Abu Dhabi Real Estate Report Q4 2018
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Property Review Abu Dhabi Real Estate Report Q4 2018 In the Middle East for over 30 Years ABU DHABI | HISTORIC REVIEW RECESSION RECOVERY AND GROWTH STABILISATION DOWNTURN 2009 - 2011 2012 - 2014 2015 2016 - 2018 • Rapid Real Estate demand growth in an undersupplied market was • The market began to show signs of recovery in 2012 and • Limited new • Bearish market sentiment, coupled with a number of major followed by substantial corrections in rental rates and sales prices, rates stabilised throughout the year. Asteco recorded a supply resulted mergers and companies downsizing, had an adverse effect on which dropped in excess of 60% from their peak in Q4 2008 as a result marked increase in rental rates and sales prices from the in moderate Real Estate demand. of the global financial crisis. end of 2012 due to improved sentiment. increases in rental rates • Approximately 11,900 units were delivered between 2016 and • The decline in rental rates led to a strong leasing market with increased • Several new prime and high-end projects were handed over and sales 2018, which put further pressure on rates. internal Tenant movement to quality properties. during this period. As a result, rates for inferior quality stock prices in 2015, advertised at above market averages corrected. especially • As a result, apartment and villa rental rates recorded an • Transaction levels picked up towards the end of 2011 leading to take-up during the first average decrease of 25% and 17%, respectively, since the end of new residential properties in well planned projects. • Internal Tenant movement and flight-to-quality prevailed as half of the year, of 2015, whilst sales prices declined by 22% and 8%. people took advantage of the options available. whilst • However, with the amount of stock available, sales prices continued to remaining • Although demand for completed projects softened, mainly due decline. • Transaction levels improved in line with increased job broadly stable to the high down payment required by the Central Bank, security and market confidence leading to tenancy upgrades thereafter. transaction volumes for newly launched projects offering • Subdued business growth put pressure on the office market resulting in and a rise in home ownership. competitive sales prices and payment plans increased. decreased rental rates across all quality grades. • The drop • Off-plan sales also recommenced during 2013 and 2014. in oil prices • However, the number of new project launches declined prompted markedly in 2018 and so did off-plan transactions. • Residential sales prices rose considerably (by approximately a general 50%) compared to their lowest point. slowdown in • The increase in supply resulted in a greater choice for investment, Residents and Landlords continued to offer incentives to retain • The office market was relatively stable, with lower quality whilst sales Tenants and increase occupancy levels. space noting marginal declines whilst superior units demand 200 recorded minimal increases. focused on completed 180 rather than off-plan 160 properties. 140 120 100 80 Index Base 100 = March 2010 60 40 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun SepDec Mar Jun Sep Dec 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Apartment Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis. 2 Abu Dhabi Real Estate Report - Q4 2018 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). - Al Raha Beach with 2,500 units; • The ADIB HQ located on Airport Road has been delivered, whereas the anticipated - Yas Island with 1,300 units; and Omega Tower on Reem Island is experiencing further delays. - Saadiyat Island 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 Al Reem Island. • 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.