Real Estate Market 4th Quarter | 2019 Review VPI Residential VPI Residential Real Capital Values Rental Values Estate 69.1 71.5 Performance (Base Q1 2016=100) (Base Q1 2016=100) -11.0% -9.3% Y-o-Y Y-o-Y

Market Intelligence. VPI Simplified. ValuStrat Price Index

Source: ValuStrat

Key Indicators

Source: ValuStrat, REIDIN, DCTAD

Apartment Asking Villa Asking Apartment Villa Sales Price Sales Price Asking Rents Asking Rents 13,005 9,943 112,500 187,734 AED/sq m AED/sq m 2 Bedrooms (AED p.a.) 4 Bedrooms (AED p.a.) -1.6% -3.4% -2.8% -3.6% Q-o-Q Q-o-Q Q-o-Q Q-o-Q

Hotel Average Hotel Office Asking Office Asking Room Rate Occupancy Sales Price Rents 343 73% 10,889 827 (AED) Jan-Sep Jan-Sep AED/sq m AED/sq m p.a. 10.9% 1.1% 2.5% -1.1% Y-o-Y Y-o-Y Q-o-Q Q-o-Q

Increase Stable Decline

1 | Real Estate Market 4th Quarter 2019 Review VPI ValuStrat Price Index

Residential

The valuation based ValuStrat Price VPI - Abu Dhabi Residential Capital Values Index (VPI) for capital values in Abu 5 Villa and 5 Apartment Locations Dhabi’s residential investment zones [Base: Q1 2016=100] for the fourth quarter 2019, declined 2.6% quarterly to 69.1 points. Annually, capital values were 11% 120 100.0 lower than the fourth quarter 2018. 96.4 95.4 94.1 100 92.4 90.3 88.5 87.1 85.5 83.8 81.1 The weighted average residential 77.6 80 75.1 72.7 value this quarter was AED 9,246 per 70.9 69.1 sq m (AED 859 per sq ft), apartments stood at AED 10,236 per sq m (AED 60 951 per sq ft), and villas at AED 6,910 per sq m (AED 642 per sq ft). 40

Ready properties in , 20 Al Muneera, Al Reef and Hydra Village saw double digit declines in capital 0 values since Q4 2018. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 2019 Locations that were more resistant to Source: ValuStrat downward pressure, with capital values declining annually in single digit percentages, were apartments in , and Al Bandar, as well as villas in Mohamed Bin Zayed VPI - Abu Dhabi Residential Rental Values City and . 5 Villa and 5 Apartment Locations [Base: Q1 2016=100] The fourth quarter VPI - Residential Rental Values declined 3.1% quarterly 120 and 9.3% annually to 71.5 points. Abu 100.0 98 Dhabi’s gross yields averaged 7.6%, 96.8 100 93.7 92.3 for apartments at 7.9% and villas with 88.8 88.7 85.2 82.9 82.2 81.3 78.9 6.8%. 77.2 75.6 80 73.8 71.5

60

40

20

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2016 2017 2018 2019

Source: ValuStrat

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www.valustrat.com | 2 Macro-Economic Snapshot

• The UAE Cabinet approved 2020 federal Abu Dhabi Population budget of AED 61 billion, with 32.6% going to government affairs, 38% to social development and services, 14% to 2,141,400 infrastructure and economic resources 2019E 2,023,600 2018E • Fitch Ratings affirmed AA long-term issuer rating and gave a stable outlook for Abu 1,912,300 Dhabi on foot of its strong fiscal and external 2017E metrics as well as high GDP per capita 1,807,000 2016 • International Monetary Fund (IMF) forecasted UAE’s non-oil GDP growth could reach 2.5%, 1,720,000 with oil GDP at 1.4% in 2020 2015

• Abu Dhabi’s non-oil foreign trade fell 8.8% 1,640,000 YoY to AED 154.4 billion stemming from 2014 declines in imports and non-oil exports by 12.7% YoY and 14.8% YoY, respectively during 1,537,000 the nine months ended September 2019, as 2013 per Statistics Centre Abu Dhabi (SCAD)

• Oil prices averaged USD 58.8 per barrel, declined 9% annually

• UAE Central Bank increased the upper age limit towards mortgage lending to 70 years from 65 as long as the client is self employed Source: Statistics Centre Abu Dhabi, ValuStrat

Consumer Price Index vs. Housing Index • US Federal Reserve January 2016 – YTD reduced interest rates by a quarter of a 125 percent, the UAE Central Bank followed 120 suit 115 • As of November 2019, 110 Abu Dhabi's inflation 105 rate softened 0.3% annually and 0.5% 100 monthly 95 • Housing and Utilities Jul Jul Jul Jul Oct Oct Oct Oct Apr Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Jun Feb Feb Feb Feb Sep Sep Sep Sep Dec Dec Dec Nov Nov Nov Nov Aug Aug Aug Aug Mar Mar Mar Mar May May May May Expenses dropped 2016 2017 2018 2019 3.7% YoY with no monthly change General Index (2014=100) Housing, Water, Electricity, Gas and Other Fuels

Source: Statistics Centre Abu Dhabi

3 | Abu Dhabi Real Estate Market 4th Quarter 2019 Review Residential Supply

• Abu Dhabi City had an estimated 237,864 Abu Dhabi Residential Supply residential homes stock as of 2019 2016-2020 (’000 UNITS) • A total of 3,878 residential units were confirmed to have been completed for the year, 2,795 apartments and 1,083 villas/townhouses, as total completions represented 62% of the projected residential supply estimated at the start of 2019 2020E 0.3 8.2 238 • Key residential completions during 2019 were 2019E 1.1 2.8 234 997 apartments and 83 villas confirmed as 2018 completed in Saadiyat Island, 1,000 villas in 234 , and 917 apartments in Al Reem 2017 230 Island 2016 226 • Notable expected deliveries during 2020 include 3,832 apartments in Al Reem Island, Current Stock Al Raha Beach with 1,859 apartments, and Al New Apartments* Marayah Island with 1,692 apartments 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 metre declined 2.1% QoQ and fell 6.3% when compared to last year -4.4% -1.6% Last Year Last Quarter • The average asking price for ready apartments stood at AED 13,005 per sq m (AED 1,208 per sq ft) displaying a decline of 1.6% QoQ, and 4.4% lower than the same period last year

• For ready villas, the average asking price was Villa Asking Prices AED 9,943 per sq m (AED 924 per sq ft) indicating prices declined 3.4% quarterly and -10.7% -3.4% 10.7% annually Last Year Last Quarter

Source: REIDIN, ValuStrat * Ready Properties Only

www.valustrat.com | 4 Residential Rents

• Overall average residential asking rents fell Apartment Asking Rents 9.3% when compared to the same period last year -7.6% -2.8% Last Year Last Quarter • On a quarterly basis, citywide average asking rents fell 3.1%

• Average apartment asking rents in Abu Dhabi City dropped 7.6% YoY and 2.8% QoQ

• Citywide villa asking rents declined 11.8% YoY Villa Asking Rents and 3.6% QoQ -11.8% -3.6% • Exceptions to the quarterly citywide negative Last Year Last Quarter rental trends, slight increases in average asking rents were observed in Al Reef (apartments 1.4%, villas 0.8%) and Al Reem (2.1%), and Saadiyat Island (1.1%)

• The average occupancy rate among a sample Source: REIDIN, ValuStrat of more than 78,000 residential units in Abu Dhabi city, stood at 79%

Average Asking Rents (’000 AED per annum) and Quarterly Change (%)

Apartments Villas

58 87 Al Reef 71 1.4% MBZ City 120 -1.4% 90 140

66 107 Al Reem 91 2.1% Al Reef 135 0.8% 134 150

85 145 Al Muneera 116 -0.6% Al Raha 167 -2.2% 156 222

100 294 Al Bandar 134 -5.2% Saadiyat 331 1.1% 183 463

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 4th Quarter 2019 Review Office Supply

• An estimated 104,369 sq m (1.12 million Abu Dhabi City Office Supply sq ft) of office Gross Leasable Area 2016-2020 (GLA) was confirmed as completed (Million sq m GLA) during 2019, bringing the total GLA in Abu Dhabi city to 3.69 million sq m (39 million sq ft)

• During Q4, Sadeem Al Raha Beach with 0.19 approximately 5,000 sq m (53,820 sq ft) 0.10 GLA finished construction 3.58 3.69 3.58 3.51 • A total of 30,000 sq m (322,917 sq ft) GLA of new office space was leased in Al 3.10 Maryah Island, as per Mubadala Real Estate

• Initial supply projection for 2020 stood at 188,542 sq m (2.03 million sq ft) GLA which may be subject to a significant downward adjustment 2016 2017 2018 2019E 2020E

Existing Stock Expected Supply Source: REIDIN, MEED Projects, ValuStrat

Office Rents

• Office asking rents in primary commercial Office Asking Rents districts fell 1.1% since Q3 2019, and 10.2% annually -10.2% -1.1% Last Year Last Quarter • The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) fell to AED 829 per sq m (AED 77 per sq ft)

• Abu Dhabi main island commanded lease rates which averaged at AED 893 per sq m Source: REIDIN, ValuStrat (AED 83 per sq ft) while average office rents in Al Reem Island stood at AED 700 per sq m (AED 65 per sq ft)

• The average occupancy among buildings within the city’s central business districts stood at 79%

www.valustrat.com | 6 Retail Supply

• Lulu Group announced to occupy 1,833 sq m Abu Dhabi City Retail Malls and (19,730 sq ft) GLA out of 28,000 sq m (301,389 Shopping Centres 720 sq ft) GLA dedicated for retailers at Abu Dhabi (‘000 sq m GLA) Midfield Terminal. This will include a gift specialty store and a non-food department store, as per Abu Dhabi Airport 112 • An additional 26 stores opened in The Galleria including largest 30,000 sq m (322,917 sq ft) GLA Waitrose supermarket in the city

• An estimated 67,406 sq m (725,551 sq ft) GLA 43 was added to the city’s total retail stock by the end of 2019

7 74 184 744 599

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, MEED Projects, ValuStrat

Retail Performance

• My City Centre Masdar achieved 71% Number of Malls and Shopping Centres occupancy rate during its first six months of in Abu Dhabi City operation

• Marina Mall Abu Dhabi announced 100% 2 occupancy in 2019 2 3 • World Economic Forum (WEF) estimated total value of e-commerce sector in the UAE to reach USD 27.2 billion by 2020

3 13 12 13 4

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, MEED Projects, ValuStrat

7 | Abu Dhabi Real Estate Market 4th Quarter 2019 Review Hotel Supply

• Latest data from Department of Culture and Abu Dhabi City Hotel Room Supply Tourism, Abu Dhabi City had a total stock of 2016-2020 29,300 keys within a mix of 138 hospitality (’000 KEYS) establishments 1.3

• W Hotel with 499 guest rooms was opened in 0.4 Yas Island

• Yas Island’s total current stock include one 5-star hotel (499 rooms), three 4-star hotels (1,133 keys), two 1 to 3-star hotels (463 30 rooms) and one hotel apartment (164 keys) 29 29 27 27 • Miral announced to build world’s first Warner Bros branded hotel with 250 rooms in Yas Island by 2021 2016 2017 2018 2019E 2020E

Hotel & Hotel Apt Rooms New Supply

Source: DCTAD, MEED Projects, ValuStrat

Hotel Performance

• Total international hotel guests in Abu Dhabi Source of Abu Dhabi City Visitors by Nationality City YTD September 2019 grew 2.2% and stood Jul-Sep 2019 at 3,334,758 • The Average occupancy rate reached 73%, up 1.1% YoY • The Average Room Rate (ARR) and Revenue Per Available Room (RevPAR) jumped 7.4% YoY to 40% 31% AED 343 and 8.5% YoY to AED 249, respectively • Local tourists took 31% of total visitors in the city and remained as the top source market, followed by Indians at 9%, Chinese at 7% and British tourists at 5% of total count • The average overnight visitor spend per day stood at AED 546.83, 42% of which goes to 9% accommodation expense • CLYMB Abu Dhabi was opened featuring 7% 4% world’s biggest indoor skydiving chamber and 4% 5% tallest indoor climbing wall • Warner Bros World Abu Dhabi officially named as largest indoor theme park by Guinness Book UAE United States of World Records China Philippines India Others United Kingdom

Source: DCTAD

www.valustrat.com | 8 Industrial Investment/Supply

• Ground broken for a 30,000 sq m (322,917 Industrial Prices sq ft) logistics facility in Abu Dhabi Airport (AED/sq m) Free Zone, equivalent to AED 365 million investment

• announced to undergo AED 3.8 5,000 4,306 4,306 billion expansion plan and increase its 4,000 handling capacity by 50% 3,000 1,938 • Abu Dhabi (KIZAD) 2,000 1,615

welcomed 28 new manufacturing factories in 1,000 2019 which injected investments worth close to AED 3 billion ICAD • Abu Dhabi Ports started construction for its Price High Price Low Marsa Mina Project Source: ValuStrat

Industrial Performance

• Industrial property prices remained flat on a • Quarterly rental rates were unchanged for quarterly basis, with some new built facilities most industrial areas with marginal higher with modern specifications commanding asking rentals observed on newly built and higher pricing. However we observed modern specification facilities in Mussafah softening of prices for older properties located in Mussafah • Asking rents quoted generally remained between AED 194 to AED 592 per sq m per • Prices generally stood between AED 1,615 per annum (AED 18 to AED 55 per sq ft per sq m to AED 4,306 per sq m (AED 150 per sq ft annum) depending on factors such as to AED 400 per sq ft) in established industrial industrial-grade specifications, quality, age, areas with high specification/quality built, and condition and size of the industrial facility with modern cold storage facilities priced at the slightly higher rates for facilities having upper end and older properties at the lower provisions for cold storage. Quarterly end increases in quoted rents were observed for new facilities built in Mussafah

Industrial Rental Rates 592 (AED/sq m)

452 450 431

215 215 183 194

Rent High Rent Low Al Mina Al Mafraq ICAD Mussafah Source: ValuStrat

9 | Abu Dhabi Real Estate Market 4th Quarter 2019 Review Valustrat In Media

8th November, 2019 23rd December, 2019 Announcing the Banker Middle East Industry UAE’s property market – ValuStrat – Awards 2019 shortlist 23.12.2019 – Business Breakfast ValuStrat was shortlisted as one of Best Research and Property expert Haider Tuaima of Valustrat reveals why Consultancy Firm in the region. he’s confident of a rebound for UAE real estate in 2020 – despite homes losing a third of their value over the past five years.

15th October, 2019 ValuStrat issue Q3 2019 Abu Dhabi real 16th December, 2019 estate market report Shahid Kazi- Insightful Leadership In “Relatively modest new home supply in the capital is to Consulting be welcomed at this stage in the property cycle, coupled with reports of buyer demand for any sensibly Shahid Kazi in an interview with The Enterprise World priced stock that is released by reputable master magazine talks about how ValuStrat is focusing on developers – these are both encouraging signs for the leadership, integrity and innovation in their consulting longer term recovery and sustained health of the business. residential property market in Abu Dhabi,” added Declan King, Managing Director and Group Head of Real Estate at ValuStrat.

12th December, 2019 Impact of interest rate cycle on UAE property market 14th October, 2019 "As a valuation surveyor I would expect cheaper Abu Dhabi property yields increase as lending rates and more flexible mortgage rules to likely prices fall faster than rents act as a stimulus for the UAE property market," said “Abu Dhabi is enjoying relatively high residential yields Declan King MRICS, Managing Director and Group across the board, this is due to the fact that rental Head of Real Estate at ValuStrat. value falls are slower than capital value declines,” said Declan King, Managing Director and Group Head of Real Estate at ValuStrat.

www.valustrat.com | 10 About

ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. Offices in Strategic the UAE, UK, Saudi Arabia, Pakistan and Qatar serve over 1,000 corporate Partners of clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and startups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, Financial Institutions entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.

VPI ValuStrat Price Index

VPI Online www.valustrat.com/vpi

About the ValuStrat Price Index The ValuStrat Pricet Index for Abu Dhabi’s residential capital values is a valuation-based index constructed to represent the quarterly price 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. 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 Director - Commercial Valuations 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 that have been properly cleansed to exclude duplicates and outliers within predetermined areas and districts for office and residential properties Copyright © ValuStrat Consulting FZCo. 2020 This document is the property of ValuStrat Consulting FZCo and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat Consulting FZCo. We welcome your constructive feedback and any corrections that may need to be made to this Associate Director & Head of Industrial Consulting 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.