OBSERVER Residential Report Q2 2020 Market Overview

Dubai’s residential sector faced a challenging second quarter, with social distancing measures, coupled with Covid-19’s economic impact, affecting market performance.

Average apartment rents fell by 3.9% quarter-on-quarter (q-o-q) and 9.5% year-on-year (y-o-y), with average villa rents seeing more moderate declines of 2.6% q-o-q and 7.2% y-o-y. While social distancing policies broadly restricted the rental market over April, activity recovered in May, driven by tenants looking to reduce rental costs or take advantage of lower rents to upsize.

The impact on residential prices was less pronounced, with the average price of recorded off-plan transactions seeing a slight uplift, while both new listing and completed unit prices fell. On average, Chestertons estimates that apartment and villa prices saw quarterly falls of 2.6% and 1.2%, respectively.

A total of 5,233 residential units were sold over Q2, representing a quarterly decline of 45%, with corresponding transaction value falling by 40% to AED 9.06 billion. When looked at on a monthly basis, June transaction figures were encouraging and point towards more typical sales volumes over the third quarter.

While clearly a testing period, there were also positives to draw from Q2. Developers held back new off-plan sales launches, a move that bodes well for more balanced supply and demand dynamics medium-term. Dubai also took a step towards greater market transparency, with the routine release of its official house price index, Mo’asher, likely to give rise to greater investor confidence.

The outlook for Dubai’s residential market will be closely tied to the performance of the wider economy. Over the second half of 2020, we expect residential prices and rents to fall further, driven by a declining expatriate population and an overall private sector contraction. Assuming a return to economic growth next year, it is likely that residential prices will see greater stability over 2021.

OBSERVER - Dubai Residential Report Q2 2020 2 Q2 Highlights Key Indicators

Economic Snapshot

Dubai’s economy was impacted by measures introduced to counter Apartments Covid-19 over the second quarter, with a further decline in GDP Prices: expected to follow ’s 3.5% contraction. Tourism-related sectors and physical retailers were acutely affected by the suspension of Q-o-Q Change: –2.6% tourist arrivals coupled with the temporary closure of hotels and malls. Y-o-Y Change: The proactive policy response from both UAE and Dubai authorities, –9.8% however, eased the overall economic impact, with the UAE’s central Rents: bank (CBUAE) predicting a recovery in economic activity over the second half of 2020. The CBUAE specifically cited the Targeted Q-o-Q Change: –3.9% Economic Support Scheme (TESS), along with economic stimulus Y-o-Y Change: –9.5% packages announced by both local and federal governments, as likely to weigh in positively on growth once the pandemic subsides.

Sales Prices Villas

Average apartment prices fell by 2.6% from Q1 2020, an increase in Prices: the rate of decline seen over Q1, with average villa prices seeing a Q-o-Q Change: –1.2% more moderate fall of 1.2%. On an annual basis, average apartment prices declined by 9.8%, with villas falling by 7.1%. There was often Y-o-Y Change: –7.1% a gap witnessed between buyer and seller price expectations over Rents: Q2 and average prices will likely decline further next quarter as transaction volume gains pace. Q-o-Q Change: –2.6% Y-o-Y Change: –7.2% Rental Rates

Average apartment rents fell by 3.9% over Q2, following more moderate declines of 1.5% the previous quarter, leading to a 9.5% fall from Q2 2019. Average villa rents proved more resilient, falling Sales Volume by 2.6% and 7.2% on a quarterly and annual basis, respectively. 5,233 units Covid-19’s economic impact will continue to challenge rents over 2020, with falls in private sector salaries, rising unemployment and a –45.4% Q-o-Q reduced population set to place downward pressure on rates. –39.6% Y-o-Y

Off-plan Sales Launches

Developers refrained from launching new projects for sale over the Sales Value second quarter, leaving total off-plan sales launches at 4,458 units for H1 2020. This compares to 12,222 in H1 2019 and 21,435 in H1 AED 9.06 billion 2018. The reduction in new sales launches is a welcome step towards –39.9% Q-o-Q more balanced supply and demand dynamics medium-term. –36.6% Y-o-Y Transactions

Volumes. Overall residential transactions reached 5,233 units over the second quarter, representing a near 40% fall on an annual basis Off-plan Launches and a 45% fall q-o-q. 4,458 units (H1 2020) Values. The total value of residential transactions stood at AED 9.06 –63.5% Y-o-Y billion, a near 40% fall on a quarterly basis and a 37% fall y-o-y.

OBSERVER - Dubai Residential Report Q2 2020 3 Covid-19’s impact disrupted Dubai’s residential sector, affecting agency and developer activity over Q2

Measures introduced to combat Covid-19 restricted broad from AED 558 to AED 524 per sq ft, representing a decline of activity over the second quarter, significantly reducing 6.1% over Q2. transaction volumes, especially across April and May. Limited sales activity can make accurately assessing average prices Motor City saw a 5.3% drop from the previous quarter, with challenging, with the market witnessing a divergence in trends prices decreasing from AED 565 to AED 535 per sq ft. between average off-plan transaction prices and average listing and completed property prices over Q2. Locations which witnessed more moderate declines over Q2 included The Greens and , with prices falling by just We estimate that average apartment prices fell 2.6% from 0.5% and 1%, respectively. Average apartment prices across Q1 2020, an increase in the rate of decline from the previous also performed comparatively well, declining by quarter, with average villa prices seeing a more moderate fall of 1.1% to AED 1,009 per sq ft, down from AED 1,020 over Q1. 1.2%. On an annual basis, average apartment prices declined by 9.8%, with villas falling by 7.1%. On an annual basis, Business Bay and The Views saw the most moderate declines, at -1.4% and -3.7%, respectively, following We expect prices to face further declines over the second half Business Bay recording a minor uplift in first quarter prices, and of 2020, with a subdued economy and a likely reduction of having seen stable prices over the preceding two quarters. the emirate’s population, both key drivers of Dubai residential Motor City, Dubai Silicon Oasis and Village Circle prices, set to hamper market performance. (JVC) saw the highest declines on an annual basis, with average prices at Motor City falling from AED 700 per sq ft in Q2 2019 A notable fall in new off-plan sales launches, which totalled to AED 535. 4,458 units over the first half of 2020, compared to 12,222 units in H1 2019 and 21,435 units in H1 2018, bodes well for Villas: supply and demand dynamics and should serve to support Q-o-Q Change: –1.2% residential prices medium-term. Y-o-Y Change: –7.1%

Units Launched for Sale Off-plan and % Change All areas saw declines in average prices over the second quarter, within a bracket of -0.4% to -2.2% q-o-q and -4.6% to -12.9% 30000 20% y-o-y. 10% 25000 0% saw the steepest quarterly price fall, with 20000 -10% average values reaching AED 1,820 per sq ft, down from AED -20% 1,860, a decline of 2.2%. This follows a price decline of less 15000 -30% than 1% over the previous quarter. The Meadows/The Springs 10000 -40% prices saw a fall of 2% q-o-q, following a 1.2% rise the previous -50% 5000 quarter, with average prices reaching AED 815 per sq ft. -60% 0 -70% The Lakes, and Jumeirah Park all witnessed H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 quarterly declines of less than 1%, at -0.4%, -0.6% and -0.7%, Source: Units launched H-o-H Change respectively. Average prices at The Lakes stood at AED 980 per REIDIN & Chestertons for sale (O -plan) sq ft, down from AED 1,038 in Q2 2019, with average prices at Arabian Ranches and Jumeirah Park standing at AED 790 and Apartments: AED 720, respectively. Q-o-Q Change: –2.6% Y-o-Y Change: –9.8% The Meadows/The Springs saw the lowest annual decline, at -4.6%. Jumeirah Park was the only area to see a double-digit The largest price declines in the apartment segment were fall in average prices, falling from AED 827 per sq ft in Q2 2019, witnessed in , with average prices falling representing a decline of 12.9%.

OBSERVER - Dubai Residential Report Q2 2020 4 HOT TOPIC Dubai embraces greater market transparency

Q2 saw the release of the second and third editions of Mo’asher, Dubai’s official house price index, marking a further step towards greater transparency within the emirate’s residential sector. , which is jointly produced by the Dubai Land Department (DLD) and listings portal Property Finder, tracks property prices from a base year of 2012.

In May 2020, the sales index increased 12.1% compared to 2012 and 0.5% compared to April 2020. Over April and May, the index saw an increase of 1.54%. Mo’asher provides separate apartment and villa/townhouse indices, which saw monthly rises of 0.59% and 0.95%, respectively, in May 2020.

The routine release of the index, which was first announced last year, should serve to bolster investor confidence and enhances Dubai’s standing as the region’s most transparent property market.

OBSERVER - Dubai Residential Report Q1 2020 5 Apartments and Villas − Residential Sales Prices and Quarterly Change

The World The Palm Deira Arabian Gulf The Palm Dubai -2.8% Waterfront Q-o-Q Change AED768 JUMEIRAH AED1,009 LAKE TOWERS DUBAI MARINA AED790 -1.1% JUMEIRAH Q-o-Q LAKE TOWERS Change -2.2% Q-o-Q AED1,020 Change DUBAI MARINA Palm Jumeirah AED1,860 AED1,820 AED815 -2.0% PALM Q-o-Q JUMEIRAH PALM THE MEADOWS Change JUMEIRAH Dubai /SPRINGS Maritime Bluewater City AED832 Islands AED524 THE MEADOWS Residence -1.6% DISCOVERY /SPRINGS AED836 Q-o-Q GARDENS Change Dubai Marina THE GREENS AED840 Jumeirah Satwa Media Internet Burjuman Hamriya City THE GREENS City Badaa Centre -6.1% Ibn Battuta JLT Al Wasl AED1,322 Deira Q-o-Q Jumeirah Sufouh -0.5% Safa AED1,343 Wuheida AED558 Mall The Greens Manara DOWNTOWNUmm Mamzar Change Gardens Heights Q-o-Q 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 AED1,050 – Barsha Al Nahda Jumeirah THE VIEWS -0.7% Park The Springs Barsha AED1,065 Abu Dhabi Q-o-Q Garhoud Sharjah Change Airport THE VIEWS -1.4% Al Khail Free Zone AED725 AED984 Q-o-Q Gate Culture Twar JUMEIRAH Change Village Qusais PARK THE LAKES -0.4% Technology Park -1.6% AED1,007 AED720 Q-o-Q Jumeirah Q-o-Q Green Village Circle Change Umm JUMEIRAH Community JumeirahChange BUSINESS BAY Golf International Ramool PARK Estates Media Dubai AED610Production Meydan Dubai Investment Zone(IMPZ) AED980 -5.3% AED997City Festival City Park AED600 JUMEIRAH Q-o-Q -1.0% JUMEIRAH VILLAGE THE LAKES Change AED535 Q-o-Q BUSINESS BAY Dubiotech Change VILLAGE CIRCLE Sports Nadd Dubai CIRCLE City MOTOR CITY Shamma World Motor Central -2.0% City AED565 -1.7% Nadd Q-o-Q MOTOR CITY Al Hammar Change Q-o-Q AED570 Change City -4.2%Centre Arabian Al BarariDUBAI SILICON Ranches OASIS Q-o-Q Mirdif AED670 Living Legends Change AED657 -5.0% Ghoroob Mizar SPORTS CITY AED580 SPORTS CITY Q-o-Q Al Waha DUBAI SILICON Warqaa Change Community AED795 OASIS AED465 AED445Shorooq ARABIAN AED790 Dragon Mart INTERNATIONAL Layan ARABIAN INTERNATIONAL RANCHES International CITY CITY AED700 RANCHES City AED665 Khwaneej DUBAILAND Dubailand Dubai -0.6% Silicon Oasis Q-o-Q Awir Change Academic City

Figures in AED/Sq Ft Villa Sales Q1 2020 Villa Sales Q2 2020 Apartment Sales Q1 2020 Apartment Sales Q2 2020 Q-o-Q Change Source: Chestertons Research

OBSERVER - Dubai Residential Report Q2 2020 6 The Palm Deira Arabian Gulf The Palm Dubai Jebel Ali -2.8% Waterfront Q-o-Q Change AED768 JUMEIRAH AED1,009 LAKE TOWERS DUBAI MARINA AED790 -1.1% JUMEIRAH Q-o-Q LAKE TOWERS Change -2.2% Q-o-Q AED1,020 Change DUBAI MARINA Palm Jumeirah AED1,860 AED1,820 AED815 -2.0% PALM Q-o-Q JUMEIRAH PALM THE MEADOWS Change JUMEIRAH Dubai /SPRINGS Maritime Bluewater City AED832 Islands AED524 Jumeirah Beach THE MEADOWS Residence -1.6% DISCOVERY /SPRINGS AED836 Q-o-Q GARDENS Change Dubai Marina Dubai Pearl THE GREENS AED840 Umm Suqeim Jumeirah Satwa Bur Dubai Media Internet Burjuman Hamriya City THE GREENS City Badaa Centre -6.1% Ibn Battuta JLT Al Wasl AED1,322 Deira Q-o-Q Jumeirah Sufouh -0.5% Safa AED1,343 Wuheida AED558 Mall The Greens Manara DOWNTOWNUmm Mamzar Change Gardens Heights Q-o-Q DOWNTOWN Hurair Jebel Ali Freezone DISCOVERY Emirates TECOM Change DIFC Trade GARDENS Meadows Hills Centre Karama Hor Al Anz Jebel Ali Deira City Discovery /Springs Mall of the Emirates Dubai Mall Centre Downtown Village The Views Al Quoz Oud Gardens Jumeirah Zabeel Metha Jebel Ali Islands The Lakes AED1,050 – Barsha Al Nahda Jumeirah THE VIEWS -0.7% Park The Springs Barsha AED1,065 Abu Dhabi Q-o-Q Al Furjan Garhoud Sharjah Change Airport THE VIEWS -1.4% Al Khail Free Zone AED725 AED984 Q-o-Q Gate Culture Twar JUMEIRAH Change Village Qusais PARK THE LAKES -0.4% Technology Park -1.6% AED1,007 AED720 Q-o-Q Jumeirah Q-o-Q Green Village Circle Change Umm JUMEIRAH Community JumeirahChange BUSINESS BAY Golf International Bu Kadra Ramool PARK Estates Media Dubai AED610Production Meydan Dubai Investment Zone(IMPZ) AED980 -5.3% AED997City Festival City Park AED600 JUMEIRAH Q-o-Q -1.0% JUMEIRAH VILLAGE THE LAKES Change AED535 Q-o-Q BUSINESS BAY Dubiotech Change VILLAGE CIRCLE Sports Nadd Dubai CIRCLE City MOTOR CITY Ras Al Khor Shamma Muhaisnah World Motor Central -2.0% City AED565 -1.7% Nadd Q-o-Q MOTOR CITY Al Hammar Change Q-o-Q AED570 Change Mirdif City -4.2%Centre Arabian Al BarariDUBAI SILICON Ranches OASIS Q-o-Q Mirdif AED670 Living Legends Change AED657 -5.0% Ghoroob Mizar SPORTS CITY AED580 SPORTS CITY Q-o-Q Al Waha DUBAI SILICON Warqaa Change Community AED795 OASIS Nad Al Sheba AED465 AED445Shorooq ARABIAN AED790 Dragon Mart INTERNATIONAL Layan ARABIAN INTERNATIONAL RANCHES International CITY CITY AED700 RANCHES City AED665 Khwaneej DUBAILAND DUBAILAND Dubailand Dubai -0.6% Silicon Oasis Q-o-Q Awir Change Academic City

Figures in AED/Sq Ft Villa Sales Q1 2020 Villa Sales Q2 2020 Apartment Sales Q1 2020 Apartment Sales Q2 2020 Q-o-Q Change Source: Chestertons Research

OBSERVER - Dubai Residential Report Q2 2020 7 Q2 saw market-wide declines in average rents, with villas proving more resilient

Dubai’s rental market saw broad declines over the second of lower rents to upsize and upgrade their accommodation. The quarter, as the economic impact of Covid-19 placed pressure on most significant ongoing threats to the rental sector come from rates. Average apartment rents fell by 3.9% over Q2, following a fall in demand driven by rising unemployment and declining more moderate declines of 1.5% over the previous quarter, income levels for private sector workers. The second quarter contributing to a 9.5% fall from Q2 2019. witnessed significant job losses, especially across travel-related sectors, and a further fall in Dubai’s expatriate population Average villa rents proved more resilient, falling by 2.6% presents a clear risk moving forward. and 7.2% on a quarterly and annual basis, respectively. The more moderate decline in villa rents is largely due to a rise in Landlords will likely need to demonstrate continued flexibility tenant interest in landed property, with agents reporting a on both rents and payment terms, focusing on taking steps to clear increase in villa enquires following the easing of social retain tenants, over the second half of 2020. distancing measures in May. Apartments: All areas saw declines in average rents over Q2, although the Q-o-Q Change: –3.9% rate of decrease varied by unit type and location, with areas Y-o-Y Change: –9.5% with higher volumes of new supply, and smaller unit-types, typically seeing larger average falls. All areas saw declines in average rents over the second quarter, within a bracket of -1.4% to -6.6%. With the ongoing economic impact of Covid-19 taking effect, Dubai landlords have continued to offer discounts and more Studio units saw the sharpest falls on average, declining 5.8% flexible payment terms to both attract and retain tenants. q-o-q and 12.6% y-o-y, followed by one bedroom units at 3.9% Multiple rental cheques, already increasingly common, are now and 11%, respectively. widely expected by tenants, with payment through four to six cheques becoming typical market practice over the second Motor City witnessed the sharpest quarterly fall in average rents, quarter. Landlords also offered extended rent-free periods and at -6.6%, followed by Sports City at -6.4%. On an individual unit- increasingly listed units with the option of shorter lease terms. type basis, rents for three bedroom units at Dubailand saw the steepest quarterly decline, at -10%. Conversely, three bedroom While social distancing measures largely restricted leasing rents at International City and DIFC held steady for the second activity during April, the market has seen a notable rise in activity consecutive quarter, as did three bedroom units within Jumeirah since May. Tenants looking to relocate have typically sort to Lake Towers. reduce rental costs, following a fall in income, or take advantage

HOT TOPIC Tenants adjust their priorities after lockdown

While Covid-19 counter measures impacted second quarter leasing activity, Dubai residential agencies reported a sharp rise in enquires as restrictions eased over May. Agents also reported a change in requirements, with tenants increasingly looking for shorter lease lengths and properties offering more flexible payment terms. With ongoing market uncertainty, it is likely that demand for properties offering greater flexibility will continue.

Listings portal Property Finder also noted a spike in searches for Dubai villas and townhouses, with more tenants searching for properties with private gardens, large balconies and private swimming pools following April’s lockdown.

OBSERVER - Dubai Residential Report Q2 2020 8 On an annual basis, average rents across Motor City and The by 12.2% and 12.7% respectively, compared to Q2 2019. Views saw the highest average declines, at -14.8% and -13.2%, Average rents at Arabian Ranches also saw a double-digit respectively, with The Greens, Dubai Silicon Oasis, Dubai Sports annual decline, at -10.2%, with other locations monitored City and Discovery Gardens all seeing double-digit falls since Q2 seeing annual falls of below 10%. 2019. , Palm Jumeirah and The Lakes saw the lowest and International City saw declines of annual declines in average rents, at -2.9%, -3.1% and -5%, 6.9% and 5.6%, respectively, with Dubailand, Dubai Marina, respectively. Business Bay and DIFC witnessing annual declines of below 8%. On a unit-type basis, four bedroom villas at The Meadows Villas: saw the sharpest annual declines, reaching AED 175,000 per Q-o-Q Change: –2.6% annum, a decline of 16.7%. Conversely, five bedroom villas at Y-o-Y Change: –7.2% Jumeirah Islands witnessed the lowest annual fall, standing at AED 236,500 per annum, a decline of just 1.5% from Q2 2019. On a quarterly basis, Jumeirah Islands was the only location to see a quarterly decline of below 1%, at -0.8%, with Victory Smaller villa units showed steeper average declines, with two Heights and The Meadows both seeing a comparatively and three bedroom units seeing annual rates fall by 13.7% and moderate decline of 1.6% q-o-q. 8.4%, respectively, compared to declines of 7.2% across four bedroom villas and 5% for five bedroom units. On an annual basis, the sharpest rental rate falls were witnessed across The Springs and The Meadows, with annual rents falling

OBSERVER - Dubai Residential Report Q2 2020 9 400,000 0%

350,000 -2%

300,000 -4% PERCENTAGE CHANGE

250,000 -6%

200,000 -8% AED RENTAL RATES AED RENTAL 150,000 -10%

100,000 -12%

50,000 -14%

- -16% Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research 2BR 3BR 4BR 5BR QoQ Change YoY Change

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

250,000 0%

-2% 200,000

-4% PERCENTAGE CHANGE

150,000 -6%

-8% 100,000 AED RENTAL RATES AED RENTAL -10% 50,000 -12%

- -14% Business Bay DIFC Discovery 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 QoQ Change YoY Change

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

400,000 0%

350,000 -2%

300,000 -4% PERCENTAGE CHANGE

250,000 -6%

200,000 -8% AED RENTAL RATES AED RENTAL 150,000 -10%

100,000 -12%

50,000 -14%

- -16% Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research 2BR 3BR 4BR 5BR QoQ Change YoY Change

OBSERVER - Dubai Residential Report Q2 2020 10

250,000 0%

-2% 200,000

-4% PERCENTAGE CHANGE

150,000 -6%

-8% 100,000 AED RENTAL RATES AED RENTAL -10% 50,000 -12%

- -14% 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 QoQ Change YoY Change 400,000 0%

350,000 -2%

300,000 -4% PERCENTAGE CHANGE

250,000 -6%

200,000 -8% AED RENTAL RATES AED RENTAL 150,000 -10%

100,000 -12%

50,000 -14%

- -16% Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research 2BR 3BR 4BR 5BR QoQ Change YoY Change

250,000 0%

-2% 200,000

-4% PERCENTAGE CHANGE

150,000 -6%

-8% 100,000 AED RENTAL RATES AED RENTAL -10% 50,000 -12%

- -14% 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 QoQ Change YoY Change

400,000 0%

350,000 -2%

300,000 -4% PERCENTAGE CHANGE

250,000 -6%

200,000 -8% AED RENTAL RATES AED RENTAL 150,000 -10%

100,000 -12%

50,000 -14%

- -16% Arabian The The The Lakes Victory Al Furjan JVT Jumeirah Jumeirah Palm Ranches Springs Meadows Heights Islands Golf Estates Jumeirah

Source: Chestertons Research 2BR 3BR 4BR 5BR QoQ Change YoY Change

OBSERVER - Dubai Residential Report Q2 2020 11

250,000 0%

-2% 200,000

-4% PERCENTAGE CHANGE

150,000 -6%

-8% 100,000 AED RENTAL RATES AED RENTAL -10% 50,000 -12%

- -14% 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 QoQ Change YoY Change Sales transactions fell sharply over Q2, although June figures point to recovery

Residential transactions totalled 5,233 units over the second Off-plan sales totalled 3,331 units over Q2, down from 5,387 quarter, representing a near 40% fall on an annual basis and a the previous quarter and the 5,171 units sold over Q2 2019. quarterly fall of 45%. Completed sales stood at 1,902 units over Q2, a near 55% fall from the 4,204 sold over Q1 and down from the 3,499 units The sharp fall in transactions is largely a result of social sold over Q2 2019. distancing measures restricting sales activity over April and May, where total sales stood at 1,739 and 1,373 units, Dubai Marina saw the highest volume of completed units respectively. Eased restrictions over June had a notable impact transfer over Q2, at 146, followed by Dubai Hills Estate at 120 on sales volumes, with monthly sales increasing to 2,121 units. units.

While off-plan sales accounted for 64% of the total number Transaction Values of units sold over Q2, total transaction value was more evenly Q-o-Q Movement (Completed Units): –41.1% divided between off-plan and completed property sales, Q-o-Q Movement (Off-Plan Units): –38.7% standing at 51% and 49%, respectively. Y-o-Y Movement (Completed Units): –37.4% Y-o-Y Movement (Off-Plan Units): –35.8% 42% of apartments sold over Q2 were one bedroom units, followed by studios at 27%, with two and three bedroom and Transaction values for completed properties fell by over 40% above units accounting for 22% and 9% of sales, respectively. from Q1, from AED 7.53 billion to AED 4.43 billion. On an annual basis, the total transaction value of completed properties Three bedroom villas accounted for 43% of second quarter declined by 37.4%, from AED 7.08 billion in Q2 2019. sales, followed by four bedroom villas at 31%. Two bedroom, five bedroom and six bedroom and above villas accounted for Off-plan transfers followed a similar trend, falling by 38.7% on 6%, 13% and 7% of total sales, respectively. a quarterly basis, from AED 7.54 billion in Q1 2020 to AED 4.62 billion, with total transaction value declining by 35.8% annually. Transaction Volumes Q-o-Q Movement (Completed Units): –54.8% District One saw the highest total value of completed properties Q-o-Q Movement (Off-Plan Units): –38.2% transfer over the second quarter, with transactions totalling AED Y-o-Y Movement (Completed Units): –45.6% 630 million, followed by Dubai Hills Estate at AED 534 million. Y-o-Y Movement (Off-Plan Units): –35.6%

Quarterly Transactions by Volume (No of Units) Quarterly Transactions by Value (AED Billion)

6000 8.00

7.00 5000 6.00 4000 5.00

3000 4.00

3.00 2000 2.00 1000 1.00

0 0.00 Q2 2019 Q1 2020 Q2 2020 Q2 2019 Q1 2020 Q2 2020

Source: REIDIN & Chestertons Completed Properties O-Plan

OBSERVER - Dubai Residential Report Q2 2020 12 HOT TOPIC What does the future hold for Dubai real estate?

The ongoing pandemic has taken its toll on Dubai’s residential sector, affecting performance at a point when the market was starting to see more stable prices and even, across several communities, a modest rise in first quarter rents. The performance of the UAE’s residential sector is closely tied to that of the wider economy, with UAE non-oil private sector growth showing a broad correlation with sales price movements over recent years. With Dubai expected to see an economic contraction over 2020, and with the emirate’s expatriate population likely to decline, we expect both rents and sales prices to fall over the second half of 2020.

Current economic projections see a return to growth next year, with Dubai Expo also set to drive tourist arrivals and provide a platform for the emirate to showcase market opportunities. While the longer-term outlook is less clear, assuming a broad economic recovery, we expect the market to see greater price stability over 2021. OBSERVER - Dubai Residential Report Q2 2020 14 Transactions Dashboard Q2 2020

Apartments Villas Q2 2020 Sales Volume Q2 2020 Sales Volume by No of Bedrooms by No of Bedrooms

9% 6% 7%

13% 22% 42% 43%

31% 27%

One Studio Two Three + Three Four Five Six + Two

Apartments Villas Q2 2020 Sales Volume Q2 2020 Sales Volume by Construction Status by Construction Status

41% 42% 58% 59%

Source: REIDIN & Chestertons Completed Properties O-Plan

OBSERVER - Dubai Residential Report Q2 2020 15 Q2 2020 Sales Transactions Completed Units

Top 10 AreasInternational Based on Transaction City Volumes (Number of Units) Umm Suqeim Third

Dubailand Residence Complex Villanova International City Umm Suqeim Third Jumeirah Village Circle Emaar South Dubailand Residence Complex Villanova International City Jumeirah Village Circle Emaar South Palm Jumeirah Downtown Dubai Dubai Sports City International City Downtown Dubai The Lagoons ( Harbour) Palm Jumeirah Downtown Dubai Sobha Hartland Downtown Dubai The Lagoons (Dubai Creek Harbour) Business Bay Business Bay Town Square Sobha Hartland Dubai Hills Estate Jumeirah Village Circle Business Bay Business Bay Dubai Marina District One Dubai Hills Estate Jumeirah Village Circle 20- 40 60 80 100 120 140 160 50- 100 150 200 250 300 350 400 Dubai Marina District One Source: REIDIN & Chestertons Source: REIDIN & Chestertons 20- 40 60 80 100 120 140 160 50- 100 150 200 250 300 350 400

Source: REIDIN & Chestertons Source: REIDIN & Chestertons

Top 10 Areas Based on Transaction Values (in million AED)

Jumeirah Beach Residence Jumeirah Village Circle

Bluewaters Island Dubai Harbour Jumeirah Village Circle Island Sobha Hartland Dubai Harbour Arabian Ranches Umm Suqeim Third Jumeirah Bay Island Sobha Hartland Dubai Marina Jumeirah First Arabian Ranches Umm Suqeim Third Business Bay Jumeirah Beach Residence Dubai Marina Jumeirah First Downtown Dubai Business Bay Business Bay Jumeirah Beach Residence Palm Jumeirah The Lagoons (Dubai Creek Harbour) Downtown Dubai Business Bay Dubai Hills Estate Downtown Dubai Palm Jumeirah The Lagoons (Dubai Creek Harbour) District One District One Dubai Hills Estate Downtown Dubai - 100 200 300 400 500 600 700 - 100 200 300 400 500 600 700 District One District One Source: REIDIN & Chestertons Source: REIDIN & Chestertons - 100 200 300 400 500 600 700 - 100 200 300 400 500 600 700

Source: REIDIN & Chestertons Source: REIDIN & Chestertons

OBSERVER - Dubai Residential Report Q2 2020 16 Q2 2020 Sales Transactions Off-plan Units

International City Top 10 Areas BasedUmm on Suqeim Transaction Third Volumes (Number of Units)

Dubailand Residence Complex Villanova International City Umm Suqeim Third Jumeirah Village Circle Emaar South Dubailand Residence Complex Villanova Dubai Sports City International City Jumeirah Village Circle Emaar South Palm Jumeirah Downtown Dubai Dubai Sports City International City Downtown Dubai The Lagoons (Dubai Creek Harbour) Palm Jumeirah Downtown Dubai Town Square Sobha Hartland Downtown Dubai The Lagoons (Dubai Creek Harbour) Business Bay Business Bay Town Square Sobha Hartland Dubai Hills Estate Jumeirah Village Circle Business Bay Business Bay Dubai Marina District One Dubai Hills Estate Jumeirah Village Circle 20- 40 60 80 100 120 140 160 50- 100 150 200 250 300 350 400 Dubai Marina District One Source: REIDIN & Chestertons Source: REIDIN & Chestertons 20- 40 60 80 100 120 140 160 50- 100 150 200 250 300 350 400

Source: REIDIN & Chestertons Source: REIDIN & Chestertons

Top 10 Areas Based on Transaction Values (in million AED)

Jumeirah Beach Residence Jumeirah Village Circle

Bluewaters Island Dubai Harbour Jumeirah Beach Residence Jumeirah Village Circle Jumeirah Bay Island Sobha Hartland Bluewaters Island Dubai Harbour Arabian Ranches Umm Suqeim Third Jumeirah Bay Island Sobha Hartland Dubai Marina Jumeirah First Arabian Ranches Umm Suqeim Third Business Bay Jumeirah Beach Residence Dubai Marina Jumeirah First Downtown Dubai Business Bay Business Bay Jumeirah Beach Residence Palm Jumeirah The Lagoons (Dubai Creek Harbour) Downtown Dubai Business Bay Dubai Hills Estate Downtown Dubai Palm Jumeirah The Lagoons (Dubai Creek Harbour) District One District One Dubai Hills Estate Downtown Dubai - 100 200 300 400 500 600 700 - 100 200 300 400 500 600 700

Source: REIDIN & ChestertonsDistrict One Source: REIDIN & Chestertons District One - 100 200 300 400 500 600 700 - 100 200 300 400 500 600 700

Source: REIDIN & Chestertons Source: REIDIN & Chestertons OBSERVER - Dubai Residential Report Q2 2020 17 About Us

Chestertons, a founding member of the Royal Institution of Chartered Surveyors, has been delivering leading-edge property advice to clients for over 200 years.

From our origins in 1805 to today’s global operation spanning over 120 offices in 20 countries, Chestertons Nick Witty, BSc (Hons) MRICS has enjoyed a longheld reputation for providing Managing Director expert property insight and on-the-ground delivery MENA [email protected] to investors, developers, corporate occupiers and financial institutions.

We support our clients across the breadth of their real estate needs and pride ourselves on taking an Adam Wilson, BSc (Hons) MRICS ACIArb Head of Valuations interest in their goals and challenges. Our ‘old service MENA values’ means we are passionate about the success [email protected] of our clients and our focus is always on consistently delivering value at every stage in the project lifecycle.

While Chestertons is a global company, we understand Chris Hobden, BA (Hons) MSc MRICS our clients’ interests are tied to the local market in which Head of Strategic Consultancy they operate. As such, we employ the most suitably MENA [email protected] qualified people on the ground, while sharing global best practices to support each and every client project. We have unparalleled knowledge of the Middle East and North Africa market with a team of 70 specialists across the region. Ellen Sleutjes Head of Agency MENA [email protected]

OBSERVER - Dubai Residential Report Q2 2020 18 Core Services

Valuations Mortgage and Secured Lending Portfolio Valuations

Strategic Consultancy & Research Financial Feasibilities Highest and Best Use Studies Market Research Conceptual Advisory and Project Positioning Studies Project Redevelopment/Repositioning Advisory Investment Strategies – Acquisition and Disposal

Sales and Leasing Commercial Industrial Residential Retail

Property Management Commercial Mixed-Use Residential

International Properties London Off-Plan Residential International Homes and Investments International Relocations

OBSERVER - Dubai Residential Report Q2 2020 19 Contact Us

Mena Head Office Bahrain Office 2503, Marina Plaza, Dubai Marina Maz Business Centre PO Box 283361, Dubai The Lagoon Amwaj Island Office: +9714 381 0200 Bahrain Fax: +9714 325 3359 Office: +973 1603 0646 Email: [email protected] Email: [email protected]

Abu Dhabi Office Global Headquarters Office No. 802, Tamouh Tower 40 Connaught Street Building 12, Marina Square London, W2 2AB Al Reem Island, PO Box 128983 United Kingdom Abu Dhabi, United Arab Emirates Office: +9712 447 3100 Fax: +9712 441 6200 Further offices across the UK, Europe Email: [email protected] Asia Pacific, Africa and the Caribbean.

Disclaimer:

All articles and data presented herein is intended for information purposes and has been compiled from sources deemed reliable including the Valuations and Research De- partment of Chestertons, sales and leasing staff, published data, and secondary sources. Though information is believed to be correct, material presented is subject to errors, omissions, changes, or withdrawal without notice. www.chestertons-mena.com