Property Review Dubai Real Estate Report Q3 2017 In the Middle East for over 30 Years 2 Property map 3 Sales Rentals 4 Sales Rentals 5 Offices Sales Rentals
Dubai Property Map 17 3 To Abu Dhabi 6 27 3 31 23 Most Expensive Expensive Mid Priced Affordable 4 15 38 6 36 37 34 25 41 32 54 40 51 63 30 58 28 39 49 1 57 56 55 47 46 60 44 3 8 61 22 42 3 29 59 44 2 35 16 10 19 44 43 26 24 Arabian Gulf 50 9 53 14 52 21 12 20 44 18 3 33 6 7 13 62 45 5 6 48 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 Dubaiand 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 36 Golf Estates 37 Islands 38 Park 39 Village Circle 40 Village Triangle 41 Lakes Towers 42 Living Legends 43 Liwan 44 Meydan 45 Mirdif 46 MotorCity 47 Mudon 48 Muhaisnah 49 Palm 50 Pearl 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 Mirdiff 63 Victory Heights 6 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 of product and exceptions of a lower and / or higher price could be available. 2 DUBAI
Dubai -4% -4% -12% Apartment sales prices remained broadly stable over the third quarter of the year. However, the rise in off-plan sales, particularly of smaller, more affordable properties, has resulted in a decline in sales volumes of completed units as increased incentives and post-completion payment plans make off-plan investments more accessible to buyers with more limited equity. Yearly changes were nominal with decreases of 4% on average across all quality bands. Business Bay and Dubai Marina led the price declines with a drop of 8%, followed by Dubai Sports City, International City and Village at 7%. Rental rates softened by 4% over the quarter. Whilst this was less pronounced than projected, the annual change since Q3 2016 amounted to 12%, which can be largely attributed to increased supply. There has been a steady rise in new projects reaching completion. However, Asteco believes a significant amount of the supply forecasted for handover in Q4 2017 will spill over into 2018. These delays are likely to result from both intentional phasing considerations and unplanned construction delays/financial issues. Asteco estimates that the delivery of new properties in Q4 2017 will be similar to previous quarters, which amounted to approximately 3,000 to 4,000 units per quarter. Despite increased government spending in infrastructure, hospitality and retail in the run-up to the Expo 2020, market sentiment remains low largely due to weak employment growth and the bearish outlook in terms of oil price and global economic recovery. TYPE STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE AED 000 S PER ANNUM FROM TO FROM TO FROM TO FROM TO Q2 2017 Q3 2016 HIGH END AND LUXURY PROPERTIES DIFC 65 85 80 130 95 180 150 250-1% -8% Downtown Dubai 55 85 75 120 95 160 150 250-1% -18% Palm 65 85 80 150 0 200 150 300-13% Sheikh Zayed Road 70 80 70 125 90 160 5 200-9% MID TO HIGH END PROPERTIES Business Bay 50 70 60 90 80 140 130 180-5% -14% Dubai Marina 45 85 55 95 75 145 105 205-7% -19% Greens 55 70 65 95 95 145 130 180-14% Beach Residence 65 80 80 120 100 140 135 200-4% -12% Lakes Towers 45 70 55 85 75 135 100 170-5% -13% AFFORDABLE PROPERTIES Al Barsha 42 62 55 75 70 0 95 135-12% Bur Dubai 30 55 45 80 60 120 90 160-5% -16% Deira 25 55 35 75 55 100 75 150-5% -15% Discovery Gardens 35 50 50 65 80 100 - - Dubai Sports City 34 50 48 70 65 95 80 120-8% -16% International City 25 38 35 52 50 70 - - -13% Village 34 48 48 68 65 105 90 130-6% -15% -5% -8% -8% -4% -6% -7% -7% -7% 2,000 AED per sq ft 1,500 1,000 500 0 DIFC Downtown Dubai Palm Business Bay Dubai Marina Greens Beach Residence Lakes Towers Discovery Gardens Dubai Sports City International City Village HIGH END AND LUXURY PROPERTIES MID TO HIGH END PROPERTIES AFFORDABLE PROPERTIES From 1,200 1,200 900 1,000 850 1,000 1,050 850 700 650 550 700 To 2,300 2,500 2,500 1,700 2,000 1,600 1,600 1,500 1,000 1,200 850 1,000 2016 8,750 Q1 10,200 expected in Q4 2017 3,500 Average Sales Price % Change (Q2 2017 - Q3 2017) % Change (Q3 2016 - Q3 2017) Asteco Property Management, 2017 3
Dubai -1% -1 Similar to the apartment market, demand for townhouses and villas has been focused towards more affordable, smaller properties. Sales prices remained largely unchanged in Q3 2017, whilst the average annual decline was minimal at 3%, although some communities recorded drops of up to 9%. There has been a marked rise in off-plan transactions stimulated by lower price points and increasingly flexible pre- and post-completion payment plans, which opened the market to mid-income Investors and End users. As with apartments, villa rental rates also recorded modest quarterly declines of 3% on average. Annual adjustments were more pronounced with drops of 1 on the back of increasing supply. Interestingly, the line between rental rates for different unit types within the same community is becoming increasingly blurred. For example, within a rental rate range of AED 0,000 to AED 140,000 Tenants can choose between a two, three, four and five bedroom townhouse in Village; although cheaper and more expensive units are available for each product type. Incentives now include rent-free periods of up to two months, 6 to 12 cheque payments and free maintenance. The sheer volume of properties announced and anticipated for delivery over the next few years will continue to put further pressure on rental rates. The impact on some projects will, however, be less notable if they benefit from unique demand drivers such as favourable location, advanced facilities, quality finishes, excellent property management, above norm incentives, etc. TYPE 2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE AED 000 S PER ANNUM FROM TO FROM TO FROM TO FROM TO Q2 2017 Q3 2016 Al Barsha - - 140 200 150 250 170 300-1 Arabian Ranches 5 165 130 190 150 250 210 320-15% Dubai Sports City (Victory Heights) - - 140 170 160 200 180 280-6% -14% - - 140 230 150 250 170 350-12% Park - - 165 215 180 250 205 300-5% -9% Village 100 140 0 170 0 170 135 195-8% -14% Meadows - - 180 220 190 260 200 300-5% -12% Mirdif 70 0 85 135 100 180 120 200-4% -% Palm - - 210 350 250 450 350 850-15% Springs 100 130 135 175 - - - - -18% The Lakes - - 165 235 200 295 300 400-9% Umm Suqeim - - 140 240 150 300 180 320-12% AED per sq ft 3,000 2,500 2,000 1,500 1,000 500 0 Arabian Ranches -6% Dubai Sports City (Victory Heights) Park -9% Village Meadows Palm From 800 850 850 550 950 1,600 950 To 1,600 1,250 1,250 1,050 1,450 4,500 1,150 Average Sales Price % Change (Q2 2017 - Q3 2017) % Change (Q3 2016 - Q3 2017) Springs 2016 5,000 Tenants and Investors benefited from greater choice of properties, as well as lower pricing and more flexible payment terms. Q1 2,325 expected in Q4 2017 1,300 4 DUBAI
Dubai Offices -6% The office sector has arguably proven the most challenging asset class over the past year. Sales prices and rental rates continued to stagnate in Q3 2017 due to limited demand in a generally oversupplied market, particularly for strata titled office units. The lack of transaction activity and reluctance of Landlords to lower rates in certain areas resulted in a largely flat market. Although stable rates generally mean the bottom of a real estate cycle, we do not believe this to be the case for the office sector and anticipate further, more pronounced declines. Whilst there has been some demand and take-up in Grade A office space, this only constitutes a fraction of the overall stock. There has been a rise in the number and size of real estate funds / real estate investment trusts (REITs) in Dubai and wider region, which generate attractive yields for Investors with low entry/exit costs, greater levels of liquidity and the ability to diversify investment across asset types. Industry experts believe that there remains room for growth and expect a rise in specialised REITs focusing on specific asset classes. This could potentially lead to a greater pool of proactive Landlords offering incentives in order to secure higher occupancy rates to deliver Investor returns. AVERAGE RENTAL RATES % CHANGE AED PER SQ FT PER ANNUM FROM TO Q2 2017 - Q3 2017 Q3 2016 - Q3 2017 Barsha Heights (formerly Tecom) 50 120-5% Bur Dubai 80 130-5% Business Bay 70 130-1 DIFC 150 350 Dubai Investment Park 60 85 Dubai Silicon Oasis 50 80 Lakes Towers 60 140-5% Sheikh Zayed Road 100 250-9% Commercial property is likely to attract VAT, which is expected to be introduced in January 2018, and although this is likely to dampen Investor interest in the short to medium-term, it may open the possibility of a potential increase in tenant demand for the accounting, auditing and tax advisory sector. The overall outlook for the office market, however, is expected to be subdued. -8% -13% -% -% 2,000 1,500 AED per sq ft 1,000 500 0 Barsha Heights (formerly TECOM) Business Bay DIFC Dubai Silicon Oasis Lakes Towers From 600 700 1,000 450 550 To 1,200 1,600 2,600 750 1,250 2016 4 m sq ft Q1 1.75 m sq ft expected in Q4 2017 0.6 m sq ft Average Sales Price % Change (Q2 2017 - Q3 2017) % Change (Q3 2016 - Q3 2017) Asteco Property Management, 2017 5
Dubai Real Estate Report Q3 2017 CURRENT REAL ESTATE TRENDS AT YOUR FINGER TIPS 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. 218551. Paid-up Capital AED 4,000,000. ORN 180