Historic Review and Outlook Dubai Real Estate Report Q4 2017 2 Property map 3 Historic Review 4 Highlights and Outlook In the Middle East for over 30 Years Apartment 5 6 Rentals Villa and Office Rentals 7 Apartment Sales 8 Villa and Office Sales
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 Dubailand 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 Jumeirah 36 Jumeirah Golf Estates 37 Jumeirah Islands 38 Jumeirah Park 39 Jumeirah Village Circle 40 Jumeirah Village Triangle 41 Jumeirah Lakes Towers 42 Living Legends 43 Liwan 44 Meydan 45 Mirdif 46 MotorCity 47 Mudon 48 Muhaisnah 49 Palm Jumeirah 50 Pearl Jumeirah 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 Mirdif 63 Victory Heights 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 6 of product and exceptions of a lower and / or higher price could be available. 2 DUBAI
Historic Review Recession 2009-20 Recovery and Growth 2012-2013 Stabilisation 2014-2015 Downturn 2016-2017 Index Base 100 = March 2010 The Dubai real estate market has gone through significant fluctuations over the years. Following the introduction of a decree allowing International Freehold Ownership in 2002, the market recorded rapid growth up until Q1 2009. This period was marked by large scale developments and project launches. The real estate market was fuelled by both strong demand from a rapidly expanding economy and workforce (leading to double digit rental growth and Investor returns) and, more problematically, Investor speculation. With the onset of the global financial crisis, loss of confidence, erosion of capital and drying-up of liquidity, speculators were driven from the market. This resulted in significant value contractions and ultimately the collapse of fundamentals underpinning the real estate market. Asteco also recorded noticeable Tenant migration from neighbouring emirates due to decreased rental rates in Dubai. Sales activity remained subdued although transaction levels picked up slightly by the end of 20. Many projects were delayed, put on hold or cancelled. 240 200 160 120 80 The market began to show signs of recovery in 2012 when the Euro Crisis and Arab Spring conflict led to Dubai being an attractive alternative and safe haven to invest and live in. In November 2013, Dubai was awarded to host Expo 2020, which led to growth in market confidence, a rise in new project launches and increased sales prices and rental rates. Established communities and quality buildings experienced increased demand whilst newer developments saw improved take-up in line with enhancements in infrastructure and connectivity. Whilst increased job security and market confidence created demand for Tenants to upgrade, rapid rental growth also restricted Residents to move within Dubai and thus resulted in an upsurge in relocations to the Northern Emirates in search of more affordable housing. In anticipation of the growing Investor demand, the Dubai Government doubled the land registration fee to 4%, and introduced new loan-to-value rules to limit property speculation. The market peaked in Q2 2014 and corrected thereafter due to a combination of factors such as the reduction in LTV s, low oil prices and a strong US dollar. Due to the substantial number of launches witnessed in the previous years, concerns of an oversupply and lack of demand particularly for high-end properties motivated Developers to focus on the mid and affordable housing sector, and to offer incentives such as extended payment plans during the post completion stage. Lower deposits also made off-plan sales a more attractive option compared to the minimum 25% down payment required for a mortgaged property. 2016 and 2017 saw a significant amount of new project launches and deliveries resulting in moderate but steady declines in sales prices and rental rates. Tenants and Investors drove the market as more and more people looked for value-for-money options, which resulted in affordable developments outperforming luxury accommodation in terms of transaction activity. The number and range of incentives increased as Landlords tried to retain Tenants and increase take-up. Developers increasingly offered smaller, off-plan units at lower price points with flexible post-completion payment plans, which resulted in an increase in first-time Buyers and End-users as home ownership became more accessible to people who were previously unable to jump on the property ladder due to high down payments. This resulted in a drop in demand for completed properties. 40 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 Dec Mar Jun Sep Dec 2009 2010 20 2012 2013 2014 2015 2016 2017 Apartment Sales Villa Sales Office Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis. Asteco Property Management, 2018 3
Highlights and Outlook TRENDS 2017 2018 Sales Prices Rental Rates Project Launches Incentives Supply Demand - Off-plan Demand - Completed 2017 Highlights 2018 Outlook Residential Apartment rental rates recorded steady declines throughout 2017 ranging from 2% to 4% per quarter, on average. Drops in sales prices were slightly less pronounced with variations of 0% to 4%. The villa market fared similarly with average quarterly decreases in sales prices and rental rates of 2% and 3%, respectively. 2017 recorded a significant number of new project launches, particularly targeting the mid-income market, with a marked shift to smaller units offering lower price points, together with a greater choice of incentives such as guaranteed returns, reduced/no commissions, low down payments and post-completion payment plans. This resulted in a rise in End-users and first-time Buyers entering the market. Consequently, off-plan sales far exceeded secondary property transactions, mainly due to the high loan-to-value ratios stipulated by the UAE Central Bank, which make real estate investment difficult to Buyers with limited equity. There has also been a steady rise in project completions, which has put the bargaining power firmly in the hands of Tenants who have taken advantage of the increased choice and competitive rates to relocate to new properties or renegotiate existing contracts. Proactive Landlords looking to secure new leases and/or retain Tenants increasingly offered incentives including, but not limited to rent-free periods of up to two months, increased payment frequency (up to 12 cheques) and all/part of the utilities absorbed. Asteco expects 2018 to follow similar trends as compared with the previous year, although project launches are anticipated to ease off as the market finds a new equilibrium. The centre of Dubai continues to shift away from its traditional core (around the Dubai International Airport and along Sheikh Zayed Road (E)), and towards the new Al Maktoum International Airport and the area surrounding the Sheikh Mohammed Bin Zayed Road (E3), a move encouraged by ongoing infrastructure and development projects in the lead up to the Expo 2020. Sales prices and rental rates are expected to continue to come under pressure with a more pronounced drop anticipated for the latter as a result of the sheer amount of supply projected for delivery this year. Investors will continue to be more sensitive to the price point of properties as opposed to the price per square foot, meaning units that were previously advertised below the AED 1,000 per sq.ft., mark will be marketed for instance at below AED 500,000 for studios or AED 1 million for one bedroom apartments to entice take-up. In order to stimulate demand for completed properties and increase transaction activity in this sector, the UAE Central Bank would need to relax their LTV ratios to make home ownership more accessible to a large proportion of the local and overseas population. However, there is no indication of any such changes in the short-term. Although residential sales and leasing is generally exempt, the introduction of the VAT will indirectly affect Tenants and Investors as the tax is applicable to items such as maintenance, utility and agency fees. However, given current market conditions, some of these charges are expected to be initially absorbed by Owners/Landlords. Office Despite recording only marginal quarterly drops in sales prices and rental rates, the office sector has arguably proven the most challenging asset class in 2017 underpinned by a bearish market sentiment, low oil prices and limited business growth. Grade A office space under single ownership, which constitutes a fraction of the overall office space, fared better when compared to strata title properties. In fact, development around the DIFC and Trade Centre area is particularly active due to good levels of demand. Similar to the residential market, Landlords negotiated terms and offered incentives to improve occupancy rates. Although the oversupply situation, particularly in regards to secondary strata stock, will continue in 2018, we expect healthy appetite for quality Grade A commercial properties. Overall, sales prices and rental rates are likely to see further adjustments until market conditions and economic sentiment improve. The newly implemented value-added tax of 5% is likely to affect market sentiment and demand in the short-term; however, it is important to note that the levy is still below the global average of 15% and will ultimately boost the economy through increased Government spending, business development and hiring. Supply 13,900 APARTMENTS 3,600 VILLAS 2.6m SQ.FT. OFFICE SPACE 23,000 APARTMENTS 8,500 VILLAS 2.8m SQ.FT. OFFICE SPACE
Apartment Rental Rates -4% (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS YEAR 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 HIGH TO LUXURY END DIFC - - - 73 80 103 3 3 105 100 - - - 5 130 158 173 158 160 145 - - - 145 170 198 235 230 190 190 Downtown Dubai 133 85 70 68 80 98 8 5 5 95 185 120 100 100 125 160 170 175 160 130 275 165 150 150 180 228 245 240 225 190 Dubai Marina 130 78 63 63 75 105 3 98 90 70 180 0 90 80 100 140 158 143 125 105 245 160 125 5 135 178 210 205 190 155 Jumeirah Beach Residence 5 85 73 70 80 108 8 5 105 95 168 8 95 90 100 135 163 148 140 5 203 148 5 0 140 175 200 193 185 160 Palm Jumeirah 200 3 90 90 95 135 150 135 130 0 228 145 120 120 140 175 208 198 175 155 300 200 170 170 190 223 243 255 235 200 Sheikh Zayed Road 160 83 70 68 83 98 3 100 95 90 203 130 105 100 0 148 148 130 125 5 290 175 120 120 135 195 200 175 165 150 HIGH TO LUXURY END AVERAGE 148 89 77 75 88 2 123 6 2 98 193 125 3 108 124 151 167 164 151 133 263 170 143 141 175 194 215 225 2 184 MID TO HIGH END Business Bay - - 55 45 60 90 93 93 85 70 - - 85 70 85 130 135 135 125 105 - - 5 100 125 178 180 185 170 150 Greens 120 65 58 55 65 85 83 95 95 75 160 88 78 75 100 135 148 143 130 5 180 130 5 105 130 155 173 175 175 145 Jumeirah Lakes Towers 0 65 50 45 55 83 90 90 75 65 160 85 65 65 75 0 133 125 5 95 210 8 85 85 100 148 168 153 150 130 MID TO HIGH END AVERAGE 4 66 55 49 57 79 86 90 84 71 153 91 77 70 83 7 127 126 9 101 217 138 120 105 123 158 166 171 161 141 AFFORDABLE Al Barsha 100 60 45 44 50 78 78 75 75 60 145 75 58 55 65 100 103 95 95 80 175 95 80 78 100 145 148 135 120 0 Bur Dubai 105 43 43 43 45 73 75 73 65 58 153 80 68 65 63 103 105 108 100 85 190 80 83 80 83 125 135 138 130 5 Deira 88 48 40 37 35 68 65 65 60 50 103 55 55 53 53 85 90 90 85 70 138 83 75 70 75 135 133 3 5 95 Discovery Gardens 100 58 45 38 45 70 70 72 65 55 135 85 70 53 70 83 80 80 85 85 - - - - - - - - - - Dubai Sports City - - - 35 40 59 65 74 65 55 - - - 45 55 88 98 105 90 75 - - - - - - - - 125 100 International City 70 44 27 23 24 43 46 50 45 40 93 63 39 38 38 65 63 65 63 55 - - - - - - - - - - Jumeirah Village - - - 35 45 70 65 73 60 55 - - - 53 70 95 103 105 95 80 - - - 80 90 120 130 138 135 0 AFFORDABLE AVERAGE 93 51 40 35 39 64 65 66 60 53 126 72 58 48 55 86 88 91 85 73 168 86 79 76 86 125 128 120 5 100 DUBAI AVERAGE 8 68 57 53 61 85 91 90 85 74 157 96 82 75 88 8 127 127 8 102 216 131 4 107 128 159 170 172 162 142 Annual - -42% -16% -7% 15% 39% 7% -1% -6% -13% - -39% -14% -8% 16% 35% 8% 0% -7% -14% - -39% -13% -6% 19% 24% 7% 2% -6% -13% since peak (2008) -38% -35% -34% since market low (20) 39% 35% 32% since 2nd peak (2014) -19% -20% -16% Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/bottomed-out and marginal variations may occur. Asteco Property Management, 2018 5
Villa Rental Rates -3% (All figures in AED 000 s p.a.) TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS YEAR 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 Al Barsha - - - 120 140 175 195 213 175 165 - - - 160 180 240 255 230 200 190 - - - 195 210 265 285 273 270 240 Arabian Ranches 275 140 125 125 155 213 215 203 195 155 335 180 160 160 220 285 300 243 235 190 425 265 250 250 285 365 343 303 285 250 Victory Heights - - - 150 155 205 195 180 175 155 - - - 165 180 220 250 215 210 180 - - - 220 275 320 313 305 300 245 Jumeirah 325 160 140 140 155 195 215 190 190 175 400 190 160 160 185 238 275 253 210 195 450 225 200 200 220 310 350 285 270 230 Jumeirah Park - - - - - 195 220 218 210 175 - - - - - 250 290 245 245 200 - - - - - 295 340 290 275 255 Jumeirah Village - - - 90 125 155 163 160 160 145 - - - 0 150 165 178 170 170 145 - - - 145 165 180 210 208 185 160 Meadows 325 180 180 180 210 230 238 233 210 195 350 240 200 200 225 250 275 260 260 225 425 265 225 225 265 285 310 285 285 250 Mirdif 240 100 80 80 90 138 133 130 120 105 260 120 0 105 5 165 155 150 150 130 275 165 125 125 140 175 175 175 170 150 Palm Jumeirah 375 270 275 275 325 350 350 333 320 275 550 340 315 315 400 495 485 420 400 390 800 450 450 450 500 723 725 675 600 500 Springs 250 125 105 105 140 163 195 180 180 145 - - - - - - - - - - - - - - - - - - - - The Lakes - - - 170 200 220 228 223 220 190 - - - 260 280 290 283 275 270 245 - - - 340 350 350 400 363 350 330 Umm Suqeim 325 160 140 135 160 215 250 195 190 180 400 190 160 160 180 290 275 260 240 220 490 230 210 210 220 313 305 290 270 245 DUBAI AVERAGE 314 179 162 152 179 213 225 206 195 175 388 223 204 186 219 261 271 244 231 206 482 274 246 224 259 3 314 290 274 245 Annual % change - -43% -9% -6% 18% 19% 5% -8% -5% -% - -43% -8% -9% 18% 19% 4% -10% -5% -% - -43% -10% -9% 15% 20% 1% -8% -6% -% since peak (2008) -44% -47% -49% since market low (20) 15% % 9% since 2nd peak (2014) -22% -24% -22% Dubai Office Rental Rates Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/ bottomed-out and marginal variations may occur. 0% (All figures in AED per sq.ft. p.a.) YEAR 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 Barsha Heights 350 105 75 60 55 85 100 0 95 95 Bur Dubai 360 150 0 90 80 95 105 108 100 100 Business Bay - - - 75 70 100 103 88 90 90 DIFC 525 370 230 220 225 220 235 255 250 245 Dubai Investment Park 205 95 50 40 40 55 65 70 70 70 Jumeirah Lakes Towers 235 100 60 50 50 90 95 98 95 95 Sheikh Zayed Road 425 215 160 140 140 175 180 185 165 150 DUBAI AVERAGE 350 173 4 96 94 7 126 130 127 122 Annual % change - -51% -34% -16% -2% 24% 8% 3% -2% -4% since peak (2008) -65% since market low (2012) 27% 6 DUBAI since 2nd peak (2014) -3%
Apartment Sales Prices AED per sq.ft. -4% 0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000 2,050 1,800 1,400 1,000 850 750 1,000 700 Business Bay 700 900 1,225 1,210 Dubai Marina 925 1,050 1,900 JLT 650 750 1,200 1,750 1,250 1,600 1,150 1,450 1,150 1,175 1,250 1,125 DIFC 2,700 1,600 1,500 1,350 1,875 Greens 1,700 1,050 825 775 950 1,400 1,875 1,375 925 1,700 1,365 938 1,750 1,350 900 1,650 1,250 800 Jumeirah Village 600 500 475 500 875 Discovery Gardens 1,250 550 500 450 450 825 International City 1,050 500 425 325 350 675 885 710 2,000 850 688 1,720 855 700 1,700 800 650 1,500 Palm Jumeirah 2,800 1,500 1,175 1,400 2,000 Downtown Dubai 2,700 1,400 2,200 2,000 925 925 1,000 1,525 2,325 1,625 2,200 1,370 1,900 1,700 1,200 JBR 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 Asteco Property Management, 2018 7
Villa Sales Prices AED per sq.ft. Dubai -3% -4% Office Sales Prices 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Arabian Ranches 2,200 2,200 2,500 850 1,000 750 850 850 750 850 750 Meadows 950 1,000 750 1,225 825 1,150 1,350 975 1,000 1,150 975 1,150 900 1,200 800 Barsha Heights Dubai Sports City 1,500 2,750 2,200 850 1,800 1,250 750 1,550 900 Palm Jumeirah 750 1,500 750 900 1,800 700 1,125 3,000 975 1,250 2,850 1,225 1,150 2,475 1,250 1,150 2,500 1,250 1,050 2,400 1,000 Business Bay Jumeirah Park 1,500 1,800 4,250 725 850 1,900 650 650 1,900 550 650 1,800 Springs 800 900 1,700 1,175 1,800 1,175 1,075 1,875 1,0 950 1,925 1,900 1,000 1,000 1,650 DIFC Jumeirah Village 2,000 600 900 500 650 475 550 550 550 850 925 975 1,075 950 975 850 850 750 800 Jumeirah Lakes Towers 2008 2009 2010 20 2012 2013 2014 2015 2016 2017 8 DUBAI
About Asteco The Middle East s largest full service Real Estate services company, Asteco was formed in Dubai in 1985. Over the years, Asteco has gained enormous respect for consistently delivering high quality, professional, valueadded 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. 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: Consultancy & 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. John Stevens MSc, BSc (Hons), MRICS Managing Director/ Director - Asset Services JohnS@Asteco.com John Allen BSc, MRICS Director - Valuation & Advisory JohnA@Asteco.com Derrick Maguire ARLA, NAEA Associate Director - Transactional Services DerrickM@Asteco.com James Joughin BSc (Hons), MRICS Associate Director - Valuation JamesJ@Asteco.com Jenny Weidling BA (Hons) Manager - Research and Advisory, Dubai JennyW@Asteco.com Ghada Amhaz MSc Manager - Research and Advisory, Abu Dhabi +971 2 626 2660 GhadaA@asteco.com Tamer Ibrahim Chaaban BE Branch Manager - Al Ain office +971 3 7666097 TamerI@asteco.com 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