Property Review Real Estate Report Q3 2019 BUILDING The building consultancy team at Asteco have a wealth of experience and an in-depth knowledge CONSULTANCY of construction technology, building pathology and effective project management methods With you throughout all stages of your which enable us to provide our Clients with a comprehensive building consultancy service. built asset lifecycle

Technical Due Snagging Area Diligence Inspections Verification

Life Cycle Schedules of Schedules of Costing Dilapidations Condition

Project RERA Technical Building Monitoring and Reports Condition Audits Surveys

Defect Project Insurance Analysis Management Reinstatement For more details, please contact Valuation Nick Constantine, BSc (Hons) MRICS, Head of Building Consultancy [email protected] DUBAI MARKET OVERVIEW

SUPPLY* RENTAL RATES SALES PRICES New apartment supply slowed marginally in the third quarter of 2019 with the handover Apartment, villa and office rental rates continued their Sales price movement for apartments, villas and of 4,600 units, compared to over 5,000 in both Q1 and Q2. downward trajectory and recorded quarterly declines offices recorded similar drops of 2% to 3% compared of 3%, 2% and 3%, respectively. to the previous quarter, and declines of between 13% Conversely, villa stock increased significantly, recording an additional 2,500 units in Q3 and 16% since Q3 2018. 2019 (more than the first two quarters combined - 2,200 units). Similarly, new office Annual changes remained in double digits with inventory delivered in Q3 reached 950,000 sq.ft., exceeding the entire total of the first average drops of 12%, 10% and 13%. Asteco Government initiatives continued to be rolled out to half of the year. anticipates that this trend is likely to solidify due to the increase transparency, boost confidence and sheer volume of supply expected for handover in the ultimately increase investment into the market. Despite ambitious handover plans, new supply is likely to fall short of earlier estimates. short to medium term. Delivery is now expected to reach a total of just over 20,000 apartments and 7,500 villas In addition to the formation of the Higher Real Estate in 2019 (by year-end). Whilst the softening market conditions are good news Planning Committee and the New Jointly Owned for many Residents, it is important to note that Property Law**, RERA introduced ‘Mollak’ in July 2019, Whilst these figures represent a marked decline on previous projections, it is still a securing reduced rents requires negotiating skills an electronic system that has been designed as the significant volume and a notable increase from 2018, which recorded deliveries of 12,000 from the individual Tenants and a willingness to move first phase to meet registration and regulation apartments and 2,750 villas. should the Landlord proof unyielding. requirements for Owners Associations.

In an effort to achieve a more sustainable balance between supply and demand, the It should also be mentioned that (long-term) Lessees In fact, the Dubai Land Department (DLD) data Dubai Government announced (early September) the formation of the Higher Real Estate who have been paying below market rents (as they revealed an increase in transactional activity (volume Planning Committee consisting of leading government and industry figures. are protected by the rental cap) could expect marginal and value) over the last three months compared to rental increases in line with the law. same period last year. Whilst, in part, due to the The committee’s objectives include: increased choice, affordability, payment/finance Residents also need to assess the financial benefits of options, etc., it is important to point out that the • Reducing the risk of oversupply; discounts/incentives against the cost/stress of moving. Dubai Real Estate market is greatly driven by • Ensuring that Semi-Government Real Estate companies do not Whilst in many cases the scale tips in favour of the sentiment meaning positive/encouraging government compete with private sector Developers; and latter, a growing disparity will likely lead to increased announcements often result in short term peaks in • Developing a comprehensive Real Estate development strategy Tenant relocation in the face of intransigent activity. for the Emirate over the next 10 years. Landlords. Despite these efforts, prolonged global economic The committee will advise on matters relating to financing regulations with industry headwinds, mainly due to US-China trade tensions representatives suggesting that foreign competition in the banking/finance sector could and uncertainties surrounding Brexit, are likely to help boost lending (currently only Emirati institutions are permitted to loan). continue to weaken employment growth and spending, which will dampen Real Estate investment. Whilst this establishment is expected to boost the real estate market and economy over the medium to long term, no further details as to its implementation have been announced.

* It is important to note that whilst a number of projects may have received completion certificates, Asteco does not consider a project delivered until the handover process has been initiated, or the units are available for lease in the open market. ** Further details are provided by Al Tamimi & Co. on page 31.

03 Dubai Real Estate Report - Q3 2019 DUBAI SUPPLY

COMPLETED IN COMPLETED IN EXPECTED IN H1 2019 Q3 2019 Q4 2019

11,000 4,600 5,000 APARTMENTS NO. OF UNITS

2,200 2,500 2,500 VILLAS NO. OF UNITS

0.9 0.95 1.25 OFFICES MILLION SQ.FT.

04 Dubai Real Estate Report - Q3 2019 DUBAI APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE Q2 2019 - Q3 2018 - FROM TO FROM TO FROM TO FROM TO Q3 2019 Q3 2019 HIGH TO LUXURY END DIFC 50 70 65 110 75 150 95 220 -5% -9% 42.5 70 57.5 90 80 140 120 200 -3% -11% PALM 55 75 60 130 100 180 115 200 -3% -10% SHEIKH ZAYED ROAD 50 65 60 90 65 140 85 160 -1% -10% MID TO HIGH END 40 55 50 70 70 110 110 140 -2% -11% 35 65 45 85 65 130 80 190 -3% -11% GREENS 37.5 55 50 75 72.5 115 95 150 -2% -12% JUMEIRAH BEACH RESIDENCE 55 70 60 85 80 120 105 150 -3% -12% JUMEIRAH LAKES TOWERS 35 50 40 70 50 95 75 135 -3% -15% AFFORDABLE AFFORDABLE DEIRA 18 45 25 65 37.5 80 60 110 -4% -9% 24 35 37.5 55 70 85 - - -2% -10% DUBAI SPORTS CITY 24 37.5 35 50 50 75 70 85 -5% -16% INTERNATIONAL CITY 18 27.5 25 40 40 58 65 80 -3% -11% JUMEIRAH VILLAGE 25 37.5 32.5 50 47.5 75 70 100 -5% -15%

11%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q2 2014 Q3 2011 -3% -12% -35%

05 Dubai Real Estate Report - Q3 2019 DUBAI APARTMENT SALES PRICES

Q-o-Q % Change Y-o-Y % Change AED per sq.ft. 0 500 1,000 1,500 2,000 2,500 (Q2 2019 - Q3 2019) (Q3 2018 - Q3 2019)

HIGH TO LUXURY END

DIFC 800 1,800 -2% -9%

DOWNTOWN DUBAI 850 1,850 -2% -11%

PALM JUMEIRAH 775 1,900 -2% -13%

MID TO HIGH END

BUSINESS BAY 725 1,375 -1% -9%

DUBAI MARINA 600 1,750 -2% -11%

GREENS 650 1,200 -3% -16%

JUMEIRAH BEACH RESIDENCE 750 1,250 0% -10%

JUMEIRAH LAKES TOWERS 650 1,100 -3% -13%

AFFORDABLE

DISCOVERY GARDENS 500 650 -4% -21%

DUBAI SPORTS CITY 500 800 -4% -14%

INTERNATIONAL CITY 350 625 -5% -17%

JUMEIRAH VILLAGE 425 875 -4% -17%

18%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q2 2014 Q3 2011 -3% -14% -35%

06 Dubai Real Estate Report - Q3 2019 DUBAI VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE Q2 2019 - Q3 2018 - FROM TO FROM TO FROM TO FROM TO Q3 2019 Q3 2019

ARABIAN RANCHES 85 125 100 160 140 240 170 270 -2% -10% DUBAI SILICON OASIS (CEDRE VILLAS) - - 130 150 140 160 160 185 -2% -9% DUBAI SPORTS CITY (VICTORY HEIGHTS) - - 120 145 150 185 170 250 -3% -10% JUMEIRAH - - 115 190 130 215 140 250 -3% -11% JUMEIRAH PARK - - 145 175 160 210 210 260 -1% -4% JUMEIRAH VILLAGE 80 120 85 125 80 140 120 170 -4% -14% MEADOWS - - 155 190 160 210 175 250 -2% -14% 55 90 65 110 80 140 100 150 -4% -13% PALM JUMEIRAH - - 165 265 225 385 320 800 -3% -9% SPRINGS 80 115 110 140 - - - - 0% -8% THE LAKES - - 135 190 200 260 240 280 -1% -4% - - 115 200 130 240 160 300 -3% -10%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q2 2014 Q2 2011 -2% -10% -37% -3%

07 Dubai Real Estate Report - Q3 2019 DUBAI VILLA SALES PRICES

Q-o-Q % Change Y-o-Y % Change AED per sq.ft. 0 1,000 2,000 3,000 4,000 5,000 (Q2 2019 - Q3 2019) (Q3 2018 - Q3 2019)

ARABIAN RANCHES 600 1,100 -3% -13%

DUBAI SILICON OASIS 575 725 0% -13% (CEDRE VILLAS)

DUBAI SPORTS CITY 700 950 0% -13% (VICTORY HEIGHTS)

JUMEIRAH PARK 600 850 -3% -15%

JUMEIRAH VILLAGE 400 775 0% -11%

MEADOWS 750 1,000 -3% -17%

PALM JUMEIRAH 700 3,750 -1% -13%

SPRINGS 600 875 -3% -15%

4%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q2 2014 Q3 2011 -2% -13% -38%

08 Dubai Real Estate Report - Q3 2019 DUBAI OFFICE RENTAL RATES

(All figures in AED per sq.ft. p.a.)

AVERAGE RENTAL RATES % CHANGE

FROM TO Q2 2019 - Q3 2019 Q3 2018 - Q3 2019

BARSHA HEIGHTS (FORMER TECOM) 50 90 -7% -22% 50 110 0% -11% BUSINESS BAY 40 95 -4% -16% DIFC 100 300 0% -11% JUMEIRAH LAKES TOWERS 30 100 -4% -21% SHEIKH ZAYED ROAD 60 140 -5% -20%

12%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q3 2015 Q4 2012 -3% -13% -23%

09 Dubai Real Estate Report - Q3 2019 DUBAI OFFICE SALES PRICES

Q-o-Q % Change Y-o-Y % Change AED per sq.ft. 0 500 1,000 1,500 2,000 2,500 (Q2 2019 - Q3 2019) (Q3 2018 - Q3 2019)

BARSHA HEIGHTS 450 800 -4% -20% (FORMER TECOM)

BUSINESS BAY 600 1,275 -3% -17%

DIFC 950 1,850 -3% -10%

JUMEIRAH LAKES TOWERS 400 950 -4% -14%

5%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q2 2019 Since Q3 2018 Q1 2015 Q2 2012 -2% -16% -32%

10 Dubai Real Estate Report - Q3 2019 DUBAI PROPERTY MAP

1 Bluewater Island 40 Jumeirah Village Circle 2 JBR 41 Dubai Hills Estate 3 Dubai Marina 42 Living Legends 4 Palm Jumeirah 43 Al Barari 5 Umm Suqeim 44 Meydan 6 Jumeirah 45 Harbour 7 Jumeirah Bay Island 46 Commercial District 8 City Walk 47 Golf District 9 Sheikh Zayed Road 48 Logistic District A 10 La Mer 49 Aviation District 11 Pearl Jumeirah 50 Al Maktoum 12 Bur Dubai International Airport 13 Dubai Maritime City 51 Expo 2020 52 Residential District 14 Port Rashid 15 Rigga 53 Dubai Investment Park 16 Deira 54 Green Community 17 Downtown 55 Dubai Production 18 City (IMPZ) 19 Discovery Gardens 56 Jumeirah Golf Estates 20 Jumeirah Park 57 Victory Heights 21 58 Dubai Sports City 22 Jumeirah 59 MotorCity Lakes Towers 60 Dubai Studio City 23 Springs / Meadows 61 Damac Hills T A 24 62 25 The Lakes 63 Mudon T 26 The Greens 27 Barsha Heights 64 Arabian Ranches 65 Dubailand (Tecom C) 28 66 The Villa 29 Business Bay 67 Liwan 68 Dubai Residence 30 Downtown Dubai Complex 31 DIFC 69 Dubai Silicon Oasis 32 Dubai Design District 33 Dubai Healthcare 70 International City City Phase 2 71 International City Phase 2 & 3 34 35 Dubai Festival City 72 Al Warqaa 36 Al Nahda 73 Mirdif 37 74 Uptown Mirdiff 75 Town Square 38 39 Jumeirah Village 76 Akoya Oxygen Triangle

11 Dubai Real Estate Report - Q3 2019 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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