Property Review Real Estate Report Q4 2018

In the Middle East for over 30 Years 2 • • • • • 2009 -2011 RECESSION

Index Base 100 = March 2010 100 120 140 160 180 200 40 60 80 decreased rental ratesacrossallqualitygrades. decreased in market resulting on theoffice Subdued growth put business pressure decline. continued to prices sales with theamount available, of stock However, planned projects. in well properties of newresidential picked up the endof2011 towards leading totake-up Transaction levels internal Tenanttoqualityproperties. movement in rentalratesledtoa The declinestrongleasingmarketwithincreased of theglobalfinancial crisis. of 60%fromtheirpeakinQ4 2008 which droppedinexcess as a result in rentalratesand prices, sales by substantialcorrections followed Rapid Real Estatedemand growth inan undersupplied marketwas ABU DHABI|HISTORICREVIEW ApartmentSales a u e Dec Sep Jun Mar 2009 ApartmentRentals a u e Dec Sep Jun Mar 2010 VillaRentals a u e Dec Sep Jun Mar 2011 OfficeRentals a u e Dec Sep Jun Mar • • • • • • • 2012 -2014 RECOVERY ANDGROWTH

recorded minimal increases. recorded units superior whilst space notingmarginal declines quality with lower stable, market wasrelatively The office point. 50%) comparedtotheirlowest (by approximately considerably rose prices sales Residential Off-plan alsorecommencedduring sales 2013 and 2014. and in homeownership. a rise and security marketconfidenceleadingtotenancyupgrades in linewithincreasedjob improved Transaction levels advantage available. took oftheoptions people as prevailed Internal Tenantand movement flight-to-quality corrected. at abovemarketaverages advertised quality stock rates forinferior during As a this period.result, handed over new primeandwere high-end projects Several end of2012sentiment. due toimproved from the in rentalratesand prices marked increase sales a recorded Asteco throughout the year. rates stabilised in 2012 and The marketbegan to showsignsofrecovery 2012 a u e Dec Sep Jun Mar 2013 a u e Dec Sep Jun Mar 2014 STABILISATION a u e Dec Sep Jun Mar The linegraphabovedemonstrates theaveragepercentagesales andrentaltrendonaquarterlybasis. • • 2015

properties. off-plan rather than completed focused on demand sales whilst investment, in slowdown a general prompted prices in oil The drop thereafter. broadly stable remaining whilst half of theyear, during the first especially in 2015, prices and sales rental rates in increases in moderate supply resulted new Limited 2015 a Jun Mar • • • • • • 2016 - 2018 2016 DOWNTURN

Tenants and occupancy increase levels. to retain and incentives Landlords continuedtooffer Residents in achoicefor greater in supplyresulted The increase in 2018 markedly and so didoff-plantransactions. launches the number declined of newproject However, and prices payment plansincreased. sales competitive launched offering for newlyprojects transaction volumes Bank, to thehigh by theCentral down paymentrequired mainly due softened, Although demand projects for completed declined by22%and prices 8%. sales of 2015, whilst since theend of 25%and average decrease 17%, respectively, apartment an As a and result, rentalratesrecorded villa 2018, on rates. which put further pressure 2016 and between delivered 11,900 units were Approximately Real Estatedemand. and had on mergers companies downsizing, effect an adverse coupled witha number market sentiment, of major Bearish 2016 e Dec Sep Mar Abu Dhabi Real EstateReport - Jun 2017 e Mar Sep Dec Jun 2018 Q4 2018 Sep Dec ABU DHABI SUPPLY

COMPLETED IN COMPLETED IN EXPECTED IN Q1 - Q3 2018 Q4 2018 2019

4,150 400 9,300 APARTMENTS NO. OF UNITS

670 1,000 1,900 VILLAS NO. OF UNITS

0 50,000 40,000 OFFICES SQ.M.

3 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI HIGHLIGHTS AND OUTLOOK

2018 HIGHLIGHT 2019 OUTLOOK

• Although a number of projects were delayed and spilled over into 2019, Asteco • Approximately 11,200 residential units are anticipated for completion in 2019. SUPPLY recorded the delivery of circa 6,200 residential units in 2018 including 4,500 • The majority of this supply will be delivered in the Investment Zones including, but not apartments and 1,700 villas. limited to: • About half of this supply was concentrated on the Islands (mainly Al Reem and Yas - Reem Island comprising 2,350 units; Islands). - Beach with 2,500 units; • The ADIB HQ located on Airport Road has been delivered, whereas the anticipated - with 1,300 units; and Omega Tower on Reem Island is experiencing further delays. - totaling 1,250 units. • The number of project launches was limited in 2018 and principally included the • The number of new project announcements is expected to be subdued until Reflection Towers and Al Ghadeer - Phase 2 by Aldar, the Riviera by IMKAN and Al economic conditions and market sentiment improve. Fahid Island by Al Nahda Investment.

• The Abu Dhabi Real Estate market continued to follow a similar downward trend as • New supply is expected to exert further pressure on rental rates. RENTAL RATES observed over the previous two years. • Whilst some residents are expected to downsize and seek value-for-money • Apartments and villas recorded average annual rental declines of 10% and 9%, properties, others will take advantage of the increased choice at lower rates to attributed to increased supply and bearish market conditions. upgrade. • Demand for office space was limited due to subdued business/employment growth. • Demand for office space will remain tepid and result in moderate rental rate declines, As a result, rental rates dropped by 4% on average over the year, although several particular for buildings with lower quality specifications. mid- to low-quality commercial buildings recorded decreases of 10% and above. • Landlords will continue to offer incentives in the form of discounts on renewal and • Conversely, demand for office space in Free Zone areas was more buoyant translating flexible payment options. into high occupancy rates.

• Whilst transactional activity for completed projects was limited, off-plan properties • Sales prices will continue to soften with the focus on competitive price points and SALES PRICES offered at attractive rates with flexible payment plans continued to generate interest attractive payment plans for off-plan and nearly completed projects. with some developments achieving high demand levels. • Whilst further drops are anticipated for 2019, we believe the rate of decline is likely to • Apartment sales prices decreased on average by 9% in 2018, with the highest decline slow towards the end of the year. recorded in Marina Square and Sun & Sky Towers on . • The annual drop in villas sales prices was less pronounced, recording a softening of 4% with the highest decrease noted in Al Raha Gardens and Al Reef Villas.

TRENDS SALES PRICES RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND - OFF PLAN DEMAND - COMPLETED

2018

2019

4 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PRIME PROPERTIES ABU DHABI ISLAND - - - - 125 125 125 128 123 108 108 - - - - 156 165 175 191 178 156 140 - - - - 230 235 265 275 253 215 203 INVESTMENT AREA - - - 120 130 130 140 145 145 138 128 - - - 165 165 165 180 193 185 183 170 - - - 220 250 255 255 275 248 240 235 HIGH END PROPERTIES Central Abu Dhabi 165 110 90 80 85 85 90 95 90 85 80 250 140 140 130 110 135 145 150 139 123 106 290 175 175 160 130 165 175 177 170 155 148 ABU DHABI ISLAND Corniche 185 135 120 95 85 105 120 120 90 88 83 280 160 160 155 125 135 150 153 138 123 113 365 240 240 225 180 225 245 243 203 173 145 Khalidya / Bateen 185 135 120 90 85 105 120 123 113 98 85 280 160 160 140 125 155 160 165 146 123 113 365 230 230 190 155 210 215 213 190 173 158 Al Raha Beach - - 110 110 100 100 110 115 110 103 90 - - 155 145 140 150 155 161 155 143 130 - - 205 200 185 190 200 205 190 175 170 Marina Square - - - - 80 85 100 105 98 85 70 - - - - 110 130 140 148 133 115 108 - - - - 140 170 175 185 175 155 140 INVESTMENT AREA Saadiyat Beach - - - - - 110 120 130 120 113 103 - - - - - 150 175 179 174 167 148 - - - - - 190 210 233 213 200 175 Shams Abu Dhabi - - - 95 95 110 115 115 98 80 73 - - - 130 130 150 155 154 143 113 106 - - - 165 165 170 195 193 173 150 140 MID TO LOW END PROPERTIES

Central Abu Dhabi 145 85 70 60 55 70 75 76 75 68 55 215 120 100 80 90 100 105 103 103 82 73 265 145 145 110 100 140 145 148 133 122 105 ABU DHABI ISLAND Corniche 155 120 95 80 70 80 80 86 85 74 63 225 145 145 120 100 105 120 125 115 105 91 325 175 175 155 130 155 170 165 148 127 115 Khalidiya / Bateen 155 120 100 75 65 80 80 81 79 71 58 225 130 130 95 90 110 120 121 111 95 80 325 170 170 125 110 135 145 146 138 123 109 INVESTMENT AREA Al Reef - - - - 60 70 80 83 79 67 59 - - - - 75 85 100 104 103 88 73 - - - - 90 100 130 130 120 109 95 OFF ISLAND Khalifa & MBZ City - 75 55 40 40 60 65 70 70 58 53 - 90 60 45 45 85 90 95 94 84 74 - 115 80 70 65 110 120 126 124 114 104 ABU DHABI AVERAGE 165 111 95 85 83 94 101 105 98 88 79 246 135 131 121 113 130 141 146 137 121 109 323 179 178 162 148 175 189 194 177 159 146 ANNUAL % CHANGE - -32% -15% -11% -2% 14% 8% 4% -7% -10% -10% - -45% -3% -8% -6% 15% 8% 4% -6% -11% -10% - -45% -1% -9% -9% 18% 8% 3% -9% -10% -8% % CHANGE SINCE PEAK (2008) -52% -56% -55% % CHANGE SINCE MARKET LOW (2012) -4% -4% -1% % CHANGE SINCE 2ND PEAK (2015) -25% -25% -25%

5 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI APARTMENT SALES PRICES

AED per sq.ft.

0 500 1,000 1,500 2,000 2,500 0 500 1,000 1,500 2,000 2,500

1,750 1,350 1,300 1,225 500 1,100 550 1,425 825 1,550 1,000 1,650 1,025 1,700 975

1,600 REEF DOWNTOWN 875 1,425 800

1,750 2,450 1,100 1,250 900 1,250 975 1,130 925 1,050 1,175 1,325 1,425 1,475 1,500 1,500

AL MUNEERA 1,500 1,400

1,275 SUN & SKY TOWERS 1,275 1,200 1,100

1,750 1,100 900 1,015 930 1,175 1,175 1,200 1,475 AL ZEINA 1,300 THE GATE 1,500 1,300 1,375 1,225 1,225 1,100 1,100

2,000 1,025 1,025 1,000 965 1,175 1,375 1,375 YAS ISLAND 1,250 MARINA SQUARE 1,100 950 1,400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

6 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Khalidiya / Bateen 395 275 235 210 190 185 185 185 185 170 168 460 290 310 225 230 240 230 225 195 180 175 530 325 330 280 255 270 245 240 220 203 200 ABU DHABI Mushrif / Karama / Manaseer 390 235 220 180 170 195 180 170 170 165 165 455 270 260 230 210 190 190 185 185 175 168 535 315 345 260 240 250 265 255 233 198 188 ISLAND Nahyan Camp / Muroor 365 260 250 195 175 170 160 160 158 148 145 430 290 283 210 210 213 200 200 190 173 160 535 290 325 268 265 250 260 260 228 185 183 Al Raha Beach - - - - 220 250 250 255 205 185 185 - - - - 300 255 255 263 250 240 228 - - - - - 320 320 320 310 275 260 Al Reef - - 115 130 105 120 135 145 140 123 110 - - 140 155 125 150 160 168 163 150 139 - - 165 175 150 170 190 190 180 163 150 INVESTMENT Hydra Village - - - - - 90 90 103 105 93 84 ------AREA Saadiyat Island - Beach Villas - - - - 275 295 295 310 310 300 298 - - - - 305 295 330 375 375 335 325 - - - - 400 400 400 450 450 450 450 Hidd Al Saadiyat ------320 ------540 Al Raha Gardens 380 205 185 175 165 175 190 193 183 173 158 420 230 210 210 200 210 243 245 218 188 175 475 240 260 270 270 285 290 290 250 215 205 Golf Gardens - - 265 240 190 210 225 225 220 215 183 - - 200 285 260 255 260 260 253 235 195 - - 345 335 340 325 325 325 305 270 255 OFF ISLAND Khalifa City 360 190 155 125 100 130 135 133 133 125 125 400 205 180 150 135 170 150 150 150 140 130 445 255 220 180 170 185 180 180 165 153 148 Mohamed Bin Zayed - - 170 110 95 123 108 108 108 108 108 - - 195 135 128 145 140 140 140 130 125 - - 205 153 140 175 168 168 158 155 143 ABU DHABI AVERAGE 378 233 202 173 168 177 178 180 174 164 157 433 257 224 203 208 214 214 219 211 195 181 504 285 278 244 253 263 276 267 247 225 217 ANNUAL % CHANGE - -38% -13% -14% -3% 6% 0% 2% -3% -6% -4% - -41% -13% -9% 2% 3% 0% 2% -4% -7% -7% - -43% -2% -12% 3% 4% 5% -3% -8% -9% -4% % CHANGE SINCE PEAK (2008) -59% -58% -57% % CHANGE SINCE MARKET LOW (2012) -7% -13% -14% % CHANGE SINCE 2ND PEAK (2015) -13% -17% -19%

7 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI VILLA SALES PRICES

AED per sq.ft.

0 500 1,000 1,500 2,000 2,500 0 500 1,000 1,500 2,000 2,500

950 1,190 600 900 560 825 520 770 540 730 745 890 845 1,115 835 1,115

AL REEF VILLAS 800 1,050 RAHA GARDENS 750 985 660 870

1,200 860 850 810 770 870 1,375 1,020 1,550 1,020 1,550 960 1,550 940 1,535 920 1,440 SAADIYAT BEACH VILLAS WEST YAS

1300 850

600 660 660 630 HYDRA VILLAGE HIDD AL SAADIYAT GOLF GARDENS 565 530

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

8 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI OFFICE RENTAL RATES

(All figures in AED per ft2 p.a.)

TYPE

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PRIME PROPERTIES FITTED* ------215 215 210 190 190 QUALITY STOCK FITTED 320 179 156 135 111 114 111 118 104 100 94 SHELL AND CORE - - 125 107 91 91 91 95 84 81 79 MATURE STOCK GOOD 228 154 111 98 81 79 79 79 79 71 66 TYPICAL BUILDING 135 129 93 65 65 65 67 67 67 60 58 ABU DHABI AVERAGE** 228 154 121 101 87 87 87 90 83 78 74 ANNUAL % CHANGE - -32% -21% -16% -14% 0% 0% 3% -7% -6% -5% % CHANGE SINCE PEAK (2008) -67% % CHANGE SINCE MARKET LOW (2012) -15% % CHANGE SINCE 2ND PEAK (2015) -17%

* Includes developments such as , Aldar HQ, International Tower, Nation Towers, Ittihad Towers, Capital Plaza, Etihad Tower, etc.

**Average excluding prime

9 Abu Dhabi Real Estate Report - Q4 2018 ABU DHABI PROPERTY MAP

1 Al Bandar – Raha Beach 2 Al Bateen Wharf 3 Al Gurm 4 Al Maqtaa 11 5 Al Muneera – Al Raha Beach 37 6 Al Nahyan Camp 21 7 Al Raha Gardens 8 Al Rayanna 9 Al Reef

27 10 Al Zeina – Al Raha Beach 33 25 YAS 11 Baniyas 34 35 31 ISLAND 12 Bateen Airport Area 16

13 Bateen Area 32 17 14 Bawabat Al Sharq 22 6 15 Capital District (ADNEC) 1 10 9 16 CBD / Tourist Club Area 2 13 5 17 Corniche 19 28

18 Danet Abu Dhabi 7 19 Eastern Mangroves 18 12 20 Golf Gardens 3 15 20 30 23 33 8 21 Hydra Village 36 4 22 Khalidia / Al Hosn / Al Manhal 38 23 Khalifa City A 29 24 Khalifa City B 25 Maryah Island 26 MBZ City 24

27 Mina 26 22 11 28 Mushrif / Karama / Manaseer / Muroor 29 Officer’s City 30 Rawdhat Abu Dhabi 31 Reem Island - Marina Square 32 Reem Island – Najmat Abu Dhabi 14

33 Reem Island – rest of Shams Abu Dhabi 11 34 Reem Island – City of Lights 35 Reem Island – The Gate District 36 Rihan Heights 37 Saadiyat Beach District 38 The Hills

10 Abu Dhabi Real Estate Report - Q4 2018 About Asteco

The Middle East’s largest full service Real VALUATION & ADVISORY SALES BUILDING CONSULTANCY Estate Services Company, Asteco was formed Our professional advisory services are Asteco has established a large regional The Building Consultancy Team at Asteco have in Dubai in 1985. Over the years, Asteco has conducted by suitably qualified personnel property Sales division with representatives a wealth of experience supporting their Clients gained enormous respect for consistently all of whom have had extensive Real Estate based in the UAE, Qatar and Jordan. Our throughout all stages of the built asset lifecycle. delivering high quality, professional, value- experience within the Middle East and Sales teams have extensive experience in the Each of the team’s highly trained surveyors added services in a transparent manner. It is internationally. negotiation and sale of a variety of assets. have an in-depth knowledge of construction also widely recognised for its involvement with technology, building pathology and effective Our valuations are carried out in accordance many of the projects that have defined the LEASING project management methods which enable landscape and physical infrastructure of the with the Royal Institution of Chartered Asteco has been instrumental in the Leasing us to provide our clients with a comprehensive Emirates. Surveyors (RICS) and International Valuation of many high-profile developments across the building consultancy service. Standards (IVS) and are undertaken by GCC. Asteco has an essential combination of local appropriately qualified valuers with extensive FRANCHISE knowledge and international expertise. local experience. ASSET MANAGEMENT Our brand, network, system and procedures A deeply established brand, renowned for Asteco provides comprehensive Asset are now available in territories across the its application of the latest technological The Professional Services Asteco conducts Management services to all property Owners, MENA region. Our Licensing services currently advances, its commitment to transparency, throughout the region include: whether a single unit (IPM) or a regional include Real Estate Brokerage Franchising and winning strategies and human expertise. mixed-use portfolio. Our focus is on maximising associated support services with many of the • Consultancy & Advisory services Undisputed Real Estate experts, Asteco value for our Clients. key elements designed specifically around represents a significant number of the • Market research the Franchisee, making it a truly unique and region’s top property Owners, Developers and • Valuation services OWNERS ASSOCIATION bespoke franchise opportunity. Investors. Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association

Management and Consultancy services

to residential, commercial and mixed-use

communities throughout the GCC Region.

Elaine Jones John Stevens John Allen James Joughin Jenny Weidling Ghada Amhaz Tamer Ibrahim Chaaban FRICS MSc, BSc (Hons), MRICS BSc, MRICS BSc (Hons), MRICS BA (Hons) MSc BE Executive Chairman and Managing Director/ Executive Director - Senior Associate Manager - Research and Manager - Research and Associate Director / Founder / Director - Director - Asset Management Valuation & Advisory Director - Head of Valuations Advisory, Dubai Advisory, Abu Dhabi General Manager - Al Ain Transactional Services +971 4 403 7777 +971 4 403 7777 +971 4 403 7777 +971 4 403 7777 +971 2 626 2660 +971 3 766 6097 +971 4 403 7777 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

DISCLAIMER: The information contained in this report has been obtained from and is based upon sources that Asteco Property Management believes to be reliable; however, no warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute Asteco Property Management’s judgment, as of the date of this report and are subject to change without notice. Figures contained in this report are derived from a basket of locations highlighted in this report and therefore represent a snapshot of the UAE market. Averages, however, represent a wider range of areas. Particularly exclusive or unique projects have been excluded from the data to avoid distorting averages. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, involve risk and uncertainty because they relate to future events and circumstances which are beyond Asteco Property Management’s control. For a full in-depth study of the market, please contact Asteco Property Management’s Research team. Asteco Property Management LLC. Commercial License No. 218551. Paid-up Capital AED 4,000,000. | ORN 180

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