MASHREQ

PROPERTYWEALTH GAUGE

The first quarter of 2016 continued to witness softening market conditions across most segments. However, the rate of decline has reduced, suggesting the Dubai residential market is approaching the bottom of its cycle. In Q1 2016, the general REIDIN sales index recorded a drop of 10% Y-o-Y. This can be attributed to continued global uncertainty over currencies and economic performance in key geographies across the globe. However, Dubai is as well positioned as any economy to deal with these challenges with strong leadership as well as proactive government investments & initiatives. With the potential introduction of VAT and other corporate and indirect tax implementations, the government is realigning its strategy to further reduce reliance on oil revenues. Moreover, the government is also putting immense effort into developing its tourism and hospitality sectors with projects like Bluewater’s Island, Dubai Parks & Resorts and other theme parks. These projects will further strengthen the diversification of Dubai’s economy and help ignite another real estate revival leading upto Expo 2020.

Despite the continued short term softening, market sentiment remains relatively positive towards the medium and longer term for buyers and investors.

Economic Overview

Volume 28 | April 2016

MASHREQ

PROPERTYWEALTH GAUGE

1. The Dubai Land Department ( DLD ) reported Real Estate transactions in Dubai collectively at Dh 55 billion in the First quarter of 2016. As per the report

issued by DLD, Dubai Marina was the most popular for real estate unit sales, followed by Burj Khalifa and Business Bay. The report also showed a total

of 11,353 investors from 127 nationalities who invested in Dubai’s property sector during this period.

2. The latest data from REIDIN showed that rental prices in Dubai’s residential market dropped by 5 percent in the last one year and 2 percent in the first

quarter of 2016. New supply is definitely having an impact on residential rentals in some of Dubai’s key neighbourhoods, including non-freehold ones

such as in Bur Dubai and Oud Metha. Apart from new supply, any rental decline is also a factor of recent job losses and landlords not willing to leave

their premises vacant for a long time. Instead, they are willing to bring down their rental demands.

3. Dubai is all set to have a structure that will be a notch taller than the Burj Khalifa’s 828 metres; ‘’The Tower’’ located at the Dubai Creek Harbour in Ras Al

Khor. “The Tower” will serve both as a monument to the city and as the anchor piece for Dubai Creek Harbour. Emaar, the developer which has already

launched nine residential towers there, hopes to recreate the same formula that had worked so well in Downtown for them .

4. Nakheel has seen an 8 percent increase in its first quarter net profits — totalling Dh 1.47 billion — compared to a year ago. The gains were led by its

delivery portfolio and the steady accumulation of new rental assets to its portfolio, especially in retail and residential leasing. During the first quarter,

Nakheel opened Dragon Mart 2, nearly doubling the size of the mall complex to 2.2 million square feet of leasable space. The new mall and hotel have

received an overwhelming response since opening .

5. Azizi Developments formally launched two serviced apartment properties in Al Furjan, within the Dubailand master development, to become the latest

UAE developer to enter the hospitality sector. The developer plans to launch a further seven such projects in the same area over the coming months,

with the first two scheduled for completion in the third quarter of 2017. Prices start at Dh 433,000 for a studio, while one bedroom units are priced

between Dh 800,000 and Dh 1 million. Two-bed units are priced at around Dh 1.2 million. Along with its recently announced project on the Palm —

where it plans to add a second one shortly — Azizi’s portfolio in Dubai has swelled to Dh 3 billion-plus.

6. Ellington Properties has announced a project pipeline of 14 developments in Dubai. The new projects will add over 2,200 residential units including

apartments, town houses and villas. The company unveiled its first project, Belgravia, a G+4 residential building with 181 one-, two-, and three-bedroom

units in Jumeirah Village Circle (JVC). Ellington has three other projects that have commenced construction — DT1 in Downtown Dubai, The Ellington

Collection on Palm Jumeirah, and Belgravia II in JVC.

7. Nestled in the heart of Dubai’s prestigious Jumeirah 1 district, No 10. City Walk is a low- mid rise residential development by Meraas group. The Project

is designed by Woods Baggot and comprises 81 apartments with one-, two-, three- and four-bedroom apartments (with maid’s quarters). This project is

particularly prestigious since it is the first strata ownership freehold project in Jumeriah with completion set for June this year.

Real Estate Sector Highlights

MASHREQ

PROPERTYWEALTH GAUGE

Mashreq Property Pricing Index At Mashreq we have been tracking the property prices by indexing them community wise on a scale of 100. Index of Median prices, Base = 100 (October 2008). Based on the Mashreq Property Price Indexing, the percentage change over a period of time has been indicated both for villas & apartments for major communities.

MASHREQ PROPERTY PRICE INDEX CHANGE IN LAST MONTH

CHANGE IN LAST 3 MONTHS

CHANGE IN LAST 12 MONTHS

LOCATION May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 Change%

changeChange

% change

Change%

changePer Sq. Ft (AED)

Arabian Ranches 76.7 76.4 76.1 75.4 75.1 74.7 74.2 74.2 73.8 73.4 73.1 72.9 -0.2% -1.2% -5.0% 1185

Burj Khalifa Tower 49.8 49.5 47.2 47.2 46.0 44.5 44.4 44.4 43.8 43.4 43.4 43.4 0.0% -0.8% -12.9% 3081

Burj Dubai Downtown 90.1 89.6 89.0 88.7 88.6 88.3 88.3 87.8 87.1 86.7 86.3 86.3 0.0% -0.9% -4.2% 2373

Business Bay 70.5 70.3 70.0 69.6 69.5 69.4 68.6 68.3 68.0 67.5 67.3 67.3 0.0% -1.0% -4.6% 1245

DIFC 52.9 52.9 52.9 52.6 52.2 52.0 52.0 52.0 52.0 52.0 51.5 51.3 -0.4% -1.3% -3.0% 1720

Dubai Land 72.8 72.8 72.4 71.7 71.3 70.8 70.6 70.3 70.0 69.5 69.4 68.9 -0.6% -1.5% -5.3% 881

Dubai Marina 82.6 82.5 82.2 81.4 80.9 80.3 79.7 79.7 79.1 78.7 78.5 78.2 -0.4% -1.1% -5.4% 1642

Greens 66.6 65.7 64.9 64.9 65.2 65.2 65.2 65.2 64.8 63.8 63.8 63.8 0.0% -1.5% -4.2% 1213

International City 71.8 71.5 71.5 71.5 71.5 71.0 71.0 71.0 71.0 71.0 70.8 70.8 0.0% -0.3% -1.4% 638

Jumeirah Beach Residences 77.7 76.8 76.8 76.8 76.7 76.0 76.0 75.4 74.7 74.7 74.7 74.7 0.0% 0.0% -3.8% 1476

Jumeirah Lake Towers 60.9 60.7 60.4 60.4 59.6 59.1 59.5 59.5 60.1 59.7 59.7 59.7 0.0% -0.6% -2.0% 1000

Jumeirah Island 94.4 94.2 93.7 93.1 92.7 91.6 91.6 91.6 91.2 90.7 90.5 89.6 -1.0% -1.7% -5.0% 1658

Jumeirah Park 69.9 69.9 69.9 69.2 67.7 67.0 67.3 67.3 66.9 66.5 66.5 65.9 -0.8% -1.5% -5.6% 1047

Jumeirah Village 100.5 100.5 100.5 100.3 100.3 99.0 99.1 99.1 99.1 98.9 98.8 98.8 0.0% -0.2% -1.7% 889

Old Town Burj Dubai 70.8 70.6 70.6 70.0 70.0 69.8 69.8 69.8 69.8 69.4 69.3 69.1 -0.3% -1.0% -2.4% 1969

Palm Jumeirah 124.6 124.4 124.4 124.4 123.5 122.3 122.3 122.3 121.9 121.0 120.6 120.3 -0.2% -1.3% -3.4% 2677

Springs/ Meadows 71.1 70.4 69.7 69.7 69.2 68.5 68.4 68.1 67.9 67.9 67.4 67.4 0.0% -0.7% -5.1% 1180

Dubai Silicon Oasis 114.9 114.9 114.5 114.0 114.0 113.6 113.6 113.5 113.5 112.6 112.4 111.4 -0.9% -1.8% -3.0% 854

Furjan 97.7 97.7 97.1 94.8 94.8 94.3 93.6 93.6 92.2 91.8 91.8 91.2 -0.7% -1.2% -6.7% 838

MASHREQ

PROPERTYWEALTH GAUGE

Villas and Apartments

• The overall property prices for the month of April ’16 on an average have corrected by 0.3% as compared to 0.2% last month across all major locations. There is a dip in 11 locations whereas there is no change in remaining 8 locations.

• A similar decline in property prices has been observed over the past 12 months. The cumulative percentage change since March 2013 is at 17.8%. The numbers indicate a stabilizing trend in property prices across all major locations.

• Over a period of the last 12 months (i.e. since May-15), Villa community in Springs & Meadows have witnessed a decrease in property prices by 5.1%, followed by Jumeirah Park which has witnessed a decrease of 5.6%.

• Over a period of the last 12 months (i.e. since May -15), Apartments in Burj Khalifa have witnessed a decrease by 12.9%, followed by Jumeirah Beach Residence which has witnessed a decrease of 3.8%.

MASHREQ

PROPERTYWEALTH GAUGE

MASHREQ PROPERTY PRICE INDEX CHANGE IN LAST MONTH

CHANGE IN LAST 3 MONTHS

LOCATION May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 Change%

changeChange

% change

Per Sq. Ft (AED)

Business Bay- Grade A 95.9 95.9 95.9 96.8 97.1 96.4 96.5 94.0 93.9 93.4 93.3 92.5 -0.9% -1.5% 1249

Business Bay- Grade B 98.6 98.6 98.6 99.9 101.3 100.3 100.0 99.5 98.8 98.1 97.9 97.5 -0.5% -1.4% 1132

Jumeirah Lake Tower - Grade A 98.8 98.0 98.0 97.5 97.0 96.2 95.0 94.9 94.3 92.6 92.3 91.9 -0.5% -2.6% 1300

Jumeirah Lake Tower - Grade B 100.0 99.4 99.4 100.5 100.2 99.6 98.2 98.3 97.8 96.7 96.5 96.5 -0.1% -1.4% 1003

Downtown - Grade A 102.1 103.2 103.2 106.8 114.2 114.2 114.2 114.2 112.6 107.4 106.3 106.3 0.0% -5.6% 2525

Downtown - Grade A+ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.5 98.9 100.5 101.1 0.5% 1.6% 4788

Dubai Marina - Grade A 103.5 103.5 103.7 102.2 102.9 102.3 101.9 100.8 101.6 100.0 101.6 100.8 -0.8% -0.8% 1625

Sheikh Zayed - Grade A 97.0 97.0 97.0 95.5 95.5 95.3 95.3 95.3 95.3 93.8 91.3 91.3 0.0% -4.2% 1575

TECOM - Grade A 98.9 99.3 99.3 95.5 94.5 93.9 93.3 91.8 90.7 90.4 89.8 89.3 -0.5% -1.5% 967

Centurion Star - - 100.0 100.0 97.2 97.2 103.0 97.2 97.2 97.2 98.6 97.2 -1.4% 0.0% 1714

Commercial Properties - Offices Based on the Mashreq Property Price Indexing, the percentage change over a period of time has been indicated for offices of major communities.

The commercial property prices for the month of April ’16 have corrected by 0.4% on an average across all major locations as compared to the previous months. A similar trend has been observed over the last six months. The numbers indicate a stabilizing trend in property prices across all major locations. Over a period of the last 12 months (i.e. since May -15), offices in Downtown have seen an increase of 4.12% whereas offices on Sheikh Zayed Road have seen a decrease of 5.83%.

* Index of Median prices , Base = 100 (August 2014), TECOM Base =100 (Jan 2015)

MASHREQ

PROPERTYWEALTH GAUGE

Outlook

• Developers are expected to hold back projects in 2016 to cope with slower market conditions which should help stabilise and avoid excessive supply in the market .

• With significant correction in property prices over 2015, Dubai’s realty market is best positioned for end-users and long-term investors.

• The rental yields are still attractive for investors to purchase properties.

• Growth in the office space market is expected to remain flat as there remains excess supply in the market, with vacancy rates continuing to be high.

Disclaimer: Please note that this communication constitutes general market information based on studies and research. It should not be solely relied on without an opinion from your investment advisor. Mashreq Bank psc shall not be responsible for a liability arising out of any financial advice provided in connection with this communication.