Economic Overview The UAE economy has registered a growth of 5.2 in 2013. In spite of the dip in Oil prices globally the economy is expected to have registered a GDP growth between 4.7-4.8 in 2014. The economy is expected to grow at 4.5 in 2015 on account of expanding non oil sector, especially tourism, retail sales, trade and real estate. The non-oil sector is forecasted to be at 5.6 in 2014 and is expected to remain above 5 for 2015 16 on account of increased foreign investment inflows. The share of the oil & gas sector in 2013 s nominal GDP stood at 38.9 (39.4 in 2012). Despite being the single largest contributor to GDP, the oil sector s share in GDP is lower as compared to the country s GCC counterparts. Going forward, the sector s growth is likely to lose steam on account of further fall in global crude oil prices. Oil prices have dropped by about 23 in ember 2014, while it fell around 46 in 2014. The Inflation is also under check, in fact for the month of November 2014, the overall Consumer Price Index (CPI) has reached 122.23 (against an index of 100 set for 2007). The overall CPI has decreased by 0.19 as compared to previous month. The average increase in prices recorded was at 2.82 as compared to same time last year i.e. November 2013. (Source: National Bureau of Statistics). Volume 17 uary 2015 1
Real Estate Sector Highlights The Real Estate property sector has stabilized over the past 6-8 months, moving to realistic & tradable price levels. Various measures introduced by authorities have successfully dampened speculation which has led to marginal correction in property prices across all major locations in UAE. In spite of marginal correction in property prices, positive market sentiments and strong fundamentals continue to encourage developers with new project launches. Real Estate Developers have shifted their approach to budget segment homes which were earlier neglected and where a strong demand still exists. Developers have also realised that Budget homes are low on both construction and maintenance cost which can be traded to offer good quality housing to meet client expectations. Dubai Properties recently announced that they will be targeting the mid range income category segment for their Remraam project towers in Dubai Land. Danube has launched Glitz apartments with a strong marketing campaign targeting the affordable housing segment in UAE. The Real Estate market is also witnessing a proportionate shift of investments from off plan properties to completed properties. Various reasons attributing this shift are; (1). Developers have been requesting clients to register their off-plan properties by paying a fee of 4 of the contract value at the time of booking the property, in line with the DLD regulation on off-plan property registration leading to increase in cash flows at the inception. (2). The Rental yields on completed properties still remain attractive. (3). The first Dubai Rent index update for 2015 indicating rentals for apartments heading north anywhere between 6 to 25. 2
Mashreq Wealth Gauge At Mashreq we have been tracking the property prices by indexing them community wise on a scale of 100. Basis the Mashreq Price Indexing, the percentage over a period of time has been indicated both for Villas & Apartments for major communities. Mashreq Price Index Last Month Last 3 Months Last 12 Months YTD Nov from - 13 from -14 Per Sq. Ft (Aed) Arabian Ranches 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 81.2 81 80.7-0.4-0.9-3.7-4 1,311 Burj Khalifa Tower 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 52.6 52.4 51.7-1.3-1.7-2.2-2 3,669 Burj Dubai Downtown 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 104.6 104.4 104.4 0.0-0.3 2.1 1 2,846 Business Bay 70 72 73 73.6 74.3 74.9 74.5 74.7 75.1 74.3 74 72.4 72.2-0.3-2.9 3.0 1 1,335 DIFC 51 51 54 54.9 55.2 55.2 55.8 55.8 55.8 55.7 55.7 55.6 55.2-0.7-0.8 8.0 7 1,850 Dubai Land 74 75 76 76.8 76.6 77.4 77.5 76.4 76.7 76 75.9 76.4 75.1-1.7-1.2 0.9 0 960 Dubai ina 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83 84.8 84.8 83.9-1.1 1.0 5.8 3 1,761 Greens 70 71 72 73.4 73.4 74 74.2 72.4 71.7 70.7 70.1 71.2 70.2-1.4-0.7-0.3-1 1,334 International City 67 70 73 75 75.7 75.7 76.4 75.7 76 74.7 74.3 75 74.0-1.4-0.9 10.4 5 666 Jumeirah Beach Residences 77 77 78 79.1 79.4 79.1 82 82 81.6 81.3 81.3 82.6 81.0-1.9-0.4 5.3 5 1,600 Jumeirah Lake Towers 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 61.4 62.1 61.5-1.0-1.0 8.4 6 1,030 Jumeirah Islands 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 97.9 98.1 98.0-0.2 0.0 0.7 0 1,813 Jumeirah Park 82 82 82 82 81.2 80.7 79.4 78.9 77.9 76.4 76.4 77.2 75.2-2.6-1.5-8.2-8 1,194 Jumeirah Village 112 111 113 114.1 113.8 114.1 114 113 111.2 110.1 106 105.3 102.8-2.3-6.6-8.1-7 925 Old Town Burj Dubai 74 75 75 76.8 76.8 76.8 76.8 76.8 76.8 76.6 76.6 77 75.9-1.4-1.0 2.7 1 2,163 Palm Jumeirah 119 120 121 125.7 126.3 126.3 127.4 125.6 126.3 126.4 126.4 126.8 131.6 3.8 4.1 10.6 9 2,927 Springs/ Meadows 81 83 84 84.8 84.5 84 83.5 81.8 81.1 79.2 78.9 79.1 77.1-2.5-2.7-5.1-7 1,349 3
Mashreq Wealth Gauge (Contd.) Apartments & Villas: The property prices for the month of ember 14 have decreased by 1 on an average across all major locations as compared to the previous months. A similar trend has been observed for the last three months, where the overall decrease in property prices has been 1.0 across board. However the average percentage in property prices since 13 is still positive. The numbers indicate a stabilizing trend in property prices. Over a period of last 12 months (since 13) Prominent Villa Community such as Jumeirah Park have witnessed a decrease by 8.2 in property prices. Over a period of last 12 months (since 13) Apartments such in International City have witnessed a increase of 10.4 in property prices followed by JLT which has witnessed a increase of 8.4. Price Watch Villa Price Trend 4 Mashreq Price Index as of End 2014 Month 3 Months 12 Months YTD Nov from - 2014 from - 13 from - 14 Per Sq. Ft (Aed) 4 Arabian Ranches 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 81.2 81.0 80.7-0.4-0.9-3.7-4 1,311 Jumeirah Islands 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 97.9 98.1 98.0-0.2 0.0 0.7 0 1,813 Jumeirah Park 82 82 82 82.0 81.2 80.7 79.4 78.9 77.9 76.4 76.4 77.2 75.2-2.6-1.5-8.2-8 1,194 Jumeirah Village 112 111 113 114.1 113.8 114.1 114.0 113.0 111.2 110.1 106.0 105.3 102.8-2.3-6.6-8.1-7 925 Springs/ Meadows 81 83 84 84.8 84.5 84.0 83.5 81.8 81.1 79.2 78.9 79.1 77.1-2.5-2.7-5.1-7 1,349
Apartment Price Trend Mashreq Price Index as of End 2014 Nov Last Month from - 2014 3 Months Chan ge 12 Months YTD from - 13 from - 14 Per Sq. Ft (Aed) Burj Khalifa Tower 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 52.6 52.4 51.7-1.3-1.7-2.2-2 3,669 Burj Dubai Downtown 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 104.6 104.4 104.4 0.0-0.3 2.1 1 2,846 Dubai ina 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83 84.8 84.8 83.9-1.1 1.0 5.8 3 1,761 Jumeirah Beach Residences 77 77 78 79.1 79.4 79.1 82 82 81.6 81.3 81.3 82.6 81.0-1.9-0.4 5.3 5 1,600 Jumeirah Lake Towers 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 61.4 62.1 61.5-1.0-1.0 8.4 6 1,030 Outlook The Real Estate Sector shows signs of stabilization and the Outlook remains positive. Demand for budget homes is expected to remain strong. We expect developers to launch new projects targetting this segment in 2015. The Lending Sector will remain competitive and lower rate regimes will prevail. The Rental returns will remain attractive. Disclaimer: Please note that this communication constitutes information of general market information and based on studies and research, it should not be solely relied on without an opinion from you investment advisor. Mashreqbank psc shall not be liable for a liability arising out of any financial advice provided in connection with this communication. 5