property review uae real estate reportal reef villas golf gardens hidd al saadiyat hydra village...

Property Review

UAE Real Estate ReportQ2 2019

Northern EmiratesDubaiAbu Dhabi 20113Al Tamimi & Co.

Oxford EconomicsAl Ain 313026

BUILDING CONSULTANCY

The building consultancy team at Asteco have a wealth of experience and an in-depth knowledge of construction technology, building pathology and effective project management methods which enable us to provide our Clients with a comprehensive building consultancy service.

Technical Due Diligence

Schedules of Dilapidations

Building Condition Surveys

Snagging Inspections

Schedules of Condition

Defect Analysis

Area Verification

Project Monitoring and Audits

Project Management

Life Cycle Costing

RERA Technical Reports

Insurance Reinstatement ValuationFor more details, please contact

Nick Constantine, BSc (Hons) MRICS, Head of Building Consultancy [email protected]

With you throughout all stages of your

built asset lifecycle

Abu Dhabi Real Estate Report -

ABU DHABI MARKET OVERVIEW

SUPPLY RENTAL RATES SALES PRICESQ2 2019 saw the delivery of approximately 500 residential units spread throughout Abu Dhabi. Whilst handover volumes over the last three months were limited, additional supply for H2 2019 is estimated to reach close to 5,000 properties (4,500 apartments & 450 villas), assuming current construction programmes are adhered to. These will predominantly be located within the Investment Zones, including, but not limited to, Al Raha Beach, Al Reem Island, Saadiyat Island and Yas Island. The office market recorded the completion of two commercial projects, namely SADEM Building in Al Raha Beach and a new office complex in Rawdhat. Residential plot launches dominated the 2nd quarter of the year with land parcels offered for sale (on attractive payment plans) within the following developments: • Al Reeman Phase II by Aldar Properties, located in the Shamkha area, offers residential land plots for sale to UAE nationals only. • Lea by Aldar, located on Yas Island, comprises villa plots for sale to all nationalities. • Al Jurf by IMKAN, located in the Ghantoot area, sells villa plots as well as villas to all nationalities. • Al Jubail Island, located adjacent to Saadiyat Island and spanning over 400 hectares, will comprise a mix of serviced plots for residential, retail and office use, which are offered for sale to all nationalities. The above projects are within master planned communities and are expected for completion over the next two to four years.

Apartment and villa rental rates softened by 1% and 2%, respectively, over the quarter. Whilst average declines were marginal, several low- and mid-quality projects recorded drops of 5% to 8% over the same period. Annual changes were more pronounced with apartment and villa rental rates contracting by 13% and 5%, respectively. Lower quality properties, predominantly located in Abu Dhabi City, recorded the most notable reductions, largely due to the increased supply of new mid-quality buildings on Al Reem Island (as well as other areas) offered at competitive rates. Several mid-/ high-quality projects in Al Raha Beach and on Al Reem Island noted a rise in occupancy levels over the last three months, mainly as a result of incentives offered (multiple cheque payments and rent-free periods). Despite limited interest in commercial space, average office rental rates across all quality specifications remained more or less unchanged during Q2 2019. Whilst office rental rates for Grade B (shell & core) units eased by approximately 7% since Q2 2018, lower quality buildings recorded annual drops between 8% and 13%. Landlords continued to provide discounts and incentives on contract renewal in order to retain Tenants.

The Abu Dhabi government recently (April 2019) issued a law amending provisions of Law No. 19 of 2005 concerning the real estate sector in Abu Dhabi, henceforward allowing foreigners to own land and properties on freehold basis in designated Investment Zones (freehold ownership was previously limited to UAE and GCC nationals, whilst expatriates were restricted to 99-year leasehold rights). This action is in line with the government’s objective to increase transparency, boost investment and stimulate the economy. Uncertainties pertaining to the property title (as well as economic challenges) have previously discouraged Residents from becoming home Owners. Implementation is underway and is expected to increase real estate demand in the medium- to long-term. In the meantime, apartment and villa sales prices continued to soften by 1% and 2% from Q1 2019, whilst annual declines averaged 4% and 9%, respectively. Although sales transaction volumes for completed properties remained limited, demand for land plots (recently launched for sale in mid-market developments) was significant as Investors continued to focus on value-for-money products.

Q2 20193

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESTHOUSAND SQ.M.

COMPLETED IN COMPLETED IN EXPECTED IN

ABU DHABI SUPPLY


2,800 380 4,500

800 120 450

29 15 40

Q2 2019

Q1 2019 Q2 2019 H2 2019

4


INVESTMENT AREA

(All figures in AED 000’s p.a.)

Since market low Q2 2012

Since peak Q4 2015

Y-o-YQ-o-Q% Change

PRIME PROPERTIES ABU DHABI ISLAND

HIGH END PROPERTIES

LOW END PROPERTIES

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

ABU DHABI APARTMENT RENTAL RATES

FROM FROM FROM FROMTO TO TO TO

ABU DHABI ISLANDCentral Abu DhabiCornicheKhalidya / Bateen

INVESTMENT AREA

Al Raha BeachMarina SquareShams Abu DhabiSaadiyat Beach

ABU DHABI ISLAND

INVESTMENT AREAShams Abu DhabiNajmat & Tamouh

OFF ISLAND Khalifa & MBZ City

ABU DHABI ISLANDCentral Abu DhabiCornicheKhalidiya / Bateen

INVESTMENT AREA Al ReefOFF ISLAND Khalifa & MBZ City

MID END PROPERTIES

- 75 130 110- 165 160 245 -1%65 105 100 155 180 290 0%

- - - - 80 130- 75 80 90 125

75 75 85 75 130-

- - 70 100 110 14047 55 60 80 78 12052 60 65 80 92 125- - 80 110 135 155

65

132120

140130120145

140

160160

195150155175

170

130 210-3%-3%

0%-1%

-3%-7%

-1%0%

-9%-5%

0%0%

-7%-1%

-2% -12%

42 60 50 90 70 130- - 55 65 75 100

42 50 55 63 70 10035 45 50 75 65 120

35 40 45 50 55 7040 42 45 55 60 65 -2% -14%38 40 45 50 55 7040 45 50 60 65 7830 40 35 45 45 60

100 155110 13798 140

130 135

70 10080 9070 9580 10065 85

-3% -9%-1%-3%

-9%-12%

-1% -5%

-2% -11%

-3% -14%0% -11%-1% -10%

Q2 2019Q1 2019 - Q2 2018 -

Q2 2019

Since Q2 2018Since Q1 2019

-4%-24%-9%-2%

Q2 20195

1,150 1,500

850 1,050

1,150 1,250

1,100 1,300

750 850

1,250 1,400

900 1,150

950 1,050

750 850

950 1,100

Q-o-Q % Change Y-o-Y % Change


Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI APARTMENT SALES PRICES


AL BANDAR

AL MUNEERA

AL ZEINA

CITY OF LIGHTS - HYDRA

MARINA SQUARE

REEF DOWNTOWN

SAADIYAT BEACH RESIDENCES

SUN & SKY TOWERS

THE GATE

YAS ISLAND

AED per sq.ft. 0 500 1,000 1,500 2,000

17%

Since Q1 2019

-1%

Since Q2 2018

-8% -27%

Q2 2019

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

0% -15%

0% -4%

-2% -15%

0% 0%

0% -7%

0% 0%

0% -7%

-5% -15%

-7% -15%

0% -14%

6

ABU DHABI VILLA RENTAL RATES



Since peak Q4 2015

Y-o-YQ-o-Q% Change


3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE2 BEDROOMS

FROM FROM FROM FROMTO TO TO TO

ABU DHABI ISLANDKhalidiya / Bateen Mushrif / Karama / Manaseer Nahyan Camp / Muroor

INVESTMENT AREA

Al Raha Beach Al Reef Hydra Village Saadiyat Island - Beach Residences

Hidd Al Saadiyat

OFF ISLAND

Al Raha Gardens Golf Gardens Khalifa City Mohamed Bin Zayed

- 160 165 165- 180 170 220 -1%- - 150 165 160 210 -1%150 185

-3%-3%

-1%- 125 160 145- 170 160 190 0%- - 180 190 250 270 0%190 265

-4%

-11%78 98 110 12587 140 135 155 -2%65 72 75 85 - - -4%- -

-12%

-5%- 285 310 280- 350 365 690 -1%- - - - 320 750 -1%290 335

-3%

-3%- 140 158 142- 170 180 220 -2%- - 170 200 170

125220 270220

-9%-1%

-5%- 115- 115 130 140 155 -3%- - 100 105 130 145135

-5%

Q2 2019Q2 2018 -

Q2 2019Q1 2019 -

110 -3%

9%

-14%-5%

Since Q2 2018

-2%

Since Q1 2019

Q2 20197


Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI VILLA SALES PRICES



AL REEF VILLAS

GOLF GARDENS

HIDD AL SAADIYAT

HYDRA VILLAGE

RAHA GARDENS

SAADIYAT BEACH VILLAS

AED Million

2 BR 3 BR 4 BR 5 BR

3 BR 4 BR 5 BR

4 BR 5 BR

2 BR 3 BR

3 BR 4 BR 5 BR

3 BR 4 BR5 BR

120 2 4 6 8 10

* Includes Raha Gardens, Golf Gardens & Al Reef Villas only. Later averages are reflective of an increase in new developments of higher quality.

1.25

3.10

1.60

3.90

6.35

0.92

1.98

4.88

8.00

1.20

2.452.60

3.80

5.506.55

9.25

2.43

-3% -7%

0% 0%

0% n/a

0% -2%

0% -4%

-4% -7%

-1% -4% -8%

Since Q1 2019 Since Q2 2018

24%*

Q2 20198

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)



Since peak Q4 2015

Y-o-YQ-o-Q% Change**

ABU DHABI OFFICE RENTAL RATES

(All figures in AED per sq.m. p.a.)

PRIME STOCK

QUALITY STOCK

OLDER STOCK

AVERAGE RENTAL RATES % CHANGE**

FROM TO

FITTED*

FITTEDSHELL AND CORE

GOODTYPICAL BUILDINGLOW QUALITY BUILDING

* Includes developments such as Al Maryah Island, Aldar HQ, International Tower, Nation Towers, Ittihad Towers, etc. ** The average percentage change calculation excludes Prime Stock

1,500

770650

600520480

2,500

1,200980

800700600

0%

0%0%

0%0%0%

0%

-3%-7%

-4%-7%-5%

Q2 2018 - Q2 2019Q1 2019 - Q2 2019

-15%-19%

Since Q2 2018

-5%0%

Since Q1 2019

Q2 20199

1 Al Bandar – Raha Beach2 Al Bateen Wharf3 Al Gurm4 Al Maqtaa5 Al Muneera – Al Raha Beach6 Al Nahyan Camp7 Al Raha Gardens8 Al Rayanna9 Al Reef10 Al Zeina – Al Raha Beach11 Baniyas12 Bateen Airport Area13 Bateen Area14 Bawabat Al Sharq15 Capital District (ADNEC)16 CBD / Tourist Club Area17 Corniche 18 Danet Abu Dhabi19 Eastern Mangroves20 Golf Gardens21 Hydra Village22 Khalidia / Al Hosn / Al Manhal23 Khalifa City A24 Khalifa City B25 Maryah Island26 MBZ City27 Mina28 Mushrif / Karama / Manaseer / Muroor29 Officer’s City30 Rawdhat Abu Dhabi31 Reem Island - Marina Square32 Reem Island – Najmat Abu Dhabi33 Reem Island – rest of Shams Abu Dhabi34 Reem Island – City of Lights35 Reem Island – The Gate District36 Rihan Heights37 Saadiyat Beach District38 The Hills

YASISLAND

11

33

2211

14

11

17

132

22

31

25

19

33

35

34

32

37

36

38

29

15

18

28

24

6

12

4

26

2320

8

1

7

10 9

5

30

27

16

3

21

ABU DHABI PROPERTY MAP

Abu Dhabi Real Estate Report - Q2 201910

Dubai Real Estate Report -

DUBAI MARKET OVERVIEW

SUPPLY RENTAL RATES SALES PRICESThe significant volume of new supply recorded in Q1 2019 continued into the second quarter with the handover of 5,250 apartments, 1,300 villas and nearly 500,000 sq.ft. of office space. Whilst the majority of this inventory is located in the new investment areas of Dubai Creek Harbour and Dubai Hills Estate (situated along Al Khail Road (E44)), established communities such as Dubai Marina also recorded additional stock in the form of Sparkle Towers, Orra Harbour Residences and The Residences at Marina Gate (Tower 2). The delivery of more than 750,000 sq.ft. of office space in Silicon Park (Dubai Silicon Oasis), which was earmarked for completion this quarter, was further delayed, thus providing some relief in Q2 2019. Despite prevailing oversupply concerns, Developers continued to launch new projects including One Park Avenue at Sobha Hartland (by Sobha Realty), Zada in Business Bay (by Damac) and Vincitore Benessere in Arjan (by Vincitore Realty). In addition, Omniyat recently (June 2019) announced the recommencement of Anwa, which is expected to be the first residential development in Dubai Maritime City (DMC). Completion is anticipated for Q2 2020. First announced in 2004, DMC - a manmade peninsula spread over 24 million sq.ft., was earmarked to become a purpose-built maritime centre with industrial, commercial, residential and leisure facilities to include six clusters: the Harbour Offices, Harbour Residences, Maritime Centre, Marina District, Dubai Maritime City Campus and the Industrial Precinct. A number of residential and commercial projects were launched leading up to the 2008 peak but came to a halt shortly thereafter due to the global financial crisis.

Continuing on from previous quarters, apartment and villa rental rates softened by 4% and 2% over Q2 2019, with annual declines settling around the 10% mark. Vacancy rates are on the rise, particularly in the older properties, as new supply continues to outperform population growth. In addition, as a result of the abundance of options available, Tenant movement picked up with Residents seeking value-for-money options in the form of more affordable/competitive rates, improved incentives, larger units and/or better quality specifications/facilities. Interestingly, whilst apartment and office rental rates still remain approximately 15% above the 2011/12 market low, villa rents have, for the first time, dropped below that point, albeit, only marginally (-1%). It should be noted, however, that this is predominantly due to the increase in affordable villa communities such as Damac’s Akoya and Nshama Town Square located along the E311 (Sheikh Mohammed Bin Zayed Road) and E611 (Emirates Road) corridors. Office rental rates came under further pressure and recorded quarterly and annual declines of 4% and 16% in line with subdued economic conditions. This downward trajectory is expected to continue for all asset classes in the second half of 2019.

Similar to last quarter, residential sales price contractions were more pronounced than those for rental rates with average quarterly and annual declines of 4% and 15% for apartments, and 5% and 14% for villas. Office sales prices recorded even more notable drops of 6% over the quarter and 18% compared to the same period last year. With the aim to attract a wider range of real estate Investors to the Emirate, the Dubai Land Department (DLD) recently announced the launch of the Real Estate Investment Opportunities (REIOs) initiative, under which several investment products will be offered including: • Collective real estate investment funds; • Partial title deeds procedures; • A lease-to-own system; and • Investment portfolio applications. Moreover, the UAE Cabinet approved a total of 122 economic activities across 13 sectors eligible for up to 100% foreign ownership such manufacturing, transport and storage, and construction. Each Emirate will determine the ownership percentage of foreign Investors in these activities. (Further details are provided by Al Tamimi & Co. on page 31.) Government initiatives are continuously being rolled out to stimulate the economy, increase investment and ultimately boost the real estate market but have yet to filter through to create notable employment/business growth. In addition, ongoing trade tensions between leading world economies are likely to dampen local market conditions and sentiment in the short-term, meaning sales prices are not expected to stabilise/rebound until these improve.

11 Q2 2019

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESMILLION SQ.FT.

COMPLETED IN COMPLETED IN EXPECTED IN

DUBAI SUPPLY


5,800 5,250

900

Q1 2019 Q2 2019 H2 2019

12,000

1,300 5,000

0.43 0.47 2.2

12 Q2 2019

AFFORDABLE

HIGH TO LUXURY END DIFCDOWNTOWN DUBAIPALM JUMEIRAH

DEIRADISCOVERY GARDENSDUBAI SPORTS CITYINTERNATIONAL CITYJUMEIRAH VILLAGE

DUBAI MARINAGREENSJUMEIRAH BEACH RESIDENCEJUMEIRAH LAKES TOWERS



Since peak Q2 2014

Y-o-YQ-o-Q% Change

1 BEDROOM 3 BEDROOMS % CHANGESTUDIO 2 BEDROOMS

DUBAI APARTMENT RENTAL RATES

FROM FROMFROM FROMTO TOTO TO

SHEIKH ZAYED ROAD

MID TO HIGH END

BUSINESS BAY

AFFORDABLE


Q1 2019 -Q2 2019

Q2 2018 -Q2 2019

50 70 70 150110 85 135 220 -3% -8%6042.5 70 90 80 140 125 200 -4% -11%

55 75 60 180130 100 120 200 -4% -11%50 70 60 14090 70 90 160 -3% -11%

40 60 50 75 70 110 115 145 -3% -12%40 70 45 85 65 130 190 -4% -9%40 55 55 75 75 115

80100 150 -1% -13%

55 70 60 85 80 120 110 150 -4% -12%35 50 40 70 50 95 75 135 -4% -16%

45 30 6520 40 80 110 -1%65 -8%25 35 40 55 70 85 -3% -10%25 75

-70

-40 35 50 50 90 -5% -15%

20 27.5 27.5 40 40 60 65 80 -5% -11%27.5 37.5 35 50 50 75 70 100 -4% -15%

14%

-33%

Q2 2018

-11%-4%

Q1 2019

13 Q2 2019


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI APARTMENT SALES PRICES



DIFC

DOWNTOWN DUBAI

PALM JUMEIRAH

BUSINESS BAY

DUBAI MARINA

GREENS

JUMEIRAH BEACH RESIDENCE

JUMEIRAH LAKES TOWERS

DISCOVERY GARDENS

DUBAI SPORTS CITY

INTERNATIONAL CITY

JUMEIRAH VILLAGE

AED per sq.ft. 0 500 1,000 1,500 2,5002,000

HIGH TO LUXURY END

MID TO HIGH END

AFFORDABLE

850

725

850

600

500

650

350

750

425

1,800

1,400

650

1,850

1,750

850

650 1,150

1,250

650

775 1,900

1,300

900

525

-2% -10%

-5% -13%

-4% -14%

-3% -14%

-5% -11%

-5% -17%

-5% -14%

-3% -14%

-4% -21%

-7% -13%

-5% -17%

-7% -16%

21%

Since Q1 2019

-4%

Since Q2 2018

-15% -33%

14

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

Q2 2019


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI VILLA RENTAL RATES


3 BEDROOMS 5 BEDROOMS % CHANGE2 BEDROOMS 4 BEDROOMS

FROMFROM FROM FROMTOTO TO TO

ARABIAN RANCHESDUBAI SILICON OASIS (CEDRE VILLAS)DUBAI SPORTS CITY (VICTORY HEIGHTS)JUMEIRAHJUMEIRAH PARKJUMEIRAH VILLAGEMEADOWSMIRDIFPALM JUMEIRAHSPRINGSTHE LAKESUMM SUQEIM


Q1 2019 - Q2 2018 - Q2 2019 Q2 2019

90 130 100 160 150 240 170 270 -3% -10%- - 140 155 150 160 170 185 -5% -7%- - 125 150 150 190 175 250 -3% -9%

Since Q2 2018

-10% -35% -1%

Since Q1 2019

-2%

- - 120 190 135 215 150 250 -4% -9%- - 145 175 160 210 215 260 -2% -6%

85 120 90 125 90 140 120 170 -3% -14%- - 155 190 160 210 175 250 -5% -14%

60 90 70 110 85 140 100 150 -1% -12%- - 165 265 225 385 350 800 -3% -9%

85 115 110 140 - - - - -2% -9%- - 140 190 200 260 240 280 -1% -13%- - 125 200 140 240 160 300 -3% -8%

15 Q2 2019

650 1,100

575 725

700 950

600 850

400 800

750 1,050

700 3,750

650 925


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI VILLA SALES PRICES



ARABIAN RANCHES

DUBAI SILICON OASIS (CEDRE VILLAS)

DUBAI SPORTS CITY (VICTORY HEIGHTS)

JUMEIRAH PARK

JUMEIRAH VILLAGE

MEADOWS

PALM JUMEIRAH

SPRINGS

0AED per sq.ft. 1,000 2,000 3,000 5,0004,000

-5% -13%

-7% -16%

-6% -18%

-3% -15%

-4% -14%

-5% -18%

-5% -15%

-3% -17%

-5% -14% -37%


6%

16

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

Q2 2019


Since peak Q3 2015

Y-o-YQ-o-Q% Change

DUBAI OFFICE RENTAL RATES

(All figures in AED per sq.ft. p.a.)

AVERAGE RENTAL RATES % CHANGE

FROM TO

BARSHA HEIGHTS (FORMER TECOM)BUR DUBAIBUSINESS BAYDIFCJUMEIRAH LAKES TOWERSSHEIKH ZAYED ROAD


Q1 2019 - Q2 2019 Q2 2018 - Q2 2019

-21%50 -6%90-16%50 -3%120-18%40 -3%100

100 300 -5% -17%-22%30 -7%100

65 140 -9% -19%

-4% -16% -20%


16%

17 Q2 2019

475

625

950

400

800

1,300

1,850

950


Since peak Q1 2015

Y-o-YQ-o-Q% Change

DUBAI OFFICE SALES PRICES



BARSHA HEIGHTS (FORMER TECOM)

BUSINESS BAY

DIFC

JUMEIRAH LAKES TOWERS

0AED per sq.ft. 500 1,000 1,500 2,5002,000

-7% -19%

-6% -16%

-2% -9%

-4% -17%

-6% -18% -30%


8%

18

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

Q2 2019

DUBAI PROPERTY MAP

60

611

611

311

11

11

11

11

44

44

44

311

311

311

611

611

3526

39

4

1640

3

62

33

18

37

29

24

52

3064

47

57

8

1

48

61

43 2

23

31

41

42

27

2844

25

34

63

46

50

58

32

59

56

38

9

17

45

21

2022

11

36

51

10

15

12

55 14

54

5

6

7

49

13

19

53

To SharjahTo Abu Dhabi

Arabian Gulf

1 Akoya2 Al Barari3 Al Barsha4 Al Furjan5 Al Nahda6 Al Qusais7 Al Warqaa8 Arabian Ranches9 Barsha Heights

(Tecom C)10 Bur Dubai11 Business Bay12 City Walk13 Culture Village14 Deira15 DIFC16 Discovery Gardens17 Downtown Dubai18 Downtown Jebel Ali19 Dubai Creek Harbour20 Dubai Design District21 Dubai Festival City22 Dubai Healthcare

City Phase 223 Dubai Hills Estate24 Dubai Investment

Park25 Dubai Residence

Complex26 Dubai Marina27 Dubai Production

City (IMPZ)28 Dubai Silicon Oasis29 Dubai South30 Dubai Sports City31 Dubailand

32 Emirates Hills33 Green Community34 International City35 JBR36 Jumeirah37 Jumeirah Golf Estates38 Jumeirah Islands39 Jumeirah

Lakes Towers40 Jumeirah Park41 Jumeirah Village Circle42 Jumeirah Village

Triangle43 Living Legends44 Liwan45 Meydan46 Mirdif47 MotorCity48 Mudon49 Muhaisnah50 Palm Jumeirah51 Pearl Jumeirah52 Remraam53 Residential City54 Rigga Al Buteen55 Sheikh Zayed Road56 Springs / Meadows57 Dubai Studio City58 The Greens59 The Lakes60 The Villa61 Town Square62 Umm Suqeim63 UptownMirdiff64 Victory Heights

Dubai Real Estate Report -19 Q2 2019

Northern Emirates Real Estate Report -

NORTHERN EMIRATES MARKET OVERVIEW

Apartment rental rates in the Northern Emirates continued to soften with average quarterly and annual declines of 5% and 13%, respectively. Further downward pressure on rates is expected as the delivery of new supply and resulting drop in rental rates in Dubai impedes the recovery of rates in the Northern Emirates in the short-term. Asteco’s research indicated the most notable decreases for typical apartment units in Ajman and Ras Al Khaimah (RAK) with drops of 9% and 7% during Q2 2019 due to the handover of new supply with better quality specifications/facilities at competitive rates within the Emirates and in neighbouring municipalities. Whilst Ajman Residents relocated to Sharjah and Dubai, Tenants in RAK opted for the local master plan communities of Mina Al Arab and Al Marjan Island. It is noteworthy to mention that there was a marked drop in typical apartment listings (for rent) in Fujairah, suggesting good occupancy rates in the Emirate. Sharjah office rental rates continued their downward trend with quarterly and annual declines of 3% and 9% on the back of low demand.

Similar to last quarter, average sales prices in Sharjah declined by 2% on average with more pronounced drops of up to 10% in stand-alone buildings in GCC freehold areas compared with properties in master planned communities offered on a leasehold basis to all nationalities. Following the 54,125 transactions worth AED 22.5 billion recorded in 2018, the Sharjah Real Estate Registration Directorate (SRERD) registered 27,588 transactions valued at AED 14.7 billion in H1 2019. The total included 1,893 sales transactions across the Emirate with the majority of the activity taking place in Muwaileh Commercial Area, followed by Al Khan and Al Nahda. At this rate, the Emirate is well on its way to surpass last year’s performance, particularly in regards to total value of transactions. The Northern Emirates saw the addition of a couple of retail developments with the opening of Oasis Mall in Sharjah (by Landmark Group) and Mall of UAQ in Umm Al Quwain (by Lulu). Furthermore, the new 89km Khorfakkan highway was inaugurated in April 2019. It links Emirates Road (E611) in Sharjah with Wadi Shi Square in Khorfakkan, thus providing ease of access to the growing tourist destination and reducing travel time between the two cities to 45 minutes. Similar to Dubai and Abu Dhabi, the local governments of the Northern Emirates are introducing larger budgets and more diversification strategies to stimulate the economy and boost investment, which is expected to translate into employment/business growth and hence increased transaction activity in the Real Estate market in the medium- to long-term.

20 Q2 2019

SHARJAHTYPICALHIGH END

AJMANTYPICALHIGH END

UMM AL QUWAIN

RAS AL KHAIMAHTYPICALHIGH END

FUJAIRAHTYPICALHIGH END

(All figures in AED 000's p.a.)


Since peak Q1 2015

Y-o-YQ-o-Q% Change

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

NORTHERN EMIRATES APARTMENT RENTAL RATES

FROM FROM FROMTO TO TOFROM TO


12

Q2 2019Q2 2018 -

Q2 2019Q1 2019 -

1618 2510 1415 2113 1712 1819 3014 20- -

13 2628 3813 2122 2817 2217 2627 4519 2628 42

20 3032 6414 2425 3824 2720 3638 5525 2932 52

30 4148 7024 3638 4228 3533 4463 7835 4552 70

-4% -11%-5% -11%-9% -22%-3% -13%-4% -7%-7% -17%-4% -13%-3% -13%-3% -12%

-5% -13% -29% -2%


21 Q2 2019


Since peak Q1 2015

Y-o-YQ-o-Q% Change

STUDIO % CHANGE

SHARJAH APARTMENT RENTAL RATES


FROM

2 BEDROOMS

FROM

3 BEDROOMS

FROMTO TO TO

1 BEDROOM

FROM TO

AL MAJAZAL QASIMIAHAL NAHDAAL KHAN (AL MAMZAR)ABU SHAGARAAL BUTINAAL YARMOOKROLLAAL WAHDACORNICHE


Q1 2019 - Q2 2018 - Q2 2019 Q2 2019

15 20 20 38 24 60 32 70 -2% -9%13 19 15 29 20 38 30 52 -4% -9%16 23 18 36 20 51 37 65 -2% -9%16 22 19 38 25 64 35 70 -3% -10%13 20 17 31 21 38 33 46 -3% -12%12 16 13 24 20 27 31 45 -4% -10%13 16 16 22 20 27 30 42 -3% -8%12 17 17 24 22 30 36 42 -1% -8%14 23 22 28 24 40 32 52 -2% -10%16 25 24 38 25 58 37 70 -4% -10%

11%

Since Q2 2018

-10% -30%

Since Q1 2019

-3%

22 Q2 2019

Q-o-Q% Change

SHARJAH APARTMENT SALES PRICES


Q-o-Q % ChangeAED per sq.ft. 0 100 200 300 400 500 600 700 800 900 1,000

AL KHAN (TYPICAL)

AL KHAN (HIGH END)

AL TAAWUN

AL NAHDA

AL MAJAZ (TYPICAL)

AL MAJAZ (HIGH END)

AL MAMSHA *

AL ZAHIA *

AL JAADA *

* Leasehold ownership (up to 100 years) for all nationalities

325 450

375 525

475 675

375 475

750 925

550 750

325 450

700 850

450 600

-3%

-8%

-5%

-2%

-4%

-0%

0%

-3%

-2%

0%

Since Q1 2019

23

(Q1 2019 - Q2 2019)

Q2 2019

SHARJAH OFFICE RENTAL RATES

AVERAGE RENTAL RATES % CHANGE

FROM TO

Y-o-YQ-o-Q% Change

(All figures in AED per sq.ft. p.a.)

AL TAAWUN ROADCORNICHE AREAAL WAHDAAL QASEMEHCLOCK R/AAL YARMOOKINDUSTRIAL AREA


284036303622 38

4450425640 -4%

-4%-2%-3%-1%-3% -9%

-4%-10%-6%

-11%-13%

Q1 2019 - Q2 2019 Q2 2018 - Q2 2019

24 43 -3% -8%

Since Q2 2018

-9%

Since Q1 2019

-3%

24 Q2 2019

NORTHERN EMIRATES MAP

Arabian Gulf

311

11

11

11

5

1

10

8

9

3

2

6

4

7

ABU DHABI

DUBAI

SHARJAH FUJAIRAH

RAS AL KHAIMAHUMM AL QUWAIN

AJMAN

SHARJAH

1 Abu Shagara2 Al Khan3 Al Majaz4 Al Nahda5 Al Qasimiyah6 Al Taawun7 Al Wahda8 Corniche / Buhaira9 Khaledia10 King Faisal and King Abdul Aziz Streets

Mina Al Arab

Marjan Island

1

2

Al Hamra

3

RAS AL KHAIMAH

1 Mina Al Arab2 Marjan Island3 Al Hamra

UNITED ARAB EMIRATES

Northern Emirates Real Estate Report - 25 Q2 2019

Al Ain Real Estate Report -

AL AIN MARKET OVERVIEW

Apartment and villa rental rates continued to decline across all areas, although average quarterly and annual drops were marginal between 1% and 2%. In fact, as a result of robust demand for prime properties/compounds in established and new quality communities, rental rates in that category remained relatively stable during the first half of the year. With the exception of the Senaya Area, office rental rates in Al Ain were unchanged in Q2 2019; although it is important to note that this is not reflective of actual demand, which has been particularly limited for over a year now. Retail rental rates along Senaya Street softened by 3% in the 2nd quarter, with average annual drops of 7%. However, some Landlords reduced rents by more than 15%. Although mall rates recorded no change this quarter, they are expected to decrease over the next 6 to 12 months mainly due to reduced consumer spending as a result of continued bearish market conditions and sentiment. Residential and commercial Landlords alike continued to offer discounts and incentives such as rent-free periods and attractive payment terms in order to retain Tenants and attract new ones.

26 Q2 2019

MATURE BUILDINGS NEW BUILDINGS PRIME COMPOUNDS

TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

AL AIN APARTMENT RENTAL RATES

FROM FROM FROMTO TO TO



Since peak Q4 2015

Y-o-YQ-o-Q % Change


Since peak Q4 2015

Y-o-YQ-o-Q % Change


AL AIN VILLA RENTAL RATES

TYPE % CHANGE3 BEDROOMS

FROM

4 BEDROOMS

FROM

5 BEDROOMS

FROMTO TO TO

MATURE VILLASAl Jimi, Town Centre, Zaker, Other(*)Al TowayaPrime Compounds

RECENT BUILDAl Jimi, Town Centre, Zaker, Other(*)Al TowayaPrime Compounds


* Includes Al Khabisi, Al Muwaiji, Al Manasir and Al Masoudi areas

Q1 2019 - Q2 2018 - Q2 2019 Q2 2019

23 27 32 37 43 50 -2% -2%3128 37 40 52 64 -1% -2%

34 38 45 50 63 85 0% -1%

Since Q2 2018

-1% -18% -3%

Since Q1 2019

-1%

Q2 2019Q2 2018 -

Q2 2019Q1 2019 -

50 58 68 75 85 95 -1% -2%65 70 85 90 97 100 0% 0%85 90 98 103 120 125 0% 0%60 70 75 85 95 110 -0.5% -2%75 80 92 95 105 115 0% 0%95 100 105 115 140 150 0% 0%

15%

Since Q2 2018

-1% -19%

Since Q1 2019

0%

27 Q2 2019

900

1,350

630

2,150

2,850

1,500

570

570

570

855

855

855

350 550


AL AIN RETAIL RENTAL RATES

AL AIN OFFICE RENTAL RATES

Since market low Since peak Q4 2015

Y-o-YQ-o-Q% Change

Since market low Since peak Q4 2015

Y-o-YQ-o-Q% Change



KHALIFA STREET

AUD AL TOUBA STREET

MAIN STREET

SENAYA STREET

0AED per sq.m. p.a. 400200 600 800 1,000

KHALIFA STREET / MAIN STREET

PRIME MALL

SENAYA STREET

0AED per sq.m. p.a. 1,5001,000500 2,000 2,500 3,000

0% 0%

0% 0%

0% 0%

-5% -5%

Since Q1 2019 Since Q2 2018 Q3 2012

-1% -1%

0% -6%

0% -2%

-3% -7%


0% -4% -8% -8%

-11% -29%

Q4 2011

28

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

(Q1 2019 - Q2 2019) (Q2 2018 - Q2 2019)

Q2 2019

Town Centre

Al Jimi

Al Khabisi

Al Muwaiji

Al Masoudi

Zaker

Al Towaya

East Airport District

Al Foaa

Hili

Al Oattara

Al Buraimi

Al Mutaredh

Al Jahili

AlMutawa’a

Al Sarooj

Al Shuwaimah

Aflaj

Al KhrairDefence

Al Dhahir Um GhafahJebel Hafeet

NeimaAl Qisais

Al Shuaibah

Al Aqabiyya

Zoo District

Falaj Hazza’a

Asharej

Al Markhaniya

Al Dahmaa

Al Bateen

Al Maqam

Gharebah

Al Salamat District

Al Yahar South

Al Yahar North

Al AinInternational

Airport

SULTANATE OF OMAN

Khalifa Bin Zayed St.

Khalifa Bin Zayed St.

Moh

d Bi

n Kh

alifa

St

Baniyas St

Ardh

Jow

St

Emira

tes

St

Zayed Bin Sultan St.


AL AIN PROPERTY MAP

29 Q2 2019

Oxford Economics -

We maintain our GDP growth forecast of 2.2% in 2019 reflecting continued acceleration in overall domestic economic activity, which will be buoyed by healthy projections for both the oil and non-oil sectors. Domestic demand will be supported by rising government spending, various government initiatives and higher investment ahead of Expo 2020. GDP growth is expected to remain broadly similar in 2020-22, averaging around 2.1%.

The statistics authority has released a more detailed breakdown of GDP growth in 2018, with the performance mixed across different sectors. The fastest-growing sectors were agriculture, accommodation and food services and real estate, which expanded by 7.1%, 4.1% and 3.6% respectively. On the other hand, utilities contracted by 2.3%, while construction grew by just 0.5%.

Oil production averaged around 3.05m b/d in April and May, broadly in line with the average in Q1 2019, reinforcing our projection of 2.5% growth for the oil sector. However, we have lowered our oil price forecast to US$65pb for 2019, from US$71pb previously, reflecting fears of a rising US-China trade war weighing on global demand conditions. As a result, we now expect a lower government fiscal surplus in 2019 of 0.6% of GDP, down from 1.9% last month.

Latest PMI numbers show that UAE's non-oil activity expanded at its fastest in more than four and a half years in May, reaching 59.4, with both the output and new orders sub-components rising markedly m/m. Despite this positive development, employment remained relatively unchanged.

GROWTH FORECAST FOR 2019 REMAINS AT 2.2%…The UAE’s GDP grew 1.7% in 2018, up from an eight-year low of 0.8% in 2017, supported by expansionary fiscal policy, higher oil output and an improving investment climate, particularly in Dubai ahead of Expo 2020, but the result was below expectations. Despite the UAE’s relatively diversified economy, the hydrocarbon sector still plays a key role, comprising around 30% of GDP. Oil sector growth is expected to remain relatively strong this year at 2.5%, slightly lower than last year’s 2.8%. Our 2019 GDP growth forecast remains at 2.2%, unchanged from last month, due to:

• Higher oil output• Oil prices marginally above break-even

…WITH THE NON-OIL SECTOR DRIVING ACTIVITYThe UAE’s relatively diversified economy and large fiscal buffers have provided a cushion against low oil prices since 2014. We see a pick-up in non-oil growth from 1.3% in 2018 to 2.1% this year, based on:

• Rising government spending• PMI in expansionary territory• Strong tourism and rising FDI in Dubai• Improved banking conditions• Stimulus plans in Abu Dhabi and Dubai• Residential property prices continue to drop

GROWTH TO PICK UP OVER THE MEDIUM TERMImproving economic sentiment and a gradual rise in oil output are two of the factors seen lifting GDP growth to 2.2% in 2019 and then around the same pace in 2020-22:

• Diversification strategy• Business conditions and Expo 2020 will support investment• Political stability

UAE: Inflation UAE: Real GDP growth% year % year

Source: Oxford Economics Source: Oxford Economics

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

F’Cast F’Cast

Middle East &North Africa

Middle East &North Africa

UAE

UAE

16

14

12

14

12

8

10

10

6

8

4

6

4

2

2

0

0

-4

-2

-2 -6

WHO WE ARE OXFORD ECONOMICSOxford 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 [email protected]

30 Q2 2019

Al Tamimi & Co. -

UAE: FOREIGN DIRECT INVESTMENT DEVELOPMENTSThe general rule in the UAE was that at least 51% of an entity’s share capital must be owned by a UAE national or a corporate entity, which is wholly owned by UAE national(s), or, 100% owned by GCC nationals. These investment restrictions are imposed by Federal Law No. 2/2015 concerning Commercial Companies, on all companies in the UAE.

However, in December 2018, the news of a new foreign direct investment (FDI) law was communicated in a series of Twitter posts by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, who had chaired the Cabinet meeting in which the decree law was approved.

Later that month, the UAE President, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, issued the Decree (Federal Decree Law No. 19 of 2018) (“Decree”) permitting 100% foreign ownership by global investors in the UAE mainland, as promised.

The Decree permits companies, who carry out activities (which are not in the ‘negative list’ prescribed by the Law), to apply to own up to 100% of a limited liability company (LLC) in the UAE.

The negative list includes banking activities, financing, payment systems and dealing in cash, insurance services, land and air transport services, commercial agent services and medical retail services such as private pharmacies.

While the Decree provided a negative list for sectors in which an FDI application may not be made, it authorised the Cabinet to separately issue a positive list of sectors in which an FDI application would be welcomed. The Decree also allowed the Cabinet to amend the positive list to include or exclude certain sectors or activities.

In the months following the issuance of the Decree, much debate occurred regarding the content of the positive list and the mechanism for its application in different Emirates. The Emirate of Dubai, as of the date of this article, was the only Emirate where the Department of Economic Development (DED) accepted applications made by businesses pursuant to the Decree. The DED in Dubai has registered new companies and converted existing companies to become 100% foreign owned. The applications to the DED in Dubai have been assessed on a case-by-case basis, based on each application’s individual merits. Common criteria included the size of the investment in the UAE and the number of employees to be hired by the business. The DED also requested companies applying for 100% foreign ownership to appoint a UAE national (or a company owned by UAE nationals) to act as a local service agent for immigration purposes.

Another welcomed development came by way of His Highness Sheikh Mohammed Bin Rashid Al Maktoum’s announcement on 1 July, 2019, stating that “a resolution allowing 100 per cent foreign ownership in UAE's 122 economic sectors [was adopted], giving foreigners 100 per cent ownership of their investment. The sectors include agriculture, manufacturing … transportation, arts, construction, entertainment among others.”

The ‘positive list’ covers 122 activities in the agriculture, manufacturing, education, health and

Author: Samer Qudah, Partner, Head of Corporate Structuring and Tala Shomar, Associate, Corporate Structuring, Al Tamimi & Company Key Contact: Tara Marlow, Partner, Head of Real Estate, Hotels & Leisure, Al Tamimi & Company ([email protected])

Al Tamimi & Company is the largest full service law firm in the Middle East with 17 offices across 9 countries. For more information, please visit www.tamimi.com.

services sectors. The ‘positive list’ also prescribes a minimum share capital for certain activities and a requirement to register with the Tawteen Partners Club for select activities as well; below is a list of the most notable activities in each sector:

The issuance of the federal ‘positive list’ indicates that the other UAE Emirates may begin accepting applications for businesses that fall within the said list. This will mean a more uniform application of the Decree across the Emirates.

The approach to activities which do not fall within the ‘negative list’ or the ‘positive list’ such as specialised retail, real estate activities, F&B and operating hotels, is not yet clear. It appears as though approvals in this grey area of activities may be granted on a case by case basis at the discretion of the relevant authorities.

Further updates will be issued once the DED in the various Emirates determine the formal procedure for applications in the sectors listed under the said resolution.

Hospitals Share Capital value: AED 100,000,000

Medical and dental clinics Share Capital value in accordance with applicable laws

Pre-primary education, primary education, secondary education, higher education and other types of education

Share Capital value in accordance with applicable laws

Retail sale in non-specialised stores (this can include hypermarkets)

Share Capital value: AED 100,000,000

Land and sea transport of goods Share Capital value in accordance with applicable laws

51 manufacturing activities including the production of food products (except of bakery products, dairy products and animal feeds)

Share Capital value ranges between AED 3,000,000 - AED 100,000,000

Civil engineering and construction of buildings

Share Capital value in accordance with applicable laws

31 Q2 2019

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

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, 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.

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.

BUILDING CONSULTANCY The Building Consultancy Team at Asteco have a wealth of experience supporting their Clients throughout all stages of the built asset lifecycle. Each of the team’s highly trained surveyors have an in-depth knowledge of construction technology, building pathology and effective project management methods which enable us to provide our clients with a comprehensive building consultancy service.

FRANCHISE 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.

Elaine JonesFRICS

Executive Chairman and Founder / Director - Transactional Services+971 4 403 [email protected]

John Stevens MSc, BSc (Hons), MRICS

Managing Director/ Director - Asset Management+971 4 403 [email protected]

John Allen BSc, MRICS

Executive Director - Valuation & Advisory+971 4 403 [email protected]

James Joughin BSc (Hons), MRICS

Senior Associate Director - Head of Valuations +971 4 403 [email protected]

Jenny Weidling BA (Hons)

Manager - Research and Advisory, Dubai+971 4 403 [email protected]

Ghada Amhaz MSc

Manager - Research and Advisory, Abu Dhabi+971 2 626 [email protected]

Tamer Ibrahim Chaaban BE

Associate Director / General Manager - Al Ain+971 3 766 [email protected]

astrep876/20190707

property review uae real estate reportal reef villas golf gardens hidd al saadiyat hydra village...

Documents