Q1-2021 REAL ESTATE MARKET OVERVIEW DUBAI 2 FOREWORD MPM Real Estate Services comprises a comprehensive real estate and advisory platform providing the full range of professional services from a single provider. Our services include:- y Strategic development advisory y Agency y Asset management y Market research y Project management y Property management y Valuation y Facilities management REPORT HIGHLIGHTS y Compared to last year, the strata office transactions segment Residential remained active with an increase in transaction value and volume y With the addition of over 8,700 residential units, the total residential terms on a quarterly and annual basis. The cumulative transaction stock of Dubai reached over 627,000 units by end Q1 2021. In terms value increased from AED 384.2 million in Q4 2020 to AED 421.6 of supply by unit type, apartments accounted for 83% of the total million in Q1 2021, an increase of 9.7% quarter-on-quarter. quarterly supply while villas/townhouses accounted for 17% share. y Average strata office sale rates saw marginally deflation of 1% y As per the projects announced and under construction, quarter-on-quarter and 3% year-on-year. The decline gap has approximately 31,000 new units (apartments/townhouse/villa) are narrowed down over the past 12 months as rates are bottoming out. expected to be completed during the next three quarters of 2021. The sale rates in Barsha Heights dropped by 2% quarter-on-quarter However, as noticed over the past few years, a large proportion of and are averaging at less than AED 750 per sq.ft. this supply is likely to pushed further to 2022. y During the quarter, the average office rents saw marginal decline y The transaction activity remained robust during the quarter with a of 1% quarter-on-quarter and 9% year-on-year. Despite landlord substantial increase in transaction value and volume on quarterly incentives, the rents are likely to weaken further during the course of and annual basis. The government initiatives on the economic and the year due to relatively stressed demand for office space. social front to a large extent boosted the investor confidence in the y Over 4.0 million sq.ft. of new office space is likely to be added to property market. Initiative such as the nationality law, stimulus the existing stock during the period Q2 2021 to 2023, provided package and vaccination drive have all paved way for building construction delays remain minimal. confidence in the market. y The transaction value for residential properties (apartments, villas, townhouses, serviced/hotel apartments, villa plots) recorded at AED Retail 15.05 billion compared to AED 13.04 billion in Q4 2020, an increase y Since the start of the pandemic, the market has witnessed a by 15% quarter-on-quarter. controlled retail supply as developers are delaying the opening dates y During the quarter, the capital values for the residential apartments further, as malls continue to struggle in achieving healthy footfalls dropped marginally by less than 1% quarter-on-quarter and and occupancy levels. Less than 200,000 sq.ft. GLA of new retail 4.9% year-on-year while the villa/townhouses within selected space was added in Q1 2021, taking the total retail stock of Dubai to development increased by 6.5% quarter-on-quarter and 2.7% year- 41.6 million sq.ft. GLA. on-year. y The retail sector which remained hard hit due to the pandemic, y The average apartment rents dropped marginally by 1.5% quarter- continues to experience pressure on the footfalls and in-store sales on-quarter and 11% year-on-year while villa/townhouse rents volume. However, implementation of online sales channels has to a inflated by an average of 3.4% quarter-on-quarter and a marginal large extent abetted in lowering the impact. annual decline. y As per the timelines announced by the developers, over 15 million sq.ft. GLA of new retail space is expected to enter during the period 2021 – 2023. However, based on the historic trends and the Office pandemic situation, a delay of 6-12 months is expected with a large y The office stock of Dubai remained unchanged during the quarter, proportion of this supply being pushed to 2024. with the total office stock figure stands at 103.6 million sq.ft. Projects that are nearing completion/completed are held back by the owners, as demand for new office space wanes due to the pandemic. Q1-2021 | REAL ESTATE MARKET OVERVIEW | DUBAI 3 FACTS & FIGURES TOTAL STAFF LARGEST ABU DHABI MAINLAND 120+ PORTFOLIO PROPERTY MANAGEMENT STAFF LANDLORD CLIENTS 70+ 1,400 ADVISORY STAFF UNITS UNDER MANAGEMENT 30+ 14,000+ DEDICATED VALUATION LEASING & SALES STAFF PROFESSIONALS 25+ 20+ COMBINED MARKET VALUE OF PROPERTIES OCCUPANCY RATE VALUED SINCE JANUARY 2012 94.7% 100+bn TABLE OF CONTENT Real estate trends ..............................................................................................................................................4 Residential sector ............................................................................................................................................... 5 Office sector ........................................................................................................................................................9 Retail sector ........................................................................................................................................................11 Definitions & methodology ...........................................................................................................................14 Contact information ........................................................................................................................................ 15 Q1-2021 | REAL ESTATE MARKET OVERVIEW | DUBAI 4 REAL ESTATE TRENDS DUBAI LAND TRANSACTION TYPE VOLUME VALUE AED.59.96bn (‘billion AED) SALES 7,932 19.16 TOTAL TRANSACTIONS MORTGAGE 7,819 40.80 15,751 TOTAL 15,751 59.96 TOP RESIDENTIAL INVESTMENT LOCATIONS - Q1 2021 mln 1,177 1,969mln 718units 295units 455mln 811mln 135units 337units 1,237mln 331mln 698mln units mln 300 389units 376 2,081mln EMIRATES LIVING 539units 73units 1,331units JUMERA GOLF ESTATES 2,586mln 575units Emirates Living Jumeirah Village Circle Source: Reidin Q1-2021 | REAL ESTATE MARKET OVERVIEW | DUBAI 5 RESIDENTIAL MARKET SUPPLY y With the addition of over 8,700 residential units, Village Circle/Jumeirah Village Triangle accounting the total residential stock of Dubai reached over for a 9.4% share each while Al Jadaf/Dubai Health 627,000 units by end Q1 2021. In terms of supply Care City/Culture Village and Al Barsha/Barsha by unit type, apartments accounted for 83% of Heights a share of 8% each. Business Bay and the total quarterly supply while villas/townhouses Downtown Dubai areas together accounted for 7% accounted for 17% share. share of the Q1 2021 supply. y The new supply during the quarter mainly emerged y As per the projects announced and under from Dubailand area accounting for a share of construction, approximately 31,000 new units 24%. Over 2,000 new units emerged from the (apartments/townhouse/villa) are expected to be neighbourhoods of Townsquare, Villanova, Mudon, completed during the next three quarters of 2021. Arjan and Akoya Oxygen that form part of the However, as noticed over the past few years, a wider Dubailand development. large proportion of this supply is likely to pushed further to 2022 y Other developments with active supply include Meydan/Mohammed bin Rashid City and Jumeirah RESIDENTIAL SUPPLY BY UNITS - (2014 - 2023) Existing Supply Apartments Supply Villas 700,000 650,000 600,000 550,000 500,000 Number ofunits 450,000 400,000 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Q2-Q4 2022 2023 2021 SALE RATES y The transaction activity remained robust apartments, villa plots) recorded at AED 15.05 during the quarter with a substantial increase billion compared to AED 13.04 billion in Q4 2020, in transaction value and volume on quarterly an increase by 15% quarter-on-quarter. and annual basis. The government initiatives on y In terms of transaction value by location, the economic and social front to a large extent Mohammed bin Rashid City (MBRC)/ Meydan boosted the investor confidence in the property recorded transactions worth AED 2.59 billion market. Initiative such as the nationality law, (18% of the total transaction value) followed by stimulus package and vaccination drive have all Dubailand development accounting for a share of paved way for building confidence in the market. 14.4% (AED 2.08 billion) and Palm Jumeirah with y The transaction value for residential properties a value of AED 1.96 billon (13.6%). Other active (apartments, villas, townhouses, serviced/hotel developments include Emirates Living AED 1.24 Q1-2021 | REAL ESTATE MARKET OVERVIEW | DUBAI 6 billion, Dubai Marina/Jumeirah Beach Residence y During the quarter, the capital values for the AED 1.18 billion and Downtown Dubai AED 0.81 residential apartments dropped marginally billion. by less than 1% quarter-on-quarter and 4.9% y The villa/townhouse segment continue to year-on-year. The rate of decline over the past dominate the quarterly residential transactions, six months has slowed down due to improved with a cumulative value of AED 9.54 billion, (a market sentiments and a rise in appetite for larger share of 63%) while apartments/hotel/service units of three bedroom and above across prime apartments saw transactions worth AED 5.55 developments. billion. Within villa/townhouse segment, the y The villa/townhouse