Report Highlights. Residential Market Q Snapshot -3% -3% Valuations Mortgage and Secured Lending Portfolio Valuations

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1 OBSERVER Abu Dhabi Market Report Q3 / 218

2 Services Report Highlights Valuations Mortgage and Secured Lending Portfolio Valuations 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 Abu Dhabi s residential property sector remained under pressure with continued downward adjustments in sales and rental levels witnessed throughout Q3. Sales Prices The downward price corrections witnessed in Q2, continued through to Q3 with average sales prices for apartments and villas down 3% from the previous quarter. Whilst buyers remain cautious, we have seen some residents opting to purchase properties, instead of renting, due to declining sales prices. Rental Rates The downward adjustment in rents continued in Q3 with average rental rates down 3% for apartments and 2% for villas from the previous quarter. Abu Dhabi s rental market continues to be hampered by supply entering the market as a result of ongoing redundancies and companies offering lower rental allowances. However, it appears that tenants are taking advantage of the sustained rental rate downturn and using this opportunity to upgrade to larger units with better-quality specifications, located in more popular areas. Market Outlook There have been recent announcements by the Abu Dhabi Government which could have a positive effect on the Capital s residential market. These include the roll out of Abu Dhabi Government s AED 5 billion stimulus package. More information has been released on this since our last report with the first phase set to include over 5 initiatives reflecting the priorities of citizens, residents and investors. A fund of AED 2 billion has been allocated to the 219 package, whilst a budget of AED 5 million has been allotted to the promotion of Abu Dhabi regionally and globally over the next three years. However, until the effects of this initiative have been realised, Abu Dhabi s real estate sector is likely to suffer continued price adjustments into 219. Residential Market Q3 218 Snapshot Price Movements QoQ Rental Movements QoQ The Observer - Abu Dhabi Residential Q

3 Residential sales performance continued to weaken across the board in Q3 Residential Sales Prices and Quarterly Change 1,6 The downward price corrections witnessed in Q2, continued through to Q3 with average sales prices for apartments and villas down 3% from the previous quarter. However, the declines were slightly less exaggerated than in Q2. Apartment sales prices In Q2, some of the biggest declines in apartment sales prices were seen in Saadiyat Island with prices falling 6% from Q1, from AED 1,497 per sq ft to AED 1,412 per sq ft. The decline from Q2 to Q3 was less excessive at 1% from AED 1,412 per sq ft to AED 1,4 per sq ft which suggests this area is starting to reach more realistic pricing levels. Al Ghadeer saw one of the biggest adjustments this quarter with a 6% drop from Q2 with prices dropping from AED 923 per sq ft to AED 866 per sq ft. in communities such as Al Reef and Al Raha Beach saw the smallest price declines, dropping Residential Sales Prices and Quarterly Change 1% and 2% respectively from the previous quarter. With an average price of approximately AED 9 per sq ft. Al Reef is currently the only affordable residential community in the Capital with good facilities and quick commute times into Abu Dhabi City. sales prices As with apartment prices, Al Ghadeer villa sales prices saw the biggest drop with a 5% decline from Q2; whilst areas such as Al Reef and Khalifa City fared better with a decline of 2% for Khalifa City and with Al Reef prices remaining unchanged from the previous quarter. In summary, ongoing restrained economic growth is leaving buyers cautious and waiting to see if stability returns to the market. However, we have seen some residents opting to purchase properties, instead of renting, due to declining sales prices. AED SALES PRICES 1,4 1,2 1, Figures in AED/sq.ft Al Ghadeer Al Reef Al Raha Gardens Khalifa City Al Raha Beach Area HOT TOPIC The real estate industry has been increasingly vocal in urging the Central Bank of the UAE to increase existing loan-to-value (LTV) ratios to facilitate home ownership for those unable to afford the current mortgage deposit requirements. Although no such changes have yet taken place this could assist in providing much needed stimulus to the residential sales market but comes with its own associated risks ,15 1,81 1,35 -% Q1 218 Q2 218 Q3 218 QoQ Change 1,6 % AED SALES PRICES 1,4 1,2 1, ,516 1,54 1, ,152 1,114 1,85 1, ,4 2 Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island -7% Figures in AED/sq.ft. Q1 218 Q2 218 Q3 218 QoQ Change The Observer - Abu Dhabi Residential Q The Observer - Abu Dhabi Residential Q

4 Flight to quality as tenants capitalise on falling rents The downward adjustment in rental rates from Q2, continued in Q3. Average rental rates were down 3% for apartments and 2% for villas from the previous quarter. The biggest declines for apartments were seen in Al Raha Beach and Reem Island, both with 4% drops from Q2. A 3 bedroom apartment in Al Raha Beach rented for AED 175, per annum in Q3, down from AED 178, in Q2. With 1 bedroom apartments witnessing the biggest decline of 7% from the previous quarter. As with Q2, the most resilient location for apartment rents was Saadiyat Island, which fell only 1% from Q2 levels with studio and 1 bedroom rents remaining unchanged at AED 15, and AED 118, per annum respectively. A limited number of locations remained unchanged from Q2; these include Al Ghadeer, Khalidiya and Khalifa City. In Khalidiya the 4BR and 5BR units continued to rent for AED 185, per annum and AED 196, per annum respectively, whilst 4BR and 5 BR units in Khalifa City rented for AED 17, per annum and AED 177, per annum respectively. The biggest villa rental decline was seen in Al Reem Island with a 6% drop from Q2. In summary, Abu Dhabi s rental market continues to be hampered by supply entering the market as a result of ongoing redundancies and companies offering lower rental allowances. However, it appears that tenants are taking advantage of the sustained rental rate downturn and using this opportunity to upgrade to larger units with better-quality specifications, located in more popular areas. Residential Market Rent and Quarterly Change AED RENTAL 4, 35, 3, 25, 2, 15, 1, 5, Figures in AED p.a Al Ghadeer Al Reef Al Raha Gardens Khalifa City Al Reem Island 3BR 4BR 5BR QoQ Change Al Khalidiya HOT TOPIC With the shift in market dynamics, many landlords are realising it is better to retain a tenant than face long void periods - sometimes months at a time - losing rental income. Especially in a market where some tenants will move to save a few thousand dirhams a year on their rental budget. MBZ % -7% Residential Market Rent and Quarterly Change 2, % 18, AED RENTAL 16, 14, 12, 1, 8, 6, 4, 2, Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island Khalifa City Al Khalidiya MBZ Corniche Road Muroor Area Figures in AED p.a Studio 1BR 2BR 3BR QoQ Change The Observer - Abu Dhabi Residential Q The Observer - Abu Dhabi Residential Q

5 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 - Abu Dhabi vladimir.cvetinovic@chestertons.com Ivana Gazivoda Vucinic Head of Consulting MENA ivana.vucinic@chestertons.com Ellen Sleutjes Head of Property Management - UAE ellen.sleutjes@chestertons.com Mena Head Office 182, Blvd. Plaza Tower 1 Sheikh Mohammed Bin Rashid Blvd. Downtown Dubai PO Box 28336, Dubai Office: Fax: uae.enquiry@chestertons.com Dubai Office 16, Rasis Business Center, Al Barsha 1 PO Box , Dubai Office: dubai@chestertons.com Abu Dhabi Office Office M1, Mezzanine Floor Al Ghazal Building (Above Al Hilal Bank) Khalifa Park PO Box , Abu Dhabi Office: Fax: abudhabi@chestertons.com Bahrain Office Maz Business Centre The Lagoon Amwaj Island Office: bahrain@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.