Historic Review and Outlook Real Estate Report Q4 2017

Property Historic Highlights 2 map 3 Review 4 and Outlook

Apartment Villa and Office Apartment Villa and In the Middle East for over 30 Years 5 Rentals 6 Rentals 7 Sales 8 Office Sales Abu Dhabi Property Map

1 – Raha Beach Most expensive 2 Al Bateen Wharf 3 Al Gurm Expensive 4 Al Maqtaa 11 5 Al Muneera – Beach Mid priced 37 6 Al Nahyan Camp Affordable 21 7 Al Raha Gardens 8 Al Rayanna 9 Al Reef

27 10 Al Zeina – Al Raha Beach 33 25 YAS 11 Baniyas 34 35 31 ISLAND 12 Bateen Airport Area 16

13 Bateen Area 32 17 14 Bawabat Al Sharq 22 6 15 Capital District (ADNEC) 1 10 9 16 CBD / Tourist Club Area 2 13 5 17 Corniche 19 28

18 Danet Abu Dhabi 7 19 Eastern Mangroves 18 12 20 Golf Gardens 3 15 20 30 23 33 8 21 Hydra Village 36 4 22 Khalidia / Al Hosn / Al Manhal 38 23 A 29 24 Khalifa City B 25 Maryah Island 26 MBZ City 24

27 Mina 26 22 11

28 Mushrif / Karama / Manaseer / Muroor 29 Officer’s City 30 Rawdhat Abu Dhabi 31 Reem Island - Marina Square 32 Reem Island – Najmat Abu Dhabi 14

33 Reem Island – rest of 11 34 Reem Island – City of Lights 35 Reem Island – The Gate District 36 Rihan Heights 37 Saadiyat Beach District 38 The Hills Note: Area classification by affordability is provided for indicative purposes only as most areas in Abu Dhabi offer various types of residential units, from affordable to high end. As such, the map colour coding takes into account the most prevalent type of product and exceptions of a lower and / or higher price could be available.

2 ABU DHABI Abu Dhabi | Historic Review

Recession Recovery and Growth Stabilisation Downturn 2009-2011 2012-2014 2015 2016-2017

• Rapid Real Estate demand growth in an undersupplied market was followed • The market began to show signs of recovery in 2012 and rates • Limited new • Bearish market sentiment, coupled by substantial corrections in rental rates and sales prices, which dropped in stabilised throughout the year. Asteco recorded a marked supply resulted with a number of major mergers excess of 60% from their peak in Q4 2008 as a result of the global financial increase in rental rates and sales prices from the end of 2012 due in moderate and companies downsizing, had an crisis. to improved sentiment. increases in unfavourable effect on Real Estate rental rates and demand. • The decline in rental rates led to a strong leasing market with increased • Several new prime and high-end projects were handed over sales prices in internal Tenant movement to quality properties. during this period. As a result, rates for inferior quality stock 2015, especially • As a result, apartment and villa rental advertised at above market averages corrected. rates recorded an average decrease of • Transaction levels picked up towards the end of 2011 leading to take-up of during the first half of the year 17% and 12%, respectively, since the end new residential properties in well planned projects. • Internal Tenant movement and flight-to-quality prevailed as of 2015, whilst sales prices declined by people took advantage of the options available. and remained • However, with the amount of stock available, sales prices continued to broadly stable 13% and 8%. decline. • Transaction levels improved in line with increased job security thereafter. • Approximately 5,000 units were and market confidence leading to tenancy upgrades and a rise in delivered in 2016 and 2017, which put • Subdued business growth put pressure on the office market resulting in home ownership. • The drop in oil decreased rental rates across all quality grades. prices prompted further pressure on rates. • Off-plan sales also recommenced during 2013 and 2014. a general • Whilst demand for completed projects slowdown in declined, transaction volumes for newly • Residential sales prices rose considerably by approximately 50% investment, compared to their lowest point. launched projects offering competitive whilst sales sales prices and payment plans • The office market was relatively stable, with lower quality space demand focused increased. noting marginal declines whilst superior units recorded minimal on completed rather than off- 200 increases. plan properties.

180

160

140

120

100

80 Index Base 100 = March 2010 60

40

20 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2009 2010 2011 2012 2013 2014 2015 2016 2017

Apartment Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis.

© Asteco Property Management, 2018 3 Sales Rental Project Incentives Supply Demand - Demand - Prices Rates Launches Off-plan Completed

Abu Dhabi 2017

2018 Highlights and Outlook TRENDS

2017 Highlights 2018 Outlook

• Limited economic growth continued to translate into job cuts, reduction of staff allowances and • Rental rates and sales prices are expected to follow a similar path as in 2017 and record moderate limited new employment opportunities. declines as a result of the continuous delivery of new supply during a period of moderate economic and market growths. • This, coupled with the increase in new supply, resulted in a drop in sales prices and rental rates across all asset classes. The decline was most prominent for high and mid-quality properties. • Approximately 9,000 residential units, including 6,200 apartments and 2,800 villas and townhouses are anticipated for completion this year, predominantly within the districts of Reem • Apartment rental rates recorded average quarterly declines between 2% and 3% during 2017, Island, Al Raha Beach and . Based on previous years, the delivery of some of this whilst q-o-q drops in sales prices ranged from 2% to 4%. inventory may be delayed until 2019.

• Quarterly decreases in villa rental rates and sales prices were less pronounced and varied from 0% • Off-plan quality projects offering attractive sales prices and payment plans will continue to benefit to 3% throughout the year. from good levels of demand and ultimately increase investment in the real estate sector. Residential • Whilst transaction activity for completed properties slowed compared with previous years, newly launched off-plan quality projects with attractive payment plans and discounts continued to benefit from strong demand.

• Bearish market sentiment in line with reduced business growth and low oil prices resulted in • The overall outlook for the office market is expected to be subdued, with further rental declines limited demand for office space. projected across all quality grades.

• Rental rates softened by 5% on average compared to the same period last year. However, evidence • Vacancy rates are likely to increase as companies continue to downsize and relocate to smaller indicated declines of up to 10% on contract renewal in several Grade A and B office buildings. units.

• Approximately 85,000 square metres of office space was delivered in 2017, mainly within Al • The delayed Omega Towers on Reem Island and the ADIB HQ on Airport Road are expected for Maryah Tower on Maryah Island and the mixed-use Leaf Tower on Reem Island. Additional office handover in 2018. developments anticipated for completion in 2017 were delayed and are likely to be handed over in • The recently introduced value-added tax (VAT) of 5% on commercial property is anticipated to Office 2018. adversely affect overall demand and put pressure on rental rates and sales prices in the short- to • Investor demand remained restricted by the limited availability of projects offering commercial medium-term. In the long-term, however, it is believed to improve the financial position of the units for sale, with average quoted sales prices ranging from AED 900 per sq.ft. (ADDAX Tower) to UAE and provide the necessary funds to further the economy, which would result in business and AED 1,500 per sq.ft. (). employment growth.

2,800 APARTMENTS 6,200 APARTMENTS 750 VILLAS AND TOWNHOUSES 2,800 VILLAS AND TOWNHOUSES

Supply 85,000 SQ.M. OFFICE SPACE 100,000 SQ.M. OFFICE SPACE

4 ABU DHABI Abu Dhabi -3% Apartment Rental Rates Q-o-Q % Change

(All figures in AED 000’s p.a.)

TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS

YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PRIME PROPERTIES

Abu Dhabi Island - - - - 125 125 125 128 123 108 - - - - 156 165 175 191 178 156 - - - - 230 235 265 275 253 215 Investment areas - - - 120 130 130 140 145 145 138 - - - 165 165 165 180 193 185 183 - - - 220 250 255 255 275 248 240

HIGH END PROPERTIES

Abu Dhabi Island Central Abu Dhabi 165 110 90 80 85 85 90 95 90 85 250 140 140 130 110 135 145 150 139 123 290 175 175 160 130 165 175 177 170 155 Corniche 185 135 120 95 85 105 120 120 90 88 280 160 160 155 125 135 150 153 138 123 365 240 240 225 180 225 245 243 203 173 Khalidya / Bateen 185 135 120 90 85 105 120 123 113 98 280 160 160 140 125 155 160 165 146 123 365 230 230 190 155 210 215 213 190 173 Investment areas Al Raha Beach - - 110 110 100 100 110 115 110 103 - - 155 145 140 150 155 161 155 143 - - 205 200 185 190 200 205 190 175 Marina Square - - - - 80 85 100 105 98 85 - - - - 110 130 140 148 133 115 - - - - 140 170 175 185 175 155 Saadiyat Beach - - - - - 110 120 130 120 113 - - - - - 150 175 179 174 167 - - - - - 190 210 233 213 200 Shams Abu Dhabi - - - 95 95 110 115 115 98 80 - - - 130 130 150 155 154 143 113 - - - 165 165 170 195 193 173 150

MID AND LOWER END PROPERTIES

Abu Dhabi Island Central Abu Dhabi 145 85 70 60 55 70 75 76 75 68 215 120 100 80 100 100 105 103 103 82 265 145 145 110 90 140 145 148 133 122 Corniche 155 120 95 80 70 80 80 86 85 74 225 145 145 120 100 105 120 125 115 105 325 175 175 155 130 155 170 165 148 127 Khalidya / Bateen 155 120 100 75 65 80 80 81 79 71 225 130 130 95 90 110 120 121 111 95 325 170 170 125 110 135 145 146 138 123 Investment areas Reef Downtown - - - - 60 70 80 83 79 67 - - - - 75 85 100 104 103 88 - - - - 90 100 130 130 120 109 Off Island MBZ & Khalifa City A 165 111 95 85 83 94 101 105 98 88 246 135 131 121 113 130 141 146 137 121 323 179 178 162 148 175 189 194 177 159

ABU DHABI AVERAGE 165 111 95 85 83 94 101 105 98 88 246 135 131 121 113 130 141 146 137 121 323 179 178 162 148 175 189 194 177 159

Annual % change - -32% -15% -11% -2% 14% 8% 4% -7% -10% - -45% -3% -8% -6% 15% 8% 4% -6% -11% - -45% -1% -9% -9% 18% 8% 3% -9% -10%

% Change since peak (2008) -46% -51% -51%

% Change since market low (2012) 7% 7% 8%

% Change since 2nd peak (2015) -16% -17% -18%

Note: The Abu Dhabi Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/bottomed-out and marginal variations may occur.

© Asteco Property Management, 2018 5 Abu Dhabi -3% Villa Rental Rates Q-o-Q % Change

(All figures in AED 000’s p.a.)

TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS

YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Khalidiya / Bateen 395 275 235 210 190 185 185 185 185 170 460 290 310 225 230 240 230 225 195 180 530 325 330 280 255 270 245 240 220 203 Al Nahyan Camp / Muroor 365 260 250 195 175 170 160 160 158 148 430 290 283 210 210 212.5 200 200 190 173 535 290 325 268 265 250 260 260 228 185 Mushrif / Karama / Manaseer 390 235 220 180 170 195 180 170 170 165 455 270 260 230 210 190 190 185 185 175 535 315 345 260 240 250 265 255 233 198 MBZ / - - 170 110 95 122.5 108 108 108 108 - - 195 135 127.5 145 140 140 140 130 - - 205 153 140 175 168 168 158 155 Khalifa A & B 360 190 155 125 100 130 135 133 133 125 400 205 180 150 135 170 150 150 150 140 445 255 220 180 170 185 180 180 165 153 Sas Al Nakhl - - 220 193 160 170 178 178 175 163 - - 240 230 180 190 200 200 200 200 - - 310 280 257.5 260 260 260 214 210 Al Raha Gardens 380 205 185 175 165 175 190 193 183 173 420 230 210 210 200 210 243 245 218 188 475 240 260 270 270 285 290 290 250 215 Golf Gardens - - 265 240 190 210 225 225 220 215 - - 200 285 260 255 260 260 253 235 - - 345 335 340 325 325 325 305 270 Al Reef - - 115 130 105 120 135 145 140 123 - - 140 155 125 150 160 168 163 150 - - 165 175 150 170 190 190 180 163 Saadiyat Beach - - - - 275 295 295 310 310 300 - - - - 305 295 330 375 375 335 - - - - 400 400 400 450 450 450 Al Raha Beach - - - - 220 250 250 255 205 185 - - - - 300 255 255 263 250 240 - - - - - 320 320 320 310 275 Hydra Village - - - - - 90 90 103 105 93 ------

ABU DHABI AVERAGE 378 233 202 173 168 177 178 180 174 164 433 257 224 203 208 214 214 219 211 195 504 285 278 244 253 263 276 267 247 225

Annual % change - -38% -13% -14% -3% 6% 0% 2% -3% -6% - -41% -13% -9% 2% 3% 0% 2% -4% -7% - -43% -2% -12% 3% 4% 5% -3% -8% -9%

% Change since peak (2008) -57% -55% -55%

% Change since market low (2012) -2% -6% -11%

% Change since 2nd peak (2015) -9% -11% -16%

(All figures in AED per sq.ft. p.a.) Abu Dhabi YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PRIME STOCK

Fitted* ------215 215 210 190

Office QUALITY STOCK

Fitted 320 179 156 135 111 114 111 118 104 100 Rental Rates Shell and core - - 125 107 91 91 91 95 84 81 -1% MATURE STOCK Note: The Abu Dhabi Average and resulting Percentage Changes are based on a wide selection of areas, not all of Good quality 228 154 111 98 81 79 79 79 79 71 which are shown in this table. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter Q-o-Q Typical 135 129 93 65 65 65 67 67 67 60 of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter % Change ABU DHABI AVERAGE** 228 154 121 101 87 87 87 90 83 78 the market peaked/bottomed-out and marginal variations may occur. Annual % change - -32% -21% -16% -14% 0% 0% 3% -7% -6% * Includes developments such as , Aldar HQ, International Tower, Nation Towers, Ittihad Towers, Capital % Change since peak (2008) -66% Plaza, Etihad Tower, etc.

**Average Excluding Prime % Change since market low (2012) -10%

6 ABU DHABI % Change since 2nd peak (2015) -13% Abu Dhabi -3% Apartment Sales Prices Q-o-Q % Change AED per sq.ft.

0 500 1,000 1,500 2,000 2,500 0 500 1,000 1,500 2,000 2,500

2,000 1,025 1,025 1,000 500 965 550 1,175 825 1,375 1,000 Marina Square 1,375 Reef Downtown 1,025 1,250 975 1,100 875

1,750 2,450 1,350 1,250 1,300 1,250 1,225 1,130 1,100 1,050 1,425 1,325 1,550 1,475

1,650 Sun & Sky Towers 1,500

Raha Beach / Al Bandar 1,700 1,400 1,600 1,275

1,750 1,100 900 975 925 1,175 1,175

1,425 The Gate 1,475 1,500 1,500 1,500 1,375 Raha Beach / Al Muneera 1,275 1,225

1,750 1,100 900 1,015 930 1,175 1,200 1,300 Raha Beach / Al Zeina 1,300 1,225

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

© Asteco Property Management, 2018 7 Abu Dhabi 0% Villa Sales Prices Q-o-Q % Change AED per sq.ft.

0 500 1,000 1,500 2,000 2,500 3,000 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,000 3,500

1,190 900 825 770 730 890 600 1,115 660 Hydra Village Raha Gardens 1,115 660 1,050 630 985 565

1,200 860 850 810 770 870 1,020 Golf Gardens 1,020 960 940

950 600 560 520 540 745 845 Al Reef Villas 835 800 750

1,375 1,550 1,550 1,550 1,535 Saadiyat Beach Villas (Standard)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

8 ABU DHABI About Asteco

The Middle East’s largest full service Real VALUATION & ADVISORY SALES OWNERS ASSOCIATION Estate services company, Asteco was formed Our professional advisory services are Asteco has established a large regional Asteco has the experience, systems, in in 1985. Over the years, Asteco has conducted by suitably qualified personnel property Sales division with representatives procedures and manuals in place to provide gained enormous respect for consistently all of whom have had extensive Real Estate based in the UAE, Qatar and Jordan. Our streamlined comprehensive Association delivering high quality, professional, value- experience within the Middle East and Sales teams have extensive experience in the Management and Consultancy services added services in a transparent manner. It is internationally. negotiation and sale of a variety of assets. to residential, commercial and mixed-use also widely recognised for its involvement with communities throughout the GCC Region. Our valuations are carried out in accordance many of the projects that have defined the LEASING landscape and physical infrastructure of the with the Royal Institution of Chartered Asteco has been instrumental in the Leasing SALES MANAGEMENT Emirates. Surveyors (RICS) and International Valuation of many high-profile developments across the Our Sales Management services are Standards (IVS) and are undertaken by GCC. comprehensive and encompass everything Asteco has an essential combination of local appropriately qualified valuers with extensive required for the successful completion and knowledge and international expertise. local experience. ASSET MANAGEMENT handover of units to individual unit Owners. A deeply established brand, renowned for Asteco provides comprehensive Asset its application of the latest technological The Professional Services Asteco conducts Management services to all property Owners, LICENSING advances, its commitment to transparency, throughout the region include: whether a single unit (IPM) or a regional Our brand, network, system and procedures winning strategies and human expertise. mixed-use portfolio. Our focus is on maximising are now available in territories across the • Consultancy & Advisory services Undisputed Real Estate experts, Asteco value for our Clients. MENA region. Our Licensing services currently represents a significant number of the • Market research include Real Estate Brokerage Franchising and associated support services with many of the region’s top property Owners, Developers and • Valuation services key elements designed specifically around Investors. the Franchisee, making it a truly unique and

bespoke franchise opportunity.

John Stevens John Allen Derrick Maguire James Joughin Jenny Weidling Ghada Amhaz Tamer Ibrahim Chaaban MSc, BSc (Hons), MRICS BSc, MRICS ARLA, NAEA BSc (Hons), MRICS BA (Hons) MSc BE Managing Director/ Director - Valuation & Advisory Associate Director - Associate Director - Valuation Manager - Research and Manager - Research and Branch Manager - office Director - Asset Services +971 600 54 7773 Transactional Services +971 600 54 7773 Advisory, Dubai Advisory, Abu Dhabi +971 3 7666097 +971 600 54 7773 [email protected] +971 600 54 7773 [email protected] +971 600 54 7773 +971 2 626 2660 [email protected] [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 UAE market. Averages, however, represent a wider range of areas. Particularly exclusive or unique projects have been excluded from the data to avoid distorting averages. 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 License No. 218551. Paid-up Capital AED 4,000,000. | ORN 180