Review
Outlook
www.valustrat.com ValuStrat Price Index – VPI Abu Dhabi Residential Base: Q1 2016=100 All prices are quoted in UAE Dirhams unless otherwise stated 2020 Review
FIRST QUARTER REVIEW 2020
VPI Residential VPI Residential Capital Values Rental Values 67.9 71.7
-9.7% -7.7% Y-o-Y Y-o-Y
Office Asking Office Asking Sales Price Rents AED 10,114 AED 779 per sq m pa per sq m pa
-7.1% -5.7% Q-o-Q Q-o-Q Jan COVID - 19 PANDEMIC
• The weighted average residential capital value this quarter was AED 843 per sq ft, down 10.6% YoY and fell 1.9% QoQ • First confirmed case in the UAE recorded on 29th January
• Apartment prices fell 10.7% YoY and 1.7% QoQ to AED 934 per sq ft while villa • Suspension of all flights except cargo, halting operation of major public mass 1W prices witnessed drops of 10.2% annually and 2.2% quarterly to AED 627 per transport sq ft • Temporary closure and suspension of public and private educational institutions • Abu Dhabi VPI for residential rental values for Q1 2020 stood at 76.3 points, with implementation of distance learning declining 1.2% quarterly and 1.7% annually. On an annual basis, apartment asking rents fell 2.6%, however, villa asking rents remained relatively stable • Countrywide curfew and disinfection drive started
2W • Conditional measures affecting non-essential retail and businesses including financial institutions
• Office staff attendance capped at 30% with the remaining workforce on remote work PROJECT LAUNCHES 3W • Provisional closure of all leisure, entertainment, cultural, and fitness establishments including places of worship • Reportage Properties unveiled The Gate Masdar City with 463 units • Prohibition, postponement or cancellation of all public events, gatherings, and sporting activities
• UAE Central Bank announced AED 100 billion stimulus package 4W • Private sector launched various initiatives to help its partners and clients get through lockdown periods which included rental reliefs, waiver of some charges TRANSACTIONS and fees and related packages
• Reported job cuts and salary reductions due to slow down in business activities • Total property deals during the quarter reached 3,613 transactions amounting to Feb most impacted tourism, retail, and interrelated sectors AED 19.2 billion, up 22% YoY • Dwindling expat population in both blue and white-collar workers increased downward pressures on the overall economy
• Abu Dhabi-based banks in co-operation with Abu Dhabi Department of Finance and Department of Economic Development Abu Dhabi announced 10-point 5W comprehensive packages for sectors and individuals affected by challenges ECONOMY stemming from the pandemic
• S&P Global Rating has upheld the UAE capital’s long-term sovereign credit rating at AA and short-term foreign and domestic currency rating at A-1+ with stable outlook 6W • At the same time S&P forecasted the city’s GDP to advance 2.5% this year TOURISM
• Total non-oil foreign trade jumped 7.2% YoY to AED 17.79 billion in February, as per Statistics Centre Abu Dhabi • AED 100 million new cruise jetty project was announced to be built at Sir Bani Yas island which could handle up to 5,000 cruise visitors
• UAE Central Bank reduced repo rate for short-term liquidity by 50 basis points 7W • Marsa Mina was inaugurated in Zayed Port • ADNOC announces sales of its Murban crude to sell it Murban crude at a discount of USD 2.75 per barrel • Louvre Abu Dhabi unveiled latest international exhibition, Furusiyya: The Art of Chivalry between East and West
• Abu Dhabi’s massive new entertainment venue officially named as Etihad Arena 8W • Jubail Mangrove Park opened to the public
RESIDENTIAL • A total of 959,000 visited the capital, down 14% YoY
• The average citywide residential asking price per square foot declined 2.2% Mar quarterly and fell 7.8% when compared to last year
• Ready apartments stood at AED 1,178 AED sq ft displaying a decline of 2.5% quarterly, and 5.9% lower than in the same period last year RETAIL
• For ready villas, the average asking price was AED 876 per sq ft indicating prices declined 1.6% quarterly and 12.1% annually 9W • Construction work was completed for AFCOOP Mall in Abu Dhabi Gate City
• Aldar malls and shopping centres portfolio occupancy rate stood at 89%
10W OFFICE HOTEL • Abu Dhabi National Oil Company (ADNOC) signed a new long-term lease of 8,194 sq m (88,199 sq ft) GLA workspace in Abu Dhabi Global Market Square • 242-room Millennium Central Mafraq was opened
• Construction work for Parsons regional headquarters in Capital District was 11W • Fairmont Marina Abu Dhabi with 563 keys started to welcome guests completed with an estimated 29,400 sq m (316,469 sq ft) GLA
12W AVIATION INFRASTRUCTURE
• Low-cost airlines Wizz Air Abu Dhabi was announced to launch in fall of this year • Construction works for infrastructural projects in sectors 7 and 12 of Al at Abu Dhabi International Airport Shawamekh area was completed SECOND QUARTER REVIEW 2020
VPI Residential VPI Residential Capital Values Rental Values 64.7 70.3
-10.9% -7.9% Y-o-Y Y-o-Y
Office Asking Office Asking Sales Price Rents AED 10,450 AED 824 per sq m pa per sq m pa
3.3% 5.8% Q-o-Q Q-o-Q Apr
COVID - 19 PANDEMIC 1W • Abu Dhabi’s residential investment zones declined 4.6% quarterly to 64.7 points. Annually, capital values were 10.9% lower than the second quarter 2019 • Abu Dhabi launched a new website to focus everything related to the health crisis, www.stayupdated.abudhabi • The weighted average residential value was at AED 8,591 per sq m (AED 798 per sq ft), apartments stood at AED 9,499 per sq m (AED 882 per sq ft), and villas at 2W • Abu Dhabi Health Services Company (SEHA) built a 29,000 sq m (312,153 sq ft) AED 6,427 per sq m (AED 597 per sq ft) field hospital in Emirates Humanitarian City and another 31,000 sq m (333,681 sq ft) in Abu Dhabi Exhibition Centre dedicated to aid in the fight against the • Abu Dhabi residential rental values stood at 70.3 points, down 7.9% YoY. The novel coronavirus weighted average annual residential asking rent in Abu Dhabi was AED 120,729, 3W apartments at AED 99,027 per annum and villas at AED 171,369 per annum • World’s first touchless elevators were introduced in Abu Dhabi Airports aimed to reduce cross-infection and achieve a coronavirus-free airport
• A total of 1,030 hotel rooms from hospitality establishments including Royal 4W Rose, City Seasons , Park Rotana and Millennium Capital Gate were dedicated to front-line workers
• Relaxation of restrictions and procedures related to the health crisis TRANSACTIONS May commenced
• Abu Dhabi recorded 2,617 deals in April, up 42.2% YoY as per Department of • With an expected economic slump due to lock-downs, interrelated sectors Municipalities and Transport including tourism, aviation, hospitality could face headwinds 5W • Sales transactions grew 16.5% YoY with 1,447 transactions, however, mortgage • Sectors which could possible perform better during this un-precedented times transactions jumped 95.6% YoY with 1,170 transactions include healthcare, pharmaceuticals, e-commerce, and telecommunications
• Total value of all transactions reached AED 6.3 billion, up 34% YoY 6W
7W RESIDENTIAL
ECONOMY • The average citywide residential asking price per square foot declined 1% quarterly and fell 6.1% when compared to the previous year 8W • S&P estimated the real gross domestic product (GDP) to shrink 7.5% • Ready apartments stood at AED 1,159 per sq ft displaying a decline of 1.7% • Moody’s forecasted economic contraction of 5.3%, and oil income to plunge quarterly, and 6.4% lower annually 30% for 2020 Jun • For ready villas, the average asking price was AED 881 per sq ft indicating prices were stable quarterly but saw annual declines of 5.3%
9W
LAWS & REGULATIONS HOTEL 10W • The UAE government released the full list of 122 categories for 100 per cent ownership in the mainland under the Foreign Direct Investment (FDI) Law • Occupancy stood at 55.2%, up 5.7% in May as per STR data
11W • Average Daily Rate (ADR) achieved was AED 251.4 and Revenue per Available Room (RevPAR) stood at AED 138.88, both fell 26.3% YoY and 22.1% YoY, respectively
12W THIRD QUARTER REVIEW 2020
VPI Residential VPI Residential Capital Values Rental Values 62.6 71.3
-11.7% -7.2% Y-o-Y Y-o-Y
Office Asking Office Asking Sales Price Rents AED 9,792 AED 851 per sq m pa per sq m pa
-6.3% 3.2% Q-o-Q Q-o-Q Jul
COVID - 19 PANDEMIC
• Abu Dhabi’s residential investment zones declined 3.3% quarterly to 62.6 points. 1W Annually, capital values were 11.7% lower than the second quarter 2019 • Abu Dhabi Emergency, Crisis and Disasters Committee approved two test requirements to enter the capital • The weighted average residential value was at AED 8,256 per sq m (AED 767 per sq ft), apartments stood at AED 9,085 per sq m (AED 844 per sq ft), and villas at • Phase 3 of inactivated vaccine trials in the city amassed 10,000 volunteers AED 6,265 per sq m (AED 582 per sq ft) 2W • A survey from The Department of Community Development Abu Dhabi revealed • Abu Dhabi residential rental values stood at 71.3 points, down 7.2% YoY. The 17% of people believed the situation would return to normalcy in mid – 2021 weighted average annual residential asking rent in Abu Dhabi was AED 122,408, apartments at AED 100,373 per annum and villas at AED 173,825 per annum • More than 92% have full conviction in the competence of the government to 3W manage the health crisis
• Abu Dhabi allowed 80% capacity for most F&B establishments
4W INFRASTRUCTURE
• Infrastructure development contracts for third and fourth phase of Riyadh City LAWS & REGULATIONS South were awarded Aug • Abraham Accords signed marking historic normalisation agreement between Israel and the UAE, mediated by the United States of America
• Loosened licensing system for alcohol trade and consumption 5W TRANSPORTATION • New directive issued to monitor public procurement and financing in the capital
• Etihad Airways and Air Arabia announced a new code-share agreement 6W
RETAIL
7W • Aldar retail assets occupancy stood at 85%, down from 92% in 2019 RESIDENTIAL • As of this quarter, Aldar has total retail GLA of 458,808 sq m (5.23 million sq ft) • The average citywide residential asking price per square foot declined 1.4% within 1,274 units 8W quarterly and fell 6.4% when compared to last year
• Ready apartments stood at AED 1,131 AED sq ft displaying a decline of 2.4% quarterly, and 7.9% lower than in the same period last year
Sep • For ready villas, the average asking price was AED 888 per sq ft indicating prices HOTEL remained stable quarterly but saw annual declines of 2.8%
• Hotel occupancy saw 3% YoY increase and revenues were up 46% QoQ, as per
9W Department of Culture and Tourism
ECONOMY
10W
• The UAE capital successfully completed a USD 5 billion multi-tranche bond TOURISM offering which represents a continuation of its commitment to fiscal sustainability, as per Emirates News Agency • Abu Dhabi started to welcome back tourists subject to health and safety 11W • Abu Dhabi Investment Office (ADIO) announced to open its first office outside the protocols country in Tel Aviv
• Fitch Ratings estimated the emirates economy to retreat 6% in 2020
12W FOURTH QUARTER REVIEW 2020
VPI Residential VPI Residential Capital Values Rental Values 63.3 69.9
-8.4% -9.5% Y-o-Y Y-o-Y
Office Asking Office Asking Sales Price Rents AED 10,252 AED 874 per sq m pa per sq m pa
4.7% 2.8% Q-o-Q Q-o-Q Oct
COVID - 19 PANDEMIC
• Abu Dhabi’s residential investment zones saw a 1% quarterly uplift to 63.3 points 1W for the first time in three years. Annually, capital values were 8.4% lower than • The UAE Ministry of Health and Prevention (MOHAP) cleared the Sinopharm the third quarter 2019 vaccine for mass usage, a few days after the UK became first country to approve a Pfizer – BioNtech developed vaccine • The weighted average residential value was at AED 8,310 per sq m (AED 772 per sq ft), apartments stood at AED 9,117 per sq m (AED 847 per sq ft) showing • Updated entry requirements were announced, including lifting of 14-day stability since the previous quarter, and villas at AED 6,383 per sq m (AED 593 2W quarantine for resident participants in the National Vaccination Program per sq ft), up 1.9% quarterly • Abu Dhabi Emergency Crisis and Disasters Committee announced plan to return • Abu Dhabi residential rental values stood at 69.9 points, down 9.5% YoY. The life into normality weighted average annual residential asking rent in Abu Dhabi was AED 120,036, apartments at AED 97,803 per annum and villas at AED 171,914 per annum 3W
4W OFFICE
INFRASTRUCTURE • An estimated 62,881 sq m (676,845 sq ft) GLA of workspace was set for completion • Abu Dhabi Municipality announced AED 115 million worth of infrastructural works was completed Nov
5W RETAIL
TRANSPORTATION • Forsan Central Mall opened in Khalifa City with an estimated 43,000 sq m (462, 848 sq ft) • Abu Dhabi toll system (Darb) announced to roll out by 2nd January, as per the Integrated Transport Centre (ITC) 6W
7W HOTEL
LAWS & REGULATIONS • Conrad Abu Dhabi Etihad Towers with 576 keys was opened
• The UAE issued historic reforms to civil, criminal law including Islamic laws for • Abu Dhabi Hotels Kosher Certification project was announced personal freedoms 8W
• Foreign Direct Investment law was implemented and starts to issue FDI licenses which will enable 100% foreign ownership
Dec TOURISM
• Abu Dhabi cultural attractions to re-open starting 8th November
ECONOMY 9W
• Fitch Ratings affirmed the capital city’s long-term foreign currency issuer default rating at AA with stable outlook
10W • Non-oil GDP estimated to shrink 4.5% noting its lesser vulnerability toward tourism, real estate, and retail sectors, as per Fitch Ratings
• Crude oil price stood at USD 42.3 per barrel during November, down 30% YoY
• The Abu Dhabi index .ADI was up 0.3%. Aldar Properties ALDAR.AD rose 2.9% 11W
12W Outlook 2021
ECONOMY COVID - 19 PANDEMIC
• The UAE is expected to see its economy grow 1.3%, as per • Six COVID-19 vaccines could be available by spring International Monetary Fund (IMF) • Gradual lifting of social safety guidelines • Abu Dhabi non-oil GDP is forecasted to modestly rebound by 2.2%, as per Fitch Ratings • Federal government to inoculate 50% of UAE population by end of March
RESIDENTIAL PRICES AND RENTS TOURISM
• Subject to health crisis being resolved, the economy is expected to • Upcoming attractions: Al Qana, The National Aquarium, Snow Abu improve and with Dubai Expo and the 50-year anniversary of the UAE, Dhabi, Yas Bay Phase 1 market sentiment is expected to pick up and could head towards bottoming out during 2021 • Possible spike changes in tourist numbers mainly due to record low visitors count in the previous year, with expected overflow from Dubai • With balanced new supply coming to Abu Dhabi in the coming years, EXPO 2020 visitors rents and capital values in established villa locations could stablise and perhaps witness gradual appreciation, apartments could follow suite towards the end of 2021
RETAIL
OFFICE PRICES AND RENTS • An approximately 367,793 sq m (4 million sq ft) GLA of retail space is up for completion during 2021
• The estimated workspace supply for 2021 stood at 142,778 sq m (1.5 • Upcoming shopping centres: Reem Mall, Red Crescent Shopping Mall million sq ft) GLA • Establishing a strong e-commerce presence will remain as one of • New government initiatives including visas for expatriate retirees and primary strategic move for major retailers including F&B consortiums the expansion of the 10-year golden visa scheme to attract foreign professionals to settle in the UAE are also expected to support the • Rentals in malls and shopping centres could continue to face market downward pressure as retailers re-focus to digital trading
• The UAE also reformed its commercial companies' law and annulled the requirement for some onshore companies to have an Emirati shareholder, which is expected to boost foreign direct investment in the country
• Office capital values and rents are expected to bottom out after HOTEL reaching 10-year lows
• The city is expected to receive 1,723 hotel keys during 2021
• Upcoming hotels: Warner Bros Hotel Yas Island, Double Tree by Hilton Abu Dhabi, Hard Rock Hotel, Intercontinental Grand Marina
• Gradual improvement for key performance indicators (occupancy, ADR, RevPAR) as global travel sentiment improve Meet the Team
ValuStrat’s key strength and advantage is the experience and reputation that its senior management and team bring to the table.
Led by leading industry figures and personalities, our client recognises the importance of addressing projects from both strategic and practical perspectives. We forge together tailored teams ideally suited for each project to successfully deliver on the varied requirements of our diverse range of clients.
Declan King, MRICS Haider Tuaima Managing Director & Group Head Real Estate Head of Real Estate Research [email protected] [email protected]
Vismer Mulenga, MRICS Cheryl McAdam, MRICS Director - Commercial Valuations Director - Residential Valuations [email protected] [email protected]
Darshan Shah, MRICS Sean Swinburne, MRICS Director & Head of Industrial Consulting Manager - Commercial Valuations [email protected] [email protected] Market Intelligence. VPI Simplified. ValuStrat Price Index
Premium Subscription
ValuStrat Price Index Abu Dhabi In-Depth Reports
ValuStrat offers premium subscription reports for clients allowing them to access to in-depth, statistical analysis of what is happening in residential real estate; allowing for more informed decision making and forward planning. The full in-depth 40+ page Abu Dhabi report includes citywide analysis of investment zones, including the ValuStrat Price Index, service charges, Price to Rent Ratios and Net Yields.
Also accessible via
Subscribe for regular market intelligence
For subscription, please visit www.valustrat.com/vpi or email at [email protected]
About VPI
The ValuStrat Pricet Index for Abu Dhabi’s residential capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The ValuStrat Price Index for Abu Dhabi’s residential rental values is constructed to represent the quarterly rental change experienced by typical residential units within Abu Dhabi City. The VPI applies weighted averages using data samples representing more than 90% of all property types across the city’s investment zones and is built by our expert RICS Registered Valuers.
Research Methodology Every effort has been made to ensure the accuracy of this document. New supply data covers 24 defined areas in Abu Dhabi City including non-freehold investment areas. Only completed and under construction projects are included. The new supply data does not include announced projects and projects in design phase. The new supply database does not take into account most private building projects. Both the price and rental data are calculated and derived from carefully chosen listings that have been properly cleansed to exclude duplicates and outliers within predetermined areas and districts for office and residential properties. ValuStrat is the Middle East’s leading provider of Advisory, Valuation, Research, Due Diligence and Divestment services across a diverse range of industry sectors. We have offices in Dubai, London, Jeddah, Riyadh, Karachi and Doha, offering comprehensive professional advisory throughout the MENA region. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company headquartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.
ValuStrat’s dedicated research department provides informed market commentary, bespoke research reports and Management Information Systems. Dubai Residential Market Report now available, a regular in-depth 100+ page subscription report containing citywide analysis of 26 freehold districts, including the ValuStrat Price Index, transaction volumes, service charges, price to rent ratios and net yields.
VPI ValuStrat Price Index
VPI online www.valustrat.com/vpi
The ValuStrat Price Index for Abu Dhabi’s freehold residential sector is constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The VPI uses a weighted sample representing more than 90% of all property types across the city and is built by our expert RICS Registered Valuers.
www.valustrat.com