Abu Dhabi Real Estate Market 2021 Quartely Review

www.valustrat.com 2nd Quarter Market Intelligence. VPI Simplified. ValuStrat Price Index

REAL ESTATE PERFORMANCE

VPI Residential VPI Residential Capital Values Rental Values 67.3 77.7 Base: Q1 2016=100 Base: Q1 2016=100

2.1% 4.3% Q-o-Q Q-o-Q

Source: ValuStrat

KEY INDICATORS

Source: ValuStrat, REIDIN, STR

Apartment Villa Apartment Villa Asking Sales Price Asking Sales Price Asking Rents Asking Rents

12,491 10,596 118,000 213,700 AED/sq m AED/sq m 2 Bedrooms (AED p.a.) 4 Bedrooms (AED p.a.)

3.5% 9.3% 4.9% 3.6% Q-o-Q Q-o-Q Q-o-Q Q-o-Q

Hotel Hotel Office Office Average Daily Rate Occupancy Asking Sales Price Asking Rents

481.5 62% 10,370 860 (AED) Mar 2021 Mar 2021 AED/sq m AED/sq m p.a.

18.6% 4.2% -10.1% 1.9% Y-o-Y Y-o-Y Q-o-Q Q-o-Q

Increase Stable Decline

1 | Real Estate Market 2nd Quarter 2021 Review Market Intelligence. VPI Simplified. ValuStrat Price Index

RESIDENTIAL

The valuation based ValuStrat Price VPI - ABU DHABI RESIDENTIAL CAPITAL VALUES Index (VPI) for capital values in 5 Villa and 5 Apartment Locations Abu Dhabi’s residential investment [Base: Q1 2016=100] zones for the second quarter 2021, increased 2.1% quarterly to 65.8 points. This was the first time the

4.1%

VPI has witnessed three consecutive 92.4 90.3 88.5 87.1 85.5 83.8 quarters of growth since 2016, 81.1 2.1% 77.6 75.1 72.7 70.9 69.1 aggregating 7.2% since Q4 2020. 67.9 1.0% 64.7 65.8 67.3 62.6

Annually, capital values were 3.9% 63.3 -1.6% -1.8% -1.7% -2.0% -1.9% -2.3% higher recovering from the Covid-19 -2.4% -2.6% headwinds of last year. -3.2% -3.2% -3.3% -3.3% -4.2% -4.3% -4.6% The weighted average residential Jun Jun Jun Jun Jun Sep Sep Sep Sep Dec Dec Dec Dec value this quarter was AED 8,816 Mar Mar Mar Mar Mar per sq m (AED 819 per sq ft), 2017 2018 2019 2020 2021 apartments stood at AED 9,634 per sq m (AED 895 per sq ft), and ValuStrat Price Index (Capital Values) QoQ Growth (%) villas at AED 6,867 per sq m Source: ValuStrat (AED 638 per sq ft).

All properties monitored by the VPI saw quarterly growth in capital VPI - ABU DHABI RENTAL VALUES values ranging from 1.2% to 2.7%. 5 Villa and 5 Apartment Locations [Base: Q1 2016=100] Locations with the highest gains were apartments in 2%, and villas located in 2.6% and Mohamed Bin 4.3% 93.9 89.7 88.6 84.6 83.8

2.7%. 83.0 80.7 77.3 79.2 77.7

77.7 1.8% 76.3 76.3 76.8 74.4 74.5 74.3 1.2% 0.7% 0.6%

The second quarter VPI - Residential 75.7 0.0%

Rental Values saw a 4.3% quarterly -0.9% -1.0% -1.2% -1.7% rise, and 4.5% an annual gain to -2.0% -1.8% -2.6% -1.6% -2.8% 77.7 points, this was the first positive -3.1% citywide rental increase in five years. -5.7% -5.7% Abu Dhabi’s gross yields averaged Jun Jun Jun Jun Jun Sep Sep Sep Sep Dec Dec Dec Dec 7.4%, for apartments at 7.6% and Mar Mar Mar Mar Mar villas with 6.8%. 2017 2018 2019 2020 2021

ValuStrat Price Index (Capital Values) QoQ Growth (%)

Source: ValuStrat

For more details, please visit www.valustrat.com/vpi

www.valustrat.com | 2 MACRO-ECONOMIC SNAPSHOT

• S&P Global Ratings and Moody’s Investor Service announced affirmation of investment ABU DHABI CITY POPULATION grade ratings for Abu Dhabi with AA/Stable/A-1+ and Aa2 with stable outlook, respectively. The rating agencies emphasised the capital’s strong economic fundamentals and large fiscal buffers backed by revenue from the hydrocarbon sector • An investment of more than AED 22 billion directed towards cultural and creative sectors was announced by the government in an attempt to prepare and stimulate its post-pandemic future as it diversifies the economy away from oil • The International Monetary Fund (IMF)

released a statement revising its initial GDP 1,640,000 1,720,000 1,807,000 1,912,300 2,023,600 2,141,400 2,266,100 2,395,200 growth outlook from 1.3% to 3.1% this year on foot of the country’s strong fiscal and monetary policy implemented to counter the 2014 2015 2016 2017E 2018E 2019E 2020E 2021E pandemic-induced recession Source: Statistics Centre Abu Dhabi, ValuStrat • Latest data from General Administration of Abu Dhabi Customs, the capital’s non-oil foreign trade reached AED 201.2 billion in 2020, down 5.7% YoY. Imports contributed 45.9%, exports share was at 36.5% and re-exports added another 17.5% of the total non-oil foreign trade

CONSUMER PRICE INDEX VS. HOUSING INDEX • The Abu Dhabi Economic January 2018 – YTD Department (ADDED) revealed the list of 1,105 registered commercial and industrial 120 activities viable for partial or full ownership which is expected to boost foreign direct investments 115 (FDIs) and would help achieve its economic growth forecast by 110 6% to 8% during the next two years

105 • As of May 2021, both the annual and monthly inflation rates 100 increased 0.6% Jul Jul Jul Oct Oct Oct Apr Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Feb Feb Feb Feb Sep Sep Sep Dec Dec Dec Nov Nov Nov Aug Aug Aug Mar Mar Mar Mar May May May May • Housing and Utilities Expenses 2018 2019 2020 2021 was steady annually at 0.1%,

General Index (2014=100) and no change was recorded Housing, Water, Electricity, Gas and Other Fuels when compared to previous

Source: Statistics Centre Abu Dhabi month

3 | Abu Dhabi Real Estate Market 2nd Quarter 2021 Review RESIDENTIAL SUPPLY

• During Q2, 855 apartments finished ABU DHABI RESIDENTIAL SUPPLY construction in five projects. This constitutes 2018-2022 7.3% of total forecasted new-build units for (’000 UNITS) this year 0.3

• Notable completions included Y Tower Reem 1.0 3 (274 units), Al Faridah Al Zeina Complex 253 11 (234 units) and Olive Beach (162 units) 241 238 241 • The remaining expected supply for this year 234 stands at 9,871 apartments and 961 villas

• Nearly 75% of the upcoming handovers will be in Al Reem Island (3,407 units), Al Raha Beach (2,765 units) and (2,572 units)

• During Q2, an estimated 1,233 off-plan properties were launched including Aldhay 2018 2019 2020 2021E 2022E Bloom Gardens (181 units), Noya Viva and Luma Yas Island (669 units), The Dunes Current Stock Saadiyat Reserve (83 units) and Jubail Islands New Apartments townhouses (300 units) New Villas * May be subject to significant downward adjustment Source: Urban Planning Council, REIDIN, MEED Projects, ValuStrat

RESIDENTIAL SALES

• The average citywide residential asking price APARTMENT ASKING PRICES per square foot during the quarter experienced a record increase of 5.2% QoQ and 3.6% YoY. This was the first positive annual growth observed since 2017

• The average asking price for ready 0.2% 3.5% apartments stood at AED 12,491 per sq m Last Year Last Quarter (AED 1,160 per sq ft), up 3.5% QoQ and was relatively stable compared to last year VILLA ASKING PRICES • For ready villas, the average asking price reached a record high and stood at AED 10,596 per sq m (AED 984 per sq ft) indicating asking prices to have jumped 9.3% QoQ and 11.7% YoY 11.7% 9.3% Last Year Last Quarter

*Ready Properties Only Source: REIDIN, ValuStrat

www.valustrat.com | 4 RESIDENTIAL RENTS

• Overall average residential asking rents grew APARTMENT ASKING RENTS 4.5% when compared to the same period last year • On a quarterly basis, citywide average asking rents experienced a record increase of 4.9% not seen since 2016 • Apartment asking rents in Abu Dhabi City 3.0% 4.9% Last Year Last Quarter increased 3% YoY and were up 4.9% QoQ • Citywide villa asking rents grew 6.2% YoY and VILLA ASKING RENTS rose 3.6% QoQ • Notable increases in average asking rents were observed in , Saadiyat Island and MBZ City • Average annual apartment asking rents were as follows: studios (AED 50,000), 1-bed (AED 6.2% 3.6% Last Year Last Quarter 74,000), 2-beds (AED 118,000), and 3-beds (AED 165,000) Source: REIDIN, ValuStrat • For villas, annual rents for 2-beds (AED 117,000), 3-beds (AED 140,000) and 4-beds (AED 214,000) • The average occupancy rate, among a sample of more than 44,000 residential units in Abu Dhabi city, stood at 82%

AVERAGE ASKING RENTS (’000 AED PER ANNUM) AND QUARTERLY CHANGE (%) Apartments Villas

51 110 Al Reef 62 -1.4% MBZ City 133 7.4% 82 153

59 102 Al Reem 85 -2.4% Al Reef 133 -0.2% 120 147

79 145 Al Muneera 106 -0.4% Al Raha 165 -3.6% 137 217

92 273 Al Bandar 139 16.5% Saadiyat 423 7.5% 230 546

One Bedroom Three Bedroom Three Bedroom Five Bedroom Two Bedroom Quarterly Change (%) Four Bedroom Quarterly Change (%)

Source: REIDIN, ValuStrat Source: REIDIN, ValuStrat

5 | Abu Dhabi Real Estate Market 2nd Quarter 2021 Review OFFICE SUPPLY

• An estimated 33,153 sq m (356,856 sq ft) GLA OFFICE SUPPLY of workspaces were completed in three 2018-2022 projects during the first half of this year (Million sq m GLA)

• These were commercial towers in Al Raha Beach, Al Hosn Sector W7/1, and Sector W58 0.02

3.80 0.131 3.94 • There are seven remaining projects expected 3.80 3.69 to finish construction this year which will inject additional 97,725 sq m (1.1 million sq ft) 3.58 GLA to the capital’s office stock

• Majority of these completions will be located in Al Raha Beach development with 64,293 sq m (692,043 sq ft) GLA

2018 2019 2020 2021E 2022E

Existing Stock Expected Supply

Source: REIDIN, MEED Projects, ValuStrat

OFFICE RENTS

• Office asking rents in primary commercial OFFICE ASKING RENTS districts rose 1.9% since the previous quarter, and saw 4.3% annual increase

• The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) stood at AED 860 4.3% 1.9% per sq m (AED 80 per sq ft) Last Year Last Quarter

• Abu Dhabi main island commanded lease Source: REIDIN, ValuStrat rates which averaged at AED 850 per sq m (AED 79 per sq ft) while average office rents in Al Reem Island followed closely at AED 840 per sq m (AED 78 per sq ft)

• The average occupancy among buildings within the city’s central business districts was estimated at 84%, however, effective building occupation may be much lower due to flexible work arrangements

www.valustrat.com | 6 RETAIL SUPPLY

• No notable new openings or completions MALLS AND SHOPPING CENTRES during the quarter, keeping the total stock at (‘000 sq m GLA) 1.8 million sq m (18.9 million sq ft) GLA 460

• The capital currently has a collection of 5 super-regional malls, 11 regional shopping

centres and 14 community retail complexes 859

112 • Available data for under construction projects remained at estimated 367,793 sq m 614 (4 million sq ft) GLA

• This will include the much-anticipated 227 super-regional category Al Reem Mall boasting an approximately 200,000 sq m (2.2 million sq ft) GLA and will host 450 stores, 48 85 food and beverage outlets and 7 6,800 parking spaces

Convenience Neighbourhood Community Regional Super Regional (< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m)

Retail Completed Retail Under Construction Source: REIDIN, ValuStrat

RETAIL PERFORMANCE

• A total of AED 2.4 billion Visa card NUMBER OF MALLS AND transactions, up 17% YoY, was recorded by SHOPPING CENTRES Retail Abu Dhabi during this year’s edition of shopping season

• Aldar’s retail portfolio achieved 83% occupancy, down 6.7% YoY as per their latest 14 2 quarterly presentation

9 11 2 • The Galleria announced footfall reached 2.7 million in the month May 5 2021, its highest number of visits since it 3 opened in 2019

• The UAE saw a 21% YoY upsurge in online shopping transactions, as per latest

Mastercard analysis Convenience Neighbourhood Community Regional Super Regional (< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m)

Retail Completed Retail Under Construction Source: REIDIN, ValuStrat

7 | Abu Dhabi Real Estate Market 2nd Quarter 2021 Review HOTEL SUPPLY

• Two hotel projects are in the current pipeline, HOTEL ROOM SUPPLY one of which is confirmed to have finished 2018 -2022 construction and the other nearing (’000 KEYS) completion at 90%

0.6 • These were Double Tree by Hilton Yas Bay 1.0 31 (545 rooms) and Warner Bros Hotel (257 keys) 29 29 29 29

• As per available data, the remaining number of hotel rooms expected to enter the market for the rest of the year will come from InterContinental Grand Marina (184 rooms)

2018 2019 2020E 2021E 2022E

Hotel & Hotel Apt Rooms New Supply Source: DCTAD, MEED Projects, ValuStrat

HOTEL PERFORMANCE

• In April, the Department of Culture and ABU DHABI - HOTEL STAR RATING Tourism Abu Dhabi (DCTAD) announced its Q2 2021 goal to achieve 23 million visitors per year by 2030

• The agency added, pre-pandemic level of 17% tourism activity could return as early as 2024

• Latest from STR Global, the UAE recorded an overall occupancy of 62%

12% • The Average Daily Rate (ADR) stood at AED 481.45, up 18.6% YoY and Revenue per 50% Available Room (RevPAR) was at AED 298.7, climbing 77.1% YoY

• Abu Dhabi’s sovereign fund ADQ revealed plans to merge two hospitality groups, The 21% Abu Dhabi National Hotels (ADNH) and Abu Dhabi National Exhibitions Company (ADNEC) to become a larger entity with total assets worth more than AED 19.8 billion, as 5 Star 4 Star part of Abu Dhabi’s long-term goal to expand 1-3 Star Hotel Apt

into non-oil sectors Source: DCTAD

www.valustrat.com | 8 INDUSTRIAL INVESTMENT / SUPPLY

• As of June, 11 projects worth AED 4.1 billion INDUSTRIAL PRICES were under construction (AED/sq m)

• Notable new projects include a manufacturing 3,767 3,660 facility with 23,000 sq m (247,570 sq ft) BUA and warehousing units with total 220,497 sq m (2 million sq ft) BUA in Abu Dhabi (KIZAD) 1,615

1,076 • The Industrial Development Bureau (IDB) announced Made in Abu Dhabi brand which aims to develop a total of 888 factories of which 678 are in the capital city, equivalent to a total investment value of AED 369.32 billion

• A research and innovation centre covering an ICAD area of 820,000 sq m (8.8 million sq ft) was announced to be built in Industrial City Price High Price Low Abu Dhabi (ICAD) Source: ValuStrat

INDUSTRIAL PERFORMANCE

• Industrial property prices remained relatively storage facilities priced at the upper end and stable on a quarterly basis, with some new older properties at the lower end built facilities with modern specifications commanding higher pricing. However, we • Asking rents quoted generally ranged observed declines for older properties located between AED 161 to AED 388 per sq m in Mussafah per annum (AED 15 to AED 36 per sq ft per annum) depending on factors such as • Prices generally ranged between industrial-grade specifications, quality, age, AED 1,076 per sq m to AED 3,767 per sq m condition, and size of the industrial facility (AED 100 per sq ft to AED 350 per sq ft) in with slightly higher rates for facilities having established industrial areas with high provisions for cold stores. Quarterly decreases specification/quality built, and modern cold in quoted rents were observed most monitored areas

INDUSTRIAL RENTAL RATES (AED/sq m)

388 377 377 301

194 194 194 161

Rent High

Rent Low

Source: ValuStrat Al Mina Al Mafraq ICAD Mussafah

9 | Abu Dhabi Real Estate Market 2nd Quarter 2021 Review IN MEDIA

21 May 2021 8 May 2021 Allowing 100% foreign ownership in UAE 7 main factors that support Abu Dhabi real firms will boost property market estate in attracting more international “The new changes to the Companies Law will have a investors positive impact on the office market, particularly for The property market in Abu Dhabi is expected to smaller offices sized between 1,000 to 2,000 square feet stabilise in 2021 amid balanced supply, according to a and would also create further demand for shared and new report from real estate consultancy firm ValuStrat. flexible office space,” Haider Tuaima, Head of Real “Rents and capital values in established villa locations Estate Research at ValuStrat told Zawya. “No doubt could stabilise and perhaps witness gradual these changes are welcome by the market, as they are appreciation. Apartments could follow suite towards the expected to fuel further demand for office space, as end of 2021,” the report said. well as residential space,” he added.

4 May 2021 28 April 2021 Abu Dhabi completes Dh11.5bn of property Abu Dhabi’s residential capital values up; transactions in Q1 rents stable Leading real estate consultancy firm ValuStrat, whose A separate report by real estate consultancy firm price index measures residential values in the capital ValuStrat also indicated signs of recovery in the increased for the second quarter in succession during Abu Dhabi property market at the end of last year. In the first three months of the year for the first time since the fourth quarter of 2020, the emirate’s residential 2016, the consultancy said in a report last week. investment zones saw a one per cent quarterly uplift for the first time in three years, it said.

14 April 2021 Aldar’s Yas Island project sells out in 48 hours The property market in Abu Dhabi is expected to stabilise in 2021 amid balanced supply, according to a report from real estate consultancy firm ValuStrat. “Rents and capital values in established villa locations could stabilise and perhaps witness gradual appreciation. Apartments could follow suit towards the end of 2021,” the report said.

www.valustrat.com | 10 ABOUT

ValuStrat is a leading consulting firm headquartered DECLAN KING, MRICS Managing Director & Group Head Strategic in providing Advisory, Partners of Valuations, Research, of Real Estate Industrial Consulting and Due [email protected] Diligence services across a diverse range of industry Financial sectors since 1977. Offices in Institutions the UAE, UK, Saudi Arabia, HAIDER TUAIMA Pakistan and Qatar serve over Head of Real Estate Research 1,000 corporate clients in the [email protected] Middle East.

Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and startups. VISMER MULENGA, MRICS Director - Commercial Valuation Some of the key sectors serviced by ValuStrat’s consulting [email protected] team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all CHERYL MCADAM, MRICS of MENA and Asia to be accepted into the prestigious RICS Director - Residential Valuation TechAffiliate program. [email protected]

DARSHAN SHAH, MRICS Director & Head of Industrial Consulting VPI [email protected] ValuStrat Price Index

VPI Online www.valustrat.com/vpi SEAN SWINBURNE, MRICS The ValuStrat Pricet Index for Abu Dhabi’s residential capital values is a Manager - Commercial Valuations valuation-based index constructed to represent the quarterly price [email protected] change experienced by typical residential units within Abu Dhabi City. The ValuStrat Price Index for Abu Dhabi’s residential rental values is constructed to represent the quarterly rental change experienced by typical residential units within Abu Dhabi City. The VPI applies weighted averages using data samples representing more than 90% of all property types across the city’s investment zones and is built by our expert RICS Registered Valuers. DUBAI LONDON Research Methodology Every effort has been made to ensure the accuracy of this document. New supply data covers 24 defined areas in Abu Dhabi City including non-freehold investment areas. Only completed and under construction projects are included. The new supply data does not include announced projects and projects in design phase. The new supply database does not take into account most private building projects. Both the price and rental data are calculated and derived from carefully chosen listings RIYADH JEDDAH that have been properly cleansed to exclude duplicates and outliers within predetermined areas and districts for office and residential properties.

Copyright © ValuStrat Consulting FZCo. 2021 This document is the property of ValuStrat Consulting FZCo and must not be reproduced or transmitted in any form or by any means, without KARACHI DOHA the prior written consent of ValuStrat Consulting FZCo. We welcome your constructive feedback and any corrections that may need to be made to this document. ValuStrat Consulting FZCo does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.