Post on 26-Sep-2020
DUBAI REAL ESTATE MARKET OVERVIEW
Q2 2017
REAL ESTATE SERVICES
2 3
CONTENTSDemand Drivers 4
Macro Trends 6
Residential Sector 8
Project Focus 14
Office Sector 16
Retail Sector 20
Hospitality Sector 22
Definitions & Methodology 24
Contact Information 25
Supply - Photo Gallery 26
Development Location Map 28
Residential
�� During Q2 2017, c.5,000 new residential units were added, taking the new residential supply count to 10,900 units during the first half of the year. In total 7,800 apartments (71%) and 3,100 villas/townhouses (29%) were added in H1 2017, taking the total residential stock of Dubai to 507,000 units.
�� Residential sales rates during the quarter recorded a marginal decline of 1.3% while year-on-year the decline was 5%. In terms of performance by location, Palm Jumeirah apartments recorded the highest drop of 9% year-on-year.
�� Residential rents continue to soften as supply continues to supersede demand. Average rents dropped marginally by 1% quarter-on-quarter and 5% year-on-year. The rate of decline across villa properties was marginally higher than the apartments with average rents dropping by 6% year-on-year and 1% quarter-on-quarter.
�� With rising vacancy levels, large landlords that own towers are becoming more open to offering incentives in the form of rent-free periods ranging from one to three months.
Office
�� During the quarter over 750,000 sq.ft. of office space was added, taking the total office stock to 94.8 million sq.ft. New office space that emerged includes Tamani Art Office tower in Business Bay and low-rise towers from Umm Al Sheif area. Looking at the ongoing construction activity, we expect c.2.4 million sq.ft. of office space to enter during the second half of 2017.
�� Average office sale rates across freehold locations declined by 3% year-on-year, while the rates remained
unchanged quarter-on-quarter. The Downtown Dubai recorded the highest yearly drop of 8% followed by Barsha Heights with 5%.
�� Office rents remained unchanged from the previous quarter while year-on-year the rates dropped by 5%. Across the freehold areas, Barsha Heights recorded the highest decline of 8% year-on-year followed by Jumeirah Lakes Towers with 6% drop year-on-year.
Retail
�� During this quarter, the rents remained flat across all major malls while secondary mall operators are looking at rental negotiation to retain existing tenants and maintain their occupancy levels.
�� All the major shopping centresr witnessed a boost in sales and footfalls, driven by the three day super sale event and extended mall hours during the Eid. The three day sales event not only attracted UAE residents but also tourists from neighbouring GCC countries.
Hotel
�� During Q2 2017, over 1,700 rooms were added taking the total supply to over 106,000 rooms and apartments. Few of the new additions include Premium Rixos in Jumeirah Beach Residence, Double Tree in Business Bay and Rove Trade Centre.
�� Year-on-year the ADR’s remained flat while occupancy rates have risen by 2% year-on-year, as Eid holidays aided in recording strong occupancy rates. Looking at the exhibitions and events scheduled and promotions offered by the hotels, occupancy rates are expected to remain strong for the remainder of the year.
FOREWORD ADIB Real Estate Services comprises a comprehensive real estate banking and advisory platform providing the full range of professional services from a single provider. Our services include:-
�� Real estate financing�� Strategic development advisory�� Investment advisory�� Asset management�� Project management
�� Valuation�� Agency�� Market research�� Property management�� Facilities management
MPM PROPERTIES FACTS AND FIGURES
TOTAL UAE STAFF PROPERTY MANAGEMENT STAFF ADVISORY STAFF
UNITS UNDER MANAGEMENT
LEASING & SALES STAFF LANDLORD CLIENTS
COMBINED MARKET VALUE OF PROPERTIES VALUED SINCE JANUARY 2012
MORTGAGE VALUATIONS SINCE JANUARY 2012
DEDICATED VALUATION PROFESSIONALS
OCCUPANCY RATE
LARGEST ABU DHABI MAINLAND PORTFOLIO
160+
7,600+
No.1
98.5%20+
30+
90bn
35+
23,500+
95+
1,700
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
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DEMAND DRIVERS
REAL ESTATE AND CONSTRUCTION�� Wasl Asset Management Group announced
construction of Warsan project covering 160,000 sq.ft. of land with a built up area of 2.6 million sq.ft. The project comprises of 26 resort-style residential buildings to accommodate hospitality staff. The project is expected to offer 3,866 residential units comprising of 3,380 shared rooms, 360 studios, and 126 one bedroom units. It is further complimented by health club, swimming pools, sports facilities and green lawns and is expected to complete by October 2020.
�� AED1.5 billion construction award for the Palm Gateway project on Palm Jumeirah was awarded to Shapoorji Pallonji Mideast. The project, developed and owned by Nakheel Properties, includes construction of three residential towers, retail space and a beach club. The development includes 1,265 luxury apartments spread across three towers with units ranging from one to three bedrooms and parking over 14 levels. The residential units from the Gateway project will be offered on annual lease and the entire project is expected to be completed in 30 months.
TOURISM INITIATIVES �� Figures from the Department of Tourism and
Commerce Marketing (Dubai Tourism) indicate a 10.5% rise in visitors to Dubai during June 2017YTD versus the same period last year. During the period YTD June 2017, Dubai had 8.06 million overnight visitors with 21% of the visitors originated from Western European countries, 19% from GCC countries and 18% from South Asia. In terms of top source market, India led with 1.05 million visitors followed by Saudi Arabia with 0.74 million visitors and the United Kingdom remained third with 0.63 million.
�� His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai launched Marsa Al Arab tourism project, which is valued at AED6.3 billion, developed by Dubai Holding and managed by Jumeirah Group. The project comprises of two islands located on either side of Burj Al Arab.One island will be dedicated to entertainment and family tourism while the other will include luxury resort. The development will also offer 300 waterfront residential apartments and 140 luxury villas along with commercial office and retail space.
TRANSPORTATION �� His Highness Sheikh Mohammed bin Rashid Al
Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai approved road works to improve Latifa Bint Hamdan Street and the junction of Umm Al Sheef and Latifa Bint Hamdan streets. The first phase of the project includes linking Jumeirah district with Al Khail road and the parallel roads to the First Al Khail and Al Asayel roads which is expected to be completed in H1 2018. The second phase of the project includes improving the link
between Sheikh Zayed road and Jumeirah to the West and Dubailand to the east, with expected completion date being Q1 2019.
�� Dubai International Airport handled 6.08 million passengers in June 2017, up by 3.9% compared to 5.85 million passengers in June 2016. During the first half of the year, passenger traffic increased by 6.3% to 43.05 million passengers, up from 40.51 million passengers during the same period last year.
FREEZONES �� China National Petroleum Corporation
(CNPC) has signed an agreement with Jebel Ali Free Zone (JAFZA) to establish its head quarter in JAFZA. The new headquarter covers 55,000 sq.m. and includes 10,000 sq.m. of office space along with warehouse facility for storage, maintenance and repair of oil and gas equipment. The new facility will also help in consolidation of 16 listed companies of CNPC to operate under one roof.
�� Dubai International Financial Centre (DIFC) signed a memorandum of understanding with Dubai Economy to allow companies operating within DIFC to obtain licenses to operate in mainland Dubai. Under the MoU, a central data repository will be established, allowing data exchange between the parties, improving visibility and transparency of commercial activity within the DIFC. In addition, joint inspections will also ensure better compliance, prevent fraud and increase consumer protection.
GOVERNMENT INITIATIVES�� Sheikh Hamdan bin Mohammed bin Rashid Al
Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, launched Smart Dubai 2021 initiative. The Dubai Pulse, a new platform, will compile all available data to both public and private sectors and provide access to live data about the city for free of cost to public. Analysed data would be available at a fee for economic, academic, professional and commercial purpose.
�� Dubai Electricity and Water Authority (DEWA) has awarded the contract worth AED248 million, to supply, extend and commission 40 kilometer of water pipelines along Al Qudra Street and the Dubai to Al Ain highway, to increase water-flow capacity and provide water for future development projects in these areas. The project includes remote control and monitoring systems, to allow continuous control of the main water transport network through remote-controlled valves in the control centre.
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
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INVESTOR ANALYSISMACRO TRENDS
DUBAI POPULATION (GROWTH & HOUSEHOLD SIZE)
Population Growth Rate
2009 2010 2011 2012 2013 2014 2016 Q2 20172015
3.0
2.5
2.0
1.5
1.0
0.5
0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0PO
PU
LA
TIO
N (
MIL
LIO
NS
)
GR
OW
TH
RA
TE
(%
PA
)
AN
D H
OU
SE
HO
LD
SIZ
E
Household Size
Source: Dubai Statistics Center
1.771
1.9
05
2.0
03
2.1
06
2.2
14
2.3
27
2.4
47
2.5
93
2.7
10
DUBAI CONSTRUCTIONACTIVITY %YoY
GDP Construction
%Y
oY
DUBAI CPI VS RENTALCONTRIBUTION TO CPI Q2 2017
CPIHousingContributionto CPISource: Dubai Statistics Center
Source: Dubai Statistics Center
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17e
120.00
100.00
80.00
JA
N 1
5
JU
N 1
5
JA
N 1
6
JU
N 1
6
JA
N 1
7
JU
N 1
7
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
2,000
4,000
6,000
8,000
10,000
12,000
Valu
e (
in M
illio
ns)
Sales Transactions
Tra
nsa
cti
on
s
DUBAI LAND TRANSACTIONSVOLUME vs VALUE
Sales Value
0
5,000
10,000
15,000
20,000
25,000
30,000
DUBAI LAND TRANSACTIONSQoQ% CHANGE
Sales Transactions
43201221 43
201321 43
201421 43
201521 43
201621
201721 43
201221 43
201321 43
201421 43
201521 43
201621
201721
-30-20-10
01020304050607080
Source: DLD and MPM Properties Research
* Established Real estate
Source: Dubai Statistics Center and MPM Properties Research Source: DLD and MPM Properties Research
DUBAI GDP SHARE BREAKDOWN BY ECONOMIC SECTORS - 2017 YTD
TOP NATIONALITIES INVESTING IN DUBAI PROPERTY IN 2016
Tra
nsa
cti
on
Valu
eA
ED
mill
ion
TOP LOCATIONS - RESIDENTIAL TRANSACTION VALUE
Q1 2017 Q2 2017
Source: DLD
Bu
sin
ess
Bay
Ju
meir
ah
Vill
ag
e
Du
bai
Sp
ort
s C
ity
Ju
meir
ah
Lakes
To
wers
Ara
bia
nR
an
ch
es
Palm
Ju
meir
ah
Ju
meir
ah
Beach
Resi
den
ce
Du
bai
Mari
na
Do
wn
tow
nD
ub
ai
Em
irate
sL
ivin
g0
200
400
600
800
1,000
KuwaitEgypt QatarPakistanUnitedKingdom
SaudiArabia
IndiaUAE0
5
10
15
20
25
Source: DLD
5%
27%
13%
16%
9%
11%
19%
Wholesale & Retail Trade
Real Estate & Construction
Transportation & Communication
Manufacturing
Financial Sector
Government & others
Hotels & Restaurants
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
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RESIDENTIAL SECTOR
RESIDENTIAL SUPPLY �� During Q2 2017, c.5,000 new residential units
were added, taking the new residential supply count to 10,900 units during the first half of the year. In total 7,800 apartments (71%) and 3,100 villas/townhouses (29%) were added in H1 2017, taking the total residential stock of Dubai to 507,000 units.
�� Majority of the new supply during Q2 2017 was completed within the freehold developments of Jumeirah Village Circle, Dubailand, Dubai Silicon Oasis, Dubai Marina and Production City while in the leasehold developments, most active location was Al Warqa.
�� Looking at the ongoing construction activity, we anticipate further 9,000 new units entering the market during the second half of the year.
�� The off-plan residential market remained active during Q2 2017 despite the holiday period. Over 4,000 residential units were launched during this quarter with 25% of these units being villas and townhouses and the remaining apartments. Some of the projects launched include Maple III, Vida Residence Dubai Mall and Downtown View tower 3 by Emaar Properties, Casa Viva by Dubai Properties, Bloom Towers in Jumeirah Village Circle by Bloom Properties, Bayz by Danube and Azizi Aura by Azizi Investments in Downtown Jebel Ali area.
0
100
200
300
400
500
600
2014 2015 2016 H2 2017H1 2017 2018 2019
Source: MPM Properties Research
Supply Apartments
RESIDENTIAL SUPPLY BY UNITS 2012-2019
Existing Supply Villas +% Change
2.0% 3.1% 2.7% 3.1% 2.2% 1.8% 5.0% YoY 1.9%
2012 2013
435 444 452 469 481 496 507 516 542
8.5 8.514 11 11 8 73 1.2 4.2 3.1 1.9
3.8%
215.2
173.8
SAMPLE OF RESIDENTIAL UPCOMING PROJECTS
SAMPLE OF ANNOUNCED PROJECTS IN Q2 2017
NAME OF PROJECT TYPE DEVELOPER LOCATION
The Pulse - Phase 3 Apartments Dubai South Dubai South
Kenda Stone Villa Villas Damac Akoya Oxygen
Bloom Towers Apartments Bloom Jumeirah Village Circle
Noor Townhouse Villas Nshama Town Square
Downtown Views Tower 3 Apartments Emaar Downtown
Azizi Aura Apartments Azizi Downtown Jebel Ali
Bayz Apartments Danube Business Bay
Aknan Villas Damac Akoya Oxygen
Vida Residence Dubai Mall Serviced Emaar Downtown
Maple III Villas Emaar Dubai Hills Estate
Aurum Villa Villas Damac Akoya Oxygen
Casa Viva Townhouse Dubai Properties Serena
Eaton Place Apartments Ellington Jumeirah Village Circle
LOCATION PROPERTY NAME
Culture Village Riah Towers
Dubai Marina Continental Tower
Dubai Studio City Glitz 1
Arjan Syann Park
Dubai Silicon Oasis Emirates Airlines Towers
Dubai Motor City OIA Residence
Business Bay The Pad
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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RESIDENTIAL SECTOR
Th
eG
reen
s
Ju
meir
ah
Beach
Resi
den
ce
Bu
sin
ess
Bay
Du
bai
Mari
na
Th
eV
iew
s
Palm
Ju
meir
ah
DIF
C
Old
To
wn
Do
wn
tow
nD
ub
ai
APARTMENT AVERAGE SALES PRICES (Q2 2017)
AND PERCENTAGE CHANGE
AE
D/s
q.ft.
Source: MPM Properties Research
-1.2% -1.4% -1.4% -1.6% -0.0% -1.6% -1.9% -1.2%-1.6% QoQ
YoY -6% -8% -3% -6% -2% -4% -4% -1%-9%
0
500
1,000
1,5002,000
2,500
2,0
25
1,8
00
1,75
0
1,5
00
1,5
00
1,3
75
1,23
0
1.3
25
1,210
AVERAGE APARTMENT ANNUAL RENTS Q2 2017
Source: MPM Properties Research
SALE PRICES �� Residential sales rates during the quarter
recorded a marginal decline of 1.3% while year-on-year the decline was 5%. In terms of performance by location, Palm Jumeirah apartments recorded the highest drop of 9% year-on-year while in the villa segment Springs, Jumeirah Village and Arabian Ranches recorded the highest drop of 7% each year-on-year.
�� Transactions of completed properties recorded a decline year-on-year both in value and volume terms. During Q2 2017 a total of 2,734 transactions were recorded at a total value of AED4.99 billion compared to AED5.4 billion in Q1 2017. The transaction value dropped by 7.3% quarter-on-quarter.
�� During the quarter, apartments accounted for 68% of the total transaction value, while villas and townhouses accounted for 32%.
We are noticing an increase in transactions in both value and volume terms for villa properties over the past two years. Since 2015, the market has witnessed the launch of several competitively priced villas and townhouses which is leading to increase in volume for villa transactions.
�� The off-plan market remained buoyant with over 4,000 properties launched during Q2 2017 with large concentration being in the Dubailand and Dubai South areas. However, as per the data from Dubailand Department, the value of transactions declined year-on-year from AED6.7 billion in Q2 2016 to AED4.8 billion in Q2 2017. Historically, the market remains sluggish during the festive season which has resulted in drop in absorption rates despite lucrative offers from the developers.
RENTS �� Residential rents continue to soften as supply continues
to supersede demand. Average rents dropped marginally by 1% quarter-on-quarter and 5% year-on-year. As the developments that towards transforming existing tenants into owner residents complete, we are witnessing a shift in market dynamics with % of owner occupied residents increasing vs. % of tenant occupied units in Dubai. This in turn is leading to softening of rents across all locations. With c.9,000 units expected to complete during the course of the year, the rents are forecasted to soften further, with increased landlord incentives anticipated.
�� The main leasehold areas of Bur Dubai, Al Barsha, Oud Metha and Al Nahda recorded over 7% decline year-on-year. Bur Dubai area recorded the highest decline with rates dropping by 9.3% year-on-year. One bedroom apartments which were achieving rents in the range of AED70,000-85,000 per unit per annum in Q2 2016 dropped to AED65,000-75,000 per unit per annum in Q2
2017. Similarly Al Barsha area recorded a decline of 7.9% year-on-year with the highest drop been across studio and two bedroom units.
�� The rate of decline across villa properties was marginally higher than the apartments with average rents dropping by 6% year-on-year and 1% quarter-on-quarter. The four bedroom units recorded the highest drop of 7.25% year-on-year with the average rate dropping from AED240,000 per unit per annum in Q2 2016 AED223,000 per unit per annum. With the expected handover of Arabian Ranches and Town Square developments, we anticipate the rates to deflate further during the course of the year.
�� With rising vacancy levels, large landlords that own towers are becoming more open to offering incentives in the form of rent-free periods ranging from one to three months, no chiller charges and relaxed payment terms of 4 to 12 cheques in order to reduce voids.
LOCATION STUDIO 1BR 2BR 3BR Q-ON-Q Y-ON-Y
Business Bay 60 78 118 158 -2.42% -4.91%
DIFC 78 108 138 205 -1.76% -6.57%
Discovery Gardens 45 67 90 - -1.10% -5.05%
Downtown Dubai 68 100 153 213 -0.89% -6.83%
Dubai Marina 60 88 130 185 -2.58% -7.37%
Greens 65 83 125 150 -1.83% -5.69%
International City 32 46 66 88 -1.41% -7.20%
Jumeirah Beach Residence 75 100 130 173 0.00% -3.17%
Jumeirah Lakes Towers 58 85 115 148 -1.65% -4.60%
Palm Jumeirah 80 115 145 182 -1.17% -8.89%
Barsha Heights 58 78 100 135 -1.52% -4.78%
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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RESIDENTIAL SECTOR
PROJECT 2 BEDROOM 3 BEDROOM 4 BEDROOM 5 BEDROOM Q.O.Q Y.O.Y
Al Furjan - 158 - 215 -0.00% -3.08%
Arabian Ranches 138 175 230 285 -2.29% -6.99%
Dubai Sports City - 173 188 265 -1.56% -6.35%
Jumeirah Park - - 220 275 -1.11% -8.62%
Jumeirah Village 138 145 158 185 -0.83% -6.77%
Meadows - 210 235 270 -1.69% -6.52%
Palm Jumeirah - 305 420 460 -0.71% -7.48%
Springs 120 165 - - -1.77% -6.70%
Jumeirah Islands - - 275 355 -0.89% -7.67%
Jumeirah Golf Estates - 245 293 365 -2.12% -7.39%
0
500
1,000
1,500
2,000
2,500
Al F
urj
an
Ju
meir
ah
Vill
ag
e
Sp
rin
gs
& M
ead
ow
s
Ju
meir
ah
Park
Ara
bia
nR
an
ch
es
Du
bai
Sp
ort
s C
ity
Th
eL
akes
Palm
Ju
meir
ah
AVERAGE VILLA SALE PRICE AED/ sq.ft. Q2 2017
AE
D/s
q.ft
Source: MPM Properties Research
0.0%
-7.0%
-3.0%
-7.0%
-3.0%
-4.0%
0.0%
-2.0%
-3.0%
-3.0%
0.0%
-6.0%
-2.0%
-7.0%
0.0%
-4.0%
QoQ
YoY
2,4
00
1,275
1,10
0
1,0
75
1,0
75
1,0
25
95
0
975
AVERAGE VILLA ANNUAL RENTS Q2 2017
Source: MPM Properties Research
0
200
400
600
800
1,000
350
500
425
320
500410
600
950
775
250350
300
NON-INVESTMENT LAND VALUES Q2 2017
AE
D /
Sq
.ft.
Source: MPM Properties Research
Mirdif Al Barsha Umm Suqeim Al Warqa
HighLow Average
0
50
100
150
200
250
300
NON-INVESTMENT VILLA RENTS Q2 2017
AE
D (
Mill
ion
)
Source: MPM Properties Research
4 Bed3 Bed 5 Bed
Al WarqaUmm SuqeimAl BarshaMirdif
150175
210200230
265
175
205
263
130150
160
3.8
7.85.8
7.0
15.0
11.09.5
24.0
16.8
4.5
7.56.0
NON-INVESTMENT VILLA VALUES Q2 2017
25
20
15
10
5
0
AE
D (
Mill
ion
)
Source: MPM Properties Research
Mirdif Al Barsha Umm Suqeim Al Warqa
HighLow Average
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
1514
Q2 2015
AMENITIES AND FACILITIES
PAYMENT PLAN
Bayz Tower is located in Business Bay masterplan development in-close proximity to Downtown Dubai and Dubai Mall. The ground plus 29 floors project is being developed by Danube Properties and offers a total of 456 apartments comprising of studios, one, two and three bedroom units along with retail space on the ground floor. All the apartments are provided with white goods and furniture.
The tower offers various sizes of apartments catering to a broad spectrum of investors from single occupants to families.
Located in the heart of the city with easy access to major landmarks of Burj Khalifa, Dubai Mall, Meydan Race Course and the upcoming world’s tallest deck
�� Located in a development with well-developed infrastructure and community facilities;
�� Modular kitchen;
�� White goods and furniture;
�� State-of-the-art Health Club with steam room and sauna;
�� Swimming Pool with Jacuzzi;
�� Zen zone for meditation and rejuvenation;
�� Cabana;
�� Barbeque area;
�� Party Hall cum Air conditioned kid’s play area
�� 10% on booking plus DLD Registration & Oqood fees;
�� 10% 60 days from booking date;
�� 7% 120 days from booking date;
�� 1% every month. (December 2017 to December 2023).
UNIT TYPE AREA (SQ.FT.) STARTING PRICE (AED)
Studio 412 - 472 700,000
One bedroom 551 - 881 925,000
Two bedroom 1,141 - 1,148 1,500,000
Three bedroom 1,365 1,800,000
BAYZ TOWER
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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OFFICE SUMMARY �� During the quarter over 750,000 sq.ft. of office
space was added, taking the total office stock to 94.8 million sq.ft. New office space that emerged includes Tamani Art Office tower in Business Bay and low-rise towers from Umm Al Sheif area.
�� Looking at the ongoing construction activity, we expect c.2.4 million sq.ft. of office space to enter during the second half of 2017.
�� Average office rents dropped by 5% year-on-year while quarter-on-quarter the rates remained stable. The office rents across all
the locations have bottom out and we do not expect a major shift in rental rates during the course of the year.
�� Based on the projects announced/ launched/under construction, it is estimated c.8.4 million sq.ft. of new office space to enter the market during the period 2018-2020. However, we are noticing a shift in office supply from strata to single owned office towers. The majority of the future supply is single owned grade A space while the strata space expected from office projects launched during the peak of the market are nearing completion now.
OFFICE SALES �� Average office sale rates across freehold locations
declined by 3% year-on-year, while the rates remained unchanged quarter-on-quarter. The Downtown Dubai recorded the highest yearly drop of 8% followed by Barsha Heights with 5%. The office sale rates have bottomed out across all the freehold locations and have stabilized at these levels in the second quarter. The average sale rates in Downtown area are currently AED2,100 per sq.ft. as compared to over AED4,500 per sq.ft. during the peak of the market.
�� The majority of the enquiries during the quarter were for smaller office sizes of less than 2,000 sq.ft. which is also evident from the Dubai Land Department transaction data. In total c.335,000 sq.ft. of office space was transacted in Q2 2017 at
a total value of AED432.2 million as compared to AED536.3 million in Q1 2017, recording a quarterly decline of 19% and 11.9% year-on-year. The majority of the transactions during the quarter were for office sizes measuring less than 1,500 sq.ft. accounting for 51% of the total transactions in value terms followed by office sizes in the range of 1,500-2,500 sq.ft. at 24%.
�� In terms of transaction by location, Business Bay and Jumeirah Lakes Towers accounted for 78% of the total value of transaction with Business Bay accounting for AED217 million worth of transactions followed by Jumeirah Lakes Towers at AED119 million. Other areas which witnessed increase in transaction activity include Trade Centre AED43 million and Barsha Heights AED35 million.
OFFICE SECTOR
0
20
40
60
80
100
120
DUBAI OFFICE STOCK (2008 - 2019)
Mill
ion
sq
.ft.
20092008 2010 2011 2012 2013 2014 2015 2016 H12017
Stock Expected
Source: MPM Properties Research
2018 2019
2.52.40.03.56.82.50.26.0
6.010.0
8.06.0 97
3.8
100959491848181756959
5145
H22017
OFFICE RENTS �� The office market remained subdued during
the quarter. Most leasing enquiries were largely from companies looking to consolidate and for smaller sized offices, with space less than 2,500 sq.ft.
�� Office rents remained unchanged from the previous quarter while year-on-year the rates dropped by 5%. The CBD area which includes office towers along Sheikh Zayed road and Downtown Dubai recorded a year-on-year decline of 6% which was primarily due to migration of tenants from ageing buildings.
Average rents in the area range from AED90-240 per sq.ft. per annum (all inclusive) dependent on the age and quality of the building.
�� Across the freehold areas, Barsha Heights recorded the highest decline of 8% year-on-year followed by Jumeirah Lakes Towers with 6% drop year-on-year. The rates across all the office locations have bottomed out and we do not expect any significant changes in the rental rates in these areas during H2 2017.
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
18
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
19
Sheikh Mohamed Bin Zayed Rd.
Sheikh Mohamed Bin Zayed Rd.
Sheikh Mohamed Bin Zayed Rd.
Al Khail Road
Al Khail Road
daoR mi equS
mm
U
Sheikh Zayed Rd.
Sheikh Zayed Rd.
Sheikh Zayed Rd.
Arabian RanchesDubai
Land
DubaiLand
DubaiLand
DubaiLand
DubaiLand
Nad AlSheba 2
Nad Al Sheba
DubaiSilicon Oasis
InternationalCity
DragonMark
MushrifNational Park
Murdif
FestivalCity
TOSHARJAH
TOHATTA & OMAN
TOAL AIN
TOABU DHABI
TheLagoons
Business Bay Za’abeel
Garhoud
Al Qusais
Port Saeed
Rigga
Ras Al Khor
Al Marqadh
LegendsAl Barari
City of ArabiaGlobal Village
MotorCity
DubaiSport City
DubaiInvestment
Park 1
Jumeirah GolfEstates
Jumeirah GolfEstates
IMPZ
DubaiInvestment
Park 2
JumeirahVillage
JumeirahVillage South
The Meadows
Emirates Hills
The Springs
TheGardens
Jebel Ali Village
Jebel Ali Port
Jebel Ali Freezone
Jebel AliIndustrial Area
Dubai World Central Airport
DiscoveryGardens
JumeirahPark
JumeirahIslands
BarshaHeightsThe
Lakes
TheGreens
Naif
Al Raffa
SatwaJumeirah
Al WaslAl Safa
Umm Suqeim
The PalmJumeirah
Al SufouhMedia / Internet
CityJumeirah Lake
Towers
Dubai Marina
Burj Al Arab
The World
The Palm Deira
Al QuozIndustrial Area
Al Barsha
Al Quoz
Emirates Towers
DIFCBurj Khalifa
Karama
OudMetha
Al Mamzar
Port Rashid
DubaiInternational
Airport
OFFICE SECTOR
0
50
100
150
200
250
300
350
DIC
& D
MC
Bars
ha
Heig
hts
Ju
meir
ah
Lake T
ow
ers
Bu
sin
ess
Bay
Sh
eik
hZ
ayed
Rd
Do
wn
tow
nD
ub
ai
DIF
C
OFFICE RENTS AED/sq.ft. Q2 2017
AE
D/s
q.ft.
High Low
Source: MPM Properties Research
125
130
34
0
24
0
85
180
65 14
0 190
55
70 11
0
120 17
5
SHEIKH ZAYED RD.RENT = AED 85 - AED 180 /sq.ft.
DIC & DMCRENT = AED 120 - AED 175 /sq.ft.
BARSHA HEIGHTSRENT = AED 70 - AED 110 /sq.ft.AVG. SALE = AED 900 /sq.ft.
JUMEIRAH LAKES TOWERSRENT = AED 55 - AED 190 /sq.ft.AVG. SALE = AED 975 /sq.ft.
DOWNTOWN DUBAIRENT = AED 130 - AED 240 /sq.ft.AVG. SALE = AED 2,075 /sq.ft.
DIFCRENT = AED 125 - AED 340 /sq.ft.AVG. SALE = AED 1,750 /sq.ft.
BUSINESS BAYRENT = AED 65 - AED 140 /sq.ft.AVG. SALE = AED 1,050 /sq.ft.
0
500
1,000
1,500
2,000
2,500
BarshaHeights
JumeirahLake Towers
BusinessBay
DubaiMarina
DIFCDowntownDubai
OFFICE AVERAGE SALE PRICES Q2 2017
AE
D /
sq
.ft.
-1.0%
-8.0%
0.0%
-3.0%
0.0%
0.0%
0.0%
-2.0%
0.0%
-3.0%
-1.0%
-5.0%
QoQ YoY
2,0751,750
1,4751,050 975 900
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
21
RETAIL SECTOR
PRIME SHOPPING MALL AVERAGE RENTS – Q2 2017
An
ch
ors
Cin
em
a
Hyp
erm
ark
et
Min
i M
ajo
rs
Fla
gsh
ips
Rest
au
ran
ts
Fo
od
Co
urt
Lin
e S
ho
ps
1,2001,1001000900800700600500400300200100
0
AE
D/s
q.ft.
Source: MPM Properties Research
Source: MPM Properties Research
�� This quarter witnessed a boost in sales and footfalls across all major shopping centers, driven by the three day super sale event and extended mall hours during the Eid. The three day sales event not only attracted UAE residents but also tourists from neighbouring GCC countries. All the major malls reported long queues across the participating outlets for the three day sales event, while the secondary malls continue to struggle in attracting similar footfall levels.
�� In terms of new retail suppy, only 37,500 sq.ft. of retail space entered the market, taking the total retail stock of Dubai to 34.5 million sq.ft. of Gross Leasable Area (GLA). With over 10 million sq.ft. of GLA under construction, Dubai’s retail space is heading for a massive
increase during the course of next three years which could have an effect on occupancy and footfall figures.
�� During this quarter, the rents remained flat across all major malls while secondary mall operators are looking at rental negotiation to retain existing tenants and maintain their occupancy levels. Some of the secondary mall operators have starting revamping their retail mix, to ensure they are aligned to the market demand and prepared for the upcoming new malls and growing space in existing malls. In addition, there is increased pressure from the rapidly expanding online shopping platform, which is growing its market share of the overall retail spend in UAE.
0
10
20
30
40
50
24.5 27.1 27.9 28.4 28.7 30.0 32.6 34.5
0.04
34.5 37.5
3.03.3
40.8
4.5
DUBAI RETAIL MALL STOCK - 2010 - 2019
GL
A s
q.ft.
(Mill
ion
s)
Stock Expected - *Includes all retail malls with a GLA greater than 25,000 sq.ft.
Source: MPM Properties Research
2010 2011 2012 2013 2014 2015 2016 H1 2017 H2 2017 2018 2019
2.62.6 0.7 0.5 0.3 1.3
1.8
RETAIL SUMMARY
DUBAI RETAIL MALLS GLA BY AREA Q2 2017
12%
17%
14%
23%
34%
Neighborhood - 33%
Community - 22%
Regional - 20%
Super Regional - 25%
DUBAI RETAIL MALLS BY SIZE Q2 2017
DUBAI RETAIL SUPPLY (PRE-2010)
NEW SUPPLY DELIVERED 2010-Q2 2017
Neighborhood - 22%
Community - 15%
Regional - 16%
Sub-Regional - 16%
Super Regional - 31%
33%
22%20%
25%22%
15%
16%16%
31%
20%
11%
14%
7%
11%
4%5%
5%
3%
6%
3%
8%
3%
Deira - 20%
Business Bay - 14%
Barsha - 11%
Mirdif - 11%
Al Warsan - 8%
Bur Dubai - 7%
Al Quoz - 6%
Dubai Marina - 5%
Jebel Ali - 5%
Dubailand - 4%
Jumeirah - 3%
Al Wasl - 3%
Other Areas - 3%
Neighborhood - 17%
Community - 12%
Regional - 14%
Sub-Regional - 23%
Super Regional - 34%
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
23
HOSPITALITY SECTOR
0
200
400
600
800
1,000
1,200
DUBAI HOTELS PERFORMANCE - 2017 YTD
ADR RevPAR
Source: MPM Properties Research
Occupancy
100.0%90.0%80.0%70.0%60.0%50.0%40.0%30.0%20.0%10.0%0%
AE
D
Occu
pan
cy
Jan
-14
Feb
Mar
Ap
rM
ay
Ju
nJu
lA
ug
Sep
Oct
No
vD
ec
Jan
-15
Feb
Mar
Ap
rM
ay
Ju
nJu
lA
ug
Sep
Oct
No
vD
ec
Jan
-16
Feb
Mar
Ap
rM
ay
Ju
nJu
lA
ug
Sep
Oct
No
vD
ec
Jan
-17
Feb
Mar
Ap
rJu
n
HOTEL SUMMARY �� During Q2 2017, over 1,700 rooms were
added taking the total supply to over 106,000 rooms and apartments. Few of the new additions include Premium Rixos in Jumeirah Beach Residence, Double Tree in Business Bay and Rove Trade Centre.
�� Tourist numbers continue to record a robust growth despite challenging economic environment and currency fluctuation. During H1 2017 Dubai hotels welcomed 8.06 million guests as against 7.29 million guests during the same period last year, a growth of 10.6% year-on-year.
�� The largest source market during H1 2017 was India with 1.05 million guests followed
by 740,000 guests from Saudi Arabia. Visa on arrival for Indian nationals holding US visa had a positive impact on the guest numbers. With foreseeable improvements with visa on arrival to Indians holding UK and EU residency visa will further boost guest numbers from India.
�� Year-on-year the ADR’s remained flat while occupancy rates have risen by 2% year-on-year, as Eid holidays aided in recording strong occupancy rates. Looking at the exhibitions and events scheduled and promotions offered by the hotels, occupancy rates are expected to remain strong for the remainder of the year.
HOTEL NAME LOCATION STAR DATE NUMBER OF KEYS
Rove Trade Centre Al Jaffliya 4 star Q2 2017 270
Premium RixosJumeirah Beach
Residence5 star Q2 2017 443
Double Tree Business Bay 5 star Q2 2017 238
TRYP by Wyndham Barsha Heights 5 star Q2 2017 674
Goldstate Hotel Al Jadaf 3 star Q2 2017 101
HOTEL NAME LOCATION STAR DATE NUMBER OF KEYS
Renaissance Downtown Dubai
Business Bay 5 star 2017 298
Waldorf AstoriaDubai International
Financial Centre5 star 2017 247
Creek Rotana & Arjaan Deira 4 star 2017 280
Bulgari Resort & Residences
Jumeirah Bay Island 5 star 2017 121
HOTELS - NEW SUPPLY Q2 2017
SAMPLE OF UPCOMING SUPPLY
0
30
60
90
120
150
DUBAI HOTEL ROOMS SUPPLY (2012 - 2019)
No
. o
f R
oo
ms
('0
00
s)
Existing Supply New Supply
Source: MPM Properties Research
418 4.7
6.8 1.66.4
H1 2017 H2 2017 2018 2019201620152012 2013 2014
79 80 84 92 97 104 105
8.0
112
7.5
120
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
25
DEFINITIONS & METHODOLOGY
RESEARCH STUDY AREA
The geographic extent of the study area covers the key districts in Dubai.
RESIDENTIAL
New residential developments are classified as delivered and thus entered into the new supply category when they are made available for occupation. This is verified via a combination of site inspections and discussion with the developer and hence our supply numbers do take into consideration the phased release of large projects.
Rental and sales trend analysis is based on transactional data derived from the MPM Properties Agency team and data sourced from developers and owners.
OFFICES
New office developments are classified as delivered and thus entered into the new supply category when they are available for tenant fit-outs.
Given the general lack of transparency in the local market rents quoted are headline rents, thus exclude any rent free period of other financial
incentives that may have been negotiated between the parties. The rents quoted are also exclusive of service charges.
RETAIL
New retail developments are classified as delivered and thus entered into the new supply category when the first units are open and trading.
Our classification of malls is based on our own assessment having regard to size and the catchment area which the mall typically penetrates.
HOSPITALITY
New hotels are classified as delivered and thus entered into the new supply category when they are opened and trading. All trading performance data is provided by DTCM.
FUTURE SUPPLY PROJECTIONS
Our future supply projections across all sectors are based on a combination of regular site inspections and discussions with developers.
BESPOKE CLIENT RESEARCH ADDING VALUE TO YOUR PROPERTY INTERESTSThe ADIB Real Estate Services team covers all sectors of the real estate market. We provide bespoke market research to our valued clients to meet their specific requirements.
We provide reports, information and presentations derived from primary market data that directly assist our clients to save or make money from real estate and shape strategies to enhance value.
DISCLAIMER:
The information contained in this report has been obtained from and is based upon sources that MPM Properties 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. MPM Properties will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute MPM Properties, 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 Dubai market. 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 MPM Properties’ control. For a full in-depth study of the market, please contact MPM Properties team.
A collaborative team providing our integrated services
BALAJI NAGARAJ MSC MRICS Head of Residential Valuation Dubai & Northern Emirates T: +971 (0)4 371 9463 M: +971 (0)55 196 2396 b.nagaraj@mpmproperties.ae
CHARLES ANDREW CHAMBERS CEO T: +971 (0)2 610 0545 M: +971 (0)56 6773521 andrew.charles@mpmproperties.ae
ABDULLAH SAID AL KUWEITI Business Development Director T: +971 (0)2 610 1554 M: +971 (0)50 623 5854 abdullahs@mpmproperties.ae
MOHAMMED FAHEEM Manager Strategic Advisory & Research T: +971 (0)4 371 9471 M: +971 (0)50 384 5220 mohammed.abdulfaheem@adib.com
WAHIDA KARAMA Head of Property Operations T: +971 (02) 610 0435 M: +971 (0)50 765 7679 wahida.karama@mpmproperties.ae
FRANK O’DWYER MBA (Hons); BEng.COO T: +971 (0)2 610 0402 M: +971 (0)50 812 1070 f.odwyer@mpmproperties.ae
DOMINIC BARLOW Head of Retail, Hospitality & Leisure T: +971 (0)2 510 0655 M: +971 (0)56 288 1458 dominic.barlow@adib.com
JUBRAN AL HASHMI Head of Property Services T: +971 (0)2 610 0232 M: +971 (0)50 122 0041 jubran@mpmproperties.ae
VINEET KUMAR Director of Agency – Dubai T: +971 (0)4 371 9462 M: +971 (0)50 651 6491 vineet.kumar@adib.com
VAIBHAV SHARMA MCOM; MDBA Chief Strategy Officer T: +971 (0)2 412 8914 M: +971 (0)50 660 9295 vaibhav.sharma@adib.com
ALI ABDULLAH ABDUL RAHMAN Acting Regional Head – Northern Emirates T: 971 (0)6 597 2514 M: +971 (0)50 656 2486 aliabdullah@mpmproperties.ae
MOHAMED AL ZOUBI Head of Development Advisory BSc Civil Engineering T: +971 (0)2 610 0564 M: +971 (0)50 310 3570 mohammedalzoubi@mpmproperties.ae
YOUSEF AL ZAROONI Regional Head – Al Ain T: +971 (0)3 708 8636 M: +971 (0)50 600 1002 yousef.alzarouni@mpmproperties.ae
PAUL MAISFIELD BSC (HONS) MRICS Head of UK Real Estate T: +44 (0) 20 7590 2234 M: +44 (0)7802 404868 paul.maisfield@adib.com
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
26
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
27
SAMPLE OF UPCOMING PROJECTS – Q2 2017RESIDENTIAL
RETAIL
HOTEL
3 AZIZ FREESIA 4 AZIZ DAISY1 RIAH TOWERS CULTURE VILLAGE
2 MAYDAN RESIDENCES 1 MAYDAN
OFFICE
1 THE POINTE PALM JUMEIRAH
2 THE FIRST AVENUE MOTOR CITY
3 NAKHEEL MALL PALM JUMEIRAH
4 PAVILION BADRAH RESIDENCE
1 BULGARI JUMEIRAH BAY ISLAND
2 PARK INN MOTOR CITY
3 RENAISSANCE DOWNTOWN DUBAI
4 WALDORF ASTORIA DIFC
1 NBAD OFFICE BLDG. AL JADDAF
2 OFFICE BUILDING, UM AL SHEIF
4 THE OPUS, BUSINESS BAY
3 OFFICE TOWER, UM AL SHEIF
1 TAMANI ART, BUSINESS BAY
2 OFFICE BUILDING, UM AL SHEIF
4 OFFICE TOWER, UM AL SHEIF
3 OFFICE TOWER, UM AL SHEIF
SUPPLY - PHOTO GALLERY
NEW SUPPLY – Q2 2017RESIDENTIAL
HOTEL
3 MARINA ARCADE 4 MANZEL AL KHOR CULTURE VILLAGE
2 NILOFAR TOWER CULTURE VILLAGE
1 SUFOUH VILLAS SUFOUH
OFFICE
1 TRYP BY WYNDHAM BARSHA HEIGHTS
2 RIXOS PREMIUM JBR
4 DOUBLE TREE BUSINESS BAY
3 GOLDSTATE AL JADAF
RETAIL
1 PAVILLION, JUMEIRAH ISLANDS
REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017
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REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017
29
TOABU DHABI
Jebel Ali Port
Jebel Ali FreezoneBarshaHeights
Al Mamzar
Al Qusais
1
2
32
34
1
13
3
4
3
4
1
2
3
3
1
4
2
2
1
1
4
4
2
4
1
2
Residential
Offices
Retail
Hotels
Q4 2016 NEW SUPPLY
Residential
Offices
Retail
Hotels
UNDER CONSTRUCTION
Q2 2017
INTEGRATED SERVICES COVERING THE FULL PROPERTY LIFECYCLE
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