Q3 2015 Q3 2015 Rental Index | Abu Dhabi Real Estate Market Overview Rental Index | Abu Dhabi Real Estate Market Overview Q3 2015
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REAL ESTATE SERVICES ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2015 Q3 2015 RENTAL INDEX | ABU DHABI REAL ESTATE MARKET OVERVIEW RENTAL INDEX | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2015 FOREWORD MPM PROPERTIES FACTS AND FIGURES ADIB Real Estate Services comprises a comprehensive real estate banking and advisory platform providing the full range of professional services from a single provider. Our services include:- Real estate financing Valuation Strategic development advisory Agency Investment advisory Market research Asset management Property management Project management Facilities management One of the aims of this report is to aid with improving market transparency by basing our analysis wherever possible on primary transactional evidence derived from our own managed portfolio and from the analysis of our sales and home financing activities. We believe that this adds credibility to the analysis and we hope provides confidence in its reliability. REPORT HIGHLIGHTS Residential Property values in the residential market have remained stable in There are a number of office developments which are Q3, reflecting low transaction volumes in the secondary market. close to entering the market, including the ADIB HQ Tower 2 situated on Airport Road, Maryha Tower on The low transaction volumes are a product of three factors:- Maryha Island, developed by Al Hilal Bank and the Al Qudra HQ at Khalifa Park, which together will add 1) Weaker investor sentiment due to the impact of approximately 60,000 sqm of net leasable space. lower oil revenues which has seen a period of price stagnation in Abu Dhabi and prices falling in Dubai. Retail Sector CONTENTS 2) A lack of availability of good stock, as owners The retail sector has witnessed no major supply entering remain unmotivated to sell in the current market, the market in Q3 with the majority of new supply with many enjoying healthy rental yields. comprising ancillary “street retail” on Abu Dhabi Island Demand Drivers 4 and mainland. This in turn is allowing the retail malls to Macro Trends 6 3) The increase in off-plan investment opportunities focus on increasing their foot-falls by attracting tourists Residential Sector 8 offering attractive payment plan terms is diverting and residents in an increasingly competitive environment. some liquidity into this segment of the market. Project in Focus 16 Retail rents across Abu Dhabi malls have remained Office Sector 18 There is evidence that rents may be approaching their ceiling stable during Q3 2015, although some mall Retail Sector 22 level at the top end of the market demonstrated by modest tenants are requesting rental reductions at Hospitality Sector 24 growth of only 1% in the last 3 months despite a low level lease renewal, driven falling revenues witnessed Definitions & Methodology 28 of vacancy and new supply in the high-end/luxury sectors. by small retail stores during Q3 2015. Developments in this segment have experienced year on Contact Information 29 year growth of between 7 to 10% hence many tenants Hospitality Sector Supply - Photo Gallery 30 are still facing sizeable increases at lease renewal. Development Location Map 32 Growth in guest arrivals into Abu Dhabi (up by 22% in Q2 Office 2015 vs. Q2 2014), driven mainly by growth in tourists from China (68%), US (30%), Philipines (29%) and KSA (27%). The commercial office market remains subdued and has seen low leasing activity during the last quarter. The hospitality sector is gearing up for the opening of Although demand has declined, particularly from the Lourve Abu Dhabi, which is expected to increase the government sector, this has been balanced by a lack number of tourist arrivals into Abu Dhabi. of new supply entering the market, which has resulted in marginal rental increases of between 1-3%. 2 3 Q3 2015 | DEMAND DRIVERS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2015 | DEMAND DRIVERS DEMAND DRIVERS – Q3 2015 GOVERNMENT INITIATIVES REAL ESTATE AND CONSTRUCTION - In line with the directives of President His placing it firmly in the ranks of the world’s elite CREATING JOBS Highness Sheikh Khalifa bin Zayed Al Nahyan innovation-based economies and His Highness Sheikh Mohamed bin Zayed Reem Mall, ($1 billion project) is on target to complete by mid- comprising 10-storeys with 302 homes ranging from studios to Al Nahyan, Crown Prince of Abu Dhabi, Deputy The UAE will introduce new labour reforms 2018 after Abu Dhabi’s Urban Planning Council (UPC) granted three-bedroom apartments, town houses and penthouses as well Supreme Commander of the UAE Armed Forces aimed at tightening oversight of employment approval for its concept plan. The mall is being developed by as shops and offices next to New York University’s Saadiyat campus and Chairman of Abu Dhabi Executive Council, agreements for the millions of temporary Kuwait’s National Real Estate Company alongside the United new housing loans worth AED2,404 billion for migrant workers who make up the bulk of the Projects for Aviation Services Company (Upac). Upac, through its Gulf Related is about to begin construction on Al Maryah Central, 1,202 beneficiaries have been approved in the country’s workforce. The reforms are being subsidiary Al Arfaj Real Estate, is investing up to $224 million in the a 2.3 million square foot super-regional shopping center. Emirate of Abu Dhabi implemented through three decrees that will project which will compose 2 million sq.ft. of space including 450 Australian contractor Brookfield Multiplex was awarded a $425 take effect on January 1. Three new labour stores, and 85 food and beverage outlets million contract to build the Al Maryah Central mall in Abu Dhabi According to the World Economic Forum’s rules issued by the Ministry of Labour include Global Competitiveness Index, UAE has moved ministry-approved contracts, conditions for Bloom Properties, the Abu Dhabi-based developer, owned by the to 17th position from 37th position in 2007 terminating employees and labour permits to Abu Dhabi conglomerate National Holding, launched Soho Square, as the most competitive nation in the world, work for new employers TOURISM INITIATIVES The Ministry of Interior has launched a 90 days visit visas run until May next year and includes performances by well-known OIL & GAS accessed, either via the ministry website www.moi.gov.ae or its names in western and eastern classical music under the theme smartphone app Music and Poetry, exploring how the genres blend The Shah gas project, which is being developed from the US with total investment estimated by Al Hosn company to tap sour gas in the to be around $10 billion (Dh36.7 billion). The 26 events spread across eight-months have been announced by Under the patronage of Sheikh Mansour bin Zayed, Deputy Prime Western region of Abu Dhabi has reached its Shah gas project located about 210 kilometers The Abu Dhabi Tourism and Culture Authority around the capital, Minister and Minister of Presidential Affairs, Abu Dhabi is to host full capacity. Al Hosn is a 60-40 joint venture south-west of Abu Dhabi is expected to in the Liwa desert and in Al Ain. The Abu Dhabi Classics season will Red Bull X-Fighters World Tour finale on October 30 between Abu Dhabi National Oil Company contribute significantly to the energy needs of (Adnoc) and Occidental Petroleum (Oxy) the UAE for over 30 years FREEZONES SIGNING UP NEW TENANTS; FORMING KEY ALLIANCES KEY EVENTS Abu Dhabi Ports has signed a standard Musataha agreement Abu Dhabi Ports signed a standard Musataha agreement (SMA) (SMA) with Al Gharbia Pipe Company to open a new pipe with Al Mazroui International Cargo Company (MICCO) to Ramadan and Eid Festival Abu Dhabi Summer Season manufacturing facility at Khalifa Industrial Zone Abu Dhabi establish a new Logistics Business Centre at Khalifa Industrial 7th July – 28th July 11th June – 5th September (Kizad). The agreement will see Al Gharbia Pipe Company invest a Zone Abu Dhabi (Kizad). MICCO’s new Centre will be built in three projected total of AED 1.1 billion, with their new facility requiring phases and will cater to MICCO’s temperature controlled storage Eid al-Adha Exhibition Louvre Abu Dhabi Stories a plot size of 200,000 square metres. Al Gharbia Pipe Company, a facilities, bulk storage through open yards, distribution services, 10th September – 21st September 21st June – 30th August at Manarat Al Saadiyat joint venture between Senaat, one of the largest industrial holding and a service centre for their trucking fleet. The first phase will see companies in the UAE, and two of Japan’s leading steel firms, JFE MICCO, a leading freight contracting company in the UAE and Abu Dhabi International Hunting and Equestrian Steel Corporation and Marubeni-Itochu Steel Inc. (MISI), expects one of the oldest logistics service providers in Abu Dhabi, invest Exhibition (ADIHEX) - 9th – 12th September the facility to be completed by March 2018. The plant will employ an initial AED 35 million. Their new facility, requiring a plot size of over 370 staff and is expected to produce 240,000 tons of steel 30,000 square metres, is expected to be ready by Q4 2016 and pipe a year fully operational by January 2017 4 5 Q3 2015 | MACRO TRENDS REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW REAL ESTATE SERVICES | ABU DHABI REAL ESTATE MARKET OVERVIEW Q3 2015 | MACRO TRENDS MACRO TRENDS STOCK MARKET vs OIL vs GOLD 350 300 250 REAL GDP GDP GROWTH GROWTH RATE RATE 2014-2018 2014-2018 ABUABU DHABIDHABI REAL REAL GDP GDP FORECAST FORECAST 2014-2018 200 2014-2018 150 Wholesale and retail trade; repair 100 6.8% 6% of motor vehicles and motorcycles 50 Accommodation and food 5% 10.0% 0 service activities 4% Manufacturing 10.0% Jan-11 Jan-12 Jan-15 Jan-13 3% Jan-14 5.2% 5.5% Sept-15 Transportation and storage 11.1% 2% Abu Dhabi Murban Gold Abu Dhabi Stock Dubai Stock Index and communications Crude Oil Market Index 1% Financial and insurance activities 15.0% 0% 0% 3% 6% 9% 12% 15% 2013 Avg.