Market Overview

The UAE’s residential sector enjoyed a robust opening quarter, with economic improvements, legislative reforms and a Contents successful vaccine roll-out buoying market sentiment and driving transactions.

Villas across and Abu Dhabi saw increased demand, with 4. average prices rising by 3.9% and 2.2%, respectively, quarter- Economy on-quarter (q-o-q). Villa prices across both emirates surpassed Vaccine roll-out and growing their Q1 2020 averages, up by 1.1% in Dubai and 0.5% in Abu confidence supported activity Dhabi year-on-year (y-o-y). Villa rents also fared well over Q1, with continued tenant demand for larger accommodation and outside space supporting uplifts across both emirates. 6. Apartment values were broadly stable, with prices rising by 0.1% Dubai in Dubai and 0.2% in Abu Dhabi, q-o-q. The overall average, 6. Overview however, belies the varied performance between more established Sales gained sustained pace over Q1 residential areas and secondary locations. Annually, Dubai and Abu 8. Prices Dhabi apartment prices were down 7.2% and 2.5%, respectively. Villas saw broad price rises; apartments Apartment rents across both emirates recorded modest Q1 remained stable declines, with continued unit handovers, along with changing 12. Rents tenant preferences, placing downward pressure on rates. Villas saw quarterly uplift; apartments recorded modest declines Q1 witnessed several key policy announcements, including citizenship reforms and the introduction of a new remote-working visa. Emirati citizenship was opened to skilled foreign nationals, at the invitation of UAE authorities, with the remote-working visa 16. offering one-year residency, subject to qualifying criteria. These Abu Dhabi reforms build on recent enhancements to the UAE’s retirement 16. Overview and investment visa programmes, and will likely serve to bolster Sales demand remained strong over Q1 residential demand moving forwards. 17. Prices Villas saw quarterly uptick, building on a While upcoming supply may challenge apartment sector solid previous quarter performance over 2021, we expect demand for villas to continue over the months ahead, with renewed international buyer interest, 20. Rents along with sustained tenant demand, set to underpin both sales Villa rents recorded modest improvements; apartment rents dipped price and rents medium-term. marginally

OBSERVER - UAE REPORT Q1 2021 2 Q4Q1 20212020 Economic Overview

Population: UAE Key Economic Indicators (2019 to 2022F) Visa reforms to support population recovery, after 15 2020 fall

10

5 Tourism: Increased tourism to buoy non-oil GDP growth 0 Annual Change (%) -5

-10 Vaccinate: 2019 2020E 2021F 2022F UAE exceeded Q1 target, with cumulative GDP Growth (annual variance) Private Consumption (annual variance) vaccinations surpassing 8m Unemployment (AoP) Inflation (CPI, annual variance, AoP)

Source: Focus Economics, April 2021

ECONOMY SAW Key announcements Reforms to support long-term growth FIRST QUARTER IMPROVEMENTS Dubai 2040 Master Plan The Dubai government released details of a new urban master plan, outlining Q1 saw the announcement of new visa and citizenship a comprehensive and ambitious vision reforms, building on the expansion of the UAE’s golden visa The UAE’s economy saw broad improvements over Q1, with Bank, which collectively comprise three-quarters of the UAE's for the emirate’s future development. and retirement schemes. growing market confidence, coupled with the pace of the UAE's banking sector assets, all reported increases in Q1 revenues. vaccine roll-out, supporting activity. Emirates NBD reported net profits of AED 2.32 billion over Q1, Citizenship reforms Emirati citizenship was opened to foreign nationals, with up 12% y-o-y, with FAB, the UAE’s largest bank, reporting a net UAE citizenship was opened to select authorities releasing details of key categories for which The IHS Markit Purchasing Managers’ Index (PMI) reached profit of AED 2.5 billion, up 3% from Q1 2020. groups of skilled foreign nationals, with citizenship would be considered. Citizenship cannot be 52.6 in March, up from 50.6 in February, marking a 20-month nominations at the sole discretion of formally applied for, with its granting solely at the invitation high. Construction activity also picked up in March, driven by a The economy is widely expected to rebound over 2021, with government or royal court officials. of UAE authorities. Recipients will be permitted to retain their modest rise in new project launches along with the resumption the easing of international travel restrictions, along with Expo existing citizenship, allowing them to become dual nationals. of paused schemes. Oil production was stable over the quarter, 2020, set to drive tourist arrivals. Remote-working visa although it remained lower than Q1 2020. A federal remote-working visa was The UAE released details of a new remote-working visa, The UAE’s Central Bank (CBUAE) forecasts 2.5% growth in real introduced, requiring a minimum granting holders the right to reside for up to one year, subject First quarter results of leading UAE banks indicated overall GDP, and 3.6% in non-oil real GDP, over 2021, with real GDP salary of USD 5,000 per month, to meeting qualifying criteria. Recent reforms are likely to economic improvements. First Abu Dhabi Bank (FAB), Emirates and non-oil real GDP growth expected to reach 3.5% and 3.9%, with one-year residency available for ease the impact of the overall population decline recorded NBD, Abu Dhabi Commercial Bank (ADCB) and Dubai Islamic respectively, in 2022. AED 1,058 (USD 287) per person. over 2020.

OBSERVER - UAE REPORT Q1 2021 4 OBSERVER - UAE REPORT Q1 2021 5 Q4Q1 20212020 Dubai

Dubai Total Residential Transaction Value by Quarter (Q1 2017 to Q1 2021)

25

20

15

10 AED Billion 5

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2017 2018 2019 2020 2021

Sales - Completed Sales - O-plan

Source: REIDIN & Chestertons Research RESIDENTIAL TRANSACTIONS SAW STRONG FIRST QUARTER GROWTH

Dubai’s residential sector enjoyed a strong first quarter, with Strong demand for villas across popular residential areas increased transactions, and broad improvements in villa prices, continued over Q1, supporting broad price rises. Average Residency reforms and international buyers support prime HOT TOPIC reflecting growing market confidence. villa prices rose 3.9% q-o-q and surpassed their Q1 2020 villa sector level, rising 1.1% annually. Total transaction value increased 14.4% q-o-q and 38.8% The first quarter saw notable demand for villas, with broad price rises building on the uplifts seen across several more established y-o-y, with transaction volume rising 5% q-o-q and 12.1% Apartment prices were broadly stable, rising 0.1% q-o-q, communities in Q4 2020. The high-end villa segment, which we define as units priced at AED 8m and above, saw particular growth, y-o-y. Overall demand appeared broad-based, with the rise in although they remained 7.2% below their Q1 2020 recording 207 sales collectively worth AED 3.34bn, compared to 85 units totalling AED 1.20bn in Q1 2020. Overall, high-end villas transactions driven by increased interest from international average. However, stability in the quarterly average belies represented a third of total villa sales, up from a quarter during the same period last year. buyers as well as local investment and end-user demand. an increased divergence between the performance of more popular residential areas and secondary locations. Interestingly, villa demand appeared broad-based, with sales supported by settled expatriate residents, in addition to a clear rise The total sales value of completed properties increased 15.4% in international buyers across the high-end segment. Agents reported particular buyer interest from the UK, India and the larger q-o-q and near-doubled annually, with transaction volume Continued work-from-home practices, along with more Euro-zone economies. rising 12.9% q-o-q and 64.4% y-o-y. While the total value of flexible workplace policies, underpinned tenant demand off-plan sales increased 11.8% q-o-q, it remained 22.2% down for villas over Q1. Villa rents rose 2.3% q-o-q, although We expect demand for high-end villas to continue medium-term, supported by Dubai’s comparatively attractive pricing, its overall y-o-y, with total sales volume falling 6.8% q-o-q and 28.8% remained 1.4% below their Q1 2020 average. Apartment quality of life and the continued take-up of the emirate’s retirement and investment visa programmes. y-o-y. Off-plan sales remained low due to limited new launches, rents fell 0.7% q-o-q and remained 11.7% below their Q1 developer promotions on recently completed units and broadly 2020 level. attractive resale prices.

OBSERVER - UAE REPORT Q1 2021 6 OBSERVER - UAE REPORT Q1 2021 7 5% 5%

11% Q4Q1 20212020 Q1 2021 Transacations Dashboard 47%

32%

Apartment Sales by Unit Type Villa Sales by Unit Type

12% 9%9% Apartment prices stable on average, although locations 21% 19%19% increasingly varied

26%

41%41% Apartment prices were broadly stable, rising 0.1% q-o-q, 622 per sq ft, down from AED 640 in Q4 2020, with average 31%31% although they remained 7.2% below their Q1 2020 level on prices in Dubai Sports City reaching AED 585 per sq ft, falling 41% average. from AED 600 over the previous quarter.

Downtown Dubai and The Greens saw the highest quarterly On an annual basis, all locations recorded declines, with Dubai price rises, at 3.1%, with average values reaching AED 1,320 Sports City seeing the steepest fall, with prices down by 12.7% Studio 1BR 2BR 3BR (and above) 2BR (and below) 3BR 4BR 5BR (and above) and AED 835 per sq ft, respectively. Village Circle y-o-y. , Dubai Land, Dubai Motor City, Dubai (JVC) saw prices rise by 1.8%, reaching AED 580 per sq ft, up Silicon Oasis and International City all recorded double-digit from AED 570 in Q4 2020. , The Views and Dubai annual declines. Marina all recorded more modest uplifts, rising by 1.2%, 1.0% and 0.5%, respectively, q-o-q. and Business Bay saw more marginal annual Sales Transactions - Completed Units falls, with average prices dropping by 1.7% and 2.2%, All other locations recorded quarterly falls, with Dubai Land respectively. The Greens, The Views and also Apartments - Top Communities by Total Transaction Value Villas - Top Communities by Total Transaction Value and Dubai Sports City seeing the sharpest declines of 2.8% and performed comparatively well, recording declines of 2.9%, 2.5%, respectively. Average prices in Dubai Land stood at AED 3.3% and 3.4%, respectively.

Dubai Hills EstateDubai Hills Estate Jumeirah Park Jumeirah Park

Bluewaters IslandBluewaters Island Arabian RanchesArabian Ranches

Jumeirah VillageJumeirah Circle Village Circle Jumeirah Golf EstatesJumeirah Golf Estates

Jumeirah Lake TowersJumeirah Lake Towers Damac Hills (Akoya)Damac Hills (Akoya)

Jumeirah Beach JumeirahResidence Beach Residence Meydan City Meydan City

DubaiTown Hills Square EstateDubaiTown Hills Square Estate JumeirahDistrict ParkOne JumeirahDistrict ParkOne

BluewatersDowntown IslandDubaiBluewatersDowntown IslandDubai ArabianEmirates Ranches HillsArabianEmirates Ranches Hills

JumeirahPalm Village JumeirahJumeirah Circle Palm Village Jumeirah Circle Jumeirah TilalGolf AlEstates JumeirahGhaf TilalGolf AlEstates Ghaf

JumeirahBusiness Lake TowersJumeirah Bay Business Lake Towers Bay DamacPalm Hills Jumeirah (Akoya)DamacPalm Hills Jumeirah (Akoya) Jumeirah BeachDubai JumeirahResidence Marina BeachDubai Residence Marina DubaiMeydan Hills Estate CityDubaiMeydan Hills Estate City Villas saw broad Q1 price rises, building on Q4 2020 Town Square - Town100 Square200- 300100 400200 500300 600400 700500 800600 900700 1,000800 900 1,000 District One - District200 One - 400 200600 400800 6001,000 8001,2001,0001,4001,2001,6001,400 1,600 Downtown DubaiDowntown Dubai Emirates Hills AED Million AED Million AED Million AED Million Palm Jumeirah Palm Jumeirah Tilal Al Ghaf Tilal Al Ghaf improvements Business Bay Business Bay Palm Jumeirah Palm Jumeirah

Dubai Marina Dubai Marina Dubai Hills EstateDubai Hills Estate Sales Transactions- 100 200- 300100 - 400200Off-plan500300 600400 700500 800600Units900700 1,000800 900 1,000 - 200 - 400 200600 400800 6001,000 8001,2001,0001,4001,2001,6001,400 1,600 Villas across all locations monitored recorded uplifts in average The Lakes, Jumeirah Park and Arabian Ranches saw uplifts of AED Million AED Million AED Million AED Million Jumeirah First Jumeirah First Rukan Rukan values over Q1, with continued end-user demand, along with 3.6%, 3.4% and 3.2%, respectively, q-o-q. Average prices in The Al Jadaf Al Jadaf Emaar South Emaar South Apartments - Top Communities by Total Transaction Value Villas - Top Communities by Total Transaction Value renewed international buyer interest, buoying prices. Average Lakes stood at AED 1,010 per sq ft, up from AED 975 in Q4 Jumeirah Lake TowersJumeirah Lake Towers Arabian RanchesArabian (Phase Ranches2) (Phase 2) Jumeirah VillageJumeirah Circle Village Circle Jumeirah Bay IslandJumeirah Bay Island villa prices rose by 3.9% q-o-q and surpassed their Q1 2020 2020, with values across Jumeirah Park and Arabian Ranches Business Bay Business Bay Reem Reem level, rising 1.1% annually. averaging AED 750 and AED 815, respectively. Jumeirah BeachJumeirah JumeirahResidence First BeachJumeirah Residence First Tilal AlRukan Ghaf Tilal AlRukan Ghaf

Dubai HarbourAl Jadaf Dubai HarbourAl Jadaf Arabian RanchesEmaarArabian (Phase South Ranches3) Emaar (Phase South 3) JumeirahPalm Lake Jumeirah TowersJumeirahPalm Lake Jumeirah Towers Arabian RanchesArabian (PhaseVillanova Ranches2) (PhaseVillanova 2) Palm Jumeirah saw the highest quarterly increase, at 4.8%, Annually, Palm Jumeirah saw the highest price increase, at Jumeirah VillageDistrictJumeirah Circle One VillageDistrict Circle One JumeirahJumeirah Bay Island FirstJumeirahJumeirah Bay Island First followed by The Meadows/The Springs at 4.4%. Average prices 4.2%, with The Lakes and The Meadows/The Springs seeing DowntownBusiness Dubai BayDowntownBusiness Dubai Bay District SevenReem District SevenReem

Jumeirah Beach JumeirahResidence Beach- Residence50 -100 50150 100200 150250 200300 250350 300400 350450 400 450 Tilal Al Ghaf - Tilal Al20 Ghaf 40- 2060 4080 10060 12080 100140 120160 140180 160200 180 200 in Palm Jumeirah reached AED 1,960 per sq ft, up from AED uplifts of 1.0% and 0.4%, respectively, from Q1 2020. Average Dubai Harbour Dubai Harbour Arabian RanchesArabian (Phase Ranches3) (Phase 3) 1,870 in Q4 2020, with prices in The Meadows/The Springs prices at Arabian Ranches and Jumeirah Park held steady y-o-y. AED Million AED Million AED Million AED Million Palm Jumeirah Palm Jumeirah Villanova Villanova

District One District One Jumeirah First Jumeirah First standing at AED 835 per sq ft, up from AED 800 over the Downtown DubaiDowntown Dubai District Seven District Seven previous quarter.

- 50 -100 50150 100200 150250 200300 250350 300400 350450 400 450 - 20 40- 2060 4080 10060 12080 100140 120160 140180 160200 180 200

AED Million AED Million AED Million AED Million

Source: REIDIN & Chestertons Research

OBSERVER - UAE REPORT Q1 2021 8 OBSERVER - UAE REPORT Q1 2021 9 RESIDENTIAL Q4Q1 20212020 Sales Prices

The World The Palm Deira Arabian Gulf The Palm Dubai -5.9% Waterfront Y-o-Y Change AED743 AED985 JUMEIRAH DUBAI LAKE TOWERS MARINA AED790 -3.4% JUMEIRAH Y-o-Y LAKE TOWERS Change AED1,960 PALM AED1,020 JUMEIRAH DUBAI MARINA AED1,950 Palm Jumeirah 4.2% 0.4% PALM Y-o-Y AED835 Y-o-Y JUMEIRAH Change THE MEADOWS Change Dubai /SPRINGS Maritime Bluewater City AED832 Islands Jumeirah Beach THE MEADOWS Residence -1.7% -11.1% /SPRINGS Y-o-Y AED835 Y-o-Y AED496 Change Change Dubai Marina Dubai Pearl THE GREENS AED860 Jumeirah Satwa DISCOVERY Media Internet THE GREENS Burjuman Hamriya City GARDENS City Badaa Centre JLT Al Wasl AED1,320 Deira Ibn Battuta Jumeirah Sufouh -2.9% Safa AED1,343 Wuheida AED558 Mall The Greens Manara DOWNTOWNUmm Mamzar Gardens Heights Y-o-Y DOWNTOWN Hurair Jebel Ali Freezone DISCOVERY Emirates TECOM Change DIFC Trade GARDENS Meadows Hills Centre Karama Jebel Ali Deira City Discovery /Springs Mall of the Emirates Dubai Mall Centre Downtown Village The Views Oud Gardens Jumeirah Zabeel Metha Jebel Ali Islands The Lakes AED1,030 Barsha Al Nahda Jumeirah THE VIEWS Business Bay 0.0% Park The Springs Barsha AED1,065 Abu Dhabi Y-o-Y Garhoud Sharjah Airport Change THE VIEWS -3.3% Al Khail Free Zone AED750 AED1000 Y-o-Y Gate Culture Twar JUMEIRAH Change Village Qusais PARK THE LAKES Technology Park -4.9% 1.0% AED750 Jumeirah Y-o-Y AED1,007 Green JumeirahY-o-Y Village Circle Change Umm JUMEIRAH Community Change BUSINESS BAY Golf International Ramool PARK Estates Media Dubai AEDProduction610 Meydan Dubai Investment AED580 Zone(IMPZ) AED1010 -11.3% -2.2% AEDCity 985 Festival City Park JUMEIRAH Y-o-Y Y-o-Y BUSINESS BAY JUMEIRAH VILLAGE THE LAKES Change AED501 Dubiotech Change VILLAGE CIRCLE Sports Nadd Dubai CIRCLE City MOTOR CITY Shamma World Motor Central City AED565 -12.7% -11.2% Nadd Y-o-Y MOTOR CITY Al Hammar Change Y-o-Y City AED515 Change DUBAI SILICON -11.4%Centre Arabian Al Barari Ranches OASIS Y-o-Y Mirdif AED670 Living Legends Change AED585 Ghoroob Mizar SPORTS CITY -11.1% AED580 SPORTS CITY Al Waha DUBAI SILICON Warqaa Y-o-Y Community Change AED815 OASIS AED465 AEDShorooq412 ARABIAN AED815 Dragon Mart INTERNATIONAL INTERNATIONAL Layan RANCHES CITY ARABIAN International CITY AED622 AED700 RANCHES City DUBAILAND Dubailand Dubai Khwaneej 0.0% Silicon Oasis Y-o-Y Awir Change Academic City

Figures in AED/Sq Ft Apartment Sales Q1 2020 Apartment Sales Q1 2021 Villa Sales Q1 2020 Villa Sales Q1 2021 Y-o-Y Movement Source: Chestertons Research

OBSERVER - UAE REPORT Q1 2021 10 OBSERVER - UAE REPORT Q1 2021 11 450,000 3%

2.4% Q1 2021 Apartment 400,000 rents saw modest falls over Q1, Q4 2020 2%

1.5% PERCENTAGE CHANGE although 350,000 the rate of decline eased q-o-q 1% 300,000 0% -0.8% 250,000 -1% -1% -1.6% -1.8% 200,000 -2.2% -2% Dubai apartment rents saw moderate declines over the first Dubai Silicon Oasis, DIFC and JVC all saw annual declines of quarter,AED PER UNIT ANNUM 150, 00with0 unit handovers and a continued tenant below 10%, with average rents falling-3.1% by 6.8%, 8.7% and 9.9%, -3% -3.3% preference for villas placing downward pressure on rates. respectively. All other locations covered saw annual decreases -4% 100,000 in excess of 10%. Average apartment rents fell by 0.7% over -4.7%Q1, a notable 50,000 -5% decrease in the 4.1% fall seen over Q4 2020, with all Studio units saw the sharpest annual falls, declining by an locations seeing - declines within a bracket of -0.4% to -1.0%. average of 11.4% y-o-y. One and two-bedroom units fell by an -6% On average, apartmentArab irentsan were down 11.7%Th y-o-y.e averageT hofe 12.5% and 11.1%, Trespectively,he Lakes with three-bedroomVictory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah units seeing annual declines of just 8.4%. On an annual basis, average rents across Discovery Gardens andSource: Dubai Chestertons Motor Research City saw the highestSt udeclines,dio at 15.9%1BR While2B weR expect apartment3BR Y- rentso-Y C htoa nfacege continued pressure and 14.7%, respectively. The Views also saw a comparatively medium-term, clear interest in the UAE’s remote-working visa, sharp 14.6% fall y-o-y. along with broad improvements in the wider economy, should serve to support demand.

Apartments - Average Rents by District/Unit Type and Annual Change

200,000 0%

180,000 -2%

160,000 -4% PERCENTAGE CHANGE 140,000 -6% -6.8% 120,000 -8% -8.7% 100,000 -9.9% -10% -10.3% -10.4% -10.6% -11.5% 80,000 -12.2% -11.9% -12% -13% 60,000 -14% -14.6% -14.7% AED PER UNIT ANNUM 40,000 -13.7% -16%

20,000 -15.9% -18%

- -20% Business Bay DIFC Discovery Downtown Dubai Marina Dubai Dubai Dubailand International JLT JVC The Greens The Views Dubai Gardens Dubai Silicon Oasis Sports City City Motor City

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q1 2021 12 OBSERVER - UAE REPORT Q1 2021 13 Villas rents buoyed by sustained Q1 demand, Q4Q1 20212020 following a stable previous quarter

Villa rents saw broad uplifts over Q1, following a comparatively Palm Jumeirah also saw the strongest annual uplift, at 2.4%, stable previous quarter. Average rents rose 2.3% q-o-q, following followed by , which saw average rents surpass a modest 0.2% decline in Q4 2020. Annually, villa rents their Q1 2020 level by 1.5%. remained 1.4% below their Q1 2020 average. All other locations saw rents remain below their Q1 2020 The rise in villa rents was primarily due to continued tenant averages, within a bracket of -0.8% to -4.7%. interest in landed property, with agents reporting a sustained increase in villa enquiries since the easing of social distancing With work-from-home policies continuing across the private restrictions last year. sector, even if on a part-time basis, we expect villa rents to outperform the wider residential average over the months Palm Jumeirah saw the highest uplift in rents, increasing by ahead. 4.1% q-o-q, followed by The Springs, which saw a quarterly rise of 2.7%. All other locations monitored saw quarterly uplifts within a bracket of 1.1% to 2.4%.

Villas - Average Rents by District/Unit Type and Annual Change

450,000 3% 2.4% 400,000 2%

1.5% PERCENTAGE CHANGE 350,000 1%

300,000 0% -0.8% 250,000 -1% -1% -1.6% -1.8% 200,000 -2.2% -2%

AED PER UNIT ANNUM 150,000 -3.1% -3% -3.3% 100,000 -4% -4.7% 50,000 -5%

- -6% Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q1 2021 14 OBSERVER - UAE REPORT Q1 2021 15

200,000 0%

180,000 -2%

160,000 -4% PERCENTAGE CHANGE 140,000 -6% -6.8% 120,000 -8% -8.7% 100,000 -9.9% -10% -10.3% -10.4% -10.6% -11.5% 80,000 -12.2% -11.9% -12% -13% 60,000 -14% -14.6% -14.7% AED PER UNIT ANNUM 40,000 -13.7% -16%

20,000 -15.9% -18%

- -20% Business Bay DIFC Discovery Downtown Dubai Marina Dubai Dubai Dubailand International JLT JVC The Greens The Views Dubai Gardens Dubai Silicon Oasis Sports City City Motor City

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change Abu Dhabi Total Sales Value by Location (Q1 2021)

Q4Q1 20212020 Al Raha Beach

Abu Dhabi Khalifa City

Saadiyat Island

Yas Island

Abu Dhabi Island

Al Reem Island

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 AED Million

Source: Department of Municipalities and Transport, Abu Dhabi

Apartment Prices Villa Prices

Average apartment prices remained broadly stable over Q1, Villa prices saw general improvements over Q1, increasing by ABU DHABI’S RESIDENTIAL increasing by 0.2% from Q4 2020, although down 2.5% y-o-y. an average of 2.2% q-o-q, building on the uplifts noted across several locations in Q4 2020. Annually, average villa prices Saadiyat Island and Al Reem Island both saw average prices increased by 0.5%. SECTOR ENJOYED A ROBUST rise over Q1, increasing by 2.2% and 1.1%, respectively. Al Raha Gardens saw the highest price rise, reaching AED 700 Prices in both Al Reef and Al Ghadeer recorded a modest 0.7% per sq ft, up from AED 675 per sq ft in Q4 2020, representing FIRST QUARTER fall q-o-q, with Al Raha Beach recording a 0.8% decline over Q1. a 3.7% increase. Al Reef saw average prices rise by 2.5%, to AED 615 per sq ft, with prices across Al Raha Beach Area and On an annual basis, Saadiyat Island was the only location Khalifa City increasing by 2.4%, respectively. Average prices in to see prices rise, reaching AED 1,405 per sq ft, up from AED Al Raha Beach Area reached AED 1,075 per sq ft, with Khalifa Abu Dhabi’s residential sector enjoyed a strong first quarter, apartment price rising by 0.2% q-o-q. Annually, apartment 1,380 in Q1 2020, representing a 1.8% increase. City prices standing at AED 850 per sq ft. Prices in Al Ghadeer with several locations seeing uplifts in both sales prices and prices remained 2.5% below their Q1 2020 average. were stable q-o-q, at AED 675 per sq ft, and down by 1.5% from rents. All other locations saw annual declines, with Al Ghadeer and Al Q1 2020. Apartment rents saw a quarterly decline of 0.5%, broadly in Reef seeing the sharpest falls of 5.6% and 5.2%, respectively. Al While transactional activity was more subdued in early January, line with the 0.6% decline seen in Q4 2020, and a fall of 4.2% Reem Island and Al Raha Beach recorded annual falls of 2.1% All other locations witnessed modest annual price uplifts, following a rush to complete deals ahead of the municipality annually. and 1.2%, respectively. within a bracket of 0.5% to 1.7%. fee waiver’s expiry in Q4 2020, market activity regained pace over February and March. Overall, the first quarter saw a marked improvement in real estate sentiment, with anticipated economic growth, coupled Abu Dhabi villas saw broad price rises over Q1, following a with federal visa and residency reforms, broadly expected to comparatively strong performance over the second half of support Abu Dhabi real estate over the year ahead. 2020. Average villa prices increased 2.2% q-o-q, leading to an Residential transactions remained strong, with completed HOT TOPIC annual rise of 0.5%. Villa rents also saw a quarterly rise, of 0.4%, With work-from-home practices, along with more flexible properties seeing broad demand although they remained below their Q1 2020 average by 2.4%. workplace policies, remaining in place across the private sector, we expect villas to outperform the wider residential average Despite the expiry of the municipality fee waiver in Q4 2020, overall transactions remained strong over Q1, with limited supply of Apartment price performance saw greater variance by location, medium-term. high-end villas supporting prices. although values were broadly stable overall, with the average Larger, high-end villas across Yas Island and Saadiyat Island saw notable prices rises, with waterfront villas in Al Raha Beach also enjoying strong buyer interest.

OBSERVER - UAE REPORT Q1 2021 16 ThisOBSERVER trend mirrors - UAE REPORT the performance Q1 2021 of Dubai’s high-end villa segment, with prime Abu Dhabi villa prices likely to benefit from 17 a limited supply pipeline and a further rise in international buyer demand once travel restrictions ease. RESIDENTIAL Q4Q1 20212020 Sales Prices

AED1,405 Halat Al -2.1% Bahrani SAADIYAT Y-o-Y AED1,380 ISLAND Change SAADIYAT ISLAND Al Rafiq 1.8% AED930 AED950 Saadiyat Y-o-Y Ras Ghurab Al Weheil Island Island Island AL REEM AL REEM Al Reem Change Qassabi ISLAND ISLAND Island Al Aryam Al Jubail Island Ba Al Umm Yifenah Ghaylam Island Island -1.2% Al Futaisi Y-o-Y Dubai Change AED1,215 AL RAHA BEACH

Zayed Sports AED1,230 City AL RAHA BEACH AED675 -5.6% AL GHADEER Y-o-Y AED1,075 Change Al Raha 1.4% Beach AL RAHA Y-o-Y Samaliyah BEACH AED715 Island Change AED690 Yas Island AL GHADEER AL RAHA AED1,070 AED700 GARDENS AL RAHA 0.5% Al Raha BEACH Y-o-Y AL RAHA Change GARDENS Gardens Al Reef -1.5% Khalifa City Y-o-Y Al Ghadeer ICAD II Change Masdar City Abu Dhabi AED765 International AED675 Airport AL REEF AED685 AED845 AL GHADEER AL GHADEER KHALIFA AED725 CITY -5.2% AL REEF AED850 AED605 Y-o-Y KHALIFA AL REEF Change CITY 0.6% Y-o-Y Change 1.7% Y-o-Y Change AED615 AL REEF

Figures in AED/Sq Ft Apartment Sales Q1 2020 Apartment Sales Q1 2021 Villa Sales Q1 2020 Villa Sales Q1 2021 Y-o-Y Movement Source: Chestertons Research

OBSERVER - UAE REPORT Q1 2021 18 OBSERVER - UAE REPORT Q1 2021 19 Apartment rents saw greater stability, declining by Q4Q1 20212020 just 0.5%

Abu Dhabi apartment rents continued to see modest declines All other locations covered recorded quarterly declines, within a over Q1, falling by 0.5% on average, following a 0.6% decline bracket of -0.3% to -1.8%. the previous quarter. Overall, apartment rents were down 4.2% from Q1 2020. Aside from Saadiyat Island, all apartment locations saw rents fall on an annual basis, within a bracket of -0.7% to -11.8%. While apartment rents registered minor declines on average, several locations were stable or enjoyed modest first quarter Al Ghadeer, Al Reem Island and Muroor Area saw the sharpest uplifts. annual declines, with average rents falling by 11.8%, 7.0% and 6.5%, respectively, y-o-y. Mohammed bin Zayed City, Corniche Saadiyat Island saw the highest rise q-o-q, with average rents Road and Al Khalidiya recorded more modest annual declines, increasing by 2.6%. This follows the modest uplift seen over the of 0.7%, 0.8% and 1.6%, respectively. second half of 2020, with Saadiyat Island further recording an annual increase of 1.7%. We expect apartment rents to continue to see greater stability over 2021, with improvements across the wider economy, Average rents on Corniche Road saw a 0.4% quarterly rise, with along with the UAE’s new remote-working visa, likely to support rents in Mohammed bin Zayed City remaining stable q-o-q. demand.

Apartments − Average Rents by Location/Unit Type and Annual Change

200,000 4%

180,000 2% PE R

160,000 0% CEN T -0.7% -0.8% 140,000 -1.7% -1.6% -2% A 120,000 GE CHANGE -4.2% -4% 100,000 -5.1% -5.6% -6% -6.5% 80,000 -7.0% -8% AED PER UNIT ANNUM 60,000 -10% 40,000 20,000 -11.8% -12% 0 -14% Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island Khalifa City Al Khalidiya MBZ Corniche Road Muroor Area

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q1 2021 20 OBSERVER - UAE REPORT Q1 2021 21

300,000 2.0%

1.0% 1.0% PE R 250,000 -0.2% 0.0% CEN T 200,000 -1.0% -1.4% -1.7% A -2.0% GE CHANGE 150,000 -3.0% -3.4% 100,000 -4.0% -5.0% -5.3%

AED PER UNIT ANNUM 50,000 -6.2% -6.0% 0 -7.0% Al Ghadeer Al Reef Al Raha Khalifa City Al Reem Al Khalidiya MBZ Gardens Island

Source: Chestertons Research Studio 4BR 5BR Y-o-Y Change Villa rents saw modest improvements over Q1, Q4Q1 20212020 recording a 0.4% average uplift

Villa rents were broadly stable across the majority of locations Al Ghadeer was the only location to record a quarterly decline, 200,000 4% monitored in Q1, supported by ongoing demand for more with rents dipping marginally by 0.8%.

open 180,000 space as work-from-home policies continued in 2021. 2% PE R

160,000 On an annual basis, only Al Reem Island saw rents increase, 0% CEN T While the average rent by location was broadly stable, prime rising by 1.0% from their Q1 2020 average. All other locations -0.7% -0.8% 140,000 -1.7% -1.6% waterfront villas across Saadiyat Island, Yas Island and Al Raha recorded declines within a bracket of -0.2% to -6.2% y-o-y. -2% A beech 120,000 were often able to command a notable premium GE CHANGE -4% compared to Q1 2020. We expect villa rents to continue to outperform the wider -4.2% 100,000 -5.1% -5.6% residential average medium-term, supported by ongoing work- -6% -6.5% Al Reem 80,000 Island and Al Reef both saw a quarterly uptick in from-home policies, as well as demand-7.0% driven by take-up of the -8% averageAED PER UNIT ANNUM 60,000 rents, rising by 2.6% and 1.1%, respectively. UAE’s recently launched remote-working visa. -10% 40,000 20,000 -11.8% -12% 0 -14% Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island Khalifa City Al Khalidiya MBZ Corniche Road Muroor Area

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

Villas − Average Rents by Location/Unit Type and Annual Change

300,000 2.0% HOT TOPIC Strong tenant demand driving uplifts in prime locations

1.0% 1.0% PE R 250,000 -0.2% 0.0% CEN T Abu Dhabi villa rents continued to outperform the wider residential average over Q1, following on from the rise in demand 200,000 -1.0% witnessed over the latter half of 2020. -1.4% -1.7% A -2.0% GE CHANGE 150,000 Agents reported strong interest in beach-front locations, with competition for high-end and luxury villas across prime freehold -3.0% -3.4% locations, such as Saadiyat and Yas Islands, driving rental uplifts. 100,000 -4.0% -5.0% With private sector companies continuing to embrace work-from-home policies, including on a part-time basis, we expect to see -5.3% AED PER UNIT ANNUM 50,000 requirements for larger, more open residential space continuing over the year ahead. -6.2% -6.0% 0 -7.0% Al Ghadeer Al Reef Al Raha Khalifa City Al Reem Al Khalidiya MBZ While villas may see a greater share of market demand moving forwards, they represent a comparatively small proportion of Gardens Island upcoming Abu Dhabi residential supply. We expect this to further support rents medium-term.

Source: Chestertons Research Studio 4BR 5BR Y-o-Y Change

OBSERVER - UAE REPORT Q1 2021 22 OBSERVER - UAE REPORT Q1 2021 23 Q4Q1 20212020 About Us Core Services

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