Valustrat Abu Dhabi Real Estate Review Q2 2021
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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 | Abu Dhabi 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 Al Reem Island 2%, and villas located in Saadiyat Island 2.6% and Mohamed Bin Zayed City 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 Al Raha 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 Yas Island (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 Al Bandar, 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