OBSERVER Dubai Market Report Q1 / 2019 Services Report Highlights Valuations Mortgage and Secured Lending Sales prices Values. Transactions involving completed properties showed an increase in values of 5% from AED 5.39 billion in Portfolio Valuations The downward price corrections witnessed throughout Q4 2018 to AED 5.64 billion in Q1 2019. Additionally, there 2018 continued in Q1 2019, albeit at a slightly slower was a significant uplift in values for off-plan properties of Advisory and Research pace than witnessed in Q4 2018. Average apartment sales 35%, from AED 5.82 billion in Q4 2018 to AED 7.85 billion Financial Feasibilities prices were down 3% from the last quarter, while average in Q1 2019. villa prices were down 1% from Q4 2018. Highest and Best Use Studies Market outlook Market Research Rental rates Conceptual Advisory and Project Positioning Studies Over 20,000 new residential units were delivered in 2018 Project Redevelopment/Repositioning Advisory As in previous quarters, we witnessed a continued and the projections for 2019 are for a similar or even downward pressure on rents in Q1 2019. This is a higher number (est. 25,000 to 30,000 units), as many of Investment Strategies – Acquisition and Disposal consequence of additional supply being added to the the 2014-16 off-plan projects will be delivered. This will market, thus offering more choice to the potential tenant. ensure Dubai’s residential market remains highly occupier Sales and Leasing Average rents saw a further 2% decrease in the apartment and buyer friendly, due to the wide variety of options Commercial and villa markets from Q4 2018. available at competitive prices/rates. Industrial Transactions Residential Retail Volumes. The completed unit market witnessed a small decline in transactional volumes in Q1 2019 with a 1% Property/Facilities Management decrease compared with Q4 2018, from 3,278 to 3,230 units. In contrast, the volume of off-plan transactions Commercial was up 10% on Q4 2018. Perhaps this figure is even more Mixed-Use significant given the 33% increase in volumes in Q4 2018 Residential when compared with Q3 2018. International Properties London Off-Plan Residential International Homes and Investments International Relocations Residential Market Q1 2019 Snapshot Price Movements Completed Unit Transactions Apartments Villas Volumes Values QoQ −3% QoQ −1% QoQ -1% QoQ +5% Rental Movements Off-Plan Unit Transactions Apartments Villas Volumes Values QoQ −2% QoQ −2% QoQ +10% QoQ +35% The Observer - Dubai Residential Q1 2019 1 Further price declines witnessed in Q1, however off-plan sales remain strong The downward price corrections witnessed throughout 2018 service charges and guaranteed rental returns. It is also worth continued in Q1 2019, albeit at a slightly slower pace than noting that off-plan inventories are largely focused on the witnessed in Q4 2018. Average apartment sales prices were affordable, mid-market options, which is likely to be having a down 3% from the last quarter, while average villa prices were positive effect on absorption rates. down 1% from Q4 2018. However perhaps more interestingly, in locations where the Off-plan sales continued to dominate the market in Q1, which largest amount of transactions have taken place in Q1, such indicates the incentives offered by developers are having the as MBR City, it is clear there is a growing demand for more desired effect. These incentives include 5-year post-handover innovative living solutions. More information is included later payment plans, the rebate of registration fees, freezing property in this report. HOT TOPIC Co-living spaces are set to change the face of Dubai’s off-plan residential market as their popularity gains pace. Simply put, the concept of co-living spaces is focused around the buyer or tenant being able to live and work in the same location; a detail which is important for many who do not want to be caught up in a long daily commute. As such, developers are now creating spaces that address the business and leisure requirements of residents, all in one development. In terms of the more established communities, Dubai Silicon Oasis has had success with co-living and co-working spaces as has Tecom with its Internet and Media Cities and Knowledge Village. More recently, Nshama launched UNA located at the Town Square community and Emaar, The Collective and Socio at MBR City. Apartments: Quarter-on-Quarter movement: (–3%) Villas: Quarter-on-Quarter movement: (–1%) Prices of apartments in Downtown, Dubailand, Dubai Motor Market sentiment in the villa community of The Lakes remained City and Dubai Silicon Oasis continued to remain resilient in the most positive, as there was no movement in prices from Q4 Q1, with these locations witnessing no price movement since 2018. In contrast to the previous quarter, The Meadows and the previous quarter. Small declines were seen in the Views Springs communities witnessed the highest price declines of and Discovery Gardens with a 1% decrease from Q4 2018. The 4%. Small price declines were seen in Jumeirah Park with a 1% highest declines were witnessed in International City, Dubai decrease, whilst Palm Jumeirah and Arabian Ranches both Sports City and Business Bay, all with a 7% decrease in prices witnessed a 2% decline from Q4 2018. since Q4 2018. Over 80% of the new stock delivered in 2018 was apartments, with a similar ratio set to be handed over in 2019. This might explain the consistently higher rate of price decline for apartments, as opposed to villas, given the greater level of supply on the market. The Observer - Dubai Residential Q1 2019 2 Apartments and Villas − Residential Sales Prices and Quarterly Change The World The Palm Deira Arabian Gulf The Palm Dubai -6% Jebel Ali Waterfront Q-o-Q Movement 1,153 921 DUBAI JUMEIRAH MARINA 977 LAKE TOWERS -3% JUMEIRAH -4% Q-o-Q LAKE TOWERS 897 Q-o-Q Movement -2% THE MEADOWS Movement Q-o-Q 1,185 Movement DUBAI MARINA Palm Jumeirah 2,035 1,984 936 PALM JUMEIRAH PALM 627 THE MEADOWS JUMEIRAH Dubai DISCOVERY Maritime GARDENS Bluewater City Islands -1% Jumeirah Beach Q-o-Q Residence 0% Movement 636 925 Q-o-Q DISCOVERY Movement Dubai Marina Dubai Pearl THE GREENS GARDENS 965 Umm Suqeim Jumeirah Satwa Bur Dubai Media Internet Burjuman Hamriya City THE GREENS City Badaa Centre Ibn Battuta JLT -4% Al Wasl Deira Jumeirah Sufouh Safa 1,511 Wuheida Mall The Greens Q-o-Q Manara 1,515 DOWNTOWNUmm Mamzar Gardens Heights DOWNTOWN Hurair Jebel Ali Freezone Emirates TECOM Movement DIFC Trade 897 Hills Centre Karama Deira City Hor Al Anz Jebel Ali Meadows THE SPRINGS Discovery Mall of the Emirates Dubai Mall Centre Downtown Village The Views Al Quoz Oud Gardens Jumeirah Zabeel Metha Jebel Ali Islands The Lakes 936 Barsha 1,197 Al Nahda -4% Jumeirah THE VIEWS Q-o-Q THE SPRINGS The Springs Movement Park Barsha Abu Dhabi Al Furjan 1,209 Garhoud Sharjah Airport THE VIEWS Al Khail -1% Free Zone Q-o-Q Gate Culture Twar 1,103 Movement Village Qusais THE LAKES Technology Park -1% 0% Q-o-Q Q-o-Q Green -4% 1,114 Movement 868 Jumeirah Movement Umm Community Q-o-Q BUSINESS BAY JUMEIRAH GolfMovement International Bu Kadra Ramool PARK Estates Media Dubai Production Meydan Dubai Investment 0% 759Zone(IMPZ) 1,107 Q-o-Q -7% 1,038City Festival City Park Movement 859 728 JUMEIRAH THE LAKES Q-o-Q BUSINESS BAY JUMEIRAH JUMEIRAH Dubiotech 713 Movement VILLAGE Sports MOTOR CITY Nadd Dubai PARK VILLAGE CIRCLE Ras Al Khor Shamma Muhaisnah CIRCLE City World Motor Central City -7% 713 0% Nadd Q-o-Q MOTOR CITY Q-o-Q Al Hammar Movement 703 Movement Mirdif City Centre DUBAI SILICON -7% Arabian Al Barari Q-o-Q Ranches OASIS Mirdif Living Legends Movement 737 793 0% Ghoroob Mizar SPORTS CITY Q-o-Q 704 SPORTS CITY Al Waha DUBAI SILICON Warqaa Movement Community 840 OASIS Nad Al Sheba Shorooq481 516 INTERNATIONAL ARABIAN 860 Dragon Mart INTERNATIONAL Layan CITY RANCHES ARABIAN International CITY 722 725 RANCHES City Khwaneej DUBAILAND DUBAILAND Dubailand Dubai +2% Silicon Oasis Q-o-Q Awir Movement Academic City Figures in AED/Sq Ft Villa Sales Q4 2018 Villa Sales Q1 2019 Apartment Sales Q4 2018 Apartment Sales Q1 2019 QoQ Movement Source: REIDIN & Chestertons The Observer - Dubai Residential Q1 2019 4 The Observer - Dubai Residential Q1 2019 5 450,000 0% 400,000 Supply continues to be a major factor causing Villas 350,0 0−0 Residential Market Rent and Quarterly Change -1% CHANGE PERCENTAGE 300,000 downward corrections in the rental market -2% 250,000 As in previous quarters, there was continued downward Apartments: Quarter-on-Quarter movement: (– 2%) 240500,,000000 0% pressure on rents in Q1 2019. This was a consequence of -3% 150,000 400,000 additional supply being added to the market, thus offering In the apartment market, the biggest declines were seen in RATES AED RENTAL -1% CHANGE PERCENTAGE more choice to potential tenants. Average rents saw a further Dubai Motor City, Dubai Silicon Oasis, Dubai Sports City and 130500,,000000 -4% 2% decrease in the apartment and villa markets from Q4 2018. JLT – all of which witnessed a 4% decline from Q4 2018. Popular 3 5000,,000000 established communities, such as Dubai Marina and Business -2% 250,00 0- -5% Due to additional stock being available and limited new Bay, have remained resilient with no movement in rates since Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm 200,000 Ranches Springs Meadows Heights Islands Golf Estates Jumeirah demand, the most important consideration for landlords in the last quarter. -3% maintaining a decent return on investment is avoiding long 150,000 Figures RATES AED RENTAL in AED/Sq Ft 2BR 3BR 4BR 5BR QoQ Movement void periods.