Economic Overview United Arab Emirates has continued to benefit from surging confidence, safeheaven status, rising population and stable world class real estate market opportunities. The macroeconomic indicators look positive and the economic growth is expected to remain strong for 2015. The easing debt and improving financing conditions has further fuelled economic activity. Infrastructural spending on account of the forthcoming Expo 2020 has increased exponentially; this has led to healthy partnerships between government and private entities in various sectors. The economic recovery has been strong with excellent support from the non-oil sectors evidenced from increase in new order book, increase in industrial output leading to capacity expansions, better employment opportunities leading to an increase in spending power & improving industrial infrastructure which is cutting Volume 16 December 20 the total supply and delivery time of goods. The Inflation is also under check. For the month of October 20, the overall Consumer Price Index (CPI) has reached 122.47 (against an index of 100 set for 2007). The overall CPI has increased by 0.1 as compared to previous month. The average increase in prices recorded was at 3.1 as compared to same time last year i.e. October 20. (Source: National Bureau of Statistics) 1
Real Estate Sector Highlights Overall the Real Estate property prices have stabilised across all major locations in UAE. The mindful measures introduced by competent authorities have successfully dampened speculation which has lead to healthy credit growth. These macro prudential measures have ensured steady and stable growth in the real estate sector. Strong economic fundamentals and positive market sentiments have encouraged master and private developers to continue launching new projects. Few developers like the AL Wasl group who is primarily into the business of leasing have launched a project which is self funded, completed and ready to move in for investors from day one of the launch. This approach has been a strategic shift from the traditional approach where investor funds were used to construct an off plan project launch. Similarly other developers are now eyeing the budget segment homes or the mid range homes where there is an imminent need and strong demand to create good quality affordable homes. Developers have realised that such affordable home projects are low on construction & maintenance costs and easy to manage over the lifespan of the project and where demand is prone to any recessionary trends. Dubai s position as a first choice city for global companies in Middle East remains intact. With limited supply in good quality office space and a strong demand will lead to an imbalance in the short run. 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 in Last 3 Months in Last YTD Location Arabian Ranches Burj Khalifa Tower Burj Dubai Downtown Business Bay DIFC Dubai Land Dubai Marina Greens Dec- Jan- Feb- Mar- Apr- May- 86 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 81.2 81.0 56 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 52.6 52.4 100 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 104.6 104.4 67 70 72 73 73.6 74.3 74.9 74.5 74.7 75.1 74.3 74.0 72.4 48 51 51 54 54.9 55.2 55.2 55.8 55.8 55.8 55.7 55.7 55.6 73 74 75 76 76.8 76.6 77.4 77.5 76.4 76.7 76.0 75.9 76.4 77 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83.0 84.8 84.8 71 70 71 72 73.4 73.4 74.0 74.2 72.4 71.7 70.7 70.1 71.2 International City 64 67 70 73 75.0 75.7 75.7 76.4 75.7 76.0 74.7 74.3 75.0 Jumeirah Beach Residences 75 77 77 78 79.1 79.4 79.1 82.0 82.0 81.6 81.3 81.3 82.6 Jumeirah Lake Towers Jumeirah Islands Jumeirah Park Jumeirah Village Old Town Burj Dubai Palm Jumeirah Springs/ Meadows 56 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 61.4 62.1 98 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 97.9 98.1 85 82 82 82 82.0 81.2 80.7 79.4 78.9 77.9 76.4 76.4 77.2 101 112 111 1 1.1 1.8 1.1 1.0 1.0 111.2 110.1 106.0 105.3 76 74 75 75 76.8 76.8 76.8 76.8 76.8 76.8 76.6 76.6 77.0 120 119 120 121 125.7 126.3 126.3 127.4 125.6 126.3 126.4 126.4 126.8 82 81 83 84 84.8 84.5 84.0 83.5 81.8 81.1 79.2 78.9 79.1 Jun- Jul- Aug- Sep- Oct- from Oct - 20 from -0.3-1.3-6.2-0.3-0.8-7.0-0. -0.7 4.6-2.2-3.6 8.2-0.2-0.3 15. 0.6-0.5 5.0 0.0 1.9 9.6 1.6-0.7 0.2 0.9-1.4 17.4 1.6 1.2 10.6 1.2 1.2 10.3 0.2 0.0-0.2 1.0-0.9-9.7-0.7-5.3 4.3 0.4 0.3 1.7 0.3 0.4 5.9 0.3-2.5-3.3 from Jan- -3-8 2 4 7 7 7-6 -5 3 5-5 Per Sq. Ft (Aed) 16 3719 2846 39 1863 976 1781 53 675 1631 1041 1816 1225 947 2194 2821 84 3
Mashreq Wealth Gauge (Contd.) Apartments & Villas: The property prices for the month of November have marginally increased across ten major locations and have dipped marginally across 8 locations as compared to the previous months. Overall its been a marginal increase in property prices by 0. across board. The percentage s in property prices over the last few months indicate a stabilizing trend. Over a period of last 12 months (since Nov ) prominent Villa Community such as Jumeirah Village have witnessed an increase of 4.3 in property prices. Over a period of last 12 months (since Nov ) apartments such as International City have witnessed a increase of 17.4 in property prices followed by DIFC which has witnessed a increase of 15. Price Watch Villa Price Trend Mashreq Price Index as of End Nov 20 in Last 3 Months in Last YTD Location Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- from Oct - 20 from from Jan- Arabian Ranches Jumeirah Islands Jumeirah Park Jumeirah Village Springs/ Meadows 86 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 81.2 81.0 98 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 97.9 98.1 85 82 82 82 82.0 81.2 80.7 79.4 78.9 77.9 76.4 76.4 77.2 101 112 111 1 1.1 1.8 1.1 1.0 1.0 111.2 110.1 106.0 105.3 82 81 83 84 84.8 84.5 84.0 83.5 81.8 81.1 79.2 78.9 79.1-0.3-1.3-6.2-3 0.2 0.0-0.2 1.0-0.9-9.7-6 -0.7-5.3 4.3-5 0.3-2.5-3.3-5 4
Apartment Price Trend Mashreq Price Index as of End Nov 20 Location Burj Khalifa Tower Dec- Jan- Feb- Mar- Apr- 56 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 52.6 52.4 May- Jun- Jul- Aug- Sep- Oct- from Oct - 20 in Last 3 Months in Last from YTD from Jan- -0.3-0.8-7.0 - Burj Dubai Downtown 100 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 104.6 104.4-0. -0.7 4.6 Dubai Marina 77 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83.0 84.8 84.8 Jumeirah Beach Residences 75 77 77 78 79.1 79.4 79.1 82.0 82.0 81.6 81.3 81.3 82.6 0.0 1.9 9.6 4 1.6 1.2 10.6 7 Jumeirah Lake Towers 56 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 61.4 62.1 1.2 1.2 10.3 7 Outlook The strategic shift to launch self funded, completed and ready to move in properties is expected to catch momentum. The demand for budget segment homes or the mid range homes is expected to remain strong in the short term. The imbalance in demand and supply for good quality commercial space will continue in the short run. The overall outlook for the Real Estate Sector is positive in the long run. 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