Q Abu Dhabi Real Estate Report

Transcription

1 Property Review Abu Dhabi Real Estate Report asteco.com

2 Report Abu Dhabi Highlights Apartment rental rates across Abu Dhabi in continued to decline, following the same trend set in the first half of the year. However, smaller units saw rates stabilise, whereas a higher drop for premium units and larger villas was recorded. Low oil prices continue to negatively affect Abu Dhabi s economy. Office rental rates are currently at their lowest point since market peak in late 2008, with rates on average 72% lower. The ongoing job cuts across various industry sectors and the reduction of staff housing allowances continues to negatively affect demand with a number of tenants opting to downsize and / or move to more affordable units. Current villa and apartment rates are respectively 5 and 6 lower than the Q peak. These rates are however 2 and 9% higher for apartments and villas respectively compared to the market s lowest point in Q Following the decrease in rental and sales rates during the first half of the year, Q3 remained relatively stable but saw a decrease in market activity. Index Base 100 = Sep RESIDENTIAL AND OFFICE PRICE MOVEMENT, SEP 2008 = BASE 100 GROWTH RECESSION RECOVERY STABILISATION 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 Apartment Sales Apartment Rental Villa Rental Office Rental -2% APARTMENT ANNUAL SALES PRICE GROWTH Abu Dhabi Apartment sales prices were 2% lower than in Q

3 Abu Dhabi Rental Rates Apartments Report Abu Dhabi Demand for large apartments has decreased further putting pressure on current rates. However there are exceptions with a number of prime projects on Saadiyat Island and the Corniche maintaining stable rates and close to full occupancy. Other prime and high quality apartments saw their rates fall by 1% from Q and by an average 6% since Q High-end units, representing the highest proportion of supply within Investment Zones, saw their rates decrease by 9% for the same period last year. Apartments Rental Rates Studio 1BR 2BR 3BR Mid quality units were down by 1.5% from last quarter and in excess of 4% during the first half of the year. Low quality units, by contrast, remained broadly stable with only slight decreases in rates for larger units, as Tenants moved to newer developments offering similar or lower rental rates. (AED 000 s pa) Prime Properties Min Max Min Max Min Max Min Max Abu Dhabi Island Investment Areas High End Properties Abu Dhabi Island Investment Areas Mid End Properties Al Raha Beach Saadiyat Beach Central Abu Dhabi Corniche Khalidiya / Bateen Nahyan Camp / Muroor Al Raha Beach Marina Square Shams Abu Dhabi Saadiyat Beach Abu Dhabi Island Investment Areas Lower End Properties Abu Dhabi Island Investment Areas Shams Abu Dhabi Najmat and Tamouh Central Abu Dhabi Corniche Khalidiya / Bateen Al Reef Off Island Khalifa and MBZ City The majority of vacant apartments, which were offered at reduced rates in Q2, have now been leased out especially the smaller units type (studio, one and two bedroom). This indicates that there is demand in the market, but value for money is the most important factor. In comparison, larger and more expensive three and four bedroom duplexes and townhouses recorded over 1 decline since last quarter, with a high percentage remaining vacant for over six months. APARTMENT RENTAL RATE MOVEMENT BY AREA PRIME PROPERTIES Al Raha Beach Saadiyat Beach HIGH END PROPERTIES Central Abu Dhabi Corniche -9% Khalidiya / Bateen Nahyan Camp / Muroor Al Raha Beach Marina Square Shams Abu Dhabi Saadiyat Beach MID END PROPERTIES Shams Abu Dhabi Najmat and Tamouh LOWER END PROPERTIES Central Abu Dhabi Corniche Khalidiya / Bateen Al Reef Khalifa and MBZ City -8% -5% -5% -4% -4% -4% -3% -3% -2% -2% -1-8% -6% -4% -2% 2% 4% 6% % Change (Q2 - ) % Change (Q ) 1% 3% 3% 4% 4% 6% 3

4 Report Abu Dhabi Rental Rates Villas Villas Rental Rates (AED 000 s pa) 2BR 3BR 4BR 5BR % Change Min Max Min Max Min Max Min Max Q2 - Q Q Villa rental rates were down, on average, by 2% since the previous quarter. The highest quarter-on-quarter decline was recorded in Al Raha Gardens (6%) followed by Al Raha Beach Villas (4%). An overall decrease in leasing activity was noticed this quarter, inducing Landlords to reduce asking rates. Demand for older villas located inside Abu Dhabi City was also down with premium units being the most affected; the average decline since the same period last year was over 1. Saadiyat Beach Villas were the only exception with rates continuing to increase since handover, recording a 7% increase compared with the same period last year. The lack of quality villa communities continued to support high rental rates. Abu Dhabi Island Investment Areas Off Island Khalidiya / Bateen Mushrif / Karama / Manaseer Nahyan Camp / Muroor Al Raha Beach Al Reef Hydra Village Saadiyat Island Al Raha Gardens Golf Gardens Khalifa City Mohamed Bin Zayed Offices Offices (AED per sq m pa) Average Rental Rates Q2 - % Change Q Office rental rates were under pressure this quarter with indications that Tenants are either downsizing or moving to more affordable premises. Rental rates in prime office buildings are now close to AED 1,600 per square metre, which represents a 4% decrease in the last three months. As demand for large office space reduced significantly over the last six months, Landlords continued to subdivide space into smaller office units. Low oil prices leading to Government budget reductions and job cuts negatively affected overall market sentiment. The reduced demand led to an increase in vacancy rates which will put further downward pressure on rental rates going forward. From To Prime Office Space (*) 1,600 3, Fitted 780 1, Recent Build Shell and Core 700 1, From To Good Older Stock Typical Building Low Quality Building * Includes developments such as Al Maryah Island, Aldar Headquarters, International Tower, Nation Towers, Etihad Towers, Capital Plaza, Capital Gate, etc. 4

5 Abu Dhabi Sales Prices Report Abu Dhabi Apartments APARTMENT SALES PRICES MOVEMENT BY AREA Sales activity remained quiet with a limited amount of completed units available for sale. Saadiyat Beach Residences -3% -3% Sales rates have decreased by 1%, on average this quarter, with Reem Island being the most affected. The Gate -8% -2% Projects located at Al Raha Beach and Al Reef recorded higher sales rates, between 2% and 8% compared with the same period last year. Sun and Sky Towers -7% -2% Reef Downtown 8% Al Zeina 6% Al Muneera 2% Al Bandar 3% Marina Square -8% -1-8% -6% -4% -2% 2% 4% 6% 8% 1 % Change (Q2 - ) % Change (Q ) Apartment Average Sales Prices (AED per sq ft) Min Max Marina Square 1,200 1,330 Al Bandar 1,500 1,900 Al Muneera 1,400 1,600 Al Zeina 1,200 1,450 Reef Downtown 950 1,100 Sun and Sky Towers 1,350 1,500 The Gate 1,320 1,450 Saadiyat Beach Residences 1,500 1,620 City of Lights - Hydra 950 1,200 5

6 Report Abu Dhabi Sales Prices Villas The villa sales market remained quiet with limited transactions mostly for completed units. Sales prices decreased by 1%, on average, since last quarter and by over 4% since Q Only Saadiyat Beach Villas recorded no change this quarter, however rates were up by 4% compared with last year. TDIC recently launched the sale of its new Saadiyat Lagoons District, which is located close to the Saadiyat Marina District and the Cultural District. Phase One, which consists of 820 townhouses (offered on a freehold basis to all nationalities) with the smallest three bedroom units starting from AED 2.3 million at an average sales rate of AED 1,180 per square foot. These prices combined with a competitive 30/70 payment plan attracted a strong level of interest. Indeed, due to the lack of villa communities available, such a product is able to attract good levels of demand as it is one of the few options available in the market at reasonable prices with attractive payment plans. VILLA SALES PRICES -6% -6% -4% 4% AED Million Raha Gardens Golf Gardens Al Reef Villas Saadiyat Beach Villas (Std) Hydra Village 2BR 3BR 4BR 5BR % Change (Q2 - ) % Change (Q ) 6

7 Abu Dhabi Area and Rent Affordability Map Report Abu Dhabi The following map highlights some of Abu Dhabi s most popular residential areas, in terms of their affordability for rent or sale. 1 Al Bandar Raha Beach 2 Al Bateen Wharf 3 Al Gurm 4 Al Maqtaa 5 Al Muneera Al Raha Beach 6 Al Nahyan Camp 7 Al Raha Gardens 8 Al Rayanna 9 Al Reef 10 Al Zeina Al Raha Beach 11 Baniyas 12 Bateen Airport Area 13 Bateen Area 14 Bawabat Al Sharq 15 Capital District (ADNEC) 16 CBD / Tourist Club Area 17 Corniche 18 Danet Abu Dhabi 19 Eastern Mangroves 20 Golf Gardens 21 Hydra Village 22 Khalidia / Al Hosn / Al Manhal 23 Khalifa City A 24 Khalifa City B 25 Maryah Island 26 MBZ City 27 Mina 28 Mushrif / Karama / Manaseer / Muroor 29 Officer s City 30 Rawdhat Abu Dhabi 31 Reem Island - Marina Square 32 Reem Island Najmat Abu Dhabi 33 Reem Island rest of Shams Abu Dhabi 34 Reem Island City of Lights 35 Reem Island The Gate District 36 Rihan Heights 37 Saadiyat Beach District 38 The Hills Most Expensive Expensive Mid Priced Affordable YAS ISLAND Note: Area classification by affordability is provided for indicative purposes only as most areas in Abu Dhabi offer various types of residential units, from affordable to high end. As such, the map colour coding takes into account the most prevalent type of product and exceptions of a lower and / or higher price could be available

8 Report Al Ain Highlights Rental rates in Al Ain have decreased across all sectors, with a marked reduction in demand for large and premium units. Whilst rental rates for villas were down by 1 on average compared with the previous quarter, these were similar to 2009 peak rates. The Al Ain office sector is currently recording the lowest rental rates since the 2009 peak, down by 53%. The difficult conditions are directly correlated to low oil prices and curtailed government spending. Index Base 100 = Sep AL AIN RENTAL MOVEMENT, SEP 2008 = BASE 100 GROWTH RECESSION RECOVERY AND GROWTH ADJUSTMENT PERIOD 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 Al Ain Apartment Al Ain Villa Rentals Al Ain Office Rentals -3% APARTMENT ANNUAL RENTAL GROWTH Al Ain Apartment rental rates decreased by 3% since Q

9 Al Ain Rental Rates Report Al Ain Apartments Office and Retail Apartment rental rates have decreased on average between 3% and 5%, with the highest decrease occurring in new buildings. A significant number of properties within Al Ain are held on historic terms (under rented). Therefore, the decreases have only had a bearing on a limited number of rental renewals or new leases. The most notable decreases were for one and two bedroom units. Rates for three bedroom units were relatively stable, as several villa occupiers moved to more affordable three-bedroom apartments. The new residential buildings at the Hazaa Bin Zayed Stadium were handed over, which offered high quality residential apartments with average asking rates of AED 63,000 and AED 73,000 per annum for a one and two-bedroom apartments respectively. These rates are 2 to 3 higher compared with average rates in the existing stock. Rates for existing good quality one-bedroom apartments range from AED 38,000 to AED 45,000 annually whereas two-bedroom apartments range from AED 50,000 and AED 60,000. Three residential buildings located in the Town Centre were handed over, which included approximately 50 mid-quality apartments. A further seven buildings are expected for delivery before the end of the year in the Town Center and Asharej areas. Similar to the residential sector, office market activity was slow this quarter, as a consequence vacant office space was offered at a discount of 5% to 6%. Rental rates for renewed contracts remained unchanged. Mid quality offices located in the Town Centre achieved close to AED 900 per square metre annually, however, lower quality offices in the same area were offered at AED 600 per square metre including service charges. The old office stock on Senaya Street recorded stable rates ranging between AED 400 and 600 per square metre. Overall, retail rental rates remained stable all over Al Ain, with the exception of Al Senaya area, where decreases of 7% on average were recorded. Demand for high quality retail space in new malls remained positive. The average rate in the more prominent malls was approximately AED 2,225 per square metre per annum, with Al Jimi Mall, Al Ain Mall, and Al Bawadi Mall achieving the highest rental rates. Villas Villa rental rates decreased, on average by 4% over the quarter, and by 1 for the same period last year. Older villas were the most affected by the declines. Four bedroom villas located within established and prime compounds achieved on average AED 86,000 and AED 120,000 per year, respectively with Shaab Al Ashkhar, Falaj Hazza, Al Towaya, and Asharej the most popular areas for residential villas in Al Ain. There is no major new villa supply expected for handover before the year end with the exception of a few private villas. 9

10 Report Al Ain Rental Rates Villas Villa Average 3BR 4BR 5BR % Change Rental Rates (AED 000 s pa) Mature Units Q2 - Q Q Town Centre Apartments 1BR 2BR 3BR % Change Apartment Rental Rates (AED 000 s pa) Min Max Min Max Min Max Q2 - Q Q Mature Buildings New Buildings Prime Compounds Others * Zaker Al Towaya Al Jimi New Units Town Centre Others * Zaker Al Towaya Al Jimi Prime Compounds * Includes Al Khabisi, Al Muwaiji, Al Manasir and Al Masoudi areas OFFICE RENTAL RATES RETAIL RENTAL RATES -6% -12% 900-6% -12% 900-6% -12% 900-7% -7% -7% -7% -17% AED per m 2 pa AED per m 2 pa Khalifa Street Aud Al Main Street Senaya Street Khalifa Street Aud Al Touba Street Touba Street Main Street Senaya Street Al Jimi Mall Al Ain Mall Al Bawadi Mall Sorouh Mall Min Max % Change (Q2 - ) % Change (Q ) Min Max % Change (Q2 - ) % Change (Q ) 10

11 Al Ain Area Map Report Al Ain East Airport District Al Masoudi Hili Ardh Jow St Baniyas St Al Oattara Al Ain International Airport Al Dahmaa Al Towaya Al Jimi Mohd Bin Khalifa St Al Buraimi SULTANATE OF OMAN Al Yahar North Al Khabisi Al Mutaredh Al Yahar South Al Bateen Al Markhaniya Khalifa Bin Zayed St. Al Muwaiji Al Jahili Al Mutawa a Town Centre Asharej Al Salamat District Khalifa Bin Zayed St. Falaj Hazza a Al Sarooj Zayed Bin Sultan St. Al Shuwaimah Al Maqam Al Aqabiyya Aflaj Zoo District Gharebah Al Shuaibah Defence Al Khrair Zaker Al Qisais Neima 11

12 Report Global Outlook United Arab Emirates Highlights Forecast Overview GDP to grow by 2.3% this year The UAE is one of the most diversified economies in the Gulf, but oil price developments are still key to the outlook. The oil and gas sector, which makes up around one third of the economy, is expected to rise by 1% in 2016 after growing 5% last year, influenced by: Change in OPEC policy unlikely we expect no meaningful agreement to freeze or cut production at OPEC s informal meeting in September, so UAE oil output should remain high in keeping with the policy to maintain market share. We expect the oil price to average $43.6 pb in 2016 and $50 pb next year. Oil output limited by capacity production in the UAE reached a record level of 3.07 mbpd in August, based on IEA numbers. After a 4.4% increase in production last year, we expect only a 1% rise this year as spare capacity remains limited. Who we are Oxford Economics Oxford Economics was founded in 1981 as a commercial venture with Oxford University s business college to provide economic forecasting and modeling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities. Our best-of-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact. Headquartered in Oxford, England, with regional centres in London, New York, and Singapore, Oxford Economics has offices across the globe in Belfast, Chicago, Dubai, Mexico City, Miami, Milan, Paarl - South Africa, Paris, Philadelphia, San Francisco, and Washington DC. We employ over 200 full-time people, including more than 120 professional economists, industry experts and business editors one of the largest teams of macro economists and thought leadership specialists. To find out more and request your free trial please contact Paul de Cintra on pdecintra@oxfordeconomics.com 12

13 Report Global Outlook with non-oil growth slowing to 2.9% Medium-term outlook more encouraging Indicators show that while growth has slowed, recession should be avoided this year. The PMI, a signal of non-oil activity, remained in expansionary territory at 54.7 in August, with growth in both output and new orders still robust. We forecast non-oil GDP growth slowing to 2.9% in 2016, with total GDP growth at 2.3%. Low oil prices tighten liquidity domestic liquidity conditions have tightened since 2014, with low oil prices feeding through to lower government spending, interest rates rising gradually in line with the US, and a need to finance the large budget deficit. Mixed price pressures for consumers headline inflation remained broadly unchaged at 1.8% in July, and we forecast a yearly average of 2% in Measures to support the fiscal balance the government has slowed outlays on non-essential projects, removed some energy subsidies and a region-wide VAT is expected from Over , non-oil growth is seen picking-up to 3.2% per year, slightly faster than in most of its neighbours. An improvement in economic sentiment and gradual rise in oil prices will help to boost growth. This will be aided by: Diversification strategy the UAE aims to transition to a knowledge based economy by 2021, with oil GDP contributing 2 to total GDP (currently 3). Business hub status and Expo 2020 will support investment the UAE ranks highly for its ease of doing business and openness to investment and trade, which will support investment. Rising business confidence the IMF suggests that efforts should be made to improve the business environment, ease restrictions on FDI and spur competition. The imminent approval of the bankruptcy law, improving access to finance and broadening the credit bureau s coverage, should all help improve business confidence. UAE: REAL GDP GROWTH UAE: INFLATION % Year % Year F cast 12 F cast Middle East and North Africa UAE Source: Oxford Economics Middle East and North Africa UAE Source: Oxford Economics 13

14 Report 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: 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, value-added 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. Consultancy and 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. 14

15 Report John Allen, BSc MRICS Director, Valuation & Advisory John Stevens, BSc MRICS Managing Director/Director, Asset Services Jeremy Oates, BSc FRICS General Manager, Abu Dhabi JerryO@asteco.com James Joughin, BSc (Hons) MRICS Associate Director, Valuation JamesJ@Asteco.com Ghada Amhaz, MBA Research & Consultancy Manager, Abu Dhabi GhadaA@asteco.com Julia Knibbs, MSc Associate Director, Research & Advisory (UAE) JuliaK@Asteco.com Tamer Ibrahim Chaaban Branch Manager, Al Ain TamerI@asteco.com 15

16 Report Xxx Property Review Abu Dhabi Real Estate Report 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 Dubai market. 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, /astrep828