REAL ESTATE SERVICES
ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 Q2 2014 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
FOREWORD
ADIB Real Estate Services comprises a comprehensive This market research publication provides an overview of the real estate banking and advisory platform with macro trends, demand drivers and real estate market in Abu complimentary business lines covering the whole Dhabi. property cycle. Our services include:- The real estate market in Abu Dhabi is entering into period Real estate financing of stabilisation after months of rising values, due to lower Strategic development advisory net yields, lower loan-to-value (75%) and limited availability of quality apartments with excellent views in the secondary Investment advisory market. Asset management Project Management There is a healthy appetite for off-plan sales for quality Valuation developments sold by established developers as was seen with Aldar’s recently launched Al Hadeel and Ansam projects. Brokerage Both the projects managed to sell most of the inventory Market Research during the launch event. We expect further projects with beach / water views to be launched in the coming months Choosing to work with ADIB means gaining (6-18 months). the benefit of across-the-board property expertise under one roof. Our report continues to improve market transparency, while highlighting key data, which is relevant to various segments of population within Abu Dhabi. REPORT HIGHLIGHTS Residential Sector Retail Sector
Strong market confidence and investor interest has Stable rents and rising footfalls have led to multiple continued the momentum for rising values in prime new tenants opening up in Off-Island malls projects. These were combined with a number of which have seen improving occupancy levels. bulk deals (buildings and projects) being closed in Q2 including plots of land being sold. Yas Mall opening up in Q4 2014 will bring multiple new retail tenants into Abu Dhabi The ADIB Rental Index shows rent cap removal has not had significant impact on the market with common rental Hospitality Sector trend of 0 to +5% during Q2 2014. Growth in airport passengers have positively impacted Office Sector the revenue (up 15%) and guest arrivals into Abu Dhabi (up 34%) in Q2 2014 vs. Q2 2013. The tourism sector Supply slowdown and healthy demand from tenants have continues to grow at a healthy pace and various initiatives led to reduction in vacancy rates. There are still some by TCA Abu Dhabi is expected to sustain this growth. speculative projects being built, but the majority are being built by owner occupiers like ADNOC, Al Hilal, ADIB, etc.
2 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014
CONTENTS
Real Estate Sector Summary 4 Supply Summary 6 Demand Drivers 8 Macro Trends 10 Residential Sector 12 Office Sector 28 Retail Sector 32 Hospitality Sector 34 Definitions & Methodology 38 Contact Information 39 Supply - Photo Schedule 40 Development Location Map 42
3 Q2 2014 | REAL ESTATE SECTOR SUMMARY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
REAL ESTATE SECTOR SUMMARY
RESIDENTIAL
ITEM DETAILS
ADIB Rental Index Common Trend 0 to +5% increase ADIB Rental Index Q-Q Change +3.7%
Q2 2014 New Supply 2,506 units (+1.2%) Q3-4 2014 Projected New Supply 6,995 units (+3.17%)
Total Abu Dhabi Housing Stock Q2 2014 226,454 units Total New Units Added From 2010 42,099 (21.84%)
RENTAL TRENDS (Q-Q CHANGE) INVESTMENT ZONE NON INVESTMENT ZONE PRIME
Studio +9.2% +19% 1 BR +4.9% +9% 2BR +6.9% +7% 3BR +4.8% +5%
SALES TRENDS (Q-Q CHANGE) INVESTMENT ZONE
Studio +18.5% 1 BR +6.0% 2BR +5.3% 3BR +4.0%
ITEM DETAILS
Grade A Headline Rent AED 1,750 Per Sqm (Q-Q Change) (2.9%) (12 Month Outlook) (Stable)
Q2 2014 New Supply 19,240 Sqm (+0.6%) Q3-4 2014 Projected New Supply 51,000 Sqm (+1.6%)
Key Additions Abu Dhabi Plaza
Total Abu Dhabi Office Stock Q2 2014 3.21 million Sqm
Under Construction 464,558 Sqm
Under Construction 53:47 (Spec v Purpose Built Ratio)
Investment Zone Net Yields 7% - 9%
KEY TREND Healthy sales activity witnessed in investment zones with interest from owner-occupiers as well as investors, especially from GCC.
4 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | REAL ESTATE SECTOR SUMMARY
RETAIL
ITEM DETAILS
Average Retail Mall Rents AED 1,800-3,800 Per Sqm (Q-Q Change) (0%) (12 Month Outlook) (Stable)
Q2 2014 New Supply 0 Sqm (0%) Q3-Q4 2014 Projected New Supply 262,000 Sqm (+11.26%)
Key Additions No Additions
Total Abu Dhabi Retail Stock Q2 2014 2.06 million Sqm
Under Construction 328,400 Sqm
Announced Projects in Pre-Construction Phase 662,000 Sqm
Vacant Space (District & Regional Malls) 30%
HOSPITALITY
ITEM DETAILS
Hotel Occupancy 78% +9% Hotel Average Room Rate 478 -5.5% Hotels Guest Nights 3.3 million +26% Hotels Revenue 2.4 billion +15%
Hotel Apts Occupancy 86% 6% Hotel Apts Average Room Rate 348 +1% Hotels Apts Guest Nights 1 million +13% Hotels Apts Revenue 271 million +9%
Q2 2014 New Supply 793 Rooms
Southern Sun Hotel Key Additions Ramada Hotel Adagio Al Bustan Ser. Apt.
Total Abu Dhabi Hotel Rooms 18,993
Q3-Q4 2014 Projected New Supply 597 Rooms
2015 Projected New Supply 2,053 Rooms
2016+ Development Pipeline 2,923 Rooms
5 Q2 2014 | REAL ESTATE SUPPLY SUMMARY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
SUPPLY SUMMARY
CUMULATIVE RESIDENTIAL SUPPLY 4.12% 3.17% 2.60% 5.27% 1.15% 241,914 250,000 6.19% 226,454 232,332 3.54% 216,993 219,449 5.68% 206,121 187,473 194,101 200,000 177,400
150,000
100,000
50,000
Number of Residential units of Residential Number 0 Pre-2010* 2010 2011 2012 2013 H1 H2 2015 2016 2014 2014 Total Supply Source: MPM Properties Research
ABU DHABI NEW HOUSING SUPPLY
15,000
12,000
2,013 9,000 5,945 4,691 4,981 6,000 2,925 3,732 3,212 3,770 4,741 2,352 3,000 1,372 2,051 5,135 675 2,326
Number of residential units of residential Number 382 775 2,221 2,863 2,411 2,550 0 752 1,439 1,200 2010 2011 2012 2013 H1 H2 2015 2016 2014 2014 Investment Area Off-Island On-Island Source: MPM Properties Research
ABU DHABI OFFICE SUPPLY (2009 - 2015)
4,000 414
3,500 249 85 51 3,000 377 541 2,500 2,000 155 3,121 3,206 3,257 1,500 2,495 2,872 1,000 1,800 1,800 1,955 NLA (in 000’s Sqm) NLA (in 000’s 500 0 2009* 2010 2011 2012 2013 H1 H2 2015 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: UPC & MPM Properties Research *as per UPC
6 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | REAL ESTATE SUPPLY SUMMARY
ABU DHABI RETAIL SUPPLY (2009 - 2017/18)
3,500 662 3,000 2,500 262 66 185 82 2,000 259 113 1,500 26 2,393 1,000 1,982 2,065 2,327 2,327 1,685 1,798 1,400 1,400 1,426
NLA (in 000’s) per Sqm per NLA (in 000’s) 500 0 2009* 2010 2011 2012 2013 H1 H2 2015 2016 2017/18 2014 2014 Running Total New Supply Completed Scheduled New Supply
Source: UPC & MPM Properties Research *as per UPC
ABU DHABI HOTEL ROOM SUPPLY (2009 - 2016+)
30000 2,923 2,053 25000 597 1,867 1,324 2,148 20000 2,012 1,427 15000 4,391
Rooms 22,967 20,317 20,914 10000 17,126 18,993 14,978 11,539 12,966 5000 7,148 7,148 0 Pre-2009 2009 2010 2011 2012 2013 H1 H2 2015 2016+ 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research
View towards Reem Island
7 Q2 2014 | DEMAND DRIVERS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
DEMAND DRIVERS – Q2 2014
Various initiatives collectively leading to increase in demand as new jobs are created and new ventures set up base in Abu Dhabi. GOVERNMENT INITIATIVES CREATING JOBS, IMPROVING QUALITY OF LIFE AND CONNECTIVITY
Executive Council approved the following Invitation to bid to local and international projects: AED12.7bn to be used for housing contractors for construction of the new Abu and community facilities projects, AED11.9bn Dhabi-Dubai main road (E311) for Government administration, AED3.1bn for economic projects, AED2.5bn for health sector projects and AED2.4bn for the education sector
REAL ESTATE AND CONSTRUCTION BUILDING MARKET MOMENTUM
Aldar successfully launched two off-plan projects, Tourism Development and Investment Company Al Hadeel and Ansam, both of which received (TDIC) has issued a pre-qualification request exceptional investor interest to contractors to undertake enabling works for a residential development on North Beach on Aldar announced that Yas Mall, Abu Dhabi’s largest Saadiyat Island mall will open to coincide with the final race of the 2014 Formula One World Championship
FREEZONES INDUSTRIAL SECTOR TO AID FUTURE GDP GROWTH
Al Khaili group has signed a AED280 million Abu Dhabi Ports Company (ADPC) has awarded musataha agreement for 50 years, to set up a AED20 million contract to construction firm country’s first caustic soda and other chlorine Alba Tec for the second phase development of the derivatives manufacturing facility, to be used in Marfa Port in Al Gharbia. Under the deal, Alba Tec various industry sectors will build landside infrastructure and new marina facilities at the port Abu Dhabi Aviation and AgustaWestland Aviation have formed a new partnership Wrightbus International, the company behind within Abu Dhabi airport free zone to provide the London double-decker buses, has opened its expertise, skills and technical and logistic Middle East headquarters in Masdar City, Abu support in the helicopter field, in addition to Dhabi. The company will look to leverage its a high maintenance level for more than 150 strategic base at Masdar City to respond to the AgustaWestland Helicopters in the Gulf and region’s growing need for innovative, efficient and Middle East region clean transportation
8 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | DEMAND DRIVERS
ETIHAD EXPANDING NETWORK TO 103 DESTINATIONS BY END OF THE YEAR
Introducing new destinations including Zurich, Etihad looking to buy Alitalia to expand its Rome, Dallas/Fort Worth, Los Angeles, Jaipur, network further Yerevan, and Madinah
TOURISM INITIATIVES
Zayed port to have a permanent cruise terminal in Abu Dhabi Summer Season to feature as many as two and a half years 62 events that will take place across the emirate of Abu Dhabi from 5th June to 31st August Ferrari World Abu Dhabi to undertake a major expansion program, with plans to introduce new rides, enhance existing ones and enhance retail and F&B offerings. This project is expected to be completed in three years
Q2 2014 KEY EVENTS ATTRACTING TOURISTS – BUSINESS AND LEISURE
Indian Premier League HSBC Golf Business Forum
World Professional Jiu-Jitsu Championship Al Gharbia Water-sports Festival
Abu Dhabi Desert Challenge Justin Timberlake Concert on Yas Island
Cityscape Abu Dhabi
HEALTH CARE FACILITIES IMPROVING FACILITIES AND BUILDING TOWARDS ATTRACTING MEDICAL TOURISM
Abu Dhabi’s Burjeel Hospital is planning a US$1.5 Cleveland Clinic in Abu Dhabi announced that the billion expansion in Abu Dhabi over the next three AED 4.7 billion project – which will house 364 years beds is due to open in 2015
9 Q2 2014 | MACRO TRENDS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
MACRO TRENDS
REAL GDP GROWTH RATE 2013-2017
15 12.8% 11.9% 11.7% 11.7% 11.6% 12 10.7% 10.5% 10.4% 9.7% 9.6% 9% 8.7% 9 6.3% 5.4% 6 4.8% 4.7% 4% Percent 3
0 Education and fishing Real estate Real Activities of Activities Construction Other mining Manufacturing other services other services Accomodation & food service service & food and motorcycles Business services Business Arts, recreation and Arts, recreation Agriculture, forestry Agriculture, and communications Financial & insurance household employers Crude oil & natural gas Crude oil & natural Wholesale, retail trade, retail Wholesale, Transportation, storage Transportation, repair of motor vehicles of motor repair Public admin & defence;
Source: DED social security compulsory Human health & social work Utilities: waste management Utilities: waste
CPI VS RENTAL CONTRIBUTION TO CPI KEY INDICATORS - STOCK MARKET vs. OIL vs. GOLD 103 350
102 300 101 250 100 200
99 Price in US$ 150 98 100 97 50 Jul Jul May Jul-12 Jul-13 Jan-11 Jun-11 Dec-11 Jan-12 Jan-13 Jan-13 Jan-14 Jan-14 Jun-14 CPI Rental Contribution to CPI AUD Murban - Crude Gold AUD Stock Index Dubai Stock Index Source: SCAD and MPM Properties Research Source: Bloomberg
10 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | MACRO TRENDS
ABU DHABI CITY BUSINESS CYCLE INDICES BUSINESS LICENCE NUMBERS
20,000 120
15,000 100
10,000 80
5,000 60
0 40 Q1 2011 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q2 2011 Q1 2012 Q4 2011 Q1 2014 Q3 2011 Q1 2013 Q1 2010 Q4 2011 Q1 2014 Q1 2010 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q2 2012 Q4 2012 Q3 2012 Q2 2013 Q4 2013 Q3 2013 Q2 2010 Q3 2010 Q4 2012 Q2 2014 Q4 2013 Q3 2014 Q2 2010 Q4 2010 Q3 2010 Q4 2014 Q4 2010 New Business Licenses Business Climate Index Business License Renewals Business Cycle Index Source: DED Source: DED
REALTY STOCK INDEX - ABU DHABI vs DUBAI
350 300 250 200 150 100 50 0 31/07/2011 29/11/2007 31/01/2007 31/08/2010 28/06/2012 30/05/2013 30/06/2014 30/10/2008 30/09/2009 Dubai realty index Abu Dhabi realty index
Source: Bloomberg
Driven by sound fundamentals and wise leadership, Development (ADDED) is periodically building Abu Dhabi’s economy witnessed remarkable and releasing including the Consumer Confidence development during the last few years, demonstrating Index, Business Confidence Index and Business Cycle its resilience to different shocks in the global Indicator, the growth prospects look very positive. economy, backed by accelerating growth in the non-oil sectors. In this connection, real GDP growth is forecasted to average 7.2% during the period 2014-2017, according Abu Dhabi’s real non-oil GDP growth was 5.9% to ADDED’s forecasts released early 2014. in 2012, followed by 7.4% in 2013, according to the recent data released by the Statistics Center - Abu Dhabi (SCAD). Shorooq Abdulla Al Zaabi Head; Development Indicators & Future Studies Division Looking ahead, and on the back of positive perspectives shown by different confidence Abu Dhabi Department indicators that the Department of Economic of Economic Development
11 Q2 2014 | RESIDENTIAL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q2 2014
SUPPLY Strong demand for quality off-plan developments in established locations and phased supply of large developments have benefitted investors and end users alike. New supply Upcoming Supply
The major new supply released to the market during As indicated in our Q1 report the real estate market Q2 2014 comprises apartments within the Gate in Abu Dhabi is entering into a period of growth District on Reem Island, including the phased release sparked by rising values, population growth and of units within Gate Towers and The Arc, which improved investor sentiment. together have added 1,200 units to the market in the last three months. This is being evidenced with multiple, previously stalled projects, now moving forward. In this Also on Reem Island, the B2 Tower at Marina Square, connection we expect to see a surge in new which has stood vacant since completion, has now development activity in the next 12 months, been made available for sale. The tower comprises particularly within the Investment Areas as sub- 202 apartments. developers commence projects to safeguard their position given the new 3 year time limit on planning There have also been a small number of infill consents and the improvement in financial viability. developments situated on the Abu Dhabi Island which have been completed in the last quarter, including Abu Dhabi Plaza which is mixed use development situated on Najda Street comprising 100 apartments, 70 office units and retail showroom space.
ABU DHABI NEW HOUSING SUPPLY
15,000
12,000
2,013 9,000 5,945 4,691 4,981 6,000 2,925 3,732 3,212 3,770 4,741 2,352 3,000 1,372 2,051 5,135 675 2,326 382 775 2,221 2,863 2,411 2,550 Number of residential units of residential Number 0 752 1,439 1,200 2010 2011 2012 2013 H1 H2 2015 2016 2014 2014 Investment Area Off-Island On-Island Source: MPM Properties Research
12 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | RESIDENTIAL SECTOR
CUMULATIVE RESIDENTIAL SUPPLY 4.12% 3.17% 2.60% 5.27% 1.15% 241,914 250,000 6.19% 226,454 232,332 3.54% 216,993 219,449 5.68% 206,121 187,473 194,101 200,000 177,400
150,000
100,000
50,000
Number of Units Residential 0 Pre-2010* 2010 2011 2012 2013 H1 H2 2015 2016 2014 2014 Total Supply Source: MPM Properties Research
SELECTION OF UPCOMING RESIDENTIAL UNITS
DEVELOPER LOCATION PROJECT SUMMARY
Low rise water fronting development comprising four Aabar Raha Beach East buildings providing 435 apartments
Sheikh Faisal Raha Beach East Exclusive development of 15 water fronting apartments
Desax Properties Shams, Reem Island Qurm Views
Dhafir Shams, Reem Island Yasmina Residences
UNB Najmat, Reem Island Two residential towers comprising apartments
Substantial mixed use development comprising 225 Bloom Abu Dhabi Marina apartments, 57 serviced apartments, 3,000 sqm retail and a 200 key 5 star hotel.
23 storey residential and commercial buildings with retail Foundation Airport Road on the podium
Link International Properties Corniche 36-storey residential building
Residential tower with ancillary commercial comprising AWQAF Electra Street, Khalidiayh over 350 apartments
Sheikh Suroor Next to Beach Rotana Two residential towers comprising apartments
Off-plan market activity witnessed pent up investor The rental market has been stable with non-investment demand with Aldar selling all the available apartments zones seeing flat rents with majority of the landlords on the sales launch day itself. Aldar units can be sold in focusing on maintaining higher occupancy vs. increasing the secondary market only after the investors have paid rents. The rental increase on investment zones witnessed 50% of the value, thus eliminating speculators. an increase of 5% to 12% as some of the prime developments have a healthy waiting list
13 Q2 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
THE ADIB RENTAL INDEX
In the last 3 months MPM Properties have higher, however such cases are very limited renewed close to 2,000 tenancy contracts in (representing in overall terms less than 5% of Abu Dhabi on behalf of our landlord clients and the portfolio) and relate predominantly to the granted over 400 new leases bottom end of the rental market typically with rents below AED 40,000 per annum Despite the removal of the rent cap 6 months ago, the ADIB Rental Index shows that the The rents are currently being adjusted to last common trend is 0 to +5% increase during Q2 achieved rents in 2013, while Government 2014 tenants have been allowed by respective landlords to renew their rents with minimum There are exceptions where rents have or no increase at all increased by over 20% and in some cases much ADIB RENTAL INDEX NOTES
The ADIB Rental Index relates to the a credible market indicator for rental trend performance of the ADIB portfolio only and the movements data is derived exclusively from transactions completed by MPM Properties Rental Index Zones are identified on the map at the rear of this report The ADIB Portfolio in Abu Dhabi comprises over 12,000 units (70% apartments, 30% The quality, age of the building and access to villas) with a spread of quality situated both facilities and amenities (gym, swimming pool, on the Abu Dhabi Island and the growing Off- underground parking, etc.) have a direct impact Island areas on the rents. In most cases a brand new two- bedroom with access to facilities and amenities We have produced the ADIB Rental Index will be more expensive than a three-bedroom with a view to enhancing transparency in the in a 10 year old building with no facilities and Abu Dhabi real estate market and to provide amenities
ADIB RENTAL INDEX ZONE COMMON TREND (Q1 2014) Q-Q CHANGE OVERALL AVERAGE
Zone A 0 to +5% +2.37%
Zone B +5% +3.86%
Zone C +5% +10.26%
Zone D +5% +9.07%
Zone E +5% +5.32%
Zone F 0 to +5% +3.26%
Zone G 0 to +5% +2.42%
Zone H 0 to +5% +5.31%
Zone I 0 to +5% +1.33% Zone J 0 to +5% +1.55% Zone K 0 to +5% +3.51%
Note: for zone boundaries please see map at the rear of this report.
14 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | ADIB RENTAL INDEX
ADIB RENTAL INDEX
ZONE A -10% to -20% UNIT TYPE RENTAL RANGE (Q2 2014) -5% to -10% HIGH LOW AVERAGE 0% to -5% 2B A 120,000 63,000 99,000
0% to +5% 3B A 120,000 85,000 101,000
5%
+5% to +10% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +20% +2.37% +16% -14% 0 to +5% +20 & Higher
ZONE B <0% to -5% UNIT TYPE RENTAL RANGE (Q2 2014)
0% to +5% HIGH LOW AVERAGE
5% 1B A 65,000 33,000 49,000
2B A 100,000 55,000 73,000 +5% to +10% 3B A 121,000 57,000 88,000 +10% to +20% 5B V 220,500 220,500 220,000 +20% & Higher
Q-Q CHANGE (AVRG.) HIGH LOW TREND
+3.86% +74% -6% + 5%
ZONE C
-20% & Lower UNIT TYPE RENTAL RANGE (Q2 2014)
-5% to -10% HIGH LOW AVERAGE
<0% to -5% Studio 60,000 33,000 38,000 1B A 65,000 20,000 48,000 0% to +5% 2A A 110,000 30,000 65,000 5% 3B A 150,000 30,000 87,000 +5% to +10% 5B V 305,000 195,000 225,000 +10% to +20% Q-Q CHANGE (AVRG.) HIGH LOW TREND +20% & Higher +10.26% +110% -13% 0 to +5% 15 Q2 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
ZONE D -10% & -20% UNIT TYPE RENTAL RANGE (Q2 2014) -5% to -10% HIGH LOW AVERAGE <0% to -5% 1B A 65,000 15,000 57,000
0% to +5% 2B A 80,000 42,000 67,000
5% 3B A 131,000 40,000 81,000 5B V 336,000 168,000 234,000 +5% to +10%
+10% to +20% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20% & Higher +9.07% +99% -8% 0 to +5%
ZONE E
-10%n to -20% UNIT TYPE RENTAL RANGE (Q2 2014) HIGH LOW AVERAGE -5% to -10% 1B A 50,000 45,000 46,000 0% to -5% 2B A 70,000 28,000 62,000 0% to +5% 3B A 147,000 57,000 95,000
5% 5B V 255,000 178,000 216,000
+5% to + 10% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +20% +5.32% +69% -0% 0 to +5% +20% & Higher
ZONE F -10% to -20% UNIT TYPE RENTAL RANGE (Q2 2014)
-5% to -10% HIGH LOW AVERAGE
0% to -5% 1B A 75,000 25,000 61,000
0% to +5% 2B A 85,000 50,000 68,000 3B A 160,000 75,000 117,000 5%
+5% to +10%
+10% to 20% Q-Q CHANGE (AVRG.) HIGH LOW TREND +3.26% +28% -4% 0 to +5% +20% & Higher
16 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | ADIB RENTAL INDEX
ADIB RENTAL INDEX
ZONE G
0% to +5% UNIT TYPE RENTAL RANGE (Q2 2014)
5% HIGH LOW AVERAGE
+5% to +10% 1B A 45,000 24,000 33,000 2B A 105,000 20,000 69,000 +10% to +20% 5B V 220,000 189,000 204,000
Q-Q CHANGE (AVRG.) HIGH LOW TREND
+2.42% +19% 0% 0 to +5%
ZONE H
0% to -5% UNIT TYPE RENTAL RANGE (Q2 2014)
0% to +5% HIGH LOW AVERAGE
5% 1B A 43,000 43,000 43,000 2B A 115,000 40,000 77,000 +5% to +10% 3B A 185,000 70,000 123,000 +10% to +20% 5B V 270,000 102,000 190,000 +20% & Higher
Q-Q CHANGE (AVRG.) HIGH LOW TREND
+5.31% +59% -4% 0 to +5%
ZONE I
0% to -5% UNIT TYPE RENTAL RANGE (Q2 2014)
0% to +5% HIGH LOW AVERAGE
5% 4B V 150,000 120,000 133,007 5B V 262,000 130,000 185,212 +5% to 10%
+10% to 20% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20 & Higher +1.33% +20% -3% 0 to +5%
17 Q2 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
ZONE J
0% to +5% UNIT TYPE RENTAL RANGE (Q2 2014)
5% HIGH LOW AVERAGE 4B V 225,000 120,000 147,000 +5% to + 10% 5B V 185,000 115,000 146,000
Q-Q CHANGE (AVRG.) HIGH LOW TREND
+1.55% +9% -0% 0 to +5%
ZONE K
-10% to -20% UNIT TYPE RENTAL RANGE (Q2 2014)
0% to +5% HIGH LOW AVERAGE
5% 1B A 50,000 35,000 40,000 2B V 70,000 30,000 53,810 +5% to +10% 4B A 150,000 93,000 118,000 +10% to +20% 5B V 202,000 115,000 168,000 +20% & Higher
Q-Q CHANGE (AVRG.) HIGH LOW TREND
+3.51% +74% -37% 0 to +5%
18 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | RESIDENTIAL MARKET PERFORMANCE
Q2 2014 - RESIDENTIAL AREA MARKET PERFORMANCE
INVESTMENT AREA Q2 2014 - RENT (AVG.) Q2 2014 - SALE (AVG. PRICE / SQ.FT) Q2 2014 ( AVG. NET YIELD)
Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR
Al Raha Beach
Al Bandar 108,500 140,000 177,000 244,000 2,100 1,900 1,800 1,750 6.0% 5.4% 4.3% 4.0%
Al Zeina 90,000 156,000 200,000 1,600 1,500 1,300 4.0% 4.0% 4.1%
Al Muneera 108,000 150,000 185,000 1,600 1,400 1,500 5.7% 4.5% 4.3%
Al Reem Island
Marina Square 70,000 92,000 133,000 187,000 1,600 1,400 1,450 1,500 6.6% 6.1% 5.3% 5.0%
Sun & Sky 103,000 147,000 173,000 1,650 1,650 1,700 5.4% 4.9% 4.6%
Gate Towers 72,500 90,000 133,000 177,000 1,660 1,550 1,500 1,500 6.4% 5.7% 4.7% 4.7%
Shams 88,000 134,000 167,000 1,300 1,400 1,500 1,400 5.4% 5.8% 4.6%
Saadiyat Island
Saadiyat Beach Residence 110,000 165,000 215,000 1,725 1,670 1,595 5.4% 5.1% 5.7%
St. Regis Apartments 95,000 135,000 195,000 265,000 2,850 2,585 2,475 1,950 4.1% 4.0% 4.0% 4.1%
Al Reef Downtown 58,700 74,500 90,000 113,000 1,300 960 900 880 7.9% 6.9% 6.3% 6.6%
Al Ghadeer 44,500 60,000 85,000 133,000 1,100 1,060 1,040 1,030 7.1% 6.8% 5.0% 4.3%
Non - Investment Zone - Prime 95,000 120,000 160,000 210,000
INVESTMENT AREA Q ON Q - CHANGE (LEASE) Q ON Q - CHANGE (SALE) Q ON Q - CHANGE (NET YIELD)
Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR
Al Raha Beach
Al Bandar 21% 12% 4% 0% 31% 23% 16% 17% -0.1% -0.7% -1.8% -1.9%
Al Zeina -5% 16% 8% 10% 3% -7% -1.4% -1.5% -1.5%
Al Muneera 8% 3% -3% 3% -7% 0% 0.1% -1.4% -1.2%
Al Reem Island
Marina Square 4% 8% 11% 7% 16% 4% 7% 13% 0.1% 0.3% -0.2% -0.4%
Sun & Sky 3% 9% -1% 6% 8% 11% 0.0% -0.5% -0.8%
Gate Towers 7% 6% 6% 8% 4% -3% -5% -5% 0.3% -0.1% -0.8% -0.4%
Shams 10% 7% -1% 0% 7% 2% 0.3% 0.7% -0.4%
Saadiyat Island
Saadiyat Beach Residence 10% 6% 10% 5% 11% 6% 0.1% -1.2% -0.9%
St. Regis Apartments 6% 0% 5% 10% 27% 15% 18% 5% -0.8% -0.9% -0.2% 0.4%
Al Reef Downtown 7% -7% -5% -2% 24% -2% -5% -2% 0.9% -0.3% -0.5% 0.4%
Al Ghadeer 11% 9% 13% 16% 9% 5% 4% 3% 0.6% 0.2% -0.3% -1.9%
Non - Investment Zone - Prime 12% 9% 7% 5% N/A N/A N/A N/A
Note: average net yield calculated adopting average unit size per type.
19 Q2 2014 | RESIDENTIAL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
20 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | RESIDENTIAL MARKET PERFORMANCE
INVESTMENT AREAS – HISTORIC SALES AND RENTAL TRENDS
AL RAHA BEACH - PRICE MOVEMENT AL REEM ISLAND - PRICE MOVEMENT
200 150
150 120
100 90 (% Change) (% Change)
50 60 Q1 2011 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q1 2010 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q2 2012 Q4 2011 Q1 2014 Q3 2012 Q2 2013 Q3 2013 Q1 2010 Q4 2012 Q2 2014 Q4 2013 Q2 2010 Q3 2010 Q1 2008 Q1 2009 Q2 2012 Q4 2010 Q3 2012 Q2 2013 Q3 2013 Q4 2012 Q2 2014 Q4 2013 Q2 2010 Q3 2010 Q1 2008 Q1 2009 Q4 2010 Q2 2008 Q3 2008 Q2 2009 Q3 2009 Q4 2008 Q4 2009 Q2 2008 Q3 2008 Q2 2009 Q3 2009 Q4 2008 Q4 2009 Al Bandar Al Muneera Island Sun & Sky Towers The Gate Al Zeina Al Muneera Mainland Marina Square
MAINLAND INVESTMENT AREAS - SAADIYAT ISLAND - PRICE MOVEMENT PRICE MOVEMENT
150 200
150 120 (% Change) (% Change) 100
90 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 50 2012 2012 2012 2013 2013 2013 2013 2014 2014 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 St Regis Apartments Q1 2010 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q4 2012 Q2 2014 Q4 2013 Q2 2010 Q3 2010 Q1 2008 Q1 2009 Q4 2010 Q2 2008 Q3 2008 Q2 2009 Q3 2009 Q4 2008 Saadiyat Beach Residences Q4 2009 Al Reef Al Ghadeer
21 Q2 2014 | RENTAL TRENDS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
RENTAL TRENDS
1 BEDROOM 2 BEDROOM
150 150
120 120 (% Change) (% Change) 90 90 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q2 2014 Q4 2012 Q4 2013 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2012 Q2 2011 Q1 2013 Q3 2011 Q1 2014 Q4 2011 Q2 2012 Q2 2013 Q3 2012 Q3 2013 Q2 2014 Q4 2012 Q4 2013 Q2 2010 Q3 2010 Q4 2010 Reem Island Saadiyat Island Reem Island Saadiyat Island Al Raha Beach Al Raha Beach
3 BEDROOM 4 BEDROOM
150 150
120 120 (% Change) (% Change)
90 90 Q1 2011 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q4 2012 Q2 2014 Q4 2013 Q2 2010 Q3 2010 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q4 2010 Q4 2012 Q2 2014 Q4 2013 Q2 2010 Q3 2010 Q4 2010 Reem Island Saadiyat Island Reem Island Saadiyat Island Al Raha Beach Al Raha Beach
22 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | CITYSCAPE SUMMARY
ABU DHABI CITYSCAPE SUMMARY
Cityscape Abu Dhabi 2014 (8th edition), ran from 22-24 April 2014, with participation from 80 countries, 131 exhibitors and 14,112 visitors. In total over 17,000 participants (visitors, exhibitor and media personnel) were attracted to the event, a 15% increase year-on-year growth, a positive indicator of renewed market confidence with healthy demand for quality projects and investment opportunities within Abu Dhabi.
The participants included many of the key Abu Dhabi based developers and government entities, including Abu Dhabi Urban Planning Council, Abu Dhabi Municipality, Aldar Properties, Mubadala Real Estate & Infrastructure, Arabtec, Al Maabar, Tamouh, Bloom Properties, Baniyas Investments, Masdar, Farglory, Hydra Properties, Eshraq, MPM Properties, Emirates Steel, Wahat Al Zaweya and Abu Dhabi Islamic Bank, among others. 26% of the exhbitors were International entities led by major developers from Turkey, Egypt, USA, Russia, UK, and Oman.
PROJECT DEVELOPER PROJECT DETAILS STATUS
Location: Al Bandar, Raha Beach Unit details: 230 units Sales Update: All units available for purchase Unit mix: Studios, 1-3 Bedrooms apartment, 3-5 Bedroom sold on first day of sales launch (May 18th), Al Hadeel Townhouses and Duplexes. with property prices ranging from Dh1,350 to Aldar Unit sizes: From 606-3,530 sqft Dh1,450psf for an apartment. Payment Plan: 10% down; re-sale only after 50% has Construction Progress: Construction is expected been paid. to commence in 2015. Open to: All nationalities
Location: Yas Island Sales Update: Approximately 300 units out Unit Details: 540 apartments; of 540 were sold off-plan during the launch, The Ansam Aldar Unit Mix: Studio, 1,2 and 3 bedrooms; apartments achieved sales prices of Dh1,450 to Unit sizes: From 482-2,180 sqft Dh1,550psf. 2nd sales to sell remaining invento- Payment Plan: 10% down; re-sale only after 50% has been ry was launched on 14th June. paid. Construction Progress: Construction is expected Open to: All nationalities to commence in 2015.
Location: Al Bateen Villa Plots on Nareel Plot Details: 143 plots (1,000-5,000 sqm) Sales Update: No launch date announced yet. Island Aldar Villa GFA: (919-3,148 sqm) Construction Progress: No update Price: Not yet announced Open to: UAE Nationals only
Location: Close to Kizad Unit details: 800 villas; Phase I -500 units, Phase II -300 Al Reef 2 Manazel Sale launch: Expected soon. units Construction Progress: Not started Unit sizes: Starting from 2,792 sq.ft. Open to: All nationalities
Location: Ghantout; 5kms from Dubai border Project Status: Arabtec Real Estate launched the Arabtec Unit details: 310 high-end villas Rancho Ghantout project in April 2014. Master plan and feasibility Properties Unit mix: The villas will be of 3, 4, and 5 bedrooms. studies are underway. Unit sizes: GFA: 8,000 sq.ft.+; Plot size: 20,000 sq.ft.+ Construction Start: To be announced. Open to: TBC
23 Q2 2014 | CITYSCAPE SUMMARY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
PROJECT DEVELOPER PROJECT DETAILS STATUS
Location: R01, Saraya, Corniche Details: 46-storey ; Plot size: 2,121 sqm ; BUA 45,619 sqm Unit Matrix:
Simplex 4BR 8 Duplex 4BR 4 Arabtec The Views, Saraya 1 Simplex 3BR 48 Penthouse 4BR 2 Sales update: Arabtec to test sales market. Properties Construction Progress: Due to complete by Q1 Duplex 7 Penthouse 1 2015. Townhouse Duplex 5BR 48 Triplex 4BR Total Units 74
Car park: 147 parking spaces Open to: UAE Nationals only
Location: R02, Saraya, Corniche Details: 40-storeys ; Plot size: 1,895 sqm ; BUA: 38,886 sqm Unit Matrix: Arabtec Simplex 3BR 3 Triplex 4BR 2 Construction Progress: Due to complete by Q1 The Views, Saraya 2 Properties Simplex 4BR 13 Penthouse 2015 1 Duplex 3BR 29 Duplex 5BR Total Units 48 Car park: 130 parking spaces Open to: UAE Nationals only
Location: Gate District, Al Reem Island Unit Details: 630 apartments; 184 serviced apartments Unit Mix: Apartments (1,2 and bedrooms); serviced apart- ments (studio, 1 and 2 bedroom) Construction Progress: Main construction Arabtec Amenities: Swimming pool (4,130 sq.m.); gym (785 sq.m.); contract has been awarded to Arabtec on 14 C-13 Properties Spa (857 sq.m.) January 2014.. Construction duration is 36 Other components: Retail (4,600 sq.m.) – 4 shops; Hotel months. – 398 keys The project was designed by APG Open to: All nationalities
Location: EW11, Al Maryah Island Cityscape Sales Launch: at AED3,200 / sq.ft. Unit Details: 144 apartments onwards; 200 registered new clients and have Unit Mix: 1,2 and 3 bedrooms + penthouse achieved 10% more off-plan sales than antici- Al Maryah Plaza Farglory Additional details: Designed by Richard Rogers and pated by Farglory. Partners Construction Progress: Started on site with Open to: All nationalities completion scheduled for 2016.
Location: EW11, Al Maryah Island Cityscape launch: Off-plan launch price at Unit Details: 144 apartments AED1,050 / sq.ft. Up to 5% discount of- Unit Mix: 1,2 and 3 bedrooms + penthouse fered. Handover of units at Hydra Avenue, a Hydra Avenue Hydra Additional details: Designed by Richard Rogers and three-tower cluster is to start in August 2014. Partners Construction Progress: Started on site with Open to: All nationalities completion scheduled for 2016
Location: Masdar, next to Abu Dhabi Airport Investment opportunity: Plots available to purchase and N/A Masdar City Masdar design and build options available. Key Features: Key infrastructure established; flexible master plan
Location: Al Reem Island Unit Details: 21 penthouses Project details: The project, designed by the US architect Arquitectonica, includes the world’s highest penthouse Gate Towers - Penthouse Aldar The penthouses prices are available on request. bridge structure, bringing the building to a total height of 245 metres. The bridge contains 21 penthouses, all of which comprise at least 4,000 square feet and most con- tain their own private swimming pools and gardens.
24 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | VILLA VALUES
VILLA VALUES – NON-INVESTMENT AREAS
The below analysis is based on the data gathered from the transactions financed by ADIB for villas in non-invesment zones and highlights the current prevailing prices and yields.
Our analysis shows that villa compounds in KCA, Khalifa City A continues to be the most MBZ and Shakbout city continue to transact expensive off-island area, followed by with healthy demand from investors. Five to six- Mohammed Bin Zayed City and Shakbout City, bedroom villas on the main island although our analysis for transactions in Q2 are commanding 15% to 20% premium over shows that given the lower price point the less the villas in KCA and MBZ, whilst seven to expensive areas do on average enjoy a higher eight-bedroom villas are commanding 30% gross rental yield to 40% premium
VILLA COMPOUND PRICES (Q2 2014) VILLA COMPOUND GROSS 20 YIELDS (Q2 2014) 8.60% 15 8.40%
10 8.20% 8.00% AED (Million) 5 Main island KCA MBZ Shakbout City 7.80% 0 7.60% Main island KCA MBZ Shakbout City 7.40% High Low Average 7.20% Note: Data relates to compounds of 4 to 6 villas 7.00%
5/6 BEDROOM VILLA PRICES (Q2 2014) 7/8 BEDROOM VILLA PRICES (Q2 2014) 10 20
8 15 6 10 4
AED (Million) AED (Million) 5 2
0 0 Main island KCA MBZ Main island KCA MBZ
High Low Average High Low Average
Source: MPM Properties Research
25 Q2 2014 | KEY INDUSTRY PLAYERS – MARKET VIEW REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
KEY INDUSTRY PLAYERS – MARKET VIEW
TAMOUH: FOCUS ON REEM ISLAND
True to its mission of building communities that developed across approximately 162 acres of land. create a lifestyle of comfort, productivity and ease The residential and commercial community features to their residents, Abu Dhabi based Tamouh has a range of office and residential towers, commercial been steadily developing projects centered around space, hotels and service suites, marina facilities and residential, commercial and mixed-use communities parks. that provide a lasting, positive impact to Abu Dhabi City of Lights is made up of around 69 plots, including and the United Arab Emirates. the following:
Tamouh offers a diverse portfolio of properties. With 52 residential towers with a GFA of 1,721,633 a long-term outlook, its growth plans address every square metres, offering 12,477 residential units. aspect of real estate development and allow the company to support Abu Dhabi government‘s vision 8 office towers with a GFA of 426,670 square for the emirate. metres including the podium.
Tamouh’s latest development is City of Lights on 2 luxury hotels with a GFA of 76,506 square Reem Island, which is currently under construction metres, which will consist of up to 450 rooms. and is soon expected to be ready for partial handover. 5 retail plots with a GFA of 95,187 square metres Tamouh’s projects on Reem Island: with podium space and facilities including gym, spas, and shopping arcades. Spread across 6.5 million square meters, Reem Island is one of the largest mixed-use developments 1 mixed development plot offering residential in Abu Dhabi. Reem Island is being developed by and office units, and 1 mixed development plot three master developers - Tamouh, Aldar and Reem offering residential apartments and serviced Investments. hotel apartments.
Work on Reem Island started in 2006 and City of Lights will offer a wide range of amenities and continues to bring to life its part in the vision of facilities to include more than 29,000 car park spaces, Abu Dhabi 2030. Reem Island has been planned to swimming pools, wading pools, children playgrounds, accommodate a total built-up area of 215 million promenade, mosques, parks, marina facility, day care square feet and will be home to approximately centre, as well as an amphitheatre. 200,000 residents once completed. There are currently 9 towers under construction in Tamouh’s first phase of development in Reem Island City of Lights, all of which have completed structural was Marina Square, a community of 13 residential works along with other facility works, and are buildings, an office tower and a commercial mall. presently finishing facade installations in order to be handed over soon. After the delivery of Marina Square, Tamouh’s main focus on Reem Island turned to City of Lights, Anshu Shukla Commercial Director Tamouh
*The content and information is provided on an “as is” basis and Tamouh has the right to change the content from time to time with or without notice.
26 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | KEY INDUSTRY PLAYERS – MARKET VIEW
City of Lights Construction in progress (June 2014)
27 Q2 2014 | OFFICE SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q2 2014
SUPPLY Speculative development slowdown signals office market approaching a turning point in the current cycle.
Q2 2014 The majority of the towers in Investment zones have multiple landlords, which will have an impact A total of 19,000 sqm of office space was added to on interest from large corporate tenants looking the market in Abu Dhabi during the last 3 months to take multiple floors, as they would be required bringing the total stock to 3.21 sqm NLA to have multiple lease agreements with different landlords New additions include Abu Dhabi Plaza comprising a mixed-use development situated on Najda Street OUTLOOK with 100 apartments and 15,296 sqm (NLA) of office space In contrast with 2014, 2015 is set to witness the handover of approximately 414,000 sqm of new In addition, a number of infill office developments offices, although this number is inflated by the 74 on the Abu Dhabi Island have been completed this story ADNOC HQ. quarter, including Plot C 69 on Muroor Street at the junction with 15th Street The most significant speculative developments under construction and anticipated for delivery in Q2 witnessed quality offices being leased to 2015 include the Al Hilal Bank Tower on Maryha corporate tenants at a healthy pace, which in turn Island and Addax Tower within the City of Lights has led to a reduction in office vacancy rates for development on Reem Island. good quality towers with facilities, amenities and parking space Post 2015, with the exception of handover delays of existing projects , there are minimal INVESTMENT ZONES – INCREASING new office developments in the pipeline. This NEW SUPPLY signals that the market is approaching the end of 5 year speculative driven development cycle Al Reem Island will see an increase in office stock which should allow the market time to absorb the being handed over in the second half of the year. current supply and see growth in occupancy levels This will allow investors and corporate tenants and values for Grade A offices over the course of additional options for owning offices, especially the next 2 years as the potential net yields are above 8% (net)
ABU DHABI OFFICE SUPPLY (2009 - 2015)
4,000 414
3,500 249 85 51 3,000 377 541 2,500 2,000 155 3,121 3,206 3,257 1,500 2,495 2,872 1,000 1,800 1,800 1,955
NLA (in 000’s Sqm) NLA (in 000’s 500 0 2009* 2010 2011 2012 2013 H1 H2 2015 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: UPC & MPM Properties Research *as per UPC
28 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | OFFICE SECTOR
ABU DHABI NEW OFFICE SUPPLY COMPOSITION
600 67 500 190 400 105
300 45 474 200 9 272 80 203 223 NLA (in 000’s Sqm) NLA (in 000’s 100 146 56 0 2010 2011 2012 2013 2014 2015
Speculative Owner Occupation / Pre-let Source: MPM Properties Research
ABU DHABI NEW OFFICE SUPPLY LOCATION
600 275 500 216 400 80 300 62 8 64 200 29 18 17 62 2 202 235 241 NLA (in 000’s Sqm) NLA (in 000’s 100 180 125 116 0 2010 2011 2012 2013 2014 2015
On-Island Off-Island Investment Area
TOTAL NEW OFFICE SUPPLY
1,099
175
597
0 200 400 600 800 1000 1200 NLA (in 000’s sqm) Source: UPC & MPM Properties Research
29 Q2 2014 | OFFICE SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
TAKE-UP & RENTS Grade A offices continue to see occupancy levels improve.
The last three months have witnessed healthy we expect to see the vacancy rate to fall demand for Grade A offices, leading to during the course of the year within the improved occupancy levels. Sowwah Square Grade A developments, driven predominantly offices are still on hold, which has benefited by a continuation of movement of existing some other Grade A offices companies upgrading to better quality offices
2014 witnessed no new major speculative Grade B offices will continue to see high developments being announced . This is a vacancy levels and weak demand which healthy sign for the office market and will will see a widening in rental performance lead to strengthening of office rents in the compared with Grade A offices coming years A key catalyst for attracting new entrants to Government sector continues to dominate the market in the coming months will be the the office space take-up Abu Dhabi Global Market Freezone on Maryah Island Real growth in the sector will only be achieved as new jobs are created and new businesses open offices in Abu Dhabi OUTLOOK
Given the relative low levels of new supply entering the market during 2014, combined with an improvement in corporate activity,
HEADLINE OFFICE RENTS
Headline2,000 office rents have moved up slightly on average during the last 3 months across all grades. HEADLINE OFFICE RENTS 1,500 2,000 1,000 1,750 1,500 1,475 500 1,025 1,000 1,750 0 1,475 Grade A Fitted Grade A S&C Gade B 500 1,025 Rent Rent per Sq.m.
0 Grade A Fitted Grade A S&C Gade B
30 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | OFFICE SECTOR
AVERAGE OFFICE SALES PRICE
1,500 1,200 900 1,460 1,450 600 1,175 1,045 300 Sales Price / Sq.ft. Sales Price / 0 Sky Tower Addax Office Tower Tamouh Tower Prestige Tower - MBZ
Sales volumes have improved in Q2 2014 Most transactions were for full floors with healthy interest from investors and some owner occupiers, especially from GCC
31 Q2 2014 | RETAIL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q2 2014
SUPPLY Close to 1 million sqm of new retail space scheduled for delivery in the next 4 years.
There have been no major additions to the retail The main retail brand additions to the Abu Dhabi market during the last three months with total market in 2014 have been “House of Frasers”, retail stock standing at 2.06 million sqm NLA, with F&F (Tesco’s affordable fashion brand), while major approximately 50% of this comprising non mall space F&B additions have been BOA steakhouse at Eastern Mangroves, Zuma at Galleria on Al Mariyah The much anticipated Yas Mall, which will be Island and PF Chang’s at Abu Dhabi World Trade the largest mall in Abu Dhabi at 235,000 sqm, Center Mall is scheduled to open during the F1 weekend in November and is reportedly 90% leased with a Kuwait’s National Real Estate Company has number of new concepts coming to Abu Dhabi for appointed the architects “RTKL Associates” for the first time. Yas Mall is currently the only super their Reem Mall on Al Reem Island. The mall when regional mall under construction in Abu Dhabi complete is expected to have over 450 stores and and is expected to create the city’s first lifestyle 85 restaurants. As per NREC, the mall is expected to destination, providing over 300 retail stores in start construction in 2015 and complete by 2018 addition to entertainment and leisure attractions
ABU DHABI RETAIL SUPPLY (2009 - 2017/18)
3,500 662 3,000 2,500 262 66 185 82 2,000 259 113 1,500 26 2,393 1,000 1,982 2,065 2,327 2,327 1,685 1,798 1,400 1,400 1,426
NLA (in 000’s) per Sqm per NLA (in 000’s) 500 0 2009* 2010 2011 2012 2013 H1 H2 2015 2016 2017/18 2014 2014 Running Total New Supply Completed Scheduled New Supply
Source: UPC & MPM Properties Research *as per UPC
RETAIL SUPPLY PRE-2010 NEW SUPPLY DELIVERED RETAIL MALLS DEVELOPMENT RETAIL SUPPLY AS AT Q2 2014 2010-2013 PIPELINE 1% 42% 7,000 163,723 22% 9% 147,000 86,400 32% 49% 335,171 188,171 2% 22,800
63% 5% 658,717 55,800
9% 75% 90% 33,000 494,994 897,000 District Neighbourhood Regional Super Regional
32 The above charts show supply of malls only and exclude all street retail. Figures are NLA (sqm) REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | RETAIL SECTOR
RETAIL SPACE CLASSIFICATION
PRE-2010 NEW SUPPLY ADDED POST 2010 RETAIL DEVELOPMENT PIPELINE RETAIL SUPPLY LOCATION AS AT Q2 2014
36% 227,741
35% 8% 2% 5% 35,000 54,200 25,000 3% 54,200 27,000 38% 392,853 56% 357,853 57% 577,635
91% 95% 349,894 938,400 On-Island Off-Island Investment Area
TAKE-UP & RENTS New Brands In Q2 SPACE TYPE AVERAGE RENT (AED) PA Leopold’s of London Galleria Specialty Store 1,800-3,800 per sqm Wildfire Galleria Anchor Store (more than 1,000 sqm) 300-1,200 per sqm Godiva Galleria F & B 3,500-5,500 per sqm Kenzo Galleria ATM’s 100,000-175,000 Sushi Art Galleria Kiosks 85,000-150,000 BOA Steakhouse Eastern Mangroves H. Street retail (Prime areas) 2,500 – 3,750 per sqm P.F Chang’s WTC Mall H. Street retail 1,550-2,550 per sqm B&B Italia Al Ain Tower
The rents quoted above are base rents excluding any turnover provisions and service charges.
Vacancy Rate (Q2 2014)
Based on our survey of the Regional A young population, strong brand association, and District Malls we estimate there is solid household consumption and modern approximately 97,670 sqm of retail space retail concepts coupled with a flourishing currently vacant and available for lease, tourism sector continue to provide ideal representing an overall vacancy rate of conditions for retail growth in Abu Dhabi. approximately 9% amongst this sub-sector. The majority of available space is situated Yas Mall currently has approximately 10% in the Off-Island malls, which have current vacancy rate and the mall is expected to be vacancy levels ranging from 9-35% (improving fully let in the coming months. from 30-40% 12 months ago).
33 Q2 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q2 2014
HOTEL PERFORMANCE SNAPSHOT
800 84% 81% 78% 80% 79% 700 76% 76% 73% 72% 72% 74% 600 66% 66% 68% 553 62% 474 60% 500 421 359 49% 366 379 358 375 400 345 330 321 297 300 274 251 218 210 200 158 100 0 Jul Jun Oct Mar Mar Apr Apr Sep Feb Feb Dec Nov May May Aug Jan-2013 ARR RevPar Occupancy Jan-2014 Source: TCA Abu Dhabi and MPM Properties Research
Q2 PERFORMANCE BY RATING
HOTELS 5 STAR 4 STAR 3 STAR 2 STAR 1 STAR Guests 545,050 395,490 254,310 20,725 56,397 Guest Nights 1,555,658 973,024 667,604 47,423 99,630 Avg. Length of Stay 2.85 2.46 2.33 2.29 1.77 Occupancy 72.4% 77.5% 81.4% 80% 75.3% ARR 675 360 281 290 291 Revenues (Mil.) 489 279 229 232 219
Q2 2014 VS. Q2 2013 (YTD)
Guests 34% increase Growth in guest arrivals into Abu Dhabi (up by 34% in Q2 2014 vs. Q2 2013), driven by a Guest Nights 26% increase significant uplift in MICE and business events Avg Length of Stay 9% decrease (including a Chinese company event hosted in Occupancy 15% increase Abu Dhabi) has improved trading performance across the sector, despite the increase in supply Revenues (Mil.) 6% increase Five-star hotels continue to lead on revenue with average spend per guest at AED2,966 vs. the hotel establishment average spend per guest of AED1,890
4,3 and 2 star hotels have experienced occupancy levels above 80% so far this year
34 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE
HOTEL APARTMENTS PERFORMANCE SNAPSHOT
92% 400 90% 88% 89% 90% 90% 85% 86% 85% 85% 86% 84% 348 84% 350 325 80% 79% 79% 306 311 310 292 75% 303 295 303 300 289 280 277 287 252 259 257 250 233 200 150 100 50 0 Jul Jun Oct Mar Mar Apr Apr Sep Feb Feb Dec Nov May May Aug Jan-2013 ARR RevPar Occupancy Jan-2014 Source: TCA
Q2 PERFORMANCE BY RATING
HOTELS DELUX SUPERIOR STANDARD Guests 57,451 60,956 45,563 Guest Nights 457,671 381,583 192,802 Avg. Length of Stay 7.97 6.26 4.23 Occupancy 88% 84% 85% Revenues (Mil.) 148,728,119 82,806,376 40,188,598 ARR 432 287 263 RevPar 380 241 224
Q2 2014 VS. Q2 2013 (YTD)
Hotel apartments continue to witness higher Guests 8% increase occupancy and average length of stay vs. hotels Guest Nights 13% increase Occupancy Levels 7% increase Average guest spend was highest within the Deluxe Apartments at AED2,589 higher than Revenues (Mil.) 9% increase four-star hotels and second only to 5 star hotels Average Length of stay 5% increase Q2 witnessed an increase in all key parameters for hotel apartments, highlighting a healthy trend for the sub-sector
35 Q2 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
HOSPITALITY SECTOR – TRADING PERFORMANCE
HOTEL ESTABLISHMENT PERFORMANCE HISTORICAL TRADING PERFORMANCE 2009-2014
1000 100%
800 80%
600 60%
400 40% Occupancy
Average room rate room Average 200 20%
0 0% Jul-12 Jul-13 Jan-11 Jul-10 Jan-12 Jan-13 July-11 Jan-14 Jan-10 Jul-09 May-14 Jan-09
ARR Occupancy Source: TCA
SUPPLY
ABU DHABI HOTEL ROOM SUPPLY (2009 - 2016+)
30000 2,923 2,053 25000 597 1,867 1,324 2,148 20000 2,012 1,427 15000 4,391 22,967 20,317 20,914 10000 17,126 18,993 14,978 11,539 12,966 5000 7,148 7,148 0 Pre-2009 2009 2010 2011 2012 2013 H1 H2 2015 2016+ 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research
2014 – SCHEDULED HOTEL COMPLETIONS
S.NO. ESTABLISHMENT NAME EXPECTED CLASS OPENING ROOMS 1 Southern Sun 4 star Q2 - 2014 156 2 Ramada Hotel 4 star Q2 - 2014 235 TOTAL 391
36 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE
2014 – HOTEL APARTMENT SCHEDULED COMPLETIONS
S.NO. ESTABLISHMENT NAME EXPECTED CLASS OPENING ROOMS 1 Adagio Al Bustan Superior Q2 - 2014 282 2 Paragon Hotel Apt. Deluxe Q2 - 2014 120 Al Reem Hotel Apartment Sun Hotel- closed during Q2 (32 rooms) 3 Danat Residences Superior Q3 - 2014 189 4 Al Seef Resort - Jannah Deluxe Q3 - 2014 213 Ramee Hotel Apartment – closed during Q2 (71 rooms) TOTAL 804
Two new hotels and two new hotel apartments There are almost 5,000 additional hotel rooms in entered the market in Q2 2014 providing a total the development pipeline, of which 2,053 are under of 793 rooms. A further two hotel apartment construction and scheduled for completion in 2015. developments (402 rooms) are scheduled for Over 90% of this new supply is targeting the 5 star completion during 2014 taking the total supply sector of the market. in Abu Dhabi to 19,387 rooms by the end of the year.
GUEST ARRIVALS Q2 2014 YTD
United Arab Emirates 37.3%
Other GCC Countries 6.9%
Other Arab Countries 6.7%
Asia (Except Arab) 19.9%
Australia & Pacific 1.4%
Africa (Except Arab) 4.0%
Europe 18.3%
North & South America 5.5%
GUEST ARRIVALS – TOP 5
RANK NATIONALITY Q2 2014 YTD Q2 2013 YTD GROWTH RATE % 1 United Arab Emirates 473,670 365,214 30% 2 India 89,761 65,148 38% 3 United Kingdom 85,956 67,028 28% 4 Germany 59,821 55,773 7% 5 China 52,392 17,251 204%
Source: TCA
37 Q2 2014 | DEFINITIONS & METHODOLOGY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
DEFINITIONS & METHODOLOGY
RESEARCH STUDY AREA
The geographical extent of the study area includes Given the general lack of transparency in the the Abu Dhabi Island, Investment Areas and the local market rents quoted are headline rents, thus most populated Off-Island districts specifically exclude any rent free period of other financial Khalifa City A, Mohammed Bin Zayed City and incentives that may have been negotiated between Shakbout City. the parties. The rents quoted are also exclusive of service charges. RESIDENTIAL RETAIL New residential developments are classified as delivered and thus entered into the new supply New retail developments are classified as delivered category when they are made available for and thus entered into the new supply category occupation. This is verified via a combination of when the first units are open and trading. site inspections and discussion with the developer and hence our supply numbers do take into Our classification of malls is based on our consideration the phased release of large projects. own assessment having regard to size and the catchment area which the mall typically The ADIB Rental Index relates to the performance penetrates. of the ADIB portfolio only and the data is derived exclusively from transactions completed by MPM HOSPITALITY Properties. New hotels are classified as delivered and thus Other rental and sales trend analysis is based entered into the new supply category when they on transactional data derived from the MPM are opened and trading. All trading performance Properties Agency team and data sourced from data is provided by ADTCA. developers and owners. FUTURE SUPPLY PROJECTIONS OFFICES Our future supply projections across all sectors are New office developments are classified as delivered based on a combination of regular site inspections and thus entered into the new supply category and discussions with developers. when they are available for tenant fit-outs.
BESPOKE CLIENT RESEARCH
ADDING VALUE TO YOUR PROPERTY INTERESTS
The ADIB Real Estate Services team covers all We provide reports, information and presentations sectors of the real estate market. We provide derived from primary market data that directly assist bespoke market research to our valued clients to our clients to save or make money from real estate meet their specific requirements. and shape strategies to enhance value.
38 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | CONTACT DETAILS
PLEASE CONTACT US FOR FURTHER INFORMATION
PAUL MAISFIELD MRICS VAIBHAV SHARMA CEO – MPM Head of Strategic Advisory & Research [email protected] [email protected]
JONATHAN BROWN MRICS KHALED CHAHAL Director of Valuation Head of Agency [email protected] [email protected]
FRANK ODWYER ABDULLA SAID AL KUWEITI Director of Property Management Director of Business Development [email protected] [email protected]
OFFICE CONTACT DETAILS MPM Properties Head Office 6th Floor, Al Wahda Tower P.O Box 114686 Abu Dhabi
Tel. 02 412 8914 Email. [email protected] www.mpmproperties.ae
DISCLAIMER:
The information contained in this report has been obtained and are subject to change without notice. Figures contained in from and is based upon sources that ADIB Real Estate Services this report are derived from a basket of locations highlighted believes to be reliable, however, no warranty or representation, in this report and therefore represent a snapshot of the expressed or implied, is made to the accuracy or completeness Dubai market. Due care and attention has been used in the of the information contained herein, and same is submitted preparation of forecast information. However, actual results subject to errors, omissions, may vary from forecasts and any variation may be materially change of price, rental or other conditions, withdrawal without positive or negative. Forecasts, by their very nature, involve notice, and to any special listing conditions imposed by our risk and uncertainty because they relate to future events and principals. ADIB Real Estate Services will not be held responsible circumstances which are beyond ADIB Real Estate Services’ for any third-party contributions. All opinions and estimates control. For a full in-depth study of the market, please contact included in this report constitute ADIB Real Estate Services, as ADIB Real Estate Services team. of the date of this report
39 Q2 2014 | SUPPLY – PHOTO SCHEDULE REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
SUPPLY – PHOTO SCHEDULE
NEW SUPPLY - Q2 2014 RESIDENTIAL ffvvc 1 THE ARC 2 ABU DHABI PLAZA 3 C59 - RAWDHAT 4 B2 TOWER
OFFICE
1 MUROOR/15TH ST 2 DEFENSE STREET 3 ABU DHABI PLAZA
RETAIL
1 NATION GALLERIA 2 CAPITAL MALL
HOTEL
1 ADAGIO AL BUSTAN 2 SOUTHERN SUN 3 RAMADA HOTEL HOTEL
40 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014 | SUPPLY – PHOTO SCHEDULE
SAMPLE OF UPCOMING PROJECTS
RESIDENTIAL
5 THE DOMAIN WTC 6 THE VIEWS 1 & 2, SARAYA 7 MEENA PLAZA 8 HYDRA AVENUE
OFFICE
4 ADIC HQ RAHA BEACH 5 OMEGA TOWER 6 AL QUADRA 7 AL JOHARA TOWER, KHALIFA PARK SARAYA
RETAIL
3 YAS MALL 4 SHAMKHA MALL
HOTEL
4 BLOOM CENTRAL 5 FAIRMONT, M/ 6 FOUR SEASONS, M/ISLAND MARRIOTT MALL
41 E 11
Q2 2014 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q2 2014
Hydra Village
E12 Sheikh Khalifa Hway Saadiyat Island
7 Jubail Island 6 2 Al Maryah 7 3 Island 6 C Al Reem Yas Island 3 2 Island 5 3 Abu Dhabi - Dubai Rd 5 8 Sheikh Maktoum Bin Rashid Rd A 4 1 5 D 2
Corniche Rd Salam Street E 10 Electra St 4 B Airport Rd 1
Zayed The First St E 1 F Al Reef
4 Salam Street Al Raha Beach
Al Saada Street St G th H 25 Airport Rd 1 6 Masdar Abu Dhabi - Dubai Rd E 10 3 City Salam Street I Khaleej Al Arabi Street
E 20 4 E 20
E 11
2 Q2 2014 NEW SUPPLY UNDER CONSTRUCTION E 22 Residential Residential J Offices Offices
Retail Retail E 30
Hotels Hotels K
42 43
E 11
OFFICE CONTACT DETAILS MPM Properties Head Office 6th Floor, Al Wahda Tower P.O Box 114686 Abu Dhabi
Tel. 02 412 8914 Email. [email protected] www.mpmproperties.ae