REAL ESTATE SERVICES
ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 Q3 2014 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
FOREWORD
ADIB Real Estate Services comprises a comprehensive This market research publication provides an overview of real estate banking and advisory platform providing the macro trends, demand drivers, supply statistics and the full range of professional services from a single value trends prevailing in the Abu Dhabi real estate market. provider. Our services include:- We believe there are significant opportunities for profitable investment strategies in the current market. However, Real estate financing comprehensive professional real estate advice is vital to Strategic development advisory allow developers and investors to make well informed Investment advisory decisions when formulating plans to develop or invest Asset management in new projects to maximise returns. Project management Valuation One of the aims of this report is to improve market Agency transparency by basing our analysis on a variety of actual transactional evidence derived from primary sources Market research including our own portfolio. We believe that this provides Property management confidence in its reliability. REPORT HIGHLIGHTS Residential Sector Retail Sector
A slowdown in new supply is evident with the phased release Some prime retail malls in Abu Dhabi have achieving of apartments within the Gate District on Reem Island and rental increases of between 10-15% on lease renewal. the last phase at Al Ghadeer being the main additions to the This is being achieved due to increases in footfall market during Q3. Sales prices and rental rates across the combined with the removal of the rent cap. Investment Areas have experienced modest growth (+5%) with the exception of Saadiyat Island which has seen rental Continued increases in occupancy levels amongst increases of over 10% for some units. The ADIB Rental Index the off-island malls, although incentives being continues to continues to show a steady rental trend across offered to secure brand conglomerates have in the portfolio of 0 to +5% increases during Q3 2014 . some cases been significant, including full CAPEX for fit out and rent free periods of up to 1 year. Office Sector Hospitality Sector Higher occupancy ratios have provided landlords of Grade A developments with greater negotiating strength; with rents Four new hotel apartment buildings entered the market achieved on new leases increased and incentives reduced. in Q3 2014 providing a total of 658 rooms. There are Moreover, given the limited availability, deals being closed almost 5,000 additional hotel rooms in the development are generally for smaller spaces which typically command pipeline, of which 2,053 are under construction and a higher rent on a per sqm basis. In some cases headline scheduled for completion in 2015. Over 90% of this new rents of over AED 2,000 per sqm are being realised. supply is targeting the 5 star sector of the market.
2 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014
CONTENTS
Real Estate Sector Summary 4 Supply Summary 6 Demand Drivers 8 Macro Trends 10 Residential Sector 12 Office Sector 24 Retail Sector 28 Hospitality Sector 32 Definitions & Methodology 36 Contact Information 37 Supply - Photo Gallery 38 Development Location Map 40
3 Q3 2014 | REAL ESTATE SECTOR SUMMARY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
REAL ESTATE SECTOR SUMMARY
RESIDENTIAL
ITEM DETAILS
ADIB Rental Index Common Trend 0 to +5% increase ADIB Rental Index Q-Q Change +6.41%
Q3 2014 New Supply 2,430 units (+1.1%) Q4 2014 Projected New Supply 2,669 units (+1.2%)
Total Abu Dhabi Housing Stock Q3 2014 223,486 units Total New Units Added From 2010 46,086 units (+9.4%)
RENTAL TRENDS (Q-Q CHANGE) INVESTMENT ZONE NON INVESTMENT ZONE PRIME
Studio +1% 0% 1 BR +3.9% 4% 2BR +3.2% 0% 3BR +3.3% 4.5%
SALES TRENDS (Q-Q CHANGE) INVESTMENT ZONE
Studio 1.5% 1 BR 1% 2BR 2% 3BR 2.6%
KEY NEW PROJECT ANNOUNCEMENTS 461 units at Mamsha Al Saadiyat and 100 luxury villas on Saadiyat Island
ITEM DETAILS
Grade A Avg. Headline Rent AED 1,775 Per Sqm (Q-Q Change) (1.4%) (12 Month Outlook) (Stable)
Q3 2014 New Supply 3,500 Sqm (+0.11%) Q4 2014 Projected New Supply 41,674 Sqm (+1.28%)
Key Additions Al Qudra HQ
Total Abu Dhabi Office Stock Q3 2014 3.1 million Sqm
Under Construction 506,358 Sqm
Under Construction 53:47 (Spec v Purpose Built Ratio)
Investment Zone Net Yields 7% - 9%
KEY TREND The interest for new office supply has mainly been driven by local companies looking to buy office space for own use.
4 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | REAL ESTATE SECTOR SUMMARY
RETAIL
ITEM DETAILS
Average Retail Mall Rents AED 1,800-3,900 Per Sqm (Q-Q Change) (2%) (12 Month Outlook) (Stable)
Q3 2014 New Supply 2,000 Sqm (0.1%) Q4 2014 Projected New Supply 260,000 Sqm (+12.58%)
Key Additions No Additions
Total Abu Dhabi Retail Stock Q3 2014 1.9 million Sqm
Under Construction 349,103 Sqm
Announced Projects in Pre-Construction Phase 662,000 Sqm
Vacant Space (District & Regional Malls) 22%
HOSPITALITY
ITEM Q3 2014 YTD
Hotel Occupancy 70% +9% Hotel Average Room Rate (AED) 436 -5% Hotels Guest Nights 5 million +25% Hotels Revenue 3.4 billion +16%
Hotel Apts Occupancy 83% +6% Hotel Apts Average Room Rate (AED) 343 +2% Hotels Apts Guest Nights 1.6 million +13% Hotels Apts Revenue 420 million +9%
Q3 2014 New Supply 658 Rooms
Adagio Serviced Apartment Al Bustan Grand Mercure Key Additions Oriental (re-opened) Ramee Guestline
Total Abu Dhabi Hotel Rooms (Abu Dhabi City defined area) 19,651
Q4 2014 Projected New Supply 746 Rooms
2015 Projected New Supply 2,053 Rooms
2016+ Development Pipeline 2,923 Rooms
5 Q3 2014 | REAL ESTATE SUPPLY SUMMARY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
SUPPLY SUMMARY
CUMULATIVE RESIDENTIAL SUPPLY 4.34% 1.19% 2.62% 5.27% 2.99% 242,144 250,000 6.19% 226,155 232,074 3.54% 216,993 223,486 5.68% 206,121 187,473 194,101 200,000 177,400
150,000
100,000
50,000
Number of Residential units of Residential Number 0 Pre 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 2010* 2014 2014 Total Supply Source: MPM Properties Research
ABU DHABI NEW HOUSING SUPPLY
15,000
12,000
2,013 9,000 5,945 4,691 5,469 6,000 2,925 3,732 3,212 3,770 4,741 2,393 3,000 4,604 1,080 2,051 5,135 675 2,326
Number of residential units of residential Number 507 700 2,221 2,863 2,411 2,550 0 1,382 889 1,200 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 2014 2014 On-Island Off-Island Investment Area Source: MPM Properties Research
ABU DHABI OFFICE SUPPLY (2009-2015)
4,000 414 3,500 249 66 48 377 3,000 541 2,500 155 2,000 3,121 3,206 3,257 2,872 1,500 2,495 1,000 1,800 1,955 NLA (in 000’s Sqm) NLA (in 000’s 1,800 500 0 2009 2010 2011 2012 2013 Q1-Q3 Q4 2015 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research 6 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | REAL ESTATE SUPPLY SUMMARY
ABU DHABI RETAIL SUPPLY (2009 - 2017/18)
3,500 662 3,000 2,500 260 64 25 185 85 2,000 259 113 1,500 26 2,416 1,000 1,983 2,067 2,327 2,391 1,685 1,798 1,400 1,400 1,426
NLA (in 000’s) per Sqm per NLA (in 000’s) 500 0 2009* 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 2017/18 2014 2014 Running Total New Supply Completed Scheduled New Supply
Source: UPC & MPM Properties Research *as per UPC
ABU DHABI HOTEL ROOM SUPPLY (2009 - 2016+)
30,000 2,923 2,053 597 25,000 1,965 1,867 2,148 20,000 2,012 1,427 15,000 4,391 23,608 20,958 21,555 10,000 17,126 18,993 14,978 11,539 12,966 Number of Rooms 5,000 7,148 7,148 0 Pre-2009 2009 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016+ 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research
Yas Mall
7 Q3 2014 | DEMAND DRIVERS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
DEMAND DRIVERS – Q3 2014
GOVERNMENT INITIATIVES
Abu Dhabi Education Council has confirmed Emirates Global Aluminum, the world’s fourth that more than 18,000 new school places have biggest aluminum producer, says it is building become available this academic year with the a US$3 billion alumina refinery as a boom in opening of 14 new private schools in Abu Dhabi regional infrastructure projects spurs demand and Al Ain. An additional 18 new schools are currently in the development pipeline which AED55 million, 18-month project to improve will deliver a further 20,000 places in the the roads around the Abu Dhabi National coming years Exhibition Centre has been completed
REAL ESTATE AND CONSTRUCTION HEALTHY SALES AND LEASING INTEREST; PROJECTS ON HOLD COMING TO LIFE
TDIC launched the sale of 461 luxury homes the capital as an influx of new workers absorbs at Mamsha Al Saadiyat ranging from 106 residential supply sq.m. to 454 sq.m. The project is expected to complete in 2017. TDIC to also build 100 super- Construction of Meena Plaza, an AED 980 luxury villas on Saadiyat Island in Abu Dhabi. million mixed use project in Abu Dhabi’s The project launch date is expected to be in Port Zayed, has resumed after a two-year November 2014 suspension. The project consists of three apartment towers and one office tower Aldar has signed a bulk lease deal with and a retail podium Cleveland Clinic to lease 607 apartments in
TRANSPORTATION CREATING JOBS AND DRIVING GROWTH
Etihad Airways has announced plans to establish with 1,538,632 in the same month of 2013. a dedicated Revenue Accounting Centre of Aircraft movement in August 2014 was also Excellence in Al Ain and create job opportunities on the rise reaching 13,395 movements, for more than 1,000 Emiratis over the next representing a 15.4% increase over the 11,608 three years movements that took place in August 2013
Abu Dhabi Airports announced that passenger Etihad Rail to launch second phase of UAE traffic at Abu Dhabi International Airport railway network, which at 628 kilometers is the increased by 24.8% in the month of August. A longest of the three planned phases. This will total of 1,920,934 passengers passed through connect the ports in Abu Dhabi and Dubai with Abu Dhabi Airport in August 2014, compared the Saudi and Omani borders
8 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | DEMAND DRIVERS
FREEZONES SIGNING UP NEW TENANTS; CREATING JOBS FOR EMIRATIS
KIZAD recently welcomed a delegation of senior of Al Khat Packaging Co., the only approved government officials and key business leaders from provider of packaging materials for McDonalds the State of Gujarat in India to explore business in the entire Middle East and trade opportunities between the State of Gujarat and the UAE ADPC and ADT are looking to recruit 80 Emiratis for new job openings with more opportunities to KIZAD signed a 50 year land-lease agreement with be announced in the near future Gulf Printing and Packaging Co., a new subsidiary
TOURISM INITIATIVES
The concept design for Abu Dhabi’s planned visa regulations that include a Dh200 multi-entry new cruise passenger terminal was unveiled in cruise visa for the UAE. Tourists can now enter September at Europe’s most prestigious cruise the UAE through any of its airports, continue on event, Seatrade Med 2014, in Barcelona a cruise out of its ports, and come back to the Emirates on the same visa Abu Dhabi Ports Company (ADPC) met with leading cruise operators and the travel industry to TCA Abu Dhabi has launched a combination promote the emirate’s case as an alternative and of digital and social media channels , named preferred winter cruise destination ‘Turathuna’ (‘Our Heritage’), which will promote the emirate’s culture and heritage ADPC’s ambitions have also been boosted by new
Q3 2014 KEY EVENTS
Abu Dhabi Summer Season, June 5 – August 31 Bollywood Spectacle with Sunidhi Chauhan, Emirates Palace, August 15, 2014 History of the World in 100 Objects, July 2014 David Blaine: Real or Illusion, Emirates Palace, Ramadan and Eid Festival, ADNEC, July 10 – August 21 – 23, 2014 August 1, 2014 Abu Dhabi International Hunting & Equestrian Liwa Date Festival, July 18-25, 2014 Exhibition , ADNEC, September 10-13, 2014
BANKING & FINANCE
The UAE Central Bank has now fixed early home government bonds in a step towards building a loan repayment charges at one per cent of the bond market operating under the best standards total outstanding, or a maximum of Dh10,000, as with international financial markets. The listing irrespective of what the existing contracts specify. solidifies the status of the Emirate of Abu Dhabi as a regional and global financial centre offering Abu Dhabi Securities Exchange (ADX) in vast investment opportunities. The total amount association with Abu Dhabi’s Department of of the bonds listed is $1.5 billion, with a maturity Finance (DOF) has launched the first listing of date in 2019.
9 Q3 2014 | MACRO TRENDS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
MACRO TRENDS
REAL GDP GROWTH RATE 2013-2017
15 12.8% 11.9% 11.7% 11.7% 11.6% 12 10.7% 10.5% 10.4% 9.7% 9.6% 9% 8.7% 9 6.3% 5.4% 6 4.8% 4.7% 4% Percent 3
0 Education and fishing Real estate Real Activities of Activities Construction Other mining management & social work Human health social security Manufacturing Utilities: waste other services other services Accomodation & food service service & food Public admin & and motorcycles Business services Business Arts, recreation and Arts, recreation Agriculture, forestry Agriculture, and communications defence; compulsory defence; Financial & insurance household employers Crude oil & natural gas Crude oil & natural Wholesale, retail trade, retail Wholesale, Transportation, storage Transportation,
Source: DED vehicles of motor repair
CPI vs RENTAL CONTRIBUTION TO CPI KEY INDICATORS - STOCK MARKET vs OIL vs GOLD 103 350 102 300 101 250 100 200 99
Price in US$ 150 98 100 97 50 Jul Jul Aug Jul-12 Jul-13 Jan-12 Jan-13 Jan-11 Jan-14 Jun-11 Dec-11 Jan-13 Jan-14 Jun-14 CPI Rental Contribution to CPI AUD Murban - Crude Gold Source: SCAD and MPM Properties Research AUD Stock Index Dubai Stock Index
Source: Bloomberg
ABU DHABI CITY – BUSINESS LICENSE NUMBERS
20000
15000
10000
5000
0 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q1 2010 Q2 2012 Q3 2012 Q2 2013 Q3 2013 Q4 2012 Q2 2014 Q4 2013 Q3 2014 Q2 2010 Q3 2010 Q4 2014 Q4 2010
New Business Licences Business Licence Renewals
Source: DED 10 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | MACRO TRENDS
BUSINESS CYCLE INDEX BUSINESS CLIMATE INDEX
120 120
100 100
80 80
60 60
40 40
20 20
0 0 Q1 2011 Q1 2011 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q4 2011 Q1 2014 Q1 2010 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q2 2012 Q4 2011 Q1 2014 Q3 2012 Q2 2013 Q3 2013 Q1 2010 Q4 2012 Q2 2014 Q4 2013 Q3 2014 Q2 2010 Q3 2010 Q4 2014 Q2 2012 Q4 2010 Q3 2012 Q2 2013 Q3 2013 Q4 2012 Q2 2014 Q4 2013 Q3 2014 Q2 2010 Q3 2010 Q4 2014 Q4 2010 Business Cycle Index Business Climate Index
Source: DED Source: DED
The index is based on businessmen's perception of Abu Dhabi's current business and economic conditions, as well as their expectations for the prevailing quarter on business conditions and economy.
REALTY STOCK INDEX - ABU DHABI vs DUBAI
350 300 250 200 150 100 50 0 31/07/2011 29/11/2007 31/08/2010 28/06/2012 30/05/2013 30/09/2014 02/01/2007 30/10/2008 30/09/2009 Dubai realty index Abu Dhabi realty index
Source: Bloomberg
Abu Dhabi Midfield Terminal
11 Q3 2014 | RESIDENTIAL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q3 2014
SUPPLY
New supply
The major new supply released to the market during All of this is being evidenced with multiple, Q3 2014 comprises apartments within the Gate previously stalled projects, now moving forward. District on Reem Island, including the phased release In this regard we expect to see a surge in new of units within Gate Towers and The Arc, which development activity in the next 12 months, together have added 1,200 units to the market in particularly within the Investment Zones. the last three months.
ABU DHABI NEW HOUSING SUPPLY
15,000
12,000
2,013 9,000 5,945 4,691 5,469 6,000 2,925 3,732 3,212 3,770 4,741 2,393 3,000 4,604 1,080 2,051 5,135 675 2,326 507 700 2,221 2,863 2,411 2,550 0 1,382 889 1,200 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 Number of residential units of residential Number 2014 2014 On-Island Off-Island Investment Area Source: MPM Properties Research
CUMULATIVE RESIDENTIAL SUPPLY 4.34% 1.19% 2.62% 5.27% 2.99% 242,144 250,000 6.19% 226,155 232,074 3.54% 216,993 223,486 5.68% 206,121 187,473 194,101 200,000 177,400
150,000
100,000
50,000
Number of Units Residential 0 Pre 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 2010* 2014 2014 Total Supply Source: MPM Properties Research
12 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | RESIDENTIAL MARKET PERFORMANCE
RESIDENTIAL OFF-PLAN PROJECT SUMMARY
PROJECT DEVELOPER PROJECT DETAILS STATUS
Sales launch: Launch event held on 2 separate Location: Cultural District, Saadiyat Island days for UAE Nationals, followed by expatriates. Unit Details: 461 (apartments and townhouses) All released units were reportedly sold. The Mamsha Al Saadiyat TDIC Unit Mix: 1,2. 3, 4 bedrooms + penthouse + lofts + average price / sq.ft. was AED2,000 townhouse Construction progress: Tender for construction Open to: All nationalities of the project is out.
Sales Launch: Project was launched at Location: C-14, Najmat, Al Reem Island AED1,200 / Sq.ft. and is currently trading at Aabar Properties Unit Details: 229 apartments Waves - Najmat AED1,350 / Sq.ft. Majority of the units sold were Unit Mix: 1,2,3 and 4 bedroom duplex 1 and 4-bed. Open to: All nationalities Construction progress: Q2 2015
Location: EW11, Al Maryah Island Unit Details: 144 apartments Sales Launch: at AED3,200 / sq.ft. upwards Al Maryah Plaza Unit Mix: 1,2 and 3 bedrooms + penthouse Farglory Construction progress: Started on site with Additional details: Designed by Richard Rogers and completion scheduled for 2016. Partners Open to: All nationalities
Location: City of Lights, Reem Island Project update: Off-plan sales launched for Tower 4; Construction to start after 10 floors have been sold. Sales launch: Off-plan price at AED1,050 / Hydra Avenue Hydra Towers under construction: Towers 1-3 are nearing com- sq.ft. Up to 5% discount offered. pletion with handover starting in Q3 2014 (923 units in Construction progress: Not started total). Payment plan: 60-40 construction linked Open to: All Nationalities
Location: Al Bandar, Raha Beach Unit details: 230 units Unit mix: Studios, 1-3 Bedrooms apartment, 3-5 Bedroom Sales launch: Approximately 95% units have Aldar Townhouses and Duplexes. been sold, with property prices ranging from Al Hadeel Unit sizes: From 606-3,530 sqft Dh1,350 to Dh1,450psf for an apartment. Payment Plan: 10% down; re-sale only after 50% has Construction progress: Not started been paid. Open to: All nationalities
Location: Yas Island Unit Details: 540 apartments; Sales launch: Approximately 86% units have Unit Mix: Studio, 1,2 and 3 bedrooms; Manazel been sold, with apartments achieveing sales The Ansam Unit sizes: From 482-2,180 sqft prices of Dh1,450 to Dh1,550psf. Payment Plan: 10% down; re-sale only after 50% has Construction progress: Not started been paid. Open to: All nationalities
Location: Close to Kizad Sale launch: Three-bedroom villas selling from Unit details: 800 villas; Phase I -500 units, Phase II -300 AED1.75 million to AED1.95 million based on Al Reef 2 Manazel units the location. Unit sizes: Starting from 2,792 sq.ft. Construction progress: Not started Open to: All nationalities
13 Q3 2014 | RESIDENTIAL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
Q3 2014 - RESIDENTIAL APARTMENT MARKET PERFORMANCE
INVESTMENT AREA Q3 2014 - RENT (AVG.) Q3 2014 - SALE (AVG. PRICE / SQ.FT) Q3 2014 ( AVG. NET YIELD)
Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR
Al Raha Beach
Al Bandar 108,500 140,000 195,000 247,500 2,205 1,987 1,900 1,888 6.0% 5.2% 4.9% 4.5%
Al Zeina 102,500 160,000 225,000 1,600 1,525 1,475 5.4% 5.4% 5.0%
Al Muneera 110,000 160,000 215,000 1,600 1,600 1,550 5.7% 5.2% 4.7%
Al Reem Island
Marina Square 70,000 95,000 135,000 190,000 1,650 1,400 1,450 1,450 6.6% 6.1% 5.3% 5.0%
Sun & Sky 105,000 150,000 180,000 1,700 1,675 1,700 5.4% 4.9% 4.8%
Gate Towers 72,000 90,000 135,000 177,500 1,675 1,550 1,500 1,500 6.4% 5.7% 5.1% 5.1%
Shams 88,000 134,000 170,000 1,400 1,500 1,400 5.4% 5.8% 5.0%
Saadiyat Island
Saadiyat Beach Residence 120,000 172,500 215,000 1,800 1,700 1,700 5.4% 5.4% 5.4%
St. Regis Apartments 95,000 160,000 200,000 265,000 2,850 2,585 2,475 2,025 5.3% 5.6% 4.9% 4.7%
Al Reef Downtown 60,000 75,000 95,000 115,000 1,300 960 900 880 7.8% 6.7% 6.2% 6.4%
Al Ghadeer 45,000 60,000 85,000 135,000 1,100 1,060 1,040 1,030 6.9% 6.6% 5.0% 4.3%
Non - Investment Zone - Prime 95,000 125,000 160,000 220,000
INVESTMENT AREA Q ON Q - CHANGE (RENT) Q ON Q - CHANGE (SALE) Q ON Q - CHANGE (NET YIELD)
Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR Studio 1BR 2BR 3BR
Al Raha Beach
Al Bandar 0% 0% 9% 1% 5% 4% 5% 7% 0.0% -0.2% 0.6% 0.5%
Al Zeina 12% 3% 11% 0% 2% 12% 1.4% 1.4% 0.9%
Al Muneera 2% 6% 14% 0% 13% 3% 0.0% 0.7% 0.4%
Al Reem Island
Marina Square 0% 3% 1% 2% 3% 0% 0% -3% 0.0% 0.0% 0.0% 0.0%
Sun & Sky 2% 2% 4% 3% 1% 0% 0.0% 0.0% 0.2%
Gate Towers 0% 0% 1% 0% 1% 0% 0% 0% 0.0% 0.0% 0.4% 0.4%
Shams 0% 0% 1% 0% 0% 0% 0.0% 0.0% 0.4%
Saadiyat Island
Saadiyat Beach Residence 8% 4% 0% 4% 2% 6% 0.0% 0.3% -0.3%
St. Regis Apartments 0% 16% 3% 0% 0% 0% 0% 4% 1.2% 1.6% 0.9% 0.6%
Al Reef Downtown 2% 1% 5% 2% 0% 0% 0% 0% -0.1% -0.2% -0.1% -0.2%
Al Ghadeer 1% 0% 0% 1% 0% 0% 0% 0% -0.2% -0.2% 0.0% 0.0%
Non - Investment Zone - Prime 0% 4% 0% 5% N/A N/A N/A N/A
Note: average net yield calculated adopting average unit size per type.
14 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | VILLA VALUES
VILLA VALUES – NON-INVESTMENT AREAS
The analysis below is based on the data gathered Khalifa City A continues to be the most from the transactions financed by ADIB for expensive off-island area, followed by villas in non-invesment zones and highlights the Mohammed Bin Zayed City and Shakbout City. current prevailing prices and yields. Our analysis for transactions in Q3 shows that given the lower price point the less expensive Our analysis shows that villa compounds in areas on average continue to enjoy a higher gross KCA, MBZ and Shakbout City continue to rental yield experience steady demand from investors. Transactions show modest growth of 2.5% to 5% in sale prices.
VILLA COMPOUND PRICES (Q3 2014) VILLA COMPOUND GROSS 25 YIELDS (Q3 2014) 8.60% 20 8.40% 15 8.20% 10 8.00% 5 7.80% AED (Million) 0 7.60% Main island KCA MBZ Shakbout City 7.40% High Low Average 7.20% Note: Data relates to compounds of 4 to 6 villas 7.00% Main island KCA MBZ Shakbout City
5/6 BEDROOM VILLA PRICES (Q3 2014) 7/8 BEDROOM VILLA PRICES (Q3 2014) 10 20
8 15 6 10 4
AED (Million) AED (Million) 5 2
0 0 Main island KCA MBZ Main island KCA MBZ
High Low Average High Low Average
Source: MPM Properties Research
15 Q3 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
THE ADIB RENTAL INDEX
In the last 9 months MPM Properties have There are exceptions where rents have renewed close to 9,000 tenancy contracts in increased by over 20% and in some cases Abu Dhabi on behalf of our landlord clients much higher, however such cases are very and granted over 1,000 new leases limited (representing in overall terms less than 5%-7% of the portfolio) and relate Despite the removal of the rent cap nearly 12 predominantly to the bottom end of the rental months ago, the ADIB Rental Index shows that market typically with rents below AED 40,000 the common trend is 0 to +5% increase during per annum. These exceptional increases have the last 3 months impacted the overall Q-on-Q average change for each zone
ADIB RENTAL INDEX NOTES
The ADIB Rental Index relates to the a credible market indicator for rental trend performance of the ADIB portfolio only and the movements data is derived exclusively from transactions completed by MPM Properties Rental Index Zones are identified on the Map located at the end of this report The ADIB Portfolio in Abu Dhabi comprises over 12,000 units (70% apartments, 30% The quality, age of the building and access to villas) with a spread of quality and locations facilities and amenities (gym, swimming pool, both on the Abu Dhabi Island and the growing underground parking, etc.) have a direct impact Off-Island areas on the rents achieved. In most cases a brand new two-bedroom apartment with access to The ADIB Rental Index has been compiled facilities and amenities will be more expensive with a view to enhancing transparency in the than a three-bedroom in a 10 year old building Abu Dhabi real estate market and to provide with no facilities and amenities
Q-Q CHANGE OVERALL COMMON TREND (Q3 2014) AVERAGE ADIB RENTAL INDEX ZONE (ANNUAL % RENTAL INCREASE) Q3 2014 Q2 2014 Q1 2014
Zone A 0% to 5% 5.01% 2.73% 4.05%
Zone B 0 to +5% 10.56% 3.86% 6.33%
Zone C 0 to +5% 12.34% 10.26% 5.06%
Zone D 0 to +5% 10.26% 9.07% 6.18%
Zone E 0 to +5% 10.20% 5.32% 4.49%
Zone F 0 to +5% 7.63% 3.26% 2.41%
Zone G 0 to +5% 2.69% 2.42% 2.92%
Zone H 0 to +5% 3.42% 5.31% 2.44% Zone I 0 to +5% 1.14% 1.33% 1.21% Zone J 0 to +5% 3.06% 1.55% 1.64% Zone K 0 to +5% 4.18% 3.51% 3.65%
Note: for zone boundaries please see map at the rear of this report. 16 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | ADIB RENTAL INDEX
ADIB RENTAL INDEX
ZONE A -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) -9.99% to -5% HIGH LOW AVERAGE -4.99% to 0% 2B A 125,000 67,700 92,000
0% to 4.99% 3B A 130,000 85,000 101,000
5% 5B V 280,000 265,000 272,000
+5% to +9.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +19.99% +5.01% +33% -3% 0 to +5% +20% & higher
ZONE B -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014)
-9.99% to -5% HIGH LOW AVERAGE
-4.99% to 0% 1B A 65,000 31,500 50,000
0% to 4.99% 2B A 99,750 45,800 76,000 3B A 130,000 70,000 91,500 5% 5B V 230,000 168,000 199,000 +5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20% & higher +10.56% +74% 0% 0 to + 5%
ZONE C -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014)
-9.99% to -5% HIGH LOW AVERAGE
-4.99% to 0% 1B A 60,000 25,000 48,500 2A A 135,000 26,000 70,000 0% to 4.99% 3B A 150,000 38,000 - 5% 5B V 210,000 185,000 197,500 +5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +20% & higher +12.34% +84% -5% 0 to +5% 17 Q3 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
ZONE D -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) -9.99% to -5% HIGH LOW AVERAGE -4.99% to 0% 1B A 66,000 35,000 57,000
0% to 4.99% 2B A 84,000 40,000 68,000
5% 3B A 125,000 40,000 82,000 5B V 425,000 195,500 249,000 +5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20% & higher +10.26% +67% 0% 0 to +5%
ZONE E
-20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) HIGH LOW AVERAGE -9.99% to -5% 1B A 50,000 57,000 -4.99% to 0% 2B A 100,000 45,000 72,500 0% to 4.99% 3B A 157,000 55,000 105,600
5% 5B V 255,000 210,000 225,000
+5% to +9.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +19.99% +10.2% +60% 0% 0 to +5% +20% & higher
ZONE F -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014)
-9.99% to -5% HIGH LOW AVERAGE
-4.99% to 0% 1B A 75,000 27,000 54,000
0% to 4.99% 2B A 150,000 50,000 80,000 3B A 170,000 63,000 109,000 5%
+5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +7.63% +63% -27% 0 to +5% +20% & higher
18 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | ADIB RENTAL INDEX
ADIB RENTAL INDEX
ZONE G -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) -9.99% to -5% HIGH LOW AVERAGE -4.99% to 0% 2B A 110,000 28,000 80,000
0% to 4.99% 3B A 157,000 115,000 139,000
5% 5B V 300,000 200,000 253,000
+5% to +9.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +19.99% +2.69% +19% 0% 0 to +5% +20% & higher
ZONE H
-20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) HIGH LOW AVERAGE -9.99% to -5% 1B A 45,000 34,000 39,700 -4.99% to 0% 2B A 105,000 45,000 74,500 0% to 4.99% 3B A 130,000 110,000 122,000
5% 5B V 265,000 178,500 207,800
+5% to +9.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND +10% to +19.99% +3.42% +33% 0% 0 to +5% +20% & higher
ZONE I -20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014) -9.99% to -5% HIGH LOW AVERAGE
-4.99% to 0% 5B V 330,000 120,000 185,000
0% to 4.99%
5% Q-Q CHANGE (AVRG.) HIGH LOW TREND +5% to +9.99% +1.14% +17% -5% 0 to +5% +10% to +19.99%
+20% & higher
19 Q3 2014 | ADIB RENTAL INDEX REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
-20% to -10%
-9.99% to -5% ZONE J UNIT TYPE RENTAL RANGE (Q3 2014) -4.99% to 0% HIGH LOW AVERAGE 0% to 4.99% 5B V 185,000 120,000 147,000 5%
+5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20% & higher +3.06% +30% 0% 0 to +5%
ZONE K
-20% to -10% UNIT TYPE RENTAL RANGE (Q3 2014)
-9.99% to -5% HIGH LOW AVERAGE
-4.99% to 0% 1B A 55,000 35,000 48,000 2B V 75,000 30,000 55,000 0% to 4.99% 3B A 115,000 88,000 102,000 5% 5B V 220,500 125,000 164,000 +5% to +9.99%
+10% to +19.99% Q-Q CHANGE (AVRG.) HIGH LOW TREND
+20% & higher +4.18% +43% 0% 0 to +5%
20 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | KEY PROJECT OVERVIEW
CULTURAL DISTRICT - SAADIYAT ISLAND
OVERVIEW OF CULTURAL DISTRICT
The Saadiyat Cultural District is set to be a global world. Universal themes and common influences will hub of art and culture within the Emirate of Abu be highlighted to illustrate similarities and exchanges Dhabi. This includes three world-class museums – arising from shared human experience, transcending Louvre Abu Dhabi, Zayed National Museum and geography, nationality and history. Guggenheim Abu Dhabi – all designed by Pritzker Prize winning architects as well as Manarat Al Designed by Prtizer Prize-winning architect Saadiyat, the dedicated art and culture centre, and Jean Nouvel, Louvre Abu Dhabi’s built up area is the UAE Pavilion. It will also house The District, approximately 87,000 square metres, with 9,200 a luxurious retail destination, as well as several square metres of galleries devoted to permanent residential and retail developments. In September display, and 2,000 square metres reserved for 2014, the educational aspect of the Cultural temporary exhibitions. The museum’s construction District was realized when Cranleigh Abu Dhabi, the is on track for its completion in 2015, with the prominent British-curriculum school, welcomed its construction of the dome and all the galleries first batch of pupils. completed in October 2014.
ZAYED NATIONAL MUSEUM PROJECTS UNDER CONSTRUCTION AND DUE FOR COMPLETION Designed by Prtizer Prize-winning architect Lord BETWEEN 2015 AND 2020 Norman Foster, the Zayed National Museum features four towers reminiscent of the tips of falcon Louvre Abu Dhabi feathers. A tribute to the late founder and president of the UAE, Sheikh Zayed bin Sultan Al Nahyan, the Saadiyat Beach Villas (Phase Three) museum will showcase Sheikh Zayed’s story and the lasting influence of his reforms with permanent Saadiyat Tunnel gallery displays as well as a dynamic special exhibition programmes, some of which will be located within its Saadiyat Rotana Resort landscaped gardens.
Zayed National Museum (Construction to start) The museum’s 5,764 sqm gallery space will be divided into eight sections: Sheikh Zayed: Life and Times, Guggenheim Abu Dhabi (Construction to start) Sheikh Zayed Library, Falconry and Conservation, Land and Water, People and Heritage, History and The District retail destination (Construction to Society, Science and Learning, Faith and Islam. start) These, along with the interactive outdoor garden, offer visitors a detailed glimpse into the UAE’s late Mamsha Al Saadiyat (Construction to start) President Sheikh Zayed bin Sultan Al Nahyan while also touching on Emirati heritage and history, along with dedicated galleries regarding education and faith. OVERVIEW OF MUSEUMS, DISTRICT AND MAMSHA AL SAADIYAT GUGGENHEIM ABU DHABI
LOUVRE ABU DHABI Guggenheim Abu Dhabi, designed by Prtizer Prize- winning architect Frank Gehry, will be a transnational Born of an intergovernmental agreement between museum dedicated to contemporary art and culture the UAE and France in 2007, Louvre Abu Dhabi is the with a permanent collection featuring pieces from the first universal museum in the Arab World, embodying 1960s to the present day. the spirit of openness and dialogue among cultures. Linking Abu Dhabi with the name of the Louvre, Surrounded almost entirely by water, the building Louvre Abu Dhabi will display works of historical, will have spectacular views of the Saadiyat Cultural cultural and sociological significance, from the most District and Arabian Gulf. Open to the elements, the ancient to the most contemporary. A museum of museum cones recall the region’s ancient wind- the world and for the world, Louvre Abu Dhabi will towers, which both ventilate and shade the exterior include pieces spanning millennia and artworks on courtyards in a fitting blend of Arabian tradition and display will originate from civilisations all over the modern design. Galleries, many unprecedented in
21 Q3 2014 | KEY PROJECT OVERVIEW REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
scale, are distributed around the central atrium on metres. Moreover, all buildings will feature ground- four levels connected by glass bridges above. The level retail offerings and pool terraces. The complete museum features 13,000 square meters of gallery project, which will be developed in phases, will also space in the monumental piles of gallery boxes, and encompass a serviced-apartment building and a retail a further 18,000 square meters of exhibition space village offering approximately 5,000 square metres of in the spectacular cones. The museum will also leasable area, for both retail and dining outlets. feature a 350-seat theatre, education workshops and classrooms, an onsite conservation lab, as well as a THE DISTRICT retail store, several cafes, and a restaurant. The District is a 168,000 square metre joint venture MAMSHA AL SAADIYAT project developed by TDIC and L Real Estate (LRE), a global real estate development and investment fund The first residential development in the Saadiyat sponsored by LVMH. The District, located between Cultural District, Mamsha Al Saadiyat, meaning the island’s three iconic museums, will feature four ‘Saadiyat Walk,’ is a 1.4 kilometre beachfront mixed- distinctive zones that feature indoor-outdoor venues use project that will offer residents the opportunity offering shopping and dining, and an impressive array to enjoy a luxurious beach-inspired lifestyle as well as of prestigious retail and designer icons. easy access to diverse retail, dining and entertainment features. Moreover, community members and visitors can take advantage of its convenient location a SUCCESS OF MAMSHA AND few minutes away from the district’s three iconic RESPONSE RECEIVED museums – Louvre Abu Dhabi, Zayed National Museum and Guggenheim Abu Dhabi. TDIC launched dedicated marketing and social media campaigns during Cityscape Global 2014 Comprising five clusters, each approximately 250 to raise awareness about Mamsha Al Saadiyat and metres long, the development will feature nine encourage potential homeowners to register their low-rise residential buildings with a total of 461 units interest. The interest and demand was overwhelming, including apartments and townhouses. The unit sizes which resulted in the development’s off-plan first will range from one to four-bedrooms to lofts and phase selling out during a special two-day event on penthouses, with a gross floor area from 106 to 454 September 27 and 29 at Manarat Al Saadiyat. Further square metres for the one to four-bedroom units. releases will be announced in due course. Penthouses enjoy a size starting from 1,200 square
Mamsha Al Saadiyat Retail Complex Cultural Attractions
GUGGENHEIM ABU DHABI TURQUOISE LILAC AZURE
9 8 7 6 5 4 3 2 1
THE DISTRICT
MANARAT LOUVRE ZAYED AL SAADIYAT ABU DHABI NATIONAL MUSEUM
CRANLEIGH SCHOOL
CULTURAL PARK TIMELINE GARDEN
22 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | KEY PROJECT OVERVIEW
23 Q3 2014 | OFFICE SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q3 2014
SUPPLY
Q3 2014 FUTURE SUPPLY
There have been no major additions to the Abu With demand for Grade A office space in the Capital Dhabi office market in the last quarter with total being dominated by the government sector and oil office stock standing at around 3.2 million sqm and gas companies there is currently a shortage of suitable options. Moreover, there are limited options Over the last 4 years just over 600,000 sqm of within the development pipeline that will satisfy “Grade A” office space has been added to the Abu government / large corporate tenant requirements Dhabi market, spread over 9 developments. As with a general mismatch in terms of location and of Q3 2014 the overall vacancy rate within this quality, despite there being over 200,000 sqm of sector of the market stands at approximately 20%, new offices due to come to the market by the end although the majority of this vacant space (80%) is of 2015 situated within the Sowwah Square development on Maryah Island, where leasing has been put on We are of the opinion that there are opportunities hold pending the launch of the new free zone (Abu for profitable office developments within Abu Dhabi Global Market) Dhabi, including strategies targeting built-to-suit options within the public / government sector Consequently there is effectively less than 20,000 sqm of Grade A office space currently available for lease and immediate occupation in the Abu Dhabi market with most prime office developments having achieved occupancy levels above 90% following lengthy leasing up periods in many cases
ABU DHABI OFFICE SUPPLY (2009-2015)
4,000 414 3,500 249 66 48 377 3,000 541 2,500 155 2,000 3,121 3,206 3,257 2,872 1,500 2,495 1,000 1,955 NLA (in 000’s Sq.m.) NLA (in 000’s 1,800 1,800 500 0 2009 2010 2011 2012 2013 Q1-Q3 Q4 2015 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research
24 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | OFFICE SECTOR
ABU DHABI OFFICE SUPPLY COMPOSITION
600 67 500 190 400 105
300 45 474 200 9 80 NLA (in 000’s Sq.m.) NLA (in 000’s 272 100 203 223 146 56 0 2010 2011 2012 2013 2014 2015
Speculative Owner Occupation / Pre-Let Source: MPM Properties Research
ABU DHABI NEW OFFICE SUPPLY - LOCATION
600 500
400 275 80 8 300 216 0 0 64 62 18 29 17 200 2 NLA (in 000’s Sq.m.) NLA (in 000’s 202 235 241 100 125 180 116 0 2010 2011 2012 2013 2014 2015
On-Island Off-Island Investment Area Source: MPM Properties Research
NEW SUPPLY BREAKDOWN - LOCATION
1099 175 597
0 500 1000 1500 2000 223 NLA (in 000’s Sq.m.)
On-Island Off-Island Investment Area Source: MPM Properties Research 25 Q3 2014 | OFFICE SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
ABU DHABI GLOBAL MARKET (ADGM)
The ADGM is the 5th free zone in Abu Dhabi, FRAMEWORK & STATUS following Khalifa Industrial Zone Abu Dhabi (KIZAD), twofour54, Masdar and Abu Dhabi ADGM is to be exempt from the application Airport Free Zone of UAE Federal Law and the specific laws applicable in Abu Dhabi on civil and Free zone companies will be permitted to commercial matters establish operations without a local partner and will be able to repatriate their profits and It is to have its own judicial system and capital legislative infrastructure with the ability to self-legislate and self-regulate governed by The Free Zones is aimed to encourage a Board of Directors more foreign direct investment and foreign businesses into the region, and are a positive Three independent authorities will be step for investors who have previously established to implement the objectives of expressed their preference for 100% the ADGM, the formation of which is already ownership underway:-
It will be a tax free environment 1) Registration Bureau responsible for the licensing and registration of all companies
COMPANIES LICENSED WITHIN 2) A two tier court system will also be THE ADGM MAY PRACTICE THE established, comprising the Court of First FOLLOWING ACTIVITIES Instance and the Court of Appeal (the list is not exhaustive): No definitive timeframe has been set for Financial and banking activities and services the launch of the free zone. We understand Business investments, commercial banking, that ADGM executives are currently in an investment banking and private finance informal consultation phase with potential companies stakeholders in the project, including leading Commodities, currencies and securities local and international experts, to contribute trading to shaping the complex legal and regulatory architecture for the freezone, tailor made for Financial and cash brokerage Abu Dhabi, but incorporating international Islamic finance and Islamic banking activities best practice Custodianship activities Buying and selling of stocks, bonds, sukuk and derivates Insurance and reinsurance Financial advisory services Accounting and auditing services Credit rating and information services
26 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | OFFICE SECTOR
OFFICE RENTS Q3 2014
Higher occupancy ratios have provided landlords of Grade A developments with greater negotiating strength and hence rents achieved on new leases have increased and incentives reduced. Moreover, given the limited availability, deals being closed are generally for smaller spaces which typically command a higher rent on a per sqm basis; in some cases achieving headline rents of over AED 2,000 per sqm.
OFFICE HEADLINE RENT AND Q-ON-Q% CHANGE
2,000 3%
3% 1,500 0.0% 1,000
Rent / Sq.m. (AED) / Rent 500
0 Grade A Fitted Grade A S&C Grade B Q3 2014 % Q-on-Q change Source: UPC & MPM Properties Research
*as per UPC
SALES Q3 2014
As some office towers near completion on Al Reem The interest for offices has been driven by local Island, we have witnessed multiple owners looking companies looking to buy office for their own use to sell, which in turn has put pressure on office prices on Al Reem Island
AVERAGE OFFICE SALES PRICE
1,500 1,450 1,150 1,150 1,200 1,045 900
600
300 Sales Price / Sq.ft. (AED) Sales Price / 0 Sky Tower Addax Office Tower Tamouh Tower Prestige Tower - MBZ
Sales Price / Sq.ft. Source: UPC & MPM Properties Research
*as per UPC 27 Q3 2014 | RETAIL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q3 2014
SUPPLY Close to 1 million sqm of new retail space scheduled for delivery in the next 4 years.
There have been no major additions to the retail In terms of future supply, in addition to Yas Mall market during Q3 2014 with total retail stock which will open in November 2014, there is over standing at approximately 2.06 million sqm NLA 700,000 sqm of additional retail space in the pipeline, including:
PROJECT NAME LOCATION ESTIMATED SIZE (SQM NLA) STATUS
Paragon Bay Reem Island, Marina Square 41,400 Tenant Negotiation
Meena Plaza Meena 25,000 Under Construction
Sowwah Central Maryha Island 214,000 Design / Planning
Saadiyat Island, The District Mall 258,000 Design / Planning Cultural District
Reem Mall Reem Island, Najmat 190,000 Design / Planning
In addition, expansions are planned for some of the city’s existing malls, including Marina Mall (Phase II), Al Wahda Mall (Phase III), Khalidiyah Mall and Mushrif Mall.
ABU DHABI RETAIL SUPPLY (2009 - 2017/18)
3,500 662 3,000 2,500 260 64 25 185 85 2,000 259 113 1,500 26 2,416 1,000 1,983 2,067 2,327 2,391 1,685 1,798 1,400 1,400 1,426
NLA (in 000’s) per Sqm per NLA (in 000’s) 500 0 2009* 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016 2017/18 2014 2014 Running Total New Supply Completed Scheduled New Supply
Source: UPC & MPM Properties Research *as per UPC
28 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | RETAIL SECTOR
RETAIL SUPPLY PRE-2010 NEW SUPPLY DELIVERED RETAIL MALLS DEVELOPMENT RETAIL SUPPLY AS AT Q3 2014 2010-2013 PIPELINE
163,723 27,703 42% 3% 147,000 86,400 22% 8% 335,171 188,171 25,350 32% 49% 4%
58,350 5% 658,717 494,994 63% 74% 33,000 897,000 9% 89% District Neighbourhood Regional Super Regional
The above charts show supply of malls only and exclude all street retail. Figures are NLA (sqm)
RETAIL SPACE CLASSIFICATION
PRE-2010 NEW SUPPLY ADDED POST 2010 RETAIL DEVELOPMENT PIPELINE RETAIL SUPPLY LOCATION AS AT Q3 2014
227,741 34%
35,000 54,750 31,000 54,750 9% 8% 3% 28,000 5% 3% 419,853 40% 384,853 58%
577,635 55% 349,894 952,103 91% 94% On-Island Off-Island Investment Area
TAKE-UP & RENTS
SPACE TYPE AVERAGE RENT (AED) PA Some prime retail malls in Abu Dhabi have achieved rental increases of between 5-15% on lease renewal. This is due Specialty Store 1,800-3,900 per sqm to improvements in footfall combined with the removal Anchor Store (more than 1,000 sqm) 400-1,250 per sqm of the rent cap F & B 3,500-5,750 per sqm There has been continued improvement in occupancy levels ATM’s 90,000-180,000 amongst the off-island malls, although Capital Mall still has a significant vacancy rate (around 40%) Kiosks 85,000-155,000
High street retail (Prime areas) 2,500 – 3,850 per sqm Incentives being offered in the off-island malls to secure brand High street retail (Non-prime areas) 1,550-2,850 per sqm conglomerates have in some cases been significant, including full CAPEX for fit out and rent free periods of up to 1 year The rents quoted above are base rents excluding any turnover provisions and service charges.
29 Q3 2014 | RETAIL SECTOR REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
YAS MALL
PROJECT OVERVIEW
Located on Yas Island next to Ferrari World (which is Largest Debenhams outside of the UK internally linked to the Mall) Yas Mall Town Square comprising the largest 2.5 million sqft with over 370 stores (95% leased) enclosed gathering space of any shopping center in the Middle East A range of leading local, regional and international retail and F&B brands Two Pearl Estidama (Sustainability) rating
Capacity to welcome 20 million visitors annually More than 10,000 car spaces available to all visitors
20 screen state-of-the-art cinema operated by VOX With the completion of Yas Mall, Aldar will become Cinemas with Abu Dhabi’s biggest screen the largest owner and manager of retail space in Abu Dhabi Extensive ‘Family Entertainment Zone’ by Funworks
The mall will include the largest Nike, Adidas, H&M Other leading brands include: Geant, Debenhams, and Zara stores in the region, plus the first Abu Dhabi House of Fraser, Marks & Spencer, Pottery Barn, Virgin outlet of Hamleys (the oldest toy shop in the world) Megastore, The One, BHS, Boots, WH Smith, Fred and the U.S. clothing store Brooks Brothers, which Perry, Hollister, Mothercare, Lego, Mango, Superdry will be the biggest in the Middle East. In addition, the and Ted Baker. mall will have the first Joe Fresh store in the UAE. The mall will also provide an array of F&B options Aldar has leased 200,000 sqft to the luxury brand with over 40 to choose from in the food court, in retailer Chalhoub Group to create the region’s largest addition to over 20 cafes spread throughout the mall department store which will showcase 200 global and a good selection of restaurants including Ashas, brands with concessions and designers covering Carluccio’s and P.F. Changs. beauty and cosmetics, fashion, accessories and “an extensive children’s selection”.
30 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | RETAIL SECTOR
31 Q3 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW MARKET OVERVIEW Q3 2014
HOTEL PERFORMANCE SNAPSHOT
84% 800 81% 78% 80% 79% 76% 76% 700 73% 72% 72% 74% 68% 67% 68% 600 66% 66% 553 62% 60% 474 500 421 51% 49% 359 366 379 358 375 400 345 330 321 297 300 274 251 218 210 236 243 200 158 173 100 0 Jul Jul Jun Jun Oct Mar Mar Apr Apr Sep Feb Feb Dec Nov May May Aug Aug Jan-2013 ARR RevPar Occupancy Jan-2014 Source: TCA Abu Dhabi and MPM Properties Research
Q3 PERFORMANCE BY RATING
HOTELS 5 STAR 4 STAR 3 STAR 2 STAR 1 STAR Guests 808,586 616,645 453,010 31,081 60,447 Guest Nights 2,233,256 1,468,885 1,159,243 71,075 120,766 Avg. Length of Stay 2.76 2.38 2.56 2.29 2.00 Occupancy 65% 72% 77% 76% 76% Revenues (Mil.) 2,178.5 671.7 456.5 34.3 50.5 ARR 613 350 270 282 262 Revenues (Mil.) 400 254 209 213 200
Q3 2014 vs Q3 2013 (YTD)
Guests 30% increase Growth in guest arrivals into Abu Dhabi (up by 30% in Q3 2014 vs. Q3 2013), driven mainly Guest Nights 25% increase by growth in tourists from China (up by 173%), Avg Length of Stay 3% increase Oman (up by 45%), Kuwait (up by 43%) and Occupancy 8% increase India (up by 33%)
Revenues (Mil.) 16% decrease Five-star hotels continue to lead on revenue with average spend per guest at AED2,694 vs. the hotel establishment average spend per guest of AED1,722
3,2 and 1 star hotels have experienced occupancy levels above 75% so far this year with 5 stars being the lowest at 65%
32 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE
HOTEL APARTMENTS PERFORMANCE SNAPSHOT
92% 90% 88% 89% 90% 90% 400 85% 86% 85% 85% 86% 77% 84% 84% 82% 79% 80% 79% 348 350 325 75% 73% 306 303 311 310 303 289 292 295 287 264 300 280 277 269 252 259 257 250 233 239 200 150 100 50 0 Jul Jul Jun Jun Oct Mar Mar Apr Apr Sep Feb Feb Dec Nov May May Aug Aug Jan-2013 ARR RevPar Occupancy Jan-2014 Source: TCA Abu Dhabi and MPM Properties Research
Q3 PERFORMANCE BY RATING
HOTEL APARTMENTS DELUX SUPERIOR STANDARD Guests 91,593 93,161 67,788 Guest Nights 738,021 596,320 290,810 Avg. Length of Stay 7.895 6.4 4.29 Occupancy 81% 81% 83% Revenues (Mil.) 231,425,237 127,495,816 61,002,857 ARR 417 283 262 RevPar 337 230 217
Q3 2014 vs Q3 2013 (YTD)
Guests 5% increase Hotel apartments continue to witness higher occupancy and average length of stay vs. hotels Guest Nights 13% increase
Occupancy Levels 8% increase Average guest spend was highest within the Revenues (Mil.) 9% increase Deluxe Apartments at AED2,527 higher than four- star hotels and second only to 5 star hotels Average Length of stay 7% increase Q3 witnessed an increase in all key parameters for hotel apartments, highlighting a healthy trend for the sub-sector
33 Q3 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
HOSPITALITY SECTOR – TRADING PERFORMANCE
HOTEL ESTABLISHMENT PERFORMANCE HISTORICAL TRADING PERFORMANCE 2009-2014
1,000 100%
800 80%
600 60%
400 40% Occupancy
Average room rate room Average 200 20%
0 0%
ARR Occupancy Source: TCA Abu Dhabi and MPM Properties Research
SUPPLY
ABU DHABI HOTEL ROOM SUPPLY (2009 - 2016+)
30,000 2,923 2,053 597 25,000 1,965 1,867 2,148 20,000 2,012 1,427 15,000 4,391 23,608 20,958 21,555 10,000 17,126 18,993 14,978 11,539 12,966 Number of rooms 5,000 7,148 7,148 0 Pre-2009 2009 2010 2011 2012 2013 Q1-Q3 Q4 2015 2016+ 2014 2014 Running Total New Supply Completed Scheduled New Supply Source: MPM Properties Research
2014 – SCHEDULED HOTEL COMPLETIONS
There were almost 5,000 additional hotels opened in Q3 2014
34 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | HOSPITALITY SECTOR – TRADING PERFORMANCE
2014 – HOTEL APARTMENT SCHEDULED COMPLETIONS
S.NO. ESTABLISHMENT NAME EXPECTED CLASS OPENING ROOMS 1 Adagio Serviced Apt. Al Bustan Deluxe Q3 - 2014 279 2 Grand Mercure Resi Deluxe Q3 - 2014 198 3 Oriental (re-opened) Superior Q3 - 2014 48 4 Ramee Guestline Superior Q3 - 2014 133 Asfar Hotel Apartment (Superior) TOTAL 658 (54 rooms) closed during Q3 2014
Four new hotel apartments and no new hotels entered Over 90% of this new supply is targeting the 5 star the market in Q32014 providing a total of 658 rooms. sector of the market. The new projects announced There are almost 5,000 additional hotel rooms in recently are also 5 star properties, which the development pipeline, of which 2,053 are under eventually will lead to a mismatch between 5, 4 construction and scheduled for completion in 2015. and 3 star properties.
GUEST ARRIVALS Q3 2014 YTD
United Arab Emirates 39.7%
Other GCC Countries 8.0%
Other Arab Countries 10.6%
Asia (Except Arab) 19.2%
Australia & Pacific 1.6%
Africa (Except Arab) 0.6%
Europe 15.1%
North & South America 5.1%
GUEST ARRIVALS – TOP 5
RANK NATIONALITY Q3 2014 YTD Q3 2013 YTD GROWTH RATE % 1 United Arab Emirates 755,150 611,196 24% 2 India 142,613 107,223 33% 3 United Kingdom 122,893 96,923 27% 4 Germany 79,771 74,382 7% 5 Saudi Arabia 76,462 59,389 29%
Source: TCA Abu Dhabi and MPM Properties Research
35 Q3 2014 | DEFINITIONS & METHODOLOGY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
DEFINITIONS & METHODOLOGY
RESEARCH STUDY AREA
The geographical extent of the study area includes Given the general lack of transparency in the local the Abu Dhabi Island, Investment Areas and the market rents quoted are headline rents, thus exclude most populated Off-Island districts specifically any rent free period or other financial incentives Khalifa City A, Mohammed Bin Zayed City and that may have been negotiated between the Shakbout City. parties. The rents quoted are also exclusive of service charges. RESIDENTIAL RETAIL New residential developments are classified as delivered and thus entered into the new supply New retail developments are classified as delivered category when they are made available for and thus entered into the new supply category occupation. This is verified via a combination of when the first units are open and trading. site inspections and discussion with the developer and hence our supply numbers do take into Our classification of malls is based on our consideration the phased release of large projects. own assessment having regard to size and the catchment area which the mall typically The ADIB Rental Index relates to the performance penetrates. of the ADIB portfolio only and the data is derived exclusively from transactions completed by MPM HOSPITALITY Properties. New hotels are classified as delivered and thus Other rental and sales trend analysis is based entered into the new supply category when they on transactional data derived from the MPM are opened and trading. All trading performance Properties Agency team and data sourced from data is provided by ADTCA. developers and owners. FUTURE SUPPLY PROJECTIONS OFFICES Our future supply projections across all sectors are New office developments are classified as delivered based on a combination of regular site inspections and thus entered into the new supply category and discussions with developers. when they are available for tenant fit-outs.
DISCLAIMER:
The information contained in this report has been obtained are subject to change without notice. Figures contained in from and is based upon sources that ADIB Real Estate Services this report are derived from a basket of locations highlighted believes to be reliable, however, no warranty or representation, in this report and therefore represent a snapshot of the Abu expressed or implied, is made to the accuracy or completeness Dhabi market. Due care and attention has been used in the of the information contained herein, and same is submitted preparation of forecast information. However, actual results subject to errors, omissions, change of price, rental or other may vary from forecasts and any variation may be materially conditions, withdrawal without notice, and to any special listing positive or negative. Forecasts, by their very nature, involve conditions imposed by our principals. ADIB Real Estate Services risk and uncertainty because they relate to future events and will not be held responsible for any third-party contributions. circumstances which are beyond ADIB Real Estate Services’ All opinions and estimates included in this report constitute control. For a full in-depth study of the market, please contact ADIB Real Estate Services, as of the date of this report and ADIB Real Estate Services team.
36 Q3 2014 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
A collaborative team providing our integrated services
PAUL MAISFIELD BSC (HONS) MRICS ABDULLAH SAID AL KUWEITI CEO Business Development Director T: +971 (0)2 610 0545 T: +971 (0)2 610 1554 M: +971 (0)50 660 9437 M: +971 (0)50 623 5854 [email protected] [email protected]
YOUSEF AL ZAROONI JONATHAN BROWN BSC (HONS) FRICS Regional Head – Al Ain Regional Head - Dubai T: +971 (0)3 708 8636 T: +971 (0)4 371 9464 M: +971 (0)50 600 1002 M: +971 (0)50 940 3540 [email protected] [email protected]
MOHAMED AL ZOUBI ABDELAZIZ AMAROUAYACHE Head of Development Advisory Regional Head – Northern Emirates BSc Civil Engineering T: 971 (0)6 597 2514 T: +971 (0)2 610 0564 M: +971 (0)50 656 2486 M: +971 (0)50 310 3570 [email protected] [email protected]
FRANK O’DWYER MBA (Hons); BEng. JUBRAN AL HASHMI Director of Property Management Head of Property Management – Abu Dhabi T: +971 (0)2 610 0402 T: +971 (0)2 610 0232 M: +971 (0)50 812 1070 M: +971 (0)50 122 0041 [email protected] [email protected]
VAIBHAV SHARMA MCOM; MDBA HAIDER TUAIMA Head of Strategic Advisory and Research Research Manager – Dubai T: +971 (0)2 412 8914 T: +971 (0)4 371 9439 M: +971 (0)50 660 9295 M: +971 (0)50 674 2318 [email protected] [email protected]
VINEET KUMAR KHALED CHAHAL Head of Agency – Dubai Head of Agency – Abu Dhabi T: +971 (0)4 371 9462 T: +971 (0)2 412 8402 M: +971 (0)50 651 6491 M: +971 (0)50 110 2929 [email protected] [email protected]
SAMUEL MORRIS BSC (HONS) FRICS KHALED AL SOLH BSC MRICS Head of Commercial Valuation Head of Valuation – Abu Dhabi T: +971 (0)4 371 9466 T: +971 (0)2 610 0085 M: +971 (0)50 107 1704 M: +971 (0)50 722 9718 [email protected] [email protected]
37 Q3 2014 | SUPPLY - PHOTO GALLERY REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
SUPPLY - PHOTO GALLERY
SAMPLE OF NEW DEVELOPMENTS - Q3 2014 RESIDENTIAL ffvvc 1 THE ARC 2 AL GHADEER VILLAS 3 AL GHADEER APARTMENTS
EDUCATION
1 CRANLEIGH SCHOOL 2 NEW YORK UNIVERSITY ABU DHABI
HOTEL
1 ADAGIO AL BUSTAN 2 GRAND MERCURE 3 ORIENTAL HOTEL RESIDENCE APARTMENT
38 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014 | SUPPLY - PHOTO GALLERY
SAMPLE OF UPCOMING PROJECTS
RESIDENTIAL
4 WTC RESIDENCE 5 WAVE TOWER - NAJMAT 6 HYDRA 55 7 SEASIDE TOWER - SHAMS
OFFICE
1 ADIB HQ 2 AL HILAL BUILDING 3 ADNOC HQ
RETAIL
1 YAS MALL 2 SHAMKHA MALL
HOTEL
4 BLOOM CENTRAL 5 FAIRMONT, M/ 6 FOUR SEASONS, 7 ROTANA MARRIOTT MALL M/ISLAND SAADIYAT
39 E 11
Q3 2014 REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW
7 Hydra Village
E12 1 Sheikh Khalifa Hway 2 Saadiyat Island
7
6 Jubail Island Al Maryah
3 Island 6
C 2 2 Al Reem Yas Island 4 Island 1 1 Abu Dhabi - Dubai Rd 5 Sheikh Maktoum Bin Rashid Rd A 5 D
Corniche Rd Salam Street E 10 Electra St 4 B Airport Rd 3 Zayed The First St E F Al Reef
4 Salam Street Al Raha Beach
Al Saada Street St G th H 25 Airport Rd 1 Masdar Abu Dhabi - Dubai Rd E 10 City Salam Street 1 I Khaleej Al Arabi Street
E 20 2 E 20
E 11
ADIB RENTAL INDEX SUMMARY Q3-2014 (RENT CHANGE %) E 22 J 100
80 E 30
60 K
40
20
0 A B C D E F G H I J K
< 0% >5% to 9.99% 10% to 19.99% 0% to 4.99% 5% 20% +
Source: MPM Properties Research
40 E 11
E 11
REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2014
7 Hydra Q3 2014 NEW SUPPLY UNDER CONSTRUCTION Village Q2 2014 NEW SUPPLY UNDER CONSTRUCTION Residential Residential E12 1 Sheikh Khalifa Hway Residential Offices Residential Offices 2 Saadiyat Island Offices Retail Offices Retail
Retail Retail 7 Hotels Hotels
6 Jubail Island Hotels Education Hotels Education Al Maryah
3 Island 6
C 2 2 Al Reem Yas Island 4 Island 1 1 Abu Dhabi - Dubai Rd 5 Sheikh Maktoum Bin Rashid Rd A 5 D
Corniche Rd Salam Street E 10 Electra St 4 B Airport Rd 3 Zayed The First St E F Al Reef
4 Salam Street Al Raha Beach
Al Saada Street St G th H 25 Airport Rd 1 Masdar Abu Dhabi - Dubai Rd E 10 City Salam Street 1 I Khaleej Al Arabi Street
E 20 2 E 20
E 11
E 22
J
E 30 K
E 11 41
PAUL MAISFIELD BSC (HONS) MRICS VAIBHAV SHARMA MCOM; MDBA CEO Head of Strategic Advisory and Research T: +971 (0)2 610 0545 T: +971 (0)2 412 8914 M: +971 (0)50 660 9437 M: +971 (0)50 660 9295 [email protected] [email protected]
OFFICE CONTACT DETAILS MPM Properties Head Office 6th Floor, Al Wahda Tower P.O Box 114686 Abu Dhabi
Tel. 02 412 8914 Email. [email protected] www.mpmproperties.ae