ReportQ12009

Contracting Property Services Development

Residential

Tenants Drive the Rental Market HIGHLIGHTS IN THIS ISSUE Apartment and villa rental rates have decreased by 22 and 34% respectively when comparing Q4 2008 with Q1 2009. The percentage drop is similar across all unit types. People are moving ƒƒApartment Transaction Activity from larger units into smaller ones in some cases due to a reduction in household income. Picks Up p.2 In contrast, those who have not been adversely affected by the economic downturn, have ƒƒInflow vs. Outflow: The Effect the opportunity to upgrade to larger units or relocate from older buildings to newer ones. on Real Estate p.4 Additionally, people who previously left Dubai for the more affordable Northern Emirates are ƒƒStrata Law No 27 of 2008 and now beginning to return. Service Charges p.6 The decline in rents is a relief for many tenants who previously paid up to half their salaries in rent. Better payment options of up to 12 cheques, grace periods and benefits such as one month free rent are also signs that the market is changing from being landlord to tenant- Asteco is the largest property services driven. Unit owners have realised that they can no longer expect double-digit yields, thus they company in the UAE. Asteco also has have to compete for the shrinking tenant pool as people leave and supply increases. offices in Qatar, Bahrain and Jordan. In the first quarter of 2009, average rents for studios, one-bedroom, two-bedroom and three- bedroom apartments reduced to AED 61,500, AED 93,000, AED 132,500 and AED 185,000 ASTECO’S SERVICES respectively. ƒƒSales and Leasing Average Apartment Rental Rates (Q4 2008-Q1 2009) ƒ 300,000 -35% ƒProperty Management 250,000 -30% ƒƒInvestment Agency -25% 200,000 -20% ƒƒValuation 150,000 -15% 100,000 AED/pa -10% ƒƒMarket Research 50,000 -5% ƒƒProperty Consultancy 0 0% Al Bur Deira Discovery Greens International Jumeirah Jumeirah Palm Sheikh Mirdiff ƒƒFurnishing and Design Barsha Dubai Gardens Burj City Beach Lake Jumeirah Zayed Residence Towers Road

Studio 1 BR 2 BR 3 BR Percentage Change

FOR ADDITIONAL INFORMATION, Average Villa Rental Rates (Q4 2008-Q1 2009) 500,000 -45% PLEASE CONTACT: 450,000 -40% 400,000 -35% 350,000 -30% Judy Lam 300,000 -25% 250,000 Regional Research Manager -20% 200,000 -15% 150,000 Email: [email protected] AED/pa 100,000 -10% 50,000 -5% 0 0% Jenny Weidling Arabian Downtown Green Jumeirah Jumeirah Meadows Mirdiff Palm Springs Umm Ranches Burj Dubai Community Islands Jumeirah Suqeim Senior Research Analyst 3 BR 4 BR 5 BR Percentage Change Email: [email protected]

Villas were available for AED 160,000 for two bedrooms, AED 215,000 for three bedrooms, Tel: +971 4 4037777 AED 264,000 for four bedrooms and AED 366,000 for five bedrooms. Fax: +971 4 4037778 Developments such as Jumeirah Beach Residence have received a great deal of interest due primarily to the abundance of retail shops and restaurants on The Walk, it’s proximity to , its completed infrastructure and the fact that it is well occupied. Customer Management: +971 4 403 77 00 www.asteco.com Residential

Apartment Transaction Activity Picks Up

Apartment sales prices have decreased by 39% since Q4 2008. Established community-style areas in new Dubai such as Dubai Marina, Finished units or those nearing completion in established locations, (JLT), and Emirates Living such as Dubai Marina have started to stabilize as rates reach launch are evolving as the preferred areas to reside due to the completed price levels. As a result, transaction activity has begun to increase as infrastructure and convenience of leisure and retail facilities nearby. investors take advantage of the numerous opportunistic deals. Due to Initiatives announced by the Real Estate Regulatory Authority (RERA) the lack of mortgage availability, cash buyers currently dominate the and the government such as The RERA Register, Strata Law, On- market. Asteco has seen little movement in off-plan sales, irrespective line Progress Reports on Projects and Federal Residency Visa Law, of price levels as developers re-assess their commitments. represent important steps towards increasing transparency in the real estate market. This will, if properly implemented, boost investor confidence.

Average Apartment Sales Prices (Q4 2008-Q1 2009) 3,500 -60%

3,000 -50%

2 2,500 -40% 2,000 -30%

AED/ft 1,500 -20% 1,000 500 -10% 0 0% DIFC Discovery Downtown Dubai Dubai Silicon Dubai Sports Greens International Jumeirah Jumeirah Mirdiff Palm Gardens Burj Dubai Marina Oasis City City Beach Lake Jumeirah Residence Towers

Q4 2008 Q1 2009 Percentage Change

Price Point Dominates Buying Decision

Villa developments have experienced a greater decrease in sales less affordable, especially when the initial down-payment presents a prices compared with apartments. Villa prices have fallen by 43% major hurdle on the back of tight lending conditions. since Q4 2008. Villas on a price per square foot basis are generally Age, location and retail facilities in close proximity play a major factor lower priced than apartments; thus making the price point per unit in determining price levels and interest.

Average Villa Sales Prices (Q4 2008-Q1 2009)

3,000 -70%

2,500 -60%

-50%

2 2,000 -40% 1,500 AED/ft -30% 1,000 -20%

500 -10%

0 0% Arabian Dubai Sports Dubai Green Jumeirah Jumeirah Jumeirah Meadows Mirdiff Palm Springs Ranches City Waterfront Community Island Park Village Jumeirah

Q4 2008 Q1 2009 Percentage Change

02 For additional information call +971 4 403 77 00 or email [email protected] Commercial

Finished Office Space Achieves Higher Premiums

As depicted in the table below, the price difference between finished and off-plan units in various developments is considerable. Off-plan developments such as Downtown have contributed highly to the average drop in prices.

Development Off-plan (AED/ft2) Finished/Nearing Completion (AED/ft2)

Jumeirah Lake Towers (JLT) 950 1,500

Tecom 1,200 1,600

Dubai International Financial Centre (DIFC) 2,000 2,500

Office sales prices for finished units as well as off-plan units have been subject to a 42% decrease since Q4 2008. Instead of purchasing office space, many companies have opted for leasing to help with cash flow while expansion plans and start-ups have been put on hold until regional and global markets begin to stabilise.

Average Office Sales Prices (Q4 2008-Q1 2009) 4,500 -60% 4,000 -50% 3,500 2 3,000 -40% 2,500 -30%

AED/ft 2,000 1,500 -20% 1,000 -10% 500 0 0% Business Bay DIFC Downtown Dubai Dubai Silicon Dubai Sports Jumeirah Lake Jumeirah Tecom Jebel Ali Investment Oasis City Towers Village Park

Q4 2008 Q1 2009 Percentage Change

DIFC Least Affected

DIFC saw a smaller decrease of 10% in office rental rates compared with other developments. DIFC is expecting around 1,000,000 square feet of office space to materialise over the next four to six months with the completion of towers such as Liberty House, Index Tower and Currency House. Companies registered with DIFC but operate outside are likely to relocate when units become available. The average decrease in office rental rates in Dubai was 30% compared with Q4 2008. There is a shift towards smaller units with tenants preferring fitted rather than shell and core offices. This is generally the norm in international markets as it is cheaper and quicker to set up. Grade A quality office space in prime locations will be less affected than older buildings in remote or congested areas.

Average Office Rental Rates (Q4 2008-Q1 2009) 600 -45% -40% 500 -35% 400 -30% /pa 2 -25% 300 -20% 200 -15% AED/ft -10% 100 -5% 0 0% Bur Dubai Deira DHCC DIFC Downtown Downtown Dubai Internet Dubai Dubai Media Jumeirah Lake Sheikh Zayed Tecom Burj Dubai Jebel Ali City Investment City Towers Road Park

Q4 2008 Q1 2009 Percentage Change

For additional information call +971 4 403 77 00 or email [email protected] www.asteco.com 03 Overview

Inflow vs. Outflow: The Effect on Real Estate

According to the Dubai Statistics Centre, the annual population cancelled. The Department of Naturalization and Residency (DNRD) growth rate between 2006 and 2008 has been in-line with the annual confirmed that the figures were for new residency visas only and did growth rate of 7.32% as depicted in the 2005 census. Current data not include renewed ones. suggests that the rate of growth has decreased over the last quarter, This suggests that the population is still growing albeit at a slower which is likely to continue in the short to medium-term. rate than originally anticipated. However, it should be noted that a percentage of these residency visas are issued to blue-collar workers Dubai Population (2005-March 2009) who live in accommodation owned by their employer. Therefore they are not in need of separate accommodation. 1.646 1.672 1.53 An increase in residential and commercial units in developments 1.422 1.321 such as Business Bay and JLT will have a downward effect on rental rates. Tenants are now in a stronger position to re-negotiate rental contracts. Landlords have recognised that they have to entice tenants with competitive rents or offer alternative payment options and benefits. To conclude therefore, Dubai’s population growth over the short to medium-term will be dampened until world markets stabilise.

2005 2006 2007 2008 Mar-09 Residency Visas Issued and Cancelled

Source: Dubai Figure 2008-Dubai Statistics Centre 93,957 88,423

In a bid to help the economy recover and restore investor confidence, the UAE Federal Government’s central bank purchased a USD 10 54,684 billion (AED 36.7 billion) bond issued by the under a USD 20 billion programme. The money raised through the 29,418 bond will be used to meet the financial commitments of government- owned entities, including debt repayment and debt servicing.

Furthermore, it is expected that inflation will fall as well as living January 2008 January 2009 and business set-up costs, which is welcomed by both nationals and expatriates. Residency Visas Cancelled Residency Visas Issued According to Bank Group, the UAE has gained 8 ranks Source: Department of Naturalization and Residency (DNRD) (from 54 to 46) in terms of the ‘ease of doing business’ compared with 2008. Ease in setting up a business, less formalities and tax relief are listed as the key advantages that give the UAE an edge over other countries. The number of commercial licenses issued in 2008 was 14,190 representing an increase of 6% compared with 2007. This is equivalent to the increase from 2006 to 2007. By the mid of January 2009 the DED had already issued 434 licences. Dubai has issued less residency visas and cancelled more in January 2009 compared with January 2008. Overall, the number of visas issued is over 60% higher than that of those which have been

Number of Commercial Licenses Issued (2004-2008)

16,000 14,190 13,387 14,000 12,661 12,000 11,293

10,000 8,608 8,000 6,000 4,000 2,000 0 2004 2005 2006 2007 2008

Source: Department of Economic Development (DED)

04 For additional information call +971 4 403 77 00 or email [email protected] Project Focus

Jumeirah Lake Towers

As more and more developments are beginning to take shape, a The first of four lakes has now been completed. The infrastructure project snapshot is provided below to highlight their status. and development of community areas will progress in the latter half of 2009. Jumeirah Lake Towers (JLT), developed by Dubai Multi Commodities Centre Authority (DMCCA), is a waterfront and free-zone development Currently, there are 10,000 to 12,000 people living in JLT. Once the spanning an area of 1.35 million square metres. It consists of 79 development is completed, it is expected to house 120,000 people, of towers (comprising of 35, 40 or 45 storeys) clustered in groups of which, approximately 75,000 will be part of the working population. three, surrounding four man-made lakes.

In addition to the aforementioned towers, eight towers will surround 19% the embankment areas with , which is a 65 storey 5% 42% structure, as the centrepiece of the project.

JLT is located adjacent to Sheikh Zayed Road, between interchanges 34% five (Emirates Golf Club) and six (). The development is situated 15 minutes from , 10 minutes from Media and Internet City and approximately 25 minutes from Dubai International Airport. Although JLT is predominantly a mix of commercial and residential towers, there are also a limited number of hotels and supporting retail Residential Commercial Hotel Mixed-use outlets within the development. On the back of the global financial crisis and subsequent tight lending First launched in 2002, JLT is on track for completion in 2011. The conditions, demand for leasing is high. There is also strong interest community is currently under development with 25 towers already from new businesses, especially in the retail sector. finished. Another 25 are expected for completion in 2009 and according to DMCC a further 27 towers are to be completed in According to DMCC, progress on some towers has been slow but no 2010. projects have been cancelled.

Office Sales Prices and Rental Rates Apartment Sales Prices and Rental Rates (Q1 2008-Q1 2009) (Q1 2008-Q1 2009) 2,500 300

250 2,000 2,000 120,000

200 AED/ft AED/pa 2 1,500 2 100,000 1,500

150 2 80,000 /pa AED/ft AED/ft 1,000 1,000 60,000 100 40,000 500 50 500 20,000 0 0 0 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009

Average Office Sales Price Average Apartment Sales Price Average Office Rental Rate Average Apartment Rental Rate for 1 BR

FACT FILE

Master Developer: Dubai Multi Commodities Centre Authority (DMCCA)

Project Size: 1.35 million square metres

Population: 120,000

Number of Towers: 87

Completion: 2011

Status: Partially Complete

For additional information call +971 4 403 77 00 or email [email protected] www.asteco.com 05 Overview Strata Law No 27 of 2008 and Service Charges There are four Regulations that provide the framework to operate facilities and most importantly maintenance costs instead of a simple the ‘Dubai Jointly Owned Property Law’ that are due for imminent square foot rate. release. These Regulations cover: Survey Plan, Jointly Owned RERA has announced that a six-month transition period will apply to Property Declaration, Owners’ Association Constitution and General existing projects to comply with the law and regulations. It will take requirements. time for implementation and, the coming months will certainly be Up until now, jointly owned freehold property operations had not steps in the right direction. been regulated. It had been left to the developer to provide property In the meantime, RERA has ordered all developers not to increase management services or out-source them to facility management service charges. Under the proposed new rules, service charges for companies. Hence service charges were calculated and collected by buildings that have been already delivered will be frozen at rates that developers. This method of operation was deemed not to be in the prevailed last year. Service charges for buildings that are due for hand- best interests of the Owners. Many new towers had been affected by over, or are in the process hand-over, will be subject to approval, by poor services and an inaccurate representation of service charges. RERA. The introduction of the Regulations will provide for transparency and RERA intends to create one service charges formula that all developers consistency in relation to service charges. It will also be mandatory will follow, when calculating service charges. for service charge budgets to be approved by RERA. Developers will be forced to disclose supply agreements with related entities, such as Service charges are quite often not taken into consideration when a in-house facility management providers. property is purchased. Sometimes rates quoted in the sales agreement and completion rates show a considerable variance. This can add a For developers the Regulations may mean significant additional costs significant cost to the owner’s bill. An example is shown in the table in order to comply with the Law; both on existing projects and future below. off-plan projects. The fees for obtaining the necessary survey plans, legal consultancy, and other necessary documentation could be quite The Service Fees Budget is generally divided into four components that costly. include: Operational Costs, Administrative Costs, Master Community Fee and Capital Reserve Fund. The effect on purchasers and unit owners will ultimately be a positive one. Service charge budgets will be approved by RERA and provide The Operation Fund covers costs associated with the maintenance fully itemised operating costs for projects, as well as the project and running of the project or building. specifications and existing contractual arrangements. Unit owners The Administration Fund includes, but is not limited to, insurance, and prospective purchasers will have an understanding as to where management, legal and professional fees. the money they pay in service charges is being spent. It will also reflect the quality and grade of the development. Master Community Fees are charges and expenses payable by the owner to the master developer for the upkeep of the public areas Once Owners’ Associations are registered on the RERA “Mollak” within the master community. system (Mollak is a Dubai Government registration system that enables property developers to register Owners Associations with RERA The Capital Reserve Fund (also known as Sinking Fund) is used for the under the new Jointly Owned Property laws), the first Annual General replacement of capital equipment no longer under warranty, e.g. lifts Assembly can be arranged by the Owners to elect a Management that may need replacing through normal wear and tear. Board to take control of the management and administration of the common areas and assets for the benefit of all owners. In such The table below lists a variety of buildings and their respective service instances the developer can relinquish responsibility and the owners charges, excluding air conditioning (AC) cooling fees and Dubai would be more pro-active and accountable. Electricity and Water (DEWA) charges. In the long–term, the introduction of the Jointly Owned Property The majority of developers include all four components in their Law and Supporting Regulations will be of great benefit to the Dubai service charge. However, some buildings, especially older ones, do property market. The sale of freehold jointly owned property in not have a Capital Reserve Fund. Landlords tend to incorporate the Dubai will be based on similar attributes to those in other established service charge in the tenant’s rent, whereas AC and utilities are levied world markets. This would include; location, quality, aspect, services, on top.

Development / Project Service Charge South Ridge (Downtown Burj Dubai) (AED/ft2) Apartment Size (1 BR): 1,000 ft2 World Trade Centre / WTCR 23.7 Sales Price (AED/ft2): 1,500 Downtown Burj Dubai / South Ridge 15.9 Rental Rate (AED/pa): 120,000 International City / Spain 12.4 Service Charge (AED/ft2): General Fund (Operation / International City / Italy 10.5 Administration Fund): 14.03 Capital Reserve Fund: 0.90 Dubai Marina / Aurora 20.5 Master Community Charge: 1.00

IMPZ / The Crescent 25.6 Chiller Charges (AED/ft2): 9 (as of 2008)

Palm Jumeirah / Shoreline Apartments 24 Gross Yield: 8%

Downtown Burj Dubai / Old Town 19.9 Net Yield (Ex. chiller): 7%

Dubai Marina / Belvedere 8 Net Yield (Inc. chiller): 6%

06 For additional information call +971 4 403 77 00 or email [email protected] Overview Mortgage Market Update Finding a mortgage in UAE remains a challenge, but fortunately, The recent Dubai Government Bond Issue should provide relief for banks are still lending. The arrival of Abu Dhabi Finance has certainly the mortgage market by improving both confidence and liquidity. As improved the situation for property buyers in the capital. All banks they are available to service the Dubai debts, this should lead to a face the problems of a lack of liquidity and confidence and until both reduction in costs of raising funds for the international markets and are resolved the banks’ lending criteria will remain tight. It is still for companies and banks in Dubai. possible to find a Loan To Value (LTV) ratio of 85%, but this is only for This strategy gives a strong and clear signal that the UAE will tackle a select minority of borrowers. The typical ratio of between 60% and the current situation as a unified entity rather than individual emirates; 75% means that a high down-payment is required. which will in turn significantly increase financial confidence. Interest rates on mortgages are slow to decrease. As most are linked in The availability of these funds as deposits in the banking system would some way to Emirates Interbank Offered Rate (EIBOR), there will only also encourage banks to lend to each other as well as customers. This be a significant reduction when the banks start to be more confident should ease the high level of EIBOR and kick start a corresponding in the current financial climate. The combination of low LTVs and high drop in mortgage rates. interest rates is deterring potential property buyers, but the interest rate is also squeezing existing borrowers hard and encouraging those It is difficult to say when the effects of this will be felt. Although, it that can still sell at a profit to do so. is unlikely to herald a return to the days of 95% mortgages, it is a positive and strong movement in the right direction, which is good news for existing and potential homeowners.

EARLY LENDERS CLIENT MAX MAX INTEREST MIN LIFE PREPAY- MAX LOAN TENOR MAX LTV PROCESSING FEE REPAY- (*) TYPE AGE DBR RATE SALARY INSURANCE MENT MENT

(AED (AED/ Yrs Yrs % % % % % % million) pm)

ADCB UAE 65 10 25 <90 with Salary <65 7.75-8.75 12,000 No 1 (no caps) <2 <2 Residents Transfer in Abu Dhabi;

<85 with Salary Transfer in Dubai

ABU UAE 70 No Limit 25 <85 <55 8.5-9 10,000 Yes 0.75-1 <3 <3 DHABI Residents FINANCE (No fee after 3 years)

BADR AL UAE 70 10 for villa 25 <70 <55 6 Month 9,000 Yes 1 No fee No fee ISLAMI Residents EIBOR + 3.99 after 2 after 2 years years

BARCLAYS UAE 70 10 for villa; 25 <75 for villa; <55 7.2-8.55 10,000 Yes 1 of loan amount <3 <3 BANK Residents 7.5 for apt. <70 for apt. (max 30,000)

DUBAI UAE 70 10 25 <80 <55 Salary 8,000 Yes 1.25 <2 <2 ISLAMIC Residents segment BANK (Capped at AED 6 Month 25,000) EIBOR + 4.3;

Self Employed

6 month EIBOR + 4.8

HSBC UAE 65 10 25 <70 <60 8.5-9.5 25,000 Yes 1 (min. AED 3 if Free BANK Residents 5,000) transfer to lender; Min. *can be added prepay to loan* 2,500 AED AED own 25,000 funds

LLOYDS UAE 65 No Limit 25 <50 (completed villa <40 8.5 12,000 Yes 1 (no caps) None None TSB BANK Residents only)

RAKBANK UAE 65 25 <85 <60 8.3-10.6 10,000 Yes 1 5 if 1 Residents transfer (Capped at AED to lender; 30,000) 1 of own fund

Note: 1. (*) Please note that the above Lenders listed, reserve the right to change their product policy, fees and charges, interest rates and other credit scoring criteria at any time without prior notice. 2. Banks will generally only finance properties from developers on their approved lists. John Charcol Dubai is an independent mortgage broker based in Dubai. For queries or assistance in relation to mortgages, contact John Charcol’s sales team in Dubai on 800 CHARCOL (+971 4 341 7566 if dialling from outside the UAE) or by email to [email protected] For additional information call +971 4 403 77 00 or email [email protected] www.asteco.com 07 Overview Highlights of Q1 2009

Decree No 1 of 2009 Freehold Owners to Get Residency Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum issued a A federal law granting residency visas to owners of freehold property decree stopping any increase in rents on residential and non-residential will be introduced within the year. The proposal will allow owners properties in Dubai in 2009 for tenants who renewed their contracts to obtain a six-month renewable residency visa, regardless of their signed last year. The decree states that rents for both residential and nationality or the size and value of the property, according to the commercial units set last year are frozen – unless they are more than federal Department of Naturalisation and Residency (DNR). 25% below the guideline figure recommended in Dubai’s new rental index. More Passengers Pass Through Dubai Airport Despite Slump RTA to Finish 11 Projects Worth AED 3.8 billion in H1 Despite the global economic downturn, the number of passengers Dubai’s Roads and Transport Authority (RTA) will complete 11 road passing through Dubai International Airport has increased 9.01% to and bridge projects worth about AED 3.8 billion in various parts of 37,441,440 last year from 34,348,110 in 2007. At the same time, cargo the city in the first half of this year. traffic at the Dubai Cargo Village climbed 9.38% from 1,668,505 tonnes in 2007 to 1,824,991 tonnes in 2008. Two Draft Laws to Protect Buyers in Off-plan Market The first law stipulates that developers must own the land and have Dubai Launches USD 20 billion Bonds completed at least 20% of construction before they can request The Dubai Government yesterday launched a USD 20 billion (AED 73.4 consent from RERA and are allowed to sell off-plan. The second billion) bond programme as part of its long-term financing strategy. law states that the payment plan must be linked to construction The bond is being issued in two tranches. The first of which, valued milestones and a maximum of 30% of the property price can be at USD 10 billion, has been fully subscribed by the UAE Central Bank. taken up front.Both are in draft form at the moment but are expected The unsecured bond pays a fixed yield of 4% per annum and has a to be implemented soon. five-year maturity, according to a statement from the Department of Finance. Law Update UAE Residential Comparison

Decree No 1 of 2009 Regarding Rentals in the Emirate The graphs below show the current average rental rates (in AED ‘000) of Dubai for apartments and the rental changes (percentage) over the last three months for the different units across the Emirates. Decree No. 1 of 2009 was published in the official gazette and came into force in the Emirate of Dubai on the 15th February 2009. This Studio -14% -15%

Decree covers the 2009 Rent Cap and the amendments to law no 26 -25% -26% -27% of 2007, The Landlord and Tenant Law. 60 30 28 26 22 18 AED 000s AED Rather than placing a standard restriction on all rental increases -40% in Dubai as in previous years, the 2009 Rent Cap takes a different Dubai Sharjah Ajman Ras Al Khaimah Fujairah Umm Al Quwain approach.

Tenancy contracts which have a rental value that is within 25% of 1 BR 150 -2% the average rent for that area will not have any increase in rent in the 97 -13% -11% -21% 41 year 2009. An exception to this rule is contained in Article 1. There 39 33 -27% 27 26 may be increases in rent in tenancy contracts where the rent value at 000s AED -34% -37% the beginning of 2009 is more than 25% less than the average similar Dubai Abu Dhabi Sharjah Ajman Ras Al Fujairah Umm Al Khaimah Quwain rent, as stated in the Index of Rental Values. Such increases may be affected in accordance with the following: 2 BR 226 a) If the rent value in year 2008 was 26% to 35% less than the -1% 135 -11% average similar rent, the maximum rent increase shall be equal to -18% -17% 5% of such value; 53 42 41 33 33 AED 000s AED -32% -31% -31% b) If the rent value in year 2008 was 36% to 45% less than the Dubai Abu Dhabi Sharjah Ajman Ras Al Fujairah Umm Al average similar rent, the maximum rent increase shall be equal to Khaimah Quwain 10% of such value; 283 3 BR 0% c) If the rent value in year 2008 was 46% to 55% less than the 194 average similar rent, the maximum rent increase shall be equal to -8% -11% 15% of such value; and -13% -14% -13%

AED 000s AED 66 61 58 50 45 d) If the rent value in year 2008 was less than 56% of the average -20% similar rent, the maximum rent increase shall be equal to 20% of Dubai Abu Dhabi Sharjah Ajman Ras Al Fujairah Umm Al such value. Khaimah Quwain DISCLAIMER: This report contains information available to the public and has been relied upon by Asteco Property Management on the basis that it is accurate and complete. Asteco Property Management accepts no responsibility if this should prove not to be the case. No warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Asteco will not be held responsible for third-party contributions.

08 For additional information call +971 4 403 77 00 or email [email protected]