DUBAI Report

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DUBAI Report - Q2 2014 • • The first half of 2014 has been a period of stabilisation and consolidation, with more moderate growth levels of 6% for apartment sales and 3% for villa sales in Q2 2014. • Buyer’s interest focused on less established areas such as communities located along the Mohamed Bin Zayed Road corridor. • Rental activity was characterised by demand stemming predominantly from newcomers to the city. On average, apartment rental rates increased by 4% in Q2 2014 throughout Dubai, and villas were up by 5%. • The office market remained stable in Q2 2014, with no growth in sales prices and only a moderate increase of 2%, on average, for rental rates. • Asteco anticipates that the second half of the year will see renewed interest and activity in the market.

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0% 4% 11% 8% 0% 11% 2% 9% 5% DUBAI SALES 28% 26% 52% 62% 22% 36% 47% 46% 31% 3,500 Dubai Residential sales Ap3,000artment 0% SALES PR4%ICE RAN11%GE (Q2 2014)8% and0% Percenta11% ge chan2% ge 9% 5% 28% 26% 52% 62% 22% 36% 47% 46% 31% • Similar to the first quarter, Q2 2014 witnessed marginal growth; with sales prices up 3,5002,500 2 3,0002,000 0% 4% 11% 8% 0% 11% 2% 9% 5% 6% and 3% for selected apartment and villa developments respectively, as the market 28% 26% 52% 62% 22% 36% 47% 46% 31%

AED/ft 1,500 continued to absorb the rapid growth witnessed in 2013. 3,5002,500 2 1,000 3,0002,000 • A two-tier market became even more apparent as buyers who were priced out of the more 500 AED/ft 2,5001,500 1,950 2,150 770 1,000 1,700 3,300 1,200 3,000 1,200 1,600 1,400 2,000 1,100 1,500 800 1,100 1,300 2,900

2 0 popular and established areas such as Downtown Dubai, Dubai Marina and Palm Jumeirah 2,0001,000 focused on other areas, such as Jumeirah Village, Dubai Sports City and Dubai Silicon Oasis 500 DIFC Discovery Downtown Dubai Marina Greens Jumeirah Beach Jumeirah Lakes Jumeirah Village Palm Jumeirah AED/ft 1,500 Gardens Dubai Residence Towers 1,950 2,150 770 1,000 1,700 3,300 1,200 3,000 1,200 1,600 1,400 2,000 1,100 1,500 800 1,100 1,300 2,900 where prices remained low in comparison. These areas witnessed stronger growth rates of 1,0000 Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) approximately 10% in Q2 2014. 500 DIFC Discovery Downtown Dubai Marina Greens Jumeirah Beach Jumeirah Lakes Jumeirah Village Palm Jumeirah Gardens Dubai Residence Towers 1,950 2,150 770 1,000 1,700 3,300 1,200 3,000 1,200 1,600 1,400 2,000 1,100 1,500 800 1,100 1,300 2,900 • Interestingly, established affordable locations such as Discovery Gardens and International 0 Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) DIFC Discovery Downtown Dubai Marina Greens Jumeirah Beach Jumeirah Lakes Jumeirah Village Palm Jumeirah City, where price increases were the strongest over the last 12 months, saw only 4% and Gardens Dubai Residence Towers 3% growth respectively in Q2 2014. Any further growth in these communities will position Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) them outside the affordable range, and consequently lead to a reduction in buyer interest. VILLA SALES5% PR ICE RAN0% GE (Q28% 2014) an5%d Percenta2% ge chan0% ge0% 3% 0% • At the same time, less budget sensitive buyers in the premium market are still drawn to 44% 11% 30% 25% 12% 30% 22% 55% 10% established locations. However, many sellers having raised their prices following the Expo 4,500 4,000 5% 0% 8% 5% 2% 0% 0% 3% 0% 2020 announcement and have no intention of reducing their asking prices until buyers 3,500 44% 11% 30% 25% 12% 30% 22% 55% 10% match their expectations. This has led to a reduction in transaction levels, especially for 3,0004,500 2 5% 0% 8% 5% 2% 0% 0% 3% 0% higher priced properties within established communities. 2,5004,000 3,500 44% 11% 30% 25% 12% 30% 22% 55% 10%

AED/ft 2,000 3,0004,500

• We expect further stabilisation in Q3 due to the traditional slowdown of transactions 2 1,500 4,000 1,0002,500 witnessed during summer and Ramadan. 3,500 AED/ft 2,000 500

3,000 1,100 1,200 1,000 1,450 1,150 1,450 900 1,100 1,200 1,700 850 1,100 1,200 1,600 2,200 4,000 1,000 1,200 • However, Asteco anticipates the post summer months together with Cityscape are likely to 2 1,500 0 1,0002,500 Al Furjan Arabian Victory Heights Green Jumeirah Jumeirah Meadows Palm Springs

see several new project announcements that will test demand in the market, giving buyers AED/ft 2,000 500 Ranches Community Islands Village Jumeirah new opportunities to invest. 1,500 0 1,100 1,200 1,000 Min 1,450 Max 1,150 1,450 Percentage 900 Change 1,100 (Q1-Q2 1,200 2014) 1,700 Percentage 850 1,100 Change 1,200 (Q2 1,600 2013-Q2 2014) 2,200 4,000 1,000 1,200 1,000 Al Furjan Arabian Victory Heights Green Jumeirah Jumeirah Meadows Palm Springs • Recent new launches include projects by Dubai Properties Group such as Manazel Al Khor 500 Ranches Community Islands Village Jumeirah in Culture Village; Rahat Villas at Mudon; and 200 new units at Remraam. 0 1,100 1,200 1,000 Min 1,450 Max 1,150 1,450 Percentage 900 Change 1,100 (Q1-Q2 1,200 2014) 1,700 Percentage 850 1,100 Change 1,200 (Q2 1,600 2013-Q2 2014) 2,200 4,000 1,000 1,200 Al Furjan Arabian Victory Heights Green Jumeirah Jumeirah Meadows Palm Springs • Damac also launched several projects, including NAIA Hotel and Hotel Apartments, 34 Ranches Community Islands Village Jumeirah OFFICE SALES PRICEMin RANGMaxE (Q2 2014)Percentage anChanged (Q1-Q2 Per 2014)centa gPercentagee chan Changeg (Q2e 2013-Q2 2014) premium Fendi Villas at Akoya Drive, and two hotel apartments at Jumeirah Village, The

Vantage and The Constella. 0% 0% 0% 0% 0% 0% • Emaar continued its string of new launches with Opera Grand, the first residential 50% 6% 28% 50% 46% 9% 2,500 development in the Opera District at Downtown Dubai. 0% 0% 0% 0% 0% 0% 2,000 50% 6% 28% 50% 46% 9% • Finally, Danube launched its first project in the UAE called Dreamz, which consist of 171 2,500

townhouses with 3 and 4 bedroom configurations located at Al Furjan. 2 1,500 0% 0% 0% 0% 0% 0% 2,000 50% 6% 28% 50% 46% 9% AED/ft 1,000 Dubai Office sales 2,500 2 1,500 2,000500

• Office sales remained stable with no significant growth witnessed during Q2. AED/ft 1,000 1,000 1,400 1,600 2,200 550 600 700 800 850 1,200 750 1,000

2 0 • However, a major transaction was concluded with Emirates REIT, Dubai’s first real estate 1,500 500 Business Bay DIFC Dubai Investment Park Dubai Silicon Oasis Jumeirah Lakes Towers Tecom C

AED/ft 1,000

investment trust, purchasing more than 15 vacant office floors in Index Tower, at DIFC. The 1,000 1,400 1,600 2,200 550 600 700 800 850 1,200 750 1,000 Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) transaction was estimated to be worth over AED 600 million. 0 500 Business Bay DIFC Dubai Investment Park Dubai Silicon Oasis Jumeirah Lakes Towers Tecom C 1,000 1,400 1,600 2,200 550 600 700 800 850 1,200 750 1,000 Page 2 © Asteco Property Management, 2014 asteco.com | astecoreports.com For additional information: 600 54 77730 Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) Business Bay DIFC Dubai Investment Park Dubai Silicon Oasis Jumeirah Lakes Towers Tecom C Min Max Percentage Change (Q1-Q2 2014) Percentage Change (Q2 2013-Q2 2014) ASSET MANAGEMENT SALES LEASING

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DUBAI LEASING Apartment Rental Rates (Q2 2014) and Percentage change Villa Rental Rates (Q2 2014) and Percentage change

Average Rental Rates (AED’000/pa) % Change Average Rental Rates (AED’000/pa) % Change Studio 1 BR 2 BR 3 BR 2 BR 3 BR 4 BR 5 BR Q1-Q2 Q2 2013- Q1-Q2 Q2 2013- Development Development 2014 Q2 2014 Min Max Min Max Min Max Min Max 2014 Q2 2014 Min Max Min Max Min Max Min Max Al Furjan - - 170 200 190 220 240 260 4 17 Deira 38 50 55 80 80 110 115 150 0 49 Arabian Ranches 150 215 180 280 275 350 285 450 4 22 Discovery Gardens 52 57 65 75 85 95 n/a n/a 3 36 Green Community - - 220 250 230 260 230 270 1 1 Downtown Dubai 75 90 100 125 150 190 200 300 4 24 Jumeirah - - 175 230 220 330 270 500 12 40 Dubai Marina 70 90 90 140 140 200 150 250 6 45 Jumeirah Islands - - - - 300 360 320 420 1 5 International City 35 43 48 53 65 70 n/a n/a 1 66 Jumeirah Village 140 170 155 185 170 220 - - 11 20 Jumeirah Beach Residence 75 90 100 140 120 200 160 250 10 39 Meadows - - 220 270 230 300 270 350 4 4 Jumeirah Lakes Towers 65 75 80 105 120 150 145 185 4 54 Mirdif - - 120 175 140 200 160 200 0 38 Jumeirah Village 50 60 70 95 90 115 115 135 6 42 Palm Jumeirah - - 250 370 400 600 500 1,000 0 13 Palm Jumeirah n/a n/a 130 160 150 220 190 320 6 21 Springs 145 155 180 220 - - - - 9 31 Sheikh Zayed Road 75 85 100 120 135 170 165 220 0 22

Office Rental Rates (Q2 2014) and Percentage change Dubai Office Leasing

Average Rental Rates (AED/ft2/pa) % Change • Compared with Q1 2014, office leasing in Dubai was relatively slow in Q2, with only certain areas witnessing any growth. Development Min Max Q1-Q2 2014 Q2 2013-Q2 2014 • With improvements in the economy, we expect an increase in enquiries and transactions Bur Dubai 75 130 5 8 after the summer as companies prepare to plan for the year ahead and look for suitable Business Bay 80 150 2 21 space to house their expansion or relocation plans. DIFC 150 300 0 0 Dubai Internet City 140 220 6 13 • We expect the main beneficiaries of this demand increase will be for quality single-owned Dubai Investment Park 50 75 9 4 office buildings in prime business locations such as DIFC, Sheikh Zayed Road and Dubai Jumeirah Lakes Towers 65 150 0 2 Media / Internet City; other locations such as Business Bay and Jumeirah Lake Towers will Sheikh Zayed Road 90 270 0 20 see demand, but predominantly higher quality properties as tenants are reluctant to move Tecom C 65 120 0 -8 to average quality and poorly maintained buildings.

Dubai Residential Leasing • Similar to the sales market, leasing activity remained relatively stable in Q2 2014, with modest growth from 0% to 10% witnessed across Dubai. • Most transactions came from newcomers to the city, rather than internal relocations. Indeed, with rents increasing steadily since 2013, tenants have elected to remain where they are, and paying the rent increase, as indicated by the RERA rental index, rather than moving as this leads to additional costs such as moving costs, agent’s commission, etc. • Jumeirah Beach Residences witnessed the highest growth of 10% in Q2 as new stock was handed over in Al Bateen Residences, the first tower in Dubai Marina with a direct beach access. • Villa rental rates grew by 5%, on average, in Q2 with the popular Jumeirah location witnessing the highest growth of 12%. • Jumeirah Village witnessed an 11% increase in rental rates in Q2 due to the villas being amongst the most affordable in Dubai. A 3-bedroom townhouse would typically achieve rates from AED 155,000 to AED 185,000 per annum.

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With 29 years of Middle east experience, Asteco’s Valuation & Valuation & Advisory Advisory Services team brings together a group of the Gulf’s leading Our professional advisory services are conducted by suitably qualified personnel all of whom have had real estate experts. extensive real estate experience within the Middle East and internationally. Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Northern Emirates, Qatar and Jordan not only and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with provides a deep understanding of the local markets but also enables us to undertake large instructions extensive local experience. where we can quickly apply resources to meet clients requirements. The Professional Services Asteco conducts throughout the region include: • Consultancy and Advisory Services Our breadth of experience across all the main property sectors is underpinned by our sales, leasing and • Market Research investment teams transacting in the market and a wealth of research that supports our decision making. • Valuation Services

Ras Al Khaimah Um Al Quwaim Ajman SALES IranIran Sharjah Jordan Dubai Fujairah Asteco has established a large regional property sales division with representatives based in the UAE, Qatar and Jordan. Our sales teams have extensive experience in the negotiation and sale United Arab Abu Dhabi of a variety of assets. Qatar Emirates

Oman Al Ain

United Arab LEASING Egypt Emirates Asteco has been instrumental in the leasing of many high-profile developments across the GCC. Yemen

John Allen Jeremy Oates Julia Knibbs Ria Goculdas ASSET MANAGEMENT BSc MRICS BSc FRICS MSc MBA Asteco provides comprehensive asset management services to all property owners, whether a single Director, Valuation & General Manager, Research & Consultancy Research & Consultancy unit (IPM) or a regional mixed use portfolio. Our focus is on maximising value for our Clients. Advisory Abu Dhabi Manager, UAE Manager, Abu Dhabi +971 600 54 7773 +971 2 626 2660 +971 600 54 7773 +971 2 626 2660 OWNER ASSOCIATION [email protected] [email protected] [email protected] [email protected] Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy Services to residential, commercial and John Stevens Sean McCauley Vineet Kumar James Joughin mixed use communities throughout the GCC Region. BSc MRICS MBA BCom BCom (Hons) BSc (Hons) MRICS Managing Director/ Director, Associate Director, Head of Valuations, Director, Asset Services Agency Agency Abu Dhabi SALES MANAGEMENT +971 600 54 7773 +971 600 54 7773 +971 600 54 7773 +971 2 626 2660 Our Sales Management services are comprehensive and encompass everything required for the successful completion and handover of units to individual unit owners. [email protected] [email protected] [email protected] [email protected]

DISCLAIMER: The informationinformation contained inin this report has been obtained from and isis based upon sources that Asteco Property Management believes to be reliable, however, no warranty or representation, expressed or implied,implied, isis made to the accuracy or completeness of the informationinformation contained herein, and same isis submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listinglisting conditions imposedimposed by our principals. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates includedincluded inin this report constitute Asteco Property Management’s judgment,judgment, as of the date of this report and are subject to change without notice. Figures contained inin this report are derived from a basket of locationslocations highlighted inin this report and therefore represent a snapshot of the Dubai market. Due care and attention has been used inin the preparation of forecast information.information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, involveinvolve risk and uncertainty because they relate to future events and circumstances which are beyond Asteco Property Management’s control. For a full in-depthin-depth study of the market, please contact Asteco Property Management’s research team. Asteco Property Management LLC. Commercial Licence No. 218551. Paid-up Capital AED4,000,000.