Exceptional. Individual.

The banking sector is expected to benefit from the With the outstanding success of the Initial Public UAE continues to benefit with influx of private strong economic growth and ample liquidity in the Offering of the Emaar Malls Group, the IPO Market capital on account of political unrest in addition to cash market. However the growth in the retail has shown traction. More number of companies are influx of wealth from emerging markets like India, Mashreq segment will be nicely balanced by the launch of expected to take this route to listing. Such listings Russia and China. The Institute of International Al Etihad Credit Bureau. The Sector is expected to will add further depth and liquidity to the bourses. Finance (IIF) confirms that Foreign Direct do well with earnings more than the market Amanat holding, Al Habtoor Group, Ithmar Capital Investments (FDI) have doubled to USD 12 billion expectations. The profitability will be primarily and Damac are a few companies who have lined up which now accounts to 3% of the 2013 GDP. The driven by growth in fee income and decline in their IPOs. Listings will ease out cash liquidity issues, fiscal balance is at a surplus of 10.2% of GDP of Property provisioning. The compression in margins is however the challenge will be to make good use of 2013. All indicators have led to an improvement Wealth Gauge. expected to continue which will be over funds raised and to meet working capital in credit conditions for the economy. shadowed by strong growth in lending book size. requirements for short and long term.

Volume 14 | October 2014 Economic Overview

United Arab has continued to benefit overall CPI has increased by 0.43% as compared Infrastructural Investments and spendings from its safe-heaven status. The economic to the previous month. The average increase in continue to rise in the UAE. The first phase of recovery has been strong which is well supported prices recorded were at 2.42% as compared the is scheduled for a launch on by tourism, hospitality and with the rebounce of to the same time last year i.e., August 2013. 11th of Nov’14. The 11 will cover 11 the real estate sector, the economic activity is (Source: National Bureau of Statistics) stations. The Tram network will circle Dubai expected to remain strong. The macroeconomic Marina and JBR and will stretch along the Al indicators also look positive. The economic The Global Infrastructure Investment Index has growth is well supported by various mega ranked UAE among the top 3 countries, from a Sofouh road. The Tram will also touch bases of projects announced, all which are aimed at list of 41 most dynamic countries with a good stations on and one on Monorail. improving the current infrastructure. potential for growth and infrastructural Once operational the traffic is expected to ease The growth is expected to bring in inflation in the investment. The study conducted had also looked out and offer convenience to commutters. The short term, primarily caused by the increase in at various other aspects such as the ease of doing Tram network is also expected to boost the real housing prices. For the month of August 2014, business, GDP per capita, ongoing tax rates, estate prices of properties strategically located in the overall Consumer Price Index (CPI) has government policies, quality of the current and around the stations. reached 121.20, (indexed at 2007 = 100), infrastructure and availability of debt.

01 Mashreq Property Wealth Gauge.

The banking sector is expected to benefit from the With the outstanding success of the Initial Public UAE continues to benefit with influx of private strong economic growth and ample liquidity in the Offering of the Emaar Malls Group, the IPO Market capital on account of political unrest in addition to cash market. However the growth in the retail has shown traction. More number of companies are influx of wealth from emerging markets like India, segment will be nicely balanced by the launch of expected to take this route to listing. Such listings Russia and China. The Institute of International Al Etihad Credit Bureau. The Sector is expected to will add further depth and liquidity to the bourses. Finance (IIF) confirms that Foreign Direct do well with earnings more than the market Amanat holding, Al Habtoor Group, Ithmar Capital Investments (FDI) have doubled to USD 12 billion expectations. The profitability will be primarily and Damac are a few companies who have lined up which now accounts to 3% of the 2013 GDP. The driven by growth in fee income and decline in their IPOs. Listings will ease out cash liquidity issues, fiscal balance is at a surplus of 10.2% of GDP of provisioning. The compression in margins is however the challenge will be to make good use of 2013. All indicators have led to an improvement expected to continue which will be over funds raised and to meet working capital in credit conditions for the economy. shadowed by strong growth in lending book size. requirements for short and long term.

Real Estate Sector Highlights

• The Dubai Real Estate market is showing signs of stabilisation owing to the much needed regulations imposed by Central Bank on mortgage has continued to benefit overall CPI has increased by 0.43% as compared Infrastructural Investments and spendings lending and increase of property registration fee from 2% to 4% imposed by Dubai Land Department. CBRE reported that the transactional from its safe-heaven status. The economic to the previous month. The average increase in continue to rise in the UAE. The first phase of numbers for all the three quarters of 2014 have dipped down by 22% as compared to subsequent quarters for previous year. Majority of the recovery has been strong which is well supported prices recorded were at 2.42% as compared the Dubai Tram is scheduled for a launch on transactional activity has been in prime residential areas like , , Emirate Living and the . by tourism, hospitality and with the rebounce of to the same time last year i.e., August 2013. 11th of Nov’14. The 11 Trams will cover 11 the real estate sector, the economic activity is (Source: National Bureau of Statistics) stations. The Tram network will circle Dubai • The residential rents have also dipped by 1% marginally though during Q3 2014. The highest fall in rentals have been in the freehold sector, expected to remain strong. The macroeconomic Marina and JBR and will stretch along the Al while rental rates across leasehold area remained stable. The dip in rentals can be attributed to an increase in new residential supply indicators also look positive. The economic The Global Infrastructure Investment Index has growth is well supported by various mega ranked UAE among the top 3 countries, from a Sofouh road. The Tram will also touch bases of combined by weaker demand. The sales market maintaines momentum though at a slower rate. projects announced, all which are aimed at list of 41 most dynamic countries with a good stations on Dubai Metro and one on Monorail. • Positive market sentiments and strong economic fundamentals has encouraged developers moving ahead with stalled projects as well as improving the current infrastructure. potential for growth and infrastructural Once operational the traffic is expected to ease The growth is expected to bring in inflation in the investment. The study conducted had also looked out and offer convenience to commutters. The launch of new projects.Various new launches by master and private developers alike has resulted in a rapidly growing pipeline of short term, primarily caused by the increase in at various other aspects such as the ease of doing Tram network is also expected to boost the real residential supply. The consistent supply of real estate will keep a check on the rental rates. housing prices. For the month of August 2014, business, GDP per capita, ongoing tax rates, estate prices of properties strategically located in the overall Consumer Price Index (CPI) has government policies, quality of the current and around the stations. • The Cityscape Global Property Exhibition that concluded was a success, attracting 40K visitors which is an increase of 27% as compared to reached 121.20, (indexed at 2007 = 100), infrastructure and availability of debt. previous year. 280 exhibitors from 28 countries had participated in this event showcasing high quality real estate projects. Various new projects worth billion dirhams were launched and quite a few were successfully sold.

02 Mashreq Property Wealth Gauge.

Mashreq Property Pricing Index At Mashreq we have been tracking the property prices by indexing them community wise on a scale of 100. Basis of the Mashreq Property Price Indexing, the percentage change over a period of time has been indicated both for Apartments and Villas for major communities.

Change in last Change in last Mashreq Property Price Index as of end June 2014 Change YTD 3 Months 12 Months % % change Per Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- % % change Location Change Change Change from Change Sq. Ft 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 change change from Sept- (AED) Jan-14 13 80 81 82 83 85 86 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 -0.7% -3.3% -2.0% -3% 1333

Burj Khalifa Tower 49 50 53 56 56 56 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 -0.5% -1.5% -6.1% -1% 3750

Burj Dubai 89 90 92 96 97 100 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 -0.5% -0.5% 8.9% 2% 2868 Downtown

Business Bay 54 58 59 62 65 67 70 72 73 73.6 74.3 74.9 74.5 74.7 75.1 74.3 -1.0% -0.3% 20.0% 4% 1389

DIFC 44 44 46 48 48 48 51 51 54 54.9 55.2 55.2 55.8 55.8 55.8 55.7 -0.2% -0.2% 16.6% 8% 1869

Dubai Land 66 67 69 70 72 73 74 75 76 76.8 76.6 77.4 77.5 76.4 76.7 76.0 -1.0% -1.9% 8.5% 1% 981

Dubai Marina 67 70 72 75 76 77 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83.0 -0.2% 0.1% 10.4% 2% 1748

Greens 61 62 64 66 69 71 70 71 72 73.4 73.4 74.0 74.2 72.4 71.7 70.7 -1.4% -4.7% 6.4% 0% 1363

International City 54 54 59 60 61 64 67 70 73 75.0 75.7 75.7 76.4 75.7 76.0 74.7 -1.8% -2.3% 25.0% 6% 684

Jumeirah Beach 67 68 71 73 74 75 77 77 78 79.1 79.4 79.1 82.0 82.0 81.6 81.3 -0.4% -0.8% 11.7% 5% 1613 Residences

Jumeirah Lake Towers 51 51 53 55 56 56 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 1.2% -0.3% 13.3% 7% 1028

Jumeirah Islands 88 91 93 95 97 98 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 -0.2% -0.7% 3.2% 0% 1816

Jumeirah Park 70 71 78 82 85 85 82 82 82 82.0 81.2 80.7 79.4 78.9 77.9 76.4 -1.9% -3.9% -7.2% -7% 1236

Jumeirah Village 83 87 91 97 98 101 112 111 113 114.1 113.8 114.1 114.0 113.0 111.2 110.1 -1.0% -3.4% 13.8% -1% 1001

Old Town Burj Dubai 67 68 69 71 72 76 74 75 75 76.8 76.8 76.8 76.8 76.8 76.8 76.6 -0.1% -0.1% 7.9% 2% 2188

Palm Jumeirah 105 108 113 116 119 120 119 120 121 125.7 126.3 126.3 127.4 125.6 126.3 126.4 0.1% -0.8% 8.7% 5% 2810

Springs/ Meadows 74 76 76 79 80 82 81 83 84 84.8 84.5 84.0 83.5 81.8 81.1 79.2 -2.3% -5.1% 0.8% -5% 1419

03 Mashreq Property Wealth Gauge. Mashreq Property Pricing Index Contd. Apartments & Villas: The property prices for the month of September ’14 as compared to the previous months have dipped across all locations except for and Palm Jumeirah which is very marginal. The percentage change in property prices over the last three months indicate a declining trend across all major locations – where the prices are marginally holding up.

Over a period of last 12 months (since Sep’13) prominent Villa Community such as Jumeirah Village have witnessed an increase of 13.8% in property prices followed by Meadows & Springs which has witnessed an increase of 0.8%.

Over a period of last 12 months (since Sep’13) Apartments such as International City have witnessed a increase of 25% in property prices followed by which has witnessed a increase of 20%. Property Price Watch

Villa Price Trend

Change in last 3 Change in last Mashreq Property Price Index as of end June 2014 Change YTD Months 12 Months

% % Per Sep- Oct- Nov Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- % % change change Location Change Change Change Change Sq. Ft 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 change change from from (AED) Sept-13 Jan-14

Arabian 83 85 86 84 84 85 85.3 85.1 84.8 84.2 82.7 82.1 81.5 -0.7% -3.3% -2.0% -3% 1333 Ranches

Jumeirah 95 97 98 97 98 98 98.5 98.5 98.6 98.6 98.1 98.1 97.9 -0.2% -0.7% 3.2% 0% 1816 Islands

Jumeirah 82 85 85 82 82 82 82.0 81.2 80.7 79.4 78.9 77.9 76.4 -1.9% -3.9% -7.2% -7% 1236 Park

Jumeirah 97 98 101 112 111 113 114.1 113.8 114.1 114.0 113.0 111.2 110.1 -1.0% -3.4% 13.8% -1% 1001 Village

Springs/ 79 80 82 81 83 84 84.8 84.5 84.0 83.5 81.8 81.1 79.2 -2.3% -5.1% 0.8% -5% 1419 Meadows

04 Mashreq Property Wealth Gauge.

Apartment Price Trend

Change in last 3 Change in last Mashreq Property Price Index as of end June 2014 Change YTD Months 12 Months % % change Per Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- % % change Location Change Change Change from Change Sq. Ft 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 change change from Sept- (AED) Jan-14 13

Burj Khalifa 56 56 56 53 53 53 52.8 53.4 53.3 53.3 53.1 52.8 52.6 -0.5% -1.5% -6.1% -1% 3750 Tower

Burj Dubai 96 97 100 102 103 104 104.4 104.4 104.6 105.2 105.2 105.2 104.7 -0.5% -0.5% 8.9% 2% 2868 Downtown

Dubai 75 76 77 79 82 82 83.5 83.4 83.4 82.9 82.9 83.2 83.0 -0.2% 0.1% 10.4% 2% 1748 Marina

Jumeirah Beach 73 74 75 77 77 78 79.1 79.4 79.1 82.0 82.0 81.6 81.3 -0.4% -0.8% 11.7% 5% 1613 Residences

Jumeirah Lake 55 56 56 57 58 59 61.2 61.9 61.9 62.3 62.1 61.4 62.1 1.2% -0.3% 13.3% 7% 1028 Towers

Outlook • The demand for mid to low end residential units is expected to remain strong in the short term. • The Economic outlook is positive which will drive the demand for good quality residential and commercial space. • The Property price across all locations have stabilised. With dip in number of transactions, we expect this trend to continue for Q4 as well. • Lower interest rate regimes will prevail in the lending market. Scope for lowering the rate of interest further looks unlikely.

Disclaimer: Please note that this communication constitutes information on general market and is based on studies and research, it should not be solely relied on without an opinion from your investment advisor. Mashreqbank psc shall not be liable for an liability arising out of any financial advice provided in connection with this communication. 05