Sheikh Zayed Road DUBAI AVERAGE Annual % change - -51% -34% -16% -2% 24% 8% 3% -2% -4% since peak (2008) -65% since market low (2012) 27% 6 DUBAI since 2nd peak (2014) -3%

7 Apartment Sales Prices AED per sq.ft. -4% ,000 1,500 2,000 2,500 3, ,000 1,500 2,000 2,500 3, ,000 1,500 2,000 2,500 3,000 2,050 1,800 1,400 1, , Business Bay ,225 1,210 Dubai Marina 925 1,050 1,900 JLT ,200 1,750 1,250 1,600 1,150 1,450 1,150 1,175 1,250 1,125 DIFC 2,700 1,600 1,500 1,350 1,875 Greens 1,700 1, ,400 1,875 1, ,700 1, ,750 1, ,650 1, Jumeirah Village Discovery Gardens 1, International City 1, , , , ,500 Palm Jumeirah 2,800 1,500 1,175 1,400 2,000 Downtown Dubai 2,700 1,400 2,200 2, ,000 1,525 2,325 1,625 2,200 1,370 1,900 1,700 1,200 JBR Asteco Property Management,

8 Villa Sales Prices AED per sq.ft. Dubai -3% -4% Office Sales Prices ,000 1,500 2,000 2,500 3,000 3, ,000 1,500 2,000 2,500 3,000 3, ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Arabian Ranches 2,200 2,200 2, , Meadows 950 1, , ,150 1, ,000 1, , , Barsha Heights Dubai Sports City 1,500 2,750 2, ,800 1, , Palm Jumeirah 750 1, , ,125 3, ,250 2,850 1,225 1,150 2,475 1,250 1,150 2,500 1,250 1,050 2,400 1,000 Business Bay Jumeirah Park 1,500 1,800 4, , , ,800 Springs ,700 1,175 1,800 1,175 1,075 1,875 1, ,925 1,900 1,000 1,000 1,650 DIFC Jumeirah Village 2, , Jumeirah Lakes Towers DUBAI

9 About Asteco The Middle East s largest full service Real Estate services company, Asteco was formed in Dubai in Over the years, Asteco has gained enormous respect for consistently delivering high quality, professional, valueadded services in a transparent manner. It is also widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the Emirates. Asteco has an essential combination of local knowledge and international expertise. A deeply established brand, renowned for its application of the latest technological advances, its commitment to transparency, winning strategies and human expertise. Undisputed Real Estate experts, Asteco represents a significant number of the region s top property Owners, Developers and Investors. VALUATION & ADVISORY Our professional advisory services are conducted by suitably qualified personnel all of whom have had extensive Real Estate experience within the Middle East and internationally. Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with extensive local experience. The Professional Services Asteco conducts throughout the region include: Consultancy & Advisory services Market research Valuation services SALES Asteco has established a large regional property Sales division with representatives based in the UAE, Qatar and Jordan. Our Sales teams have extensive experience in the negotiation and sale of a variety of assets. LEASING Asteco has been instrumental in the Leasing of many high-profile developments across the GCC. ASSET MANAGEMENT Asteco provides comprehensive Asset Management services to all property Owners, whether a single unit (IPM) or a regional mixed-use portfolio. Our focus is on maximising value for our Clients. OWNERS ASSOCIATION Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy services to residential, commercial and mixed-use communities throughout the GCC Region. SALES MANAGEMENT Our Sales Management services are comprehensive and encompass everything required for the successful completion and handover of units to individual unit Owners. LICENSING Our brand, network, system and procedures are now available in territories across the MENA region. Our Licensing services currently include Real Estate Brokerage Franchising and associated support services with many of the key elements designed specifically around the Franchisee, making it a truly unique and bespoke franchise opportunity. John Stevens MSc, BSc (Hons), MRICS Managing Director/ Director - Asset Services JohnS@Asteco.com John Allen BSc, MRICS Director - Valuation & Advisory JohnA@Asteco.com Derrick Maguire ARLA, NAEA Associate Director - Transactional Services DerrickM@Asteco.com James Joughin BSc (Hons), MRICS Associate Director - Valuation JamesJ@Asteco.com Jenny Weidling BA (Hons) Manager - Research and Advisory, Dubai JennyW@Asteco.com Ghada Amhaz MSc Manager - Research and Advisory, Abu Dhabi GhadaA@asteco.com Tamer Ibrahim Chaaban BE Branch Manager - Al Ain office TamerI@asteco.com DISCLAIMER: The information contained in this report has been obtained from and is based upon sources that Asteco Property Management believes to be reliable; however, no warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute Asteco Property Management s judgment, as of the date of this report and are subject to change without notice. Figures contained in this report are derived from a basket of locations highlighted in this report and therefore represent a snapshot of the UAE market. Averages, however, represent a wider range of areas. Particularly exclusive or unique projects have been excluded from the data to avoid distorting averages. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, involve risk and uncertainty because they relate to future events and circumstances which are beyond Asteco Property Management s control. For a full in-depth study of the market, please contact Asteco Property Management s Research team. Asteco Property Management LLC. Commercial License No Paid-up Capital AED 4,000,000. ORN 180