Q2 Market Overview

The UAE saw a notable increase in residential sales over Q2, with renewed market confidence, and improvements in the wider economy, buoying demand. Contents

Dubai’s total residential transaction value recorded a near 50% rise quarter-on-quarter (q-o-q), reaching AED 31.02 billion, up 4. from AED 20.77 billion in Q1, marking a seven-year high. Abu Economy Dhabi developers reported strong sales across off-plan schemes Key indicators point to overall over Q2, with the quarter further witnessing the announcement improvements of new project pipelines.

Villas across and Abu Dhabi saw sustained interest, with average Dubai prices rising by 5.7% q-o-q. Abu Dhabi villa prices 6. also rose over Q2, albeit by a more marginal 0.3%, following a Dubai 2.2% rise the previous quarter. Villa prices across both emirates 6. Overview surpassed their Q2 2020 averages, up by 9.1% in Dubai and 2.2% Residential sales reached seven-year in Abu Dhabi, year-on-year (y-o-y). high 8. Prices Villa rents also fared comparatively well over Q2, with continued Villas saw notable uplifts; apartments tenant demand for larger accommodation and outside space saw modest improvements supporting uplifts across both emirates. 12. Rents Villas saw quarterly rises; apartments Apartment values increased moderately on average, with prices recorded marginal declines rising by 0.8% in Dubai and 0.5% in Abu Dhabi, q-o-q. Performance continued to vary by location, however, with more established residential areas typically seeing modest uplifts and secondary locations often recording declines. Annually, Dubai and Abu Dhabi 16. apartment prices were down 3.7% and 0.8%, respectively. Abu Dhabi 16. Overview Apartment rents across both emirates recorded modest Q2 Developers reported strong sales on new declines, with continued unit handovers, along with changing off-plan launches tenant preferences, placing downward pressure on rates. 17. Prices Villas and apartments saw marginal While upcoming supply may challenge apartment sector uplifts performance over H2 2021, we expect demand for villas to 20. Rents continue, with ongoing international buyer interest, along with Villas recorded clear improvements; sustained tenant demand, set to underpin both sales prices and apartments dipped marginally rents medium-term.

OBSERVER - UAE REPORT Q2 2021 2 Q4Q2 20212020 Economic Overview

UAE IHS Markit PMI (50-threshold) April 2019 to June 2021

60 58 56 54 52 50

Index Value Index 48 46 44 42 40 Jul-20 Jul-19 Jun-21 Jun-20 Jun-19 Jan-21 Jan-20 Oct-20 Oct-19 Apr-21 Apr-20 Apr-19 Feb-21 Feb-20 Sep-20 Sep-19 Dec-20 Dec-19 Aug-20 Aug-19 Nov-20 Nov-19 Mar-21 Mar-20 May-21 May-20

IHS Markit PMI Threshold

Source: Focus Economics May-19 ECONOMIC OUTLOOK IMPROVES OVER SECOND QUARTER Key drivers Easing travel restrictions and Expo 2020 to support tourism Economic activity continued to gain pace over Q2, with key H1 2021 results for several leading UAE banks further indicators suggesting that the UAE is on track for an overall indicated general economic improvements. Emirates NBD, Expo 2020 Expo 2020, scheduled to run from October through to March recovery this year. Abu Dhabi Commercial Bank (ADCB) and First Abu Dhabi Expo forecast to attract 25 2022, looks set to support a significant increase in tourist Bank (FAB) all reported rises in net profits, broadly supported million visitors over its six arrivals from Q4 onwards. The non-oil private sector purchasing managers’ index (PMI) by declines in loan loss provisions, reduced operating costs month duration While there is still uncertainty surrounding travel restrictions achieved a higher quarterly average, reflecting improved and improved non-interest income. business conditions, with the index remaining above the internationally, organisers maintained their forecast of 25 50-threshold throughout the quarter, indicating continued Oil Output million visitors over its six month duration. However, international travel restrictions continued to weigh monthly expansion. June’s PMI reading revealed improvements Increased output, coupled on the UAE’s all-important tourism industry, with the in employment levels for the first time in five months, and at with higher oil prices, look set This should come as a welcome boost to Dubai, and the wider to support state finances the strongest rate in nearly two and a half years. hospitality sector still somewhat reliant on domestic travel UAE’s, hospitality sector, which has remained largely reliant over Q2. on ‘staycations’ over H1 2021. While Dubai and Abu Dubai Oil production increased over Q2, with June’s output marking a hotels both recorded rises in average occupancy rates over ten-month high. Following the OPEC+ decision to continue a The UAE’s Central Bank (CBUAE) forecasts 2.4% growth in Vaccine Rollout June, Dubai’s average daily rate (ADR) remained under gradual easing of production cuts from August, oil production real GDP, and 3.8% in non-oil real GDP, over 2021, with real The UAE reached a 70% pressure, with improvements likely contingent on renewed vaccination rate over Q2 looks set to rise further. This, coupled with higher oil prices over GDP and non-oil real GDP growth expected to reach 3.8% and international arrivals. recent months, bodes well for government finances. 3.9%, respectively, in 2022.

OBSERVER - UAE REPORT Q2 2021 4 OBSERVER - UAE REPORT Q2 2021 5 Q4Q2 20212020 Dubai

Dubai Total Residential Transaction Value by Quarter (Q1 2017 to Q2 2021)

35 30 25 20 15

AED Billion 10 5 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2017 2018 2019 2020 2021

Sales - Completed Sales - O-plan RESIDENTIAL TRANSACTIONS Source: REIDIN & Chestertons Research REACHED SEVEN-YEAR HIGH OVER Q2 With transactions at near-record highs, what's driving sales? HOT TOPIC Dubai witnessed a notable rise in residential transactions Strong villa demand continued over Q2, with price rises over Q2, with positive market sentiment, coupled with gaining further pace. Average villa values rose by 5.7% continued international buyer interest, driving sales. q-o-q, following a 3.9% increase the previous quarter, and Increased international interest has been a key factor in Q2 performance, with Dubai’s handling of Covid-19 supporting post- supporting a 9.1% rise y-o-y. lockdown demand from buyers drawn by visa reforms, the emirate’s quality of life and comparatively attractive pricing. Total transaction value saw a near 50% rise q-o-q, reaching AED 31.02 billion, up from AED 20.77 billion the previous Apartment prices saw a modest 0.8% uplift q-o-q, following We have seen a clear improvement in market sentiment among UAE residents this year, with a desire to buy ahead of anticipated quarter. Total transaction value reached its highest level their 0.1% rise the previous quarter, although they remained price rises, coupled with favourable mortgage rates and generous developer incentives, spurring sales. since Q4 2013, which recorded total residential sales worth 3.7% below their Q2 2020 average. Performance continued AED 31.67 billion. Transaction volume totalled 14,426 units to vary by location, with more-established residential areas There is also a broader international context, with several key markets enjoying robust demand over 2021. Chestertons London in Q2, up from 10,648 in Q1, a rise of 35.48%. typically seeing modest uplifts and largely secondary saw its strongest residential sales performance on record over H1, for example, and Hong Kong residential sales volumes have also locations recording further declines. rebounded sharply this year. While drivers vary by market, there was an overarching trend of pent-up 2020 demand underpinning Completed property sales continued to comprise the sales. majority of transactions, accounting for 71% of total value, Villa rents rose by 2.6% q-o-q and surpassed their Q2 2020 and 59% of volume, with off-plan sales yet to approach average by 3.5%. Apartment rents fell by 0.5% q-o-q and their pre-pandemic share. remained 8.7% below their Q2 2020 level.

OBSERVER - UAE REPORT Q2 2021 6 OBSERVER - UAE REPORT Q2 2021 7 5% 5%

11% Q4Q2 20212020 Q2 2021 Transaction Dashboard 47%

32%

Apartment Sales by Unit Type Villa Sales by Unit Type Apartment prices saw modest uplift, although performance

12% 11%11% 17%17% varied by location 25% Apartment prices saw a modest uplift, with average values 5.1%, followed by , at 2.6%. Average 25% rising by 0.8% q-o-q, although they remained 3.7% below prices in stood at AED 590 per sq ft, down their Q2 2020 level. from AED 622 last quarter, with Discovery Gardens seeing 28%28% 44%44% prices reach AED 483 per sq ft, down from AED 496 in Q1 38% The Views recorded the highest quarterly rise, at 5.3%, with 2021. prices averaging AED 1,085 per sq ft, up from AED 1,030 the previous quarter. also saw a clear uplift, On an annual basis, Downtown Dubai, The Views, The Studio 1BR 2BR 3BR (and above) 2BR (and below) 3BR 4BR 5BR (and above) with prices increasing by 4.5% q-o-q. Both Lake Greens and saw prices rise by 4.4%, 3.3%, Towers (JLT) and The Greens saw quarterly price rises of 2.9% and 0.3%, respectively. 3.0%, reaching AED 765 and AED 860 per sq ft, respectively. All other locations saw prices decline, with Dubai Sports Sales Transactions - Completed Units , Motor City, Business Bay and International City, Dubailand and Dubai Silicon Oasis all recording City achieved more moderate quarterly uplifts of 2.2%, double-digit falls of 12.4%, 11.3% and 10.5%, respectively, Apartments - Top Communities by Total Transaction Value Villas - Top Communities by Total Transaction Value 1.8%, 1.5% and 0.7%, respectively. y-o-y. Motor City and Jumeirah Village Circle (JVC) recorded price declines of 4.7% and 5.0%, respectively,

Dubai Hills EstateDubai Hills Estate The Meadows The Meadows All other locations recorded quarterly declines ranging from with JLT and Dubai Marina seeing marginal falls of 0.4% Bluewaters IslandBluewaters Island District One District One 1.0% to 5.1%. Dubailand saw the sharpest quarterly fall, at and 0.2%, respectively, y-o-y. Jumeirah VillageJumeirah Circle Village Circle Arabian RanchesArabian Ranches

Jumeirah Lake TowersJumeirah Lake Towers Emirates Hills

Jumeirah Beach JumeirahResidence Beach Residence Jumeirah Golf EstatesJumeirah Golf Estates

DubaiTown Hills Square EstateDubaiTown Hills Square Estate Green CommunityThe MeadowsGreen West CommunityThe Meadows West

BluewatersDowntown IslandDubaiBluewatersDowntown IslandDubai TilalDistrict Al Ghaf One TilalDistrict Al Ghaf One

JumeirahPalm Village JumeirahJumeirah Circle Palm Village Jumeirah Circle DamacArabian Hills Ranches (Akoya)DamacArabian Hills Ranches (Akoya)

JumeirahBusiness Lake TowersJumeirah Bay Business Lake Towers Bay PalmEmirates Jumeirah Hills PalmEmirates Jumeirah Hills

Jumeirah BeachDubai JumeirahResidence Marina BeachDubai Residence Marina JumeirahDubai Golf Hills Estates EstateJumeirahDubai Golf Hills Estates Estate

Town Square Green CommunityGreen West Community West - 200 - 400 200 600 400 800600 1,0008001,200 1,000 1,4001,200 1,400 - 500 - 1,000500 1,5001,000 2,0001,500 2,5002,000 3,0002,500 3,5003,000 3,500 Downtown DubaiDowntown Dubai Tilal Al Ghaf Tilal Al Ghaf AED Million AED Million AED Million AED Million Villa prices saw further gains, with value rises gaining pace Palm Jumeirah Damac Hills (Akoya)Damac Hills (Akoya)

Business Bay Business Bay Palm Jumeirah Palm Jumeirah

Dubai Marina Dubai Marina Dubai Hills EstateDubai Hills Estate Sales Transactions- 200 - 400 200 - Off-plan600 400 800600 1,000 800Units1,200 1,000 1,4001,200 1,400 - 500 - 1,000500 1,5001,000 2,0001,500 2,5002,000 3,0002,500 3,5003,000 3,500 Villa prices across all locations monitored saw positive growth Jumeirah Park saw prices rise by 5.4%, with Palm Jumeirah and AED Million AED Million AED Million AED Million Sobha Hartland Sobha Hartland Tilal Al Ghaf Tilal Al Ghaf over Q2, with strong-end user demand, and continued both seeing 4.9% uplifts q-o-q. Average ApartmentsJumeirah First- TopJumeirah Communities First by Total Transaction Value VillasTown Square - TopTown Communities Square by Total Transaction Value international buyer interest, underpinning values. Average villa prices in Jumeirah Park stood at AED 780 per sq ft, up from Jumeirah VillageJumeirah Circle Village Circle Rukan Rukan prices rose by 5.7% q-o-q and saw significant improvements on AED 740 in Q1 2021, with prices in Palm Jumeirah averaging Business Bay Business Bay Jumeirah Bay IslandJumeirah Bay Island

District One District One Arabian RanchesArabian (Phase Ranches2) (Phase 2) their Q2 2020 average, increasing by 9.1% y-o-y. AED 2,045 per sq ft, up from AED 1,950 in Q1 2021. Average JumeirahSobha Lake Hartland TowersJumeirahSobha Lake Hartland Towers JumeirahTilal Al Ghaf First JumeirahTilal Al Ghaf First prices in Arabian Ranches reached AED 850 per sq ft, up JumeirahMeydan OneFirst JumeirahMeydan OneFirst DubaiTown Hills Square EstateDubaiTown Hills Square Estate The Meadows/The Springs and The Lakes saw the highest from AED 810 the previous quarter. JumeirahPalm Village JumeirahJumeirah Circle Palm Village Jumeirah Circle Arabian RanchesArabian (PhaseRukan Ranches3) (PhaseRukan 3)

DowntownBusiness Dubai BayDowntownBusiness Dubai Bay Jumeirah BayVillanova IslandJumeirah BayVillanova Island quarterly uplifts, at 6.6% and 6.5%, respectively. Average prices DubaiDistrict Harbour One DubaiDistrict Harbour One Arabian RanchesDistrictArabian (Phase Seven Ranches2) District (Phase Seven 2) in The Meadows/The Springs reached AED 885 per sq ft, up On an annual basis, Palm Jumeirah was the only location to Jumeirah Lake TowersJumeirah- Lake 200Towers - 400200 600 400800 6001,000 8001,2001,0001,4001,200 1,6001,400 1,600 Jumeirah First -Jumeirah100 First - 200 100 300 200 400 300 500 400 600 500 700 600 700 from AED 830 the previous quarter, while The Lakes saw see a double-digit rise, with average prices increasing by Meydan One Meydan One Dubai Hills EstateDubai Hills Estate AED Million AED Million AED Million AED Million average prices increase to AED 1,065 per sq ft, up from AED 12.4%. The Lakes and The Meadows/The Springs also saw Palm Jumeirah Palm Jumeirah Arabian RanchesArabian (Phase Ranches3) (Phase 3)

Downtown DubaiDowntown Dubai Villanova Villanova 1,000 in Q1 2021. notable gains at 8.7% and 8.6%, respectively, y-o-y.

Dubai Harbour Dubai Harbour District Seven District Seven

- 200 - 400200 600 400800 6001,000 8001,2001,0001,4001,200 1,6001,400 1,600 - 100 - 200 100 300 200 400 300 500 400 600 500 700 600 700

AED Million AED Million AED Million AED Million

Source: REIDIN & Chestertons Research

OBSERVER - UAE REPORT Q2 2021 8 OBSERVER - UAE REPORT Q2 2021 9 RESIDENTIAL Q4Q2 20212020 Sales Prices

The World The Palm Deira Arabian Gulf The Palm Dubai -0.4% Waterfront Y-o-Y Change AED765 AED1,007 JUMEIRAH DUBAI LAKE TOWERS MARINA AED768 -0.2% JUMEIRAH Y-o-Y LAKE TOWERS Change AED2,045 PALM AED1,009 JUMEIRAH DUBAI MARINA AED1,820 Palm Jumeirah PALM 12.4% AED885 8.6% Y-o-Y Y-o-Y JUMEIRAH Change THE MEADOWS Change Dubai /SPRINGS Maritime Bluewater City AED815 Islands Jumeirah Beach THE MEADOWS Residence 4.4% -7.8% /SPRINGS Y-o-Y AED860 Y-o-Y AED483 Change Change Dubai Marina THE GREENS AED836 Jumeirah Satwa DISCOVERY Media Internet THE GREENS Burjuman Hamriya City GARDENS City Badaa Centre Ibn Battuta JLT Al Wasl AED1,380 Deira Jumeirah Sufouh 2.9% Safa AED1,322 Wuheida AED524 Mall The Greens Manara DOWNTOWNUmm Mamzar Gardens Heights Y-o-Y DOWNTOWN Hurair Jebel Ali Freezone DISCOVERY Emirates TECOM Change DIFC Trade GARDENS Meadows Hills Centre Karama Jebel Ali Deira City Discovery /Springs Dubai Mall Centre Downtown Village The Views Oud Gardens Jumeirah Zabeel Metha Jebel Ali Islands The Lakes AED1,085 Barsha Al Nahda Jumeirah THE VIEWS Business Bay 8.3% Park The Springs Barsha AED1,050 Abu Dhabi Y-o-Y Garhoud Sharjah Airport Change THE VIEWS 3.3% Al Khail Free Zone AED720 AED980 Y-o-Y Gate Culture Twar JUMEIRAH Change Village Qusais PARK THE LAKES Technology Park -5.0% 8.7% AED780 Jumeirah Y-o-Y AED997 Green JumeirahY-o-Y Village Circle Change Umm JUMEIRAH Community Change BUSINESS BAY Golf International Ramool PARK Estates Media Dubai AED600Production Meydan Dubai Investment AED570 Zone(IMPZ) AED1,065 -4.7% 0.3% AED1,000City Festival City Park JUMEIRAH Y-o-Y Y-o-Y BUSINESS BAY JUMEIRAH VILLAGE THE LAKES Change AED510 Dubiotech Change VILLAGE CIRCLE Sports Nadd Dubai CIRCLE City MOTOR CITY Shamma World Motor Central City AED535 -12.4% -10.5% Nadd Y-o-Y MOTOR CITY Al Hammar Change Y-o-Y City AED510 Change DUBAI SILICON -6.8%Centre Arabian Al Barari Ranches OASIS Y-o-Y Mirdif AED657 Living Legends Change AED575 Ghoroob Mizar SPORTS CITY -11.3% AED570 SPORTS CITY Al Waha DUBAI SILICON Warqaa Y-o-Y Community Change AED790 OASIS AED445 AED415Shorooq ARABIAN AED850 Dragon Mart INTERNATIONAL INTERNATIONAL Layan RANCHES CITY ARABIAN International CITY AED590 AED665 RANCHES City DUBAILAND DUBAILAND Dubailand Dubai Khwaneej 7.6% Silicon Oasis Y-o-Y Awir Change Academic City

Figures in AED/Sq Ft Apartment Sales Q2 2020 Apartment Sales Q2 2021 Villa Sales Q2 2020 Villa Sales Q2 2021 Y-o-Y Movement Source: Chestertons Research

OBSERVER - UAE REPORT Q2 2021 10 OBSERVER - UAE REPORT Q2 2021 11 450,000 10%

Apartment rents recorded modest declines, Q4Q2 20212020 9% 400,000 8.7% PERCENTAGE CHANGE 8% albeit 350,000 at a reduced rate 7% 300,000 6% 250,000 4.9% 5% Average rents recorded modest declines over Q2, with a Studio units saw a quarterly decline of 1.4% in Q2, while 200,000 4.2% continued tenant preference for villas, coupled with long- both one and two-bedroom units fell by an average of just 4.3% 4%

AED PER UNIT ANNUM 150,000 3.4% standing oversupply, placing downward pressure across 0.3%. Conversely, three-bedroom units recorded a slight 3% secondary locations. uptick, at 0.1%. 2.4% 2.4% 2.3% 100,000 2.0% 2%

While 50,000 rents fell by 0.5% on average, and remained 8.7% Annually, the majority of locations recorded single-digit 1% below their Q2 2020 level, the rate of decline eased from average declines, with Downtown Dubai, JVC and JLT 0.2% the 0.7% fall - seen over the previous quarter. Several popular seeing falls of 5.3%, 6.5% and 6.7%, respectively. Discovery 0% Arabian The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm residential locationsRanches also enjoyed modest uplifts q-o-q. GardensMeadows saw the sharpest annual decline, at 15.8%,Heights Islands Golf Estates Jumeirah The Springs followed by DIFC, at 10.6%. Downtown Dubai recorded a slight increase in average Source: Chestertons Research 1BR 2BR 3BR Y-o-Y Change rents, at 1.7% q-o-q, followed by DubaiStudio Marina at 1.5% and While we expect apartment rents to face continued pressure JLT at 1.1%. DIFC saw the highest quarterly decline, at medium-term, improvements in employment levels noted 3.4%, followed by Discovery Gardens, at 2.8%. Both Dubai over Q2, along with continued take-up of the UAE’s remote- Silicon Oasis and Dubailand recorded 2.5% declines q-o-q. working visa, should serve to support demand over H2 2021.

Apartments - Average Rents by District/Unit Type and Annual Change

250,000 0%

-2%

200,000 -4%

-5.3% PERCENTAGE CHANGE -6% -6.7% -6.5% -7.3% -7.3% 150,000 -8.2% -8% -8.4% -8.5% -8.7% -8.6% -9.9% -9.7% -10% -10.6% 100,000 -12%

-14%

AED PER UNIT ANNUM 50,000 -15.8% -16%

-18%

- -20% Business Bay DIFC Discovery Downtown Dubai Marina Dubai Dubai Dubailand International JLT JVC The Greens The Views Dubai Gardens Dubai Silicon Oasis Sports City City Motor City

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q2 2021 12 OBSERVER - UAE REPORT Q2 2021 13 Villa rents continued to outperform the residential Q4Q2 20212020 average over Q2

Villa rents across all locations monitored saw an overall Lakes, which recorded quarterly increases of 3.4%, 3.1% and improvement in Q2, following a comparatively strong previous 3.0%, respectively. All other locations saw quarterly uplifts quarter. Average rents rose by 2.6% q-o-q, a modest uptick in within a bracket of 1.6% to 2.3%. the 2.3% increase witnessed in Q1. Annually, villa rents surpassed their Q2 2020 average, rising by 3.5% y-o-y. Palm Jumeirah also saw the strongest annual uplift, at 8.7%, followed by Jumeirah Golf Estates, Jumeirah Village Triangle The rise in villa rents was primarily due to continued tenant (JVT) and , which saw average rents surpass interest in more open space and outside areas, with agents their Q2 2020 levels by 4.9%, 4.3% and 4.2%, respectively. reporting a sustained increase in villa enquiries since the easing of social distancing restrictions last year. With work-from-home policies continuing across the private sector, even if on a part-time basis, we expect villa rents to Palm Jumeirah saw the highest increase in rents, at 3.9% q-o-q, outperform the wider residential average over the months followed by Jumeirah Golf Estates, Victory Heights and The ahead.

Villas - Average Rents by District/Unit Type and Annual Change

450,000 10%

9% 400,000 8.7% PERCENTAGE CHANGE 8% 350,000 7% 300,000 6% 250,000 4.9% 5% 200,000 4.2% 4.3% 4%

AED PER UNIT ANNUM 150,000 3.4% 3% 2.4% 2.4% 2.3% 100,000 2.0% 2%

50,000 1%

- 0.2% 0% Arabian The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches The Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q2 2021 14 OBSERVER - UAE REPORT Q2 2021 15

250,000 0%

-2%

200,000 -4%

-5.3% PERCENTAGE CHANGE -6% -6.7% -6.5% -7.3% -7.3% 150,000 -8.2% -8% -8.4% -8.5% -8.7% -8.6% -9.9% -9.7% -10% -10.6% 100,000 -12%

-14%

AED PER UNIT ANNUM 50,000 -15.8% -16%

-18%

- -20% Business Bay DIFC Discovery Downtown Dubai Marina Dubai Dubai Dubailand International JLT JVC The Greens The Views Dubai Gardens Dubai Silicon Oasis Sports City City Motor City

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change Average Sales Price (Apartments) Q1 2017 to Q2 2021

1,700

Q4Q2 20212020 1,500 Abu Dhabi 1,300 1,100

900 AED PER SQ FT

700

500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021

Al Raha Beach Al Ghadeer Al Reef Al Reem Island Saadiyat Island

Source: Chestertons Research

Apartment Prices Villa Prices

Average apartment prices saw modest improvements, Villa prices saw a marginal rise over Q2, increasing by an increasing by 0.6% q-o-q, although they remained 0.8% average of 0.3%. Annually, average villa prices rose by 2.2%. below their Q2 2020 level. ABU DHABI SAW RENEWED Al Reef and Al Raha Gardens saw average prices rise by Al Reem Island saw average prices rise by 2.2% q-o-q, with 1.6% and 1.4%, respectively, q-o-q. Average values in Al Reef Saadiyat Island and Al Reef both recording quarterly upticks reached AED 625 per sq ft, up from AED 615 the previous OFF-PLAN LAUNCH ACTIVITY of 0.7%. Only Al Ghadeer recorded declines on a quarterly quarter, with Al Raha Gardens averaging AED 710, up from basis, falling by 0.7% from Q1 2021. AED 700 in Q1 2021.

OVER Q2 On an annual basis, Saadiyat Island and Al Reem Island Al Raha Beach saw a marginal 0.5% increase q-o-q, with were the only locations to see prices rise, at 2.9% and 0.5%, prices in Khalifa City and Al Ghadeer declining by 1.2% and respectively. Saadiyat Island prices averaged AED 1,410 per 0.7%, respectively. sq ft, up from AED 1,370 in Q2 2020, with prices in Al Reem Abu Dhabi saw renewed off-plan launch activity over Q2, company’s upcoming master-planned community, Bloom reaching AED 945 per sq ft, up from AED 930 in Q2 2020. On an annual basis, Al Raha Gardens and Al Reef recorded with developers seeking to capitalise on improved market Gardens, located on the Eastern Mangrove Corniche. the highest price rises, gaining 5.2% and 5.0% over their Q2 sentiment, and a more favourable economic backdrop, to Al Raha Beach saw average prices remain stable y-o-y, at 2020 levels. Prices in Khalifa City remained stable y-o-y, with release new schemes. Residential sales prices saw modest improvements over Q2, AED 1,215 per sq ft, with Al Ghadeer and Al Reef recording Al Ghadeer being the only location to record a decline, of with apartments and villas recording marginal uplifts of 0.6% declines of 5.0% and 2.7%, respectively. 0.7%. Aldar Properties, the emirate’s largest developer, announced and 0.3%, respectively, q-o-q. While apartment rents recorded plans to launch five new projects this year, with upcoming a 0.8% quarterly decline, villa rents saw broad improvements, schemes set to comprise a range of villas, land plots and rising by 1.4% q-o-q and surpassing their Q2 2020 average by Off-plan sales enjoyed robust demand, with recent launches apartments across Al Reem, Saadiyat and Yas Islands. The 0.9%. HOT TOPIC announcement followed the successful launch of Aldar’s Noya suggesting renewed market confidence development, located on Yas Island, which completed sales of Overall, the second quarter saw continued improvements in real its second and third phases over Q2. estate market sentiment, with a return to economic growth, Following a comparatively strong opening quarter, Abu Dhabi’s leading developers reported notable off-plan demand across schemes along with recent federal visa and residency reforms, likely to launched during Q2. Bloom Properties reported the completion of off-plan sales support Abu Dhabi’s real estate market over the remainder of for the first phase of its Aldhay development, part of the 2021. Aldar Properties announced that all units within the third phase of its Noya project, Noya Luma, located on Yas Island and comprising 189 villas, sold within four hours of launch in May. This followed the successful launch of the project’s second phase, comprising 480 villas, which reportedly sold out within two days in April.

Bloom Properties also reported the completion of sales for the first phase of Aldhay, Bloom Gardens, within six hours of launch in May.

OBSERVER - UAE REPORT Q2 2021 16 RecentOBSERVER sales - UAEperformance REPORT Q2 2021suggests renewed confidence in the emirate’s residential market, particularly the villa sector, which 17 is supported by a comparatively limited supply pipeline. Villas currently comprise less than 17.5% of scheduled residential completions over the coming 18 months. RESIDENTIAL Q4Q2 20212020 Sales Prices

AED1,410 Halat Al 0.5% Bahrani SAADIYAT Y-o-Y AED1,370 ISLAND Change SAADIYAT ISLAND Al Rafiq 2.9% AED945 AED940 Saadiyat Y-o-Y Ras Ghurab Al Weheil Island Island Island AL REEM AL REEM Al Reem Change Qassabi ISLAND ISLAND Island Al Aryam Al Jubail Island Ba Al Umm Yifenah Ghaylam Island Island 0.0% Al Futaisi Y-o-Y Dubai Change AED1,215 AL RAHA BEACH

Zayed Sports AED1,215 City AL RAHA BEACH AED665 -5.0% AL GHADEER Y-o-Y AED1,080 Change Al Raha 5.2% Beach AL RAHA Y-o-Y Samaliyah BEACH AED700 Island Change AED675 Yas Island AL GHADEER AL RAHA AED1,065 AED710 GARDENS AL RAHA 1.4% Al Raha BEACH Y-o-Y AL RAHA Change GARDENS Gardens Al Reef -0.7% Khalifa City Y-o-Y Al Ghadeer ICAD II Change Masdar City Abu Dhabi AED750 International AED670 Airport AL REEF AED675 AED840 AL GHADEER AL GHADEER KHALIFA AED730 CITY -2.7% AL REEF AED840 AED595 Y-o-Y KHALIFA AL REEF Change CITY 0.0% Y-o-Y Change 5.0% Y-o-Y Change AED625 AL REEF

Figures in AED/Sq Ft Apartment Sales Q2 2020 Apartment Sales Q2 2021 Villa Sales Q2 2020 Villa Sales Q2 2021 Y-o-Y Movement Source: Chestertons Research

OBSERVER - UAE REPORT Q2 2021 18 OBSERVER - UAE REPORT Q2 2021 19 Apartment rents continued to record modest Q4Q2 20212020 declines, falling by 0.8%

Abu Dhabi apartment rents continued to see modest Khalifa City saw continued stability over Q2, with rents having declines over Q2, falling by 0.8% on average, following a also held steady over the previous quarter. All other locations 0.5% dip the previous quarter. Overall, apartment rents monitored recorded quarterly declines ranging from 0.6% to were down by 3.1% from Q2 2020. 2.8%.

While apartment rents registered minor declines on Aside from Saadiyat Island and Mohammed bin Zayed City, average, several locations were stable or enjoyed modest all locations saw rents decline on an annual basis, falling from uplifts over Q2. 1.3% to 10.6%.

Saadiyat Island saw rents increase both on a quarterly and Al Ghadeer, Al Raha Beach Area and Muroor Area saw the an annual basis, with average rents rising by 1.7% q-o-q sharpest annual declines, with average rents falling by 10.6%, and 6.3% y-o-y. Average rents in Mohammed bin Zayed 6.2% and 6.2%, respectively. Al Khalidiya and Corniche Road City remained stable on both a quarterly and an annual recorded comparatively modest annual declines of 1.3% and basis. 1.4%, respectively.

Apartments − Average Rents by Location/Unit Type and Annual Change

200,000 8% 6.3%

180,000 6% PERCENTAGE CHANGE 160,000 4% 140,000 2% 120,000 0.0% 0% -1.3% -1.4% 100,000 -2% 80,000 -4.1% -4.0% -3.9% -4%

AED PER UNIT ANNUM 60,000 -6.2% -6.2% -6% 40,000 -8% -10% 20,000 -10.6% 0 -12% Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island Khalifa City Al Khalidiya MBZ Corniche Road Muroor Area

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

OBSERVER - UAE REPORT Q2 2021 20 OBSERVER - UAE REPORT Q2 2021 21

300,000 8%

6.4% PERCENTAGE CHANGE 250,000 6% 4% 200,000 2.9% 2% 150,000 1.3% 1.0% 0% 100,000 -0.8% -0.8% -2% -3.5% AED PER UNIT ANNUM 50,000 -4% 0 -6% Al Ghadeer Al Reef Al Raha Khalifa City Al Reem Al Khalidiya MBZ Gardens Island

Source: Chestertons Research Studio 4BR 5BR Y-o-Y Change Villa rents saw modest improvements over Q2, Q4Q2 20212020 recording a 1.4% average uplift

Villa rents saw broad improvements over Q2, supported by On an annual basis, Al Reem Island saw the highest increase, 200,000 8% ongoing demand for more open space as work-from-home with rents rising by 6.4% above their Q2 2020 average. Al Reef, 6.3% policies 180,000 continued to remain in place across parts of the private Al Raha Gardens and Khalifa City saw rents rise by 2.9%, 1.3% 6% PERCENTAGE CHANGE sector. 160,000 1.0%, respectively, y-o-y. 4% 2% Average 140,000 villa rents rose by 1.4% q-o-q, an increase in the Al Khalidiya rents recorded a decline of 3.5% y-o-y, with both Al marginal 120,000 0.4% increase recorded over the previous quarter, and Ghadeer and Mohammed bin Zayed City seeing rents remain 0.0% 0% -1.3% -1.4% surpassed 100,000 their Q2 2020 average by 0.9%. 0.8% below their Q2 2020 average. -2%

Al Reem 80,000 Island, Al Reef and Al Raha Gardens recorded notable We expect-4.1% villa rents to continue -4.0%to outperform the wider -3.9% -4%

upliftsAED PER UNIT ANNUM 60,000 in average rents, -6.2%rising by 3.6%, 2.3% and 2.3%, residential average medium-term, supported by ongoing work- -6.2% -6% respectively. Al Ghadeer, Al Khalidiya and Mohammed bin from-home policies, as well as demand driven by take-up of the 40,000 -8% Zayed City saw rents remain stable over Q2. UAE’s remote-working visa. -10% 20,000 -10.6% 0 -12% Al Raha Beach Area Al Ghadeer Al Reef Al Reem Island Saadiyat Island Khalifa City Al Khalidiya MBZ Corniche Road Muroor Area

Source: Chestertons Research Studio 1BR 2BR 3BR Y-o-Y Change

Villas − Average Rents by Location/Unit Type and Annual Change

300,000 8% HOT TOPIC Strong tenant demand continued to buoy villa rents

6.4% PERCENTAGE CHANGE 250,000 6% Abu Dhabi villa rents continued to outperform the wider residential average over Q2, following on from the rise in demand 4% witnessed over the first quarter. 200,000 2.9% 2% 150,000 1.3% 1.0% Beach-front locations benefitted from sustained tenant interest, with competition for high-end and luxury villas across prime 0% freehold locations, such as Saadiyat and Yas Islands, driving rental uplifts. 100,000 -0.8% -0.8% -2% While villas may see a greater share of market demand moving forwards, they represent a comparatively small proportion of -3.5% AED PER UNIT ANNUM 50,000 -4% upcoming Abu Dhabi residential supply. We expect this to further support rents medium-term. 0 -6% Al Ghadeer Al Reef Al Raha Khalifa City Al Reem Al Khalidiya MBZ Improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa initiative, Gardens Island should serve to support rental demand more broadly over H2 2021.

Source: Chestertons Research Studio 4BR 5BR Y-o-Y Change

OBSERVER - UAE REPORT Q2 2021 22 OBSERVER - UAE REPORT Q2 2021 23 Q4Q2 20212020 About Us Core Services

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