Abu Dhabi Report H2 2011 “Following a sustained period of rental declines we have seen some stabilisation over the last 3 months, due in part to a slowdown in transactional activity as handover delays result in limited new supply being available for immediate occupation. These delays will result in an increased volume of new supply delivered in 2012, which could put further downward pressure on rents.”

Elaine Jones CEO, Asteco Property Management LLC Supply Office Supply

Based on Asteco’s estimates of new office supply recently added to the market or due to finish Handed over in 2011 Upcoming in 2012 construction between 2010 and 2013, it appears that supply is higher than the most optimistic scenario in Plan 2030 by the Urban Planning Council, which forecasts a maximum of 2.4 million square metres of total office space in 2013. Apartments (in units) 6,680 18,800 Based on our analysis, actual supply will reach around 3.5 million square metres by the end of 2013. Broadly speaking, according to these figures, there is enough office supply to serve the market until Villas (in units) 3,600 5,950 at least 2020, implying that new speculative office developments are a high-risk investment with little potential for returns. Offices (in m 2) 455,750 650,350 NJA& ![#$%&'(()*

MJA& Asteco has recently carried out an extensive Abu Dhabi Supply Analysis covering all areas of Abu Dhabi City. The figures are updated on a quarterly basis or whenever any news relating to the LJA& construction progress becomes available. KJA& Overall the area that has seen the highest level of new supply delivered during 2011 was the Abu Dhabi Mainland (which includes A & B, Mohammed Bin Zayed City, Bani Yas, Al Reef 8JA& #&K%'## #&K%'## #&K%'## and Beach), with over 2,000 villas and close to 3,000 apartments delivered in this area. 7JA& Al Zeina at Raha Beach represents the largest new development to be completed in Abu Dhabi K*# during H2 2011, comprising 952 apartments, 26 penthouses, 119 townhouses and 124 villas. The 6JA&

first residents took possession of their units at the beginning of H2 2011. However, approaching the +,)),-.%&/0%-!% ![#$%&(1#$% year end less than 10% of the development is occupied and it is expected that only a portion of the 5JA& units will be handed over in 2011. AJA& Due to extended handover delays, new supply available for occupation on Reem Island comprised 6AAH& 6A57& 6A6A& 6A7A& only Sun & Sky Towers by Sorouh and an additional few developments at Marina Square, including RAK Tower and Towers A1 & A2. Overall apartments on Reem Island represented about 23% of the (/E4&C)E4<'&(;:,#)$E& (<)E,=&C)E4<'&(;:,#)$E %I:)#=:&C)E4<'&(;:,#)$E >!)):,< total supply handed over in 2011. The first supply on is due for handover early next year, at the St. Regis Resort, with 2009 2013 2020 2030 the first residents due to move in this January. The development comprises 259 luxury residential apartments situated next to the new 5-star St. Regis Hotel. This development is expected to set the benchmark for true luxury living in Abu Dhabi. Slow Growth Scenario - 1.6 2.7 4.6 Whilst the volume of new supply available for occupation has been limited by handover delays during 2011, we expect over 12,000 residential units to enter the market in the first half of 2012. Strong Growth Scenario - 2.4 4.0 6.9 Approximately 8,000 of these units would represent a significant improvement in quality compared to existing stock in the market, providing tenants as well as buyers with significantly better value- for-money options. Average Growth Scenario - 2.2 3.1 6.7

Current 1.8 3.47 3.47 3.47

03 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Summary 2011 and Outlook 2012 Residential Leasing – Apartments and Villas

2011 2012

Transaction activity We have seen leasing activity increase significantly in comparison with 2010 in line with the delivery of improved There is a lot of latent demand in the residential leasing market amongst existing residents with a desire to quality and better value-for-money accommodation, which has enticed a large number of existing residents to upgrade to better quality accommodation. move home. The level of transactions is expected to increase in H1 2012 as a large stock of improved quality supply is Transactional activity has slowed slightly during H2 2011 following a very active period over the summer, which delivered in the form of mixed-use developments on the Corniche, Saadiyat Island and Reem Island. traditionally sees families taking the opportunity to move during the school holidays. The delay in project handovers has had some impact on activity levels, with some tenants choosing to renew leases in existing premises at lower rents and wait for new projects to become available. As a result, market rental rates have been broadly stable during the last quarter of 2011.

Popular Apartment towers at the top end of the market, occupying prime positions on the Corniche and providing water There is a large quantity of new developments due for delivery in 2012, with a high percentage offering developments and views remain popular, with very few units becoming available. improved quality in comparison with the majority of existing stock. unit types at Raha Beach is also very popular and has benefitted from the delay in handover of the adjoining Al At the top end of the market, we anticipate that in H1 2012 St. Regis Residences and Etihad Towers will prove Zeina and Al Muneera developments, which will provide strong competition in 2012. very popular and will achieve good levels of occupancy. In terms of villas, at the high end of the market Golf Gardens continues to prove popular, with low vacancy rates We believe that new buildings on the Abu Dhabi Island, even of mid-range quality, which are reasonably priced and stable rents. At the more affordable end, Al Reef is also continuing to benefit from a lack of competing and provide parking in line with UPC parking regulations, will benefit from rapid absorption levels. developments.

Leasing terms and The average number of cheques is still within the range of 1 to 2, but some landlords are becoming more flexible Competition between landlords will lead to more incentives being offered to secure potential tenants. incentives and willing to accept alternative payment terms, although at an additional cost to the tenant. Discounts for two-year lease terms and above will increasingly be offered to guarantee rental income. Etihad Towers have been the first to introduce a pricing strategy that provides a discount for longer term leases, Upon the delivery of projects in the Investment Areas (particularly Reem Island) we expect to see an increase in which is proving popular. We expect other landlords to follow suit. expat landlords entering the market who are willing to accept multiple rental cheques. At Sun Tower, Sorouh has recently announced that it is offering tenants a six-week rent-free period or 10% cashback. The deal runs until the end of December 2011.

Supply and demand Although over 10,000 residential units were handed over during 2011, this was far lower than was forecast due The volume of new supply forecast to enter the market in 2012 is significant and has been exacerbated by to continued handover delays within the major projects. handover delays in 2011. In this connection Marina Square is now two years past its original delivery date. We estimate that over 25,000 units will be delivered to the market in 2012, many of which were initially due We have seen a trend of tenant movement back onto the Main Abu Dhabi Island from some off-island areas in 2011. (particularly Mohammed Bin Zayed City and Khalifa City) on the back of decreased rental rates and increased Leasing demand will continue to be predominantly driven by existing residents looking to upgrade to better supply. quality and value-for-money accommodation. Tenants are drawn back towards the city to take advantage of a comparatively better standard of community We expect the handover of high-end and luxury developments will attract some of the Dubai commuters back facilities and an overall better quality lifestyle. to Abu Dhabi, although the effect will take time to filter through.

Trends We have seen internal tenant movement and flight-to-quality, as people take advantage of a wider choice at Relocations in the search for value-for-money will continue, especially for young professionals and couples due reduced rates. to the comparative ease of moving. However, this internal movement has been limited given the handover delays of good quality supply.

04 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Residential Leasing Apartments

Average Apartment Rental Rates (AED/pa) % Change Map Studio 1 BR 2 BR 3 BR Location Key Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 - Q4 2011 PRIME BUILDINGS* 1 Corniche n/a n/a n/a n/a 110,000 102,500 95,000 95,000 160,000 155,000 152,500 152,500 235,000 225,000 225,000 225,000 0% 2 Khalidiya / Bateen n/a n/a n/a n/a 105,000 100,000 90,000 90,000 160,000 145,000 140,000 140,000 220,000 200,000 192,500 192,500 0% 3 Mushrif / Karama / Manaseer n/a n/a n/a n/a 80,000 70,000 65,000 65,000 140,000 130,000 127,500 127,500 175,000 165,000 160,000 160,000 0% 4 Central Abu Dhabi 57,500 55,000 52,500 52,500 85,000 80,000 77,500 77,500 140,000 130,000 127,500 127,500 185,000 165,000 160,000 160,000 0% 5 / 18 Tourist Club Area / Mina n/a n/a n/a n/a 80,000 75,000 72,500 72,500 140,000 130,000 127,500 127,500 185,000 170,000 160,000 160,000 0% 6 Al Nahyan Camp / Muroor n/a n/a n/a n/a 80,000 75,000 72,500 72,500 142,500 130,000 127,500 127,500 180,000 170,000 160,000 160,000 0% 9 / 8 MBZ / 49,000 45,000 42,500 42,500 62,500 57,500 52,500 52,500 77,500 72,500 67,500 67,500 115,000 100,000 92,500 92,500 0% 13 / 28 Khalifa A & B 37,500 37,500 32,500 32,500 45,000 45,000 45,000 45,000 67,500 67,500 65,000 65,000 105,000 100,000 92,500 92,500 0% 7 n/a n/a n/a n/a n/a 97,000 95,000 95,000 n/a 135,000 130,000 130,000 n/a 170,000 165,000 165,000 0% 7 Marina Square n/a n/a n/a n/a n/a 115,000 n/a n/a n/a 160,000 n/a n/a n/a 220,000 n/a n/a n/a 14 Al Raha Beach 87,500 90,000 87,500 87,500 117,500 115,000 112,500 112,500 160,000 160,000 152,500 152,500 235,000 235,000 215,000 215,000 0% LOW QUALITY BUILDINGS 1 Corniche n/a n/a n/a n/a 80,000 80,000 75,000 75,000 120,000 110,000 102,500 102,500 155,000 142,500 142,500 142,500 0% 2 Khalidiya / Bateen 42,500 n/a n/a n/a 75,000 72,500 70,000 70,000 97,500 85,000 80,000 80,000 140,000 120,000 120,000 120,000 0% 3 Mushrif / Karama / Manaseer 37,500 37,500 37,500 37,500 65,000 65,000 62,500 62,500 80,000 75,000 70,000 70,000 105,000 95,000 90,000 90,000 0% 4 Central Abu Dhabi 45,000 42,500 42,500 42,500 65,000 60,000 57,500 57,500 80,000 75,000 67,500 67,500 105,000 100,000 95,000 95,000 0% 5 / 18 Tourist Club Area / Mina n/a n/a n/a n/a 65,000 62,500 55,000 55,000 80,000 75,000 80,000 80,000 97,500 92,500 87,500 87,500 0% 6 Al Nahyan Camp / Muroor n/a n/a n/a n/a 65,000 60,000 57,500 57,500 80,000 75,000 70,000 70,000 105,000 95,000 90,000 90,000 0% 9 / 8 MBZ / Mussafah 27,500 30,000 30,000 30,000 35,000 35,000 35,000 35,000 45,000 40,000 40,000 40,000 70,000 67,500 65,000 65,000 0% 13 / 28 Khalifa A & B 27,500 30,000 30,000 30,000 40,000 35,000 35,000 35,000 50,000 40,000 40,000 40,000 70,000 67,500 65,000 65,000 0%

05 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Residential Leasing Villas

Average Villa Rental Rates (AED/pa) % Change Map 2 BR 3 BR 4 BR 5+ BR Location Key Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 - Q4 2011 2 Khalidiya/Bateen n/a n/a n/a n/a 220,000 215,000 210,000 210,000 275,000 235,000 222,500 222,500 285,000 285,000 277,500 277,500 0% 6 Al Nahyan Camp/Muroor n/a n/a n/a n/a 200,000 200,000 195,000 195,000 235,000 225,000 210,000 210,000 285,000 280,000 267,500 267,500 0% 3 Mushrif/Karama/Manaseer n/a n/a n/a n/a 200,000 185,000 180,000 180,000 255,000 235,000 227,500 227,500 285,000 265,000 257,500 257,500 0% 9 / 8 MBZ/Mussafah n/a n/a n/a n/a 120,000 117,500 110,000 110,000 145,000 140,000 135,000 135,000 175,000 155,000 152,500 152,500 0% 13 / 28 Khalifa A & B n/a n/a n/a n/a 135,000 130,000 122,500 122,500 160,000 155,000 147,500 147,500 200,000 185,000 177,500 177,500 0% 10 Sas Al Nakhl n/a n/a n/a n/a 195,000 195,000 192,500 192,500 230,000 230,000 230,000 230,000 300,000 290,000 280,000 280,000 0% 12 Al Raha Gardens n/a n/a n/a n/a 185,000 175,000 175,000 175,000 210,000 215,000 207,500 207,500 260,000 275,000 267,500 267,500 0% 11 Golf Gardens n/a n/a n/a n/a 245,000 245,000 240,000 240,000 295,000 287,500 282,500 282,500 345,000 345,000 335,000 335,000 0% 15 Al Reef 90,000 97,500 105,000 105,000 110,000 117,500 127,500 127,500 137,500 140,000 152,500 152,500 162,500 165,000 172,500 172,500 0%

06 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Summary 2011 and Outlook 2012 Residential Sales – Apartments and Villas

2011 2012

Transaction activity Transactional activity is exclusively focussed on completed properties, with the volume of transactions remaining Asteco expects some improvement in transactional activity in 2012 linked to the delivery of Investment Area low, despite the handover of some projects. stock on Reem Island and Raha Beach. The supply of apartments and villas available for immediate occupation is restricted, with unaffordable prices limiting / discouraging demand from existing residents / potential buyers.

Popular Al Bandar at Raha Beach remains popular due to its waterfront location and good finish quality with healthy The established villa communities of Al Raha Gardens, Golf Gardens and Al Reef are expected to remain popular developments and demand for owner-occupation. as there is a limited supply of competitive villas in the development pipeline, which will help sustain rental unit types We understand that Aldar has had success with its Rent-to-Own Scheme, with the majority of the unsold units returns. at Al Bandar having been taken up. Participants in the scheme are able to convert 100% of the rent in year 1 Mangrove Place, situated next to Sun & Sky Towers on Reem Island, is expected for handover in the first half of and 90% in year 2 to equity towards purchasing the unit at a pre-determined price. 2012 and is likely to provide a good alternative for potential buyers, with small, well-designed units with fully Al Reef continues to benefit from good demand given its more affordable prices in comparison with other fitted kitchen appliances and above-average finishes. Investment Area stock. We expect the villas at the Bawabbat Al Sharq development in Baniyas will increase in popularity once the Golf Gardens and Al Raha Gardens are popular developments for UAE National investors, offering attractive adjoining shopping mall opens for trading. In addition, the villas are in line with the end-user requirements of yields. UAE National owner-occupiers. The Al Ward community at Al Raha Garden comprising 28 five-bedroom villas has had good take-up and we understand around 20 villas have been sold or are under offer.

Developer strategy On the whole the major developers in Abu Dhabi have been focussed on completing and handing over projects In the absence of any significant improvement in the sales market Asteco expects more developers will need to and developing strategies to secure a steady stream of liquidity in the absence of an active sales market. adjust their strategy and look to secure income through leasing unsold units. This has taken the form of rent-to-own schemes launched to secure rental income and to entice residents to Incentives from developers will continue to include lease-to-own-schemes for completed projects and discounts become owners rather than tenants. on bulk sales and/or flexible payment plans for off-plan units.

Buyer profile and The majority of buyers in the market are owner-occupiers (both UAE Nationals and Expats) looking to buy a Typical buyer profile and reasons for buying are unlikely to change during 2012. reasons for buying home. There is limited demand amongst this group to buy for investment purposes given the current trend of falling rents eroding returns. There is some interest from long-term investors looking for opportunities to buy holiday homes, although this is limited to luxury projects perceived to offer favourable prospects for capital appreciation (i.e. St. Regis on Saadiyat Island).

Trends Sales prices have been stagnant throughout the year due principally to a lack of transactional activity with a The delivery of developments on Reem Island and Raha Beach will see a significant increase in ready-to-move-in lack of ready-to-move-in stock. stock, allowing prospective buyers the opportunity to view the finished developments. End-user purchases will increase during the course of the year.

07 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Residential Sales Apartments

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08 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Summary 2011 and Outlook 2012 Commercial Leasing - Offices

2011 2012

Transaction activity Enquiry levels have increased substantially post Ramadan, predominantly from existing companies in Abu Dhabi We expect transactional activity to continue to increase throughout the year, driven predominantly by internal looking to upgrade their office space and secure better value for money. movement of existing companies taking advantage of superior quality space becoming available. With rents having declined and landlords taking a more flexible approach (with the value of incentives increasing) some companies that have previously had a wait-and-see attitude are increasingly prepared to make a commitment, which is leading to more deals completing. We have witnessed an increase in completed transactions as companies that were previously operating from villas are now being forced to relocate.

Popular developments Fitted offices in good locations (offering easy access to retail / f&b options), with sufficient parking availability An increasing number of office buildings situated within integrated mixed-use developments offering an (both allocated basement spaces and street level parking for staff) and low congestion are preferred. attractive working environment with a choice of retail and f&b options will be available in 2012. Landlords of shell & core developments in sub-prime locations are finding it increasingly difficult to attract Developments falling into this category include Nation Towers, Etihad Towers and Al Bustan Complex, all of tenant interest, which is leading some landlords to fit out the space to improve marketability and absorption which are likely to prove popular choices for companies to take space. levels.

Leasing terms and There is a desire amongst major landlords of Grade ‘A’ offices to sustain headline rents at current levels, with The tenant-led market will force landlords to continue to offer increasingly flexible lease terms. incentives quoting rents still above AED 2,100 per square metre. Landlords are becoming increasingly flexible to entice tenants to take space given the highly competitive market environment. Rent-free periods of over 6 months are available in the market for fully fitted space when taking a five-year lease.

Supply and demand We estimate that around 455,756 square metres of new office supply entered the market in 2011, including We estimate that an additional 650,353 square metres of new office space will enter the market during 2012. lower quality office space in MBZ and Al Nahyan Camp. Major developments include: Most of the prime office space in the development pipeline has yet to be delivered, which is encouraging some Sowwah Square on Sowwah Island tenants to take short-term renewals in existing premises in anticipation that rents will decline further in the next 6-12 months. Trust Tower at Central Market There is currently a mismatch between the supply of new fitted space at affordable rents and immediately Nation Towers on the Corniche available for occupation and tenant demand. This is resulting in some less prime buildings which offer fitted Al Bustan Complex on Airport Road space and are ready for occupation securing deals and achieve good occupancy levels. Shinning Towers in Khalidiya ADIC and IPIC headquarter buildings in Al Nahyan Camp Demand will continue to be driven predominantly by internal movement of existing companies.

Trends Overall net effective rents have declined throughout the year as securing occupancy takes precedence and Overall net effective rents will continue to decline in line with the significant volume of new supply entering the incentives increase. market, which will further strengthen prospective tenants’ negotiating positions. Older Grade ‘B’ and ‘C’ buildings are seeing vacancy levels increase and rental rates decline as more tenants Vacancy levels in Grade ‘B’ and ‘C’ buildings will continue to increase, which is likely to lead to some older relocate to improved quality and value-for-money options. buildings being demolished and redeveloped.

09 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Overview

2011 2012

Transaction activity The residential sector has seen an increase in leasing activity as rents have continued their downward trend and Transactions for residential properties are expected to improve as better opportunities for tenants become better quality supply has become available. available at increasingly lower prices. Al Ain is starting to see a rental gap between better and lower quality supply, with the most popular Office and retail rents are expected to fall further in 2012 as more supply becomes available with limited new developments witnessing stable rents and older stock seeing rents fall rapidly. demand expected, although some internal movement will continue as companies seek better quality premises. The office segment has, however, seen relatively slow take-up, as following recent trends, several company start-ups in Al Ain were cancelled, weakening the outlook for the market.

Popular developments Currently, the most popular residential developments are those featuring above-average facilities, including Demand for good quality compounds with facilities will increase as prices reduce further. and unit types landscaping, children’s play areas, swimming pools, etc., such as Al Muwaiji Village or the Al Noor compound. Older apartment buildings are likely to lose a number of their tenants, and as a result, see their rents fall further. Other new apartment compounds are also attracting good tenant demand. New retail space is expected to attract good demand levels, especially in well-frequented malls and retail areas. Purpose-built office buildings are still rare in Al Ain and generally these are likely to fare better than the rest of the market, especially as operating from residential villas is now restricted.

Leasing terms and Following the trend witnessed across the UAE, landlords are becoming increasingly flexible in terms of payments, The trend is expected to continue as landlords compete to attract tenants, with incentives being offered more incentives some of them accepting up to five cheques per year, compared to one previously. frequently. In addition, rent-free periods are now being offered.

Supply and demand New supply delivered to Al Ain within the last six months includes several apartment and villa compounds, such New residential supply will continue to be delivered in the form of smaller compounds and is likely to attract as Al Muwaiji Village (200 apartment and villa units); Al Noor Compound (150 apartments) as well as several good demand if marketed at the right price. smaller apartment compounds. Retail will see further substantial additions in the form of the soon-to-complete Sorouh Mall (Q1 2012), as well In terms of retail the first phase of the Al Ain Mall extension was completed with Phases 2 and 3 still remaining. as a variety of smaller shopping centres scattered across Al Ain in areas, such as Butain, Al Hili and Al Foah. A new hotel, Ayla Hotel, also opened earlier this year. Given the amounts of new retail space available, rents are likely to see rapid declines over the coming months. Offices have been added, mostly as part of mixed-use buildings where they occupy the mezzanine floor, and as Limited office supply will be delivered to the market. However, given the subdued demand levels, rents are likely part of small business centres. to come under futher downward pressure.

Trends The market has seen a flight-to-quality, especially in the residential sector. The flight-to-quality trend is expected to continue. The Tawtheeq system will be implemented in Al Ain starting 30 November 2011, which will help ease the process of registering leases, managing sublets, etc.

010 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Property Focus

St. Regis Residences - Saadiyat Island

Location Adjacent to the St. Regis Saadiyat Island Resort, Abu Dhabi on Saadiyat Beach Unit Mix, Size, Rates Unit No. of Avg. Internal Avg. External Rental Rate Car 2 2 and Parking Type Units Area (m ) Area (m ) (AED’000s/pa) Parks Connectivity The St. Regis Residences benefit from easy access to both the Abu Dhabi CBD and Studios 46 62 72 75 – 90 1 to the attractions on . Abu Dhabi International Airport can be reached in less than 30 minutes via Saadiyat Freeway, which also provides access to the Abu 1 BR 56 91 128 107 – 132 1 Dhabi-Dubai road. 2 BR 71 158 204 145 – 180 2

Developer Tourism Development and Investment Company (TDIC) 3 BR 57 242 316 193 – 238 2 Operator – Starwood 4 BR 24 280 403 263 – 323 2

Completion Tenants are expected to be able to move in January 2012 5 BR 5 508 174 TBC 3

Unique Selling Points Currently the best quality residential development in Abu Dhabi Floors G+55 (offices from level 3 to 26 and residential from level 29 to 53) First branded residences in Abu Dhabi Facilities and Central A/C Proximity to the large natural beach with free access Amenities Fully equipped kitchen (Bosch branded) Easy access to Abu Dhabi CBD Built-in wardrobes Maid’s room in large 3 BR units with open and enclosed kitchen and separate maid’s entrance All units have large balconies off the living room and bedrooms Excellent views to Saadiyat Beach and Saadiyat Beach Golf Course Ground level units have their own private landscaped garden Every unit has at least one parking space Access to three swimming pools Discounted membership to the St. Regis Health Club Dining, shopping and entertainment at the St. Regis Saadiyat Island Resort On-site 24-hour call centre for maintenance and service Various benefits and discounts at the hotel facilities

Number of Units 259 apartments

011 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com 2++&%/ 2++&%/ 3!4#$, 3!4#$,

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The number of locations in Dubai has increased from 16 to 22, with the majority of new areas added being affordable developments, which explains the above-average decline.

012 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Mortgage Market Update With 2011 almost drawing to a close the look back over the past year has been an interesting one. We have seen new and old There is still a steady demand from clients looking to refinance their existing properties and a large appetite from lenders looking lenders entering the market, product improvements and lending restrictions beginning to ease again. to take on clients with a proven stable credit history who are repaying their loans with rates as high as 9%. Over the past six months we have continued to witness a significant reduction in interest/profit rates. The local lenders are Lenders are also keen to assist UAE Nationals in restructuring their property portfolios both in Abu Dhabi and Dubai. Clients are competing with each other to secure good quality clients with rates being offered from 3.99% over a fixed term. This is very able to secure longer mortgage terms, lower interest/profit rates along with more flexible monthly repayments. This has been of appealing to borrowers as they feel secure with knowing that their monthly payments will not increase for the next one to five great interest to clients as most were/are tied into six monthly/annual repayment schedules. years. Due to these rate changes we have received an increase in applications from endusers looking to purchase property in Lenders have started to assist UAE Nationals with refinancing whole buildings by relaxing their lending attitude and basing their Dubai. calculations on the rental income from the actual property. Along with the rate reductions, other aspects of the mortgage products in Dubai are becoming far more attractive and we are Overall the mortgage market has definitely been tested with various challenges, and as a result, is maturing and becoming more able to offer clients products with little or no fees and due to our established relationships with the lenders. resilient.

MAX MAX MAX INTEREST LENDER (*) CLIENT TYPE MAX AGE TERM MIN SALARY INSURANCE PROCESSING FEE PART REPAYMENT CLOSURE/ EARLY SETTLEMENT LOAN LTV DBR RATE

(AED Yrs Yrs % % % (AED/ pm) % % % million) 65 salaried; Not mandatory for 1 of loan amount No fee after 3 years (if own funds); 3 (if transferred to ADCB UAE Nationals & UAE Residents 10 25 <80 <60 5.99 25,000 < 2 (no fee after 5 years) 70 self employed life insurance (no caps) another lender)

ABU DHABI UAE Nationals, UAE Residents & Non No 1-1.25 of loan No fee after 3 years (if own funds); 4 (if transferred to 70 30 <85 <55 5.75-8.50 10,000 Mandatory < 2 (no fee after 3 years) FINANCE Residents Limit amount (no caps) another lender)

1 of loan amount <20 of balance with no charge; ADIB UAE Nationals & UAE Residents 70 8 25 <90 <60 5.5-8.5 10,000 Mandatory <3 (no caps) anything above charged at 3 UAE Nationals, UAE Residents & UK Non BARCLAYS 65 10 25 <75 <55 5.35-7.75 25,000 Mandatory None <3 of the outstanding amount <3 of the outstanding amount Residents 65 salaried; 1 (capped at AED DUBAI BANK UAE Nationals & UAE Residents 6 25 <85 <60 5.25-6.65 15,000 Mandatory None None 70 self employed 15,000) UAE Nationals, UAE Residents & Non None (minimum payment of AED 3 (if transferred to another lender, min. AED 10,000); HSBC BANK 70 20 25 <80 <60 5.49-5.99 15,000 Mandatory 0.25-0.75 Residents 25,000) or AED 2,500 (if cleared with own funds) LLOYDS TSB No 0-1 of loan None (minimum payment of AED UAE Nationals & UAE Residents 65 20 <70 <40 5.49-7.99 12,000 Mandatory None BANK Limit amount (no caps) 50,000) 65 salaried; 1 (capped at AED <1 (no fee after 2 years); 3 (if transferred to another MASHREQ BANK UAE Nationals & UAE Residents 10 25 <80 <55 4.99-5.49 18,000 Mandatory <1 (no fee after 2 years) 70 self employed 25,000) lender) NOOR ISLAMIC 10,000 salaried; 1 (capped at AED 2 (if paid from own funds); 5 (if transferred to another UAE Nationals & UAE Residents 65 10 25 <80 <55 5.99-8.25 Mandatory 2 (for the term of the mortgage) BANK 50,000 self employed 40,000) lender) UAE Nationals, UAE Residents & Non No RAKBANK 65 25 <80 <58 5.5-9 10,000 Mandatory 1-1.25 1 (if paid from own funds) 1; or 5 (if transferred to another lender) Residents Limit STANDARD None (for loans under AED 10 1 of the loan None (for loans under AED 10 million); 2 (for loans CHARTERED UAE Nationals & UAE Residents 70 18 30 <80 <60 4.99 12,000 Mandatory million); 2 (for loans over AED 10 amount over AED 10 million); 5 (if bank buy out) BANK million) UNITED ARAB <2 (of the amount repaid/ UAE Nationals & UAE Residents 70 5 25 <85 <65 3.99-5.99 15,000 Mandatory 1 < 2 (for the first 5 years); none (thereafter) BANK outstanding); none (after 5 years)

Note: 1. (*) The above lenders reserve the right to change their product policy, fees and charges, interest rates and other credit-scoring criteria at any time without prior notice. 2. Banks will generally only finance properties from developers on their approved lists. John Charcol Middle East is an independent mortgage broker based in Dubai. For queries or assistance in relation to mortgages, contact Aimee Garraway at John Charcol Middle East Toll Free on 800 JCME (5263) or +971 (4) 341 7466 if dialling from outside the UAE, or by email to mortgages@johncharcol.

013 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com Law Update - Al Tamimi & Co.

There are approximately 97 real estate laws. Many of these are historic and have limited application, whilst some relate only to free zones. Below we summarise some of the key laws relating to the sale and leasing of real estate.

1. Laws Pertaining to Granted Lands A number of Directions have also been issued pursuant to the Jointly Owned Properties (“Strata”) There are approximately seven laws pertaining to Granted Lands. These laws allow the Government Law. of Dubai to grant land to UAE nationals and other organisations for various purposes. 6. Landlord and Tenant Laws 2. Free Zone Laws Law No. 26 of 2007 as amended by Law No. 33 of 2008 is the principle landlord and tenant law Property laws are, in most cases, applicable to all of Dubai. However, the Dubai International operating in Dubai. This law applies to both residential and commercial tenancies. Financial Centre (“DIFC”) is an exception. The DIFC has its own real property law, strata title law, Unless arbitration is decided upon between the landlord and the tenant, all disputes go to the contracts law and regulations pursuant to these laws. Rent Committee, which was established pursuant to Decree No. 2 of 1993. 3. Land Registration Laws The various Rent Decrees (usually issued annually) supplement the rental laws and usually the Law No. 7 of 2006 Concerning Real Estate Property Registration in the Emirate of Dubai is the cap rent rises. Currently Decree No. 2 of 2011 regarding rentals in the emirate of Dubai applies principle law of real estate registration. This law sets out the responsibilities of the Land Department whereby rent increases are linked to market rents as assessed by RERA and increases are also and requirements for real estate to be registered in the records of the Land Department. restricted to ranges having regard to the relationship to a market rent. From a foreign national’s point of view, Regulation No. 3 of 2006 specifying where non-UAE 7. Other Property Laws nationals can own property in the Emirate of Dubai, is an important law. This law designates Law No. 9 of 2009 Amending some provisions of Law No. 13 of 2008 and Executive Council some areas in which non-UAE or GCC nationals can own property. Updates to this law were Resolution No. 6 2010: completed by Regulation No. 1 of 2010. This law contains many provisions regulating the property market. Matters such as the termination 4. Real Estate Development Laws of sale and purchase agreements, developers’ obligations in relation to cancelled projects, The Real Estate Development Laws are as follows: damages payable upon termination and other such issues are dealt with under these laws. Law No. 16 of 2007 Establishing the Real Estate Regulatory Agency: By-Law No. 85 in 2006 Regulating the Registration of Real Estate Brokers in the Emirate of Dubai: This law establishes what is commonly known as “RERA”, the body which is responsible for Sets out registration, licensing and ethical issues applying to real estate brokers in the Emirate of regulating the Dubai real estate market and registered developers. Dubai. Law No. 8 of 2007 Concerning Guarantee Accounts of Real Estate Developments in the emirate Law No. 14 of 2008 Concerning Mortgages in the Emirate of Dubai: of Dubai: This law applies to mortgages of property and sets out the procedures in relation to exercising This law requires developers to set up Escrow or Trust Accounts into which investors deposit funds powers of sale pursuant to a mortgage. received from Purchasers in relation to any off-plan development. Payments from the Escrow 8. Special Laws Account are monitored by RERA. A number of laws have been passed due to the global financial crisis. These laws pertain to the Law No. 13 of 2008 Regulating Interim Property Registration in Dubai: administration of various companies, specialist judicial committees and other decrees in relation This law enables investors to register their interest in an off-plan development. to the restructuring or reorganising of real estate zones. 5. Jointly Owned Property or Strata Laws 9. Federal Law no 5 of 1985 - the Civil Transactions Law (“Civil Code”) Law No. 27 Of 2007 on Ownership of Jointly Owned Properties in the emirate of Dubai: The Civil Code contains many provisions that are important from a Real Estate Law perspective, This law created a Jointly Owned Property (“Strata”) system of property ownership whereby including landlord and tenant matters, liens over real estate, succession, easements and buildings can be subdivided into Units (in private ownership) and Common Areas (being the contractual issues. shared areas within the development owned collectively by all owners). The above legal information is supplied courtesy of Al Tamimi & Company. (For more information go to www.tamimi.com.)

014 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com 35

11 Abu Dhabi Property Map

34

33

20 18

Arab ia n Gu lf 5 19 17

32 7 4

16 1

2 6 15

31 3 14 11 12 22 30

23 11 13 33 24

21 25 10 33

29

28

22 8 9 11

1 Corniche 11 Golf Gardens 21 Hodariyat Island 31 Al Falah Community Development Project 26 2 Khalidiya / Bateen 12 Al Raha Gardens 22 Danet Abu Dhabi 32 Yas Island *

3 Mushrif / Karama / Manaseer 13 Khalifa City A 23 Embassy Area 33 Al Shahama

4 Central Abu Dhabi 14 Al Raha Beach * 24 Zayed Sports City 34 Al Bahia

5 Tourist Club Area 15 Al Reef * 25 Bain Jisrain 35 Al Rahba 6 16 Al Nahyan Camp / Muroor The Marina 26 Al Mafraq 27 7 Reem Island * 17 Lulu Island * 27 Baniyas City 11 Sheikh Zayed Road

8 18 Al Mina 28 Khalifa City B 22 Abu Dhabi - Al Ain Road

9 Mohammed Bin Zayed (MBZ) City 19 Al Sowwah Island * 29 Al Shamkha 33 Road

10 Sas Al Nakheel 20 Saadiyat Island * 30 Masdar Future City * Investment Areas

22 Al Foaa

Camel Al Ain Property Map Racetrack

Emirates St

East Airport District Hili

SULTANATE OF OMAN Al Masoudi

Ardh Jow St

Baniyas St Al Oattara

Al Ain International Airport Al Towaya Al Buraimi Al Dahmaa Al Jimi

Mohd Bin Khalifa St Al Yahar North Al Khabisi Al Mutaredh Al Markhaniya Camel Town Centre Racetrack Al Jahili Khalifa Bin Zayed St. Al Yahar South Al Muwaiji Al Al Bateen Mutawa’a

Asharej

Al Sarooj Falaj Hazza’a Al Salamat District Khalifa Bin Zayed St. Al Shuwaimah Zayed Bin Sultan St. Al Maqam Al Aqabiyya

Aflaj

Zoo District

Gharebah Al Shuaibah

Al Khrair Defence

Zaker

Al Qisais Neima

Camel Jebel Hafeet Racetrack Al Dhahir Um Ghafah Asteco Property Management LLC

With over 25 years’ experience in the Middle East, Asteco’s Professional Services team brings together instructions where we can quickly apply resources to meet the client’s requirements. a group of the Gulf’s leading real estate experts. Our breadth of experience across all the main property sectors is underpinned by our sales, leasing Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Northern Emirates, Qatar, Bahrain and Jordan and property management teams transacting in the market, and a wealth of research that supports not only provides a deep understanding of local markets but also enables us to undertake large our decision making.

Research Ras Al Khaimah Asteco’s Research Department provides investors and developers with essential real estate knowledge to Regional Offices and Operations Ajman ensure clients understand their competitors, target markets and their long-term strategies. Sharjah JORDAN Dubai Consultancy

Asteco’s Consultancy Department provides comprehensive advice on market trends and solid solutions, UNITED ARAB BAHRAIN EMIREMIRATESATES Abu Dhabi from project concept to completion. Asteco’s consultancy reports stimulate initial investment to financial QATAR KINGDOM OF SAUDI ARABIA institutions and other private equity providers. Al Ain

Valuations The team is fully independent in its approach and adheres to the Royal Institution of Chartered Surveyors’ (RICS) valuation standards.

Sales John Allen Paul Maisfield Judy Lam Jenny Weidling Asteco’s internationally qualified team has enjoyed over two decades of experience within the highly BSc MRICS BSc (Hons) MRICS dynamic Middle East property market. Director - Research, Consultancy GM & Head of Professional Regional Research Manager Senior Research Analyst, Dubai and Valuations Services, Abu Dhabi Leasing +971 4 403 7777 +971 2 626 2660 +971 4 403 7777 +971 4 403 7777 [email protected] [email protected] [email protected] [email protected] Asteco is the leading leasing agent in the UAE and is the sole agent for a number of key developments in the region. Julia Knibbs John Stevens Brett Whalley Vineet Kumar BSc MRICS Property Management Senior Analyst, Abu Dhabi Director - Property Management Head of Corporate Services Head of Business Development Asteco manages some 45,000 leases or approximately 3,500 buildings throughout the UAE, which include +971 2 626 2660 +971 4 424 9444 +971 4 403 7777 +971 4 403 7777 corporate portfolios and local and international funds. [email protected] [email protected] [email protected] [email protected]

DISCLAIMER: The information contained in this report has been obtained from and is based upon sources that Asteco Property Management believes to be reliable, however, no warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute Asteco Property Management’s judgment, as of the date of this report and are subject to change without notice. Figures contained in this report are derived from a basket of locations highlighted in this report and therefore represent a snapshot of the 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 Asteco Property Management’s control. For a full in-depth study of the market, please contact Asteco Property Management’s research team. Asteco Property Management LLC. Commercial Licence No. 218551. Paid-up Capital AED4,000,000.

017 For additional information call +971 2 626 2660 or email [email protected] www.astecoreports.com