Valustrat Abu Dhabi Real Estate Review Q1 2019
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Real Estate Market 1st Quarter | 2019 Review VPI Residential VPI Residential Real Capital Values Rental Values Estate 75.1 77.2 Performance (Base Q1 2016=100) (Base Q1 2016=100) -12.2% -6.9% Y-o-Y Y-o-Y Market Intelligence. VPI Simplified. ValuStrat Price Index Source: ValuStrat Source: ValuStrat Key Indicators Source: ValuStrat, REIDIN, DCTAD Apartment Asking Villa Asking Apartment Villa Sales Price Sales Price Asking Rents Asking Rents 13,476 11,248 118,700 198,200 AED/sq m AED/sq m 2 Bedrooms (AED p.a.) 4 Bedrooms (AED p.a.) -1.0% 1.0% -2.2% -1.9% 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 350 74% 10,290 904 (AED) Jan-Dec Jan-Dec AED/sq m AED/sq m p.a. -4.4% 0.4% -10.5% -1.9% Y-o-Y Y-o-Y Q-o-Q Q-o-Q Increase Stable Decline 1 | Abu Dhabi Real Estate Market 1st Quarter 2019 Review VPI ValuStrat Price Index Residential The ValuStrat Price Index (VPI) is a VPI - Abu Dhabi Residential Capital Values valuation-based weighted price index 5 Villa and 5 Apartment Locations that represents the quarterly price [Base: Q1 2016=100] change experienced by key residential locations in Abu Dhabi City. The VPI – Residential first quarter 2019 stood at 110 75.1 points, this is compared with 100 100.0 points from the 2016 base. 100 96.4 95.4 94.1 92.4 Abu Dhabi’s declining residential 90.3 90 88.5 capital values were 18.7% lower than 87.1 85.5 83.8 the same period in 2017, 12.2% lower 81.1 than last year and 3.2% below the 80 77.6 75.1 previous quarter. The weighted average residential value this quarter 70 was AED 10,150 per sq m (AED 943 per sq ft), apartments stood at AED 11,259 per sq m (AED 1,046 per sq ft), 60 and villas at AED 7,513 per sq m (AED Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 698 per sq ft). 2016 2017 2018 2019 Source: ValuStrat All ten locations monitored by the VPI witnessed single-digit quarterly declines in capital values of less than 5%. Highest quarterly price falls were registered for villas in Al Raha and VPI - Abu Dhabi Residential Rental Values Hydra Village, 4.3% and 4.1% 5 Villa and 5 Apartment Locations respectively. On an annual basis, [Base: Q1 2016=100] most areas lost 12% in capital values, however, two locations were slightly 110 less affected by the negative trend and they were apartments on 100.0 98 Saadiyat Island and villas located in 100 96.8 93.7 Mohamed Bin Zayed City, with capital 92.3 values declining 9.3% and 7.1% 90 88.8 88.7 85.2 respectively. 82.9 82.2 81.3 78.9 80 77.2 The Abu Dhabi VPI also tracks residential rentals. The Q1 2019 rental VPI stood at 77.2 points, 70 declining 22.8% since 2016, softening 2.1% quarterly and 6.9% annually. 60 Abu Dhabi’s gross yields averaged Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 7.1%, for apartments at 7.4% and 2016 2017 2018 2019 villas with 6.5%. Source: ValuStrat For more details, please visit www.valustrat.com/vpi www.valustrat.com | 2 Macro-Economic Snapshot • Latest nominal GDP figures from Statistics Abu Dhabi Population Centre Abu Dhabi (SCAD) witnessed a 14% YoY jump, equivalent to AED 692.8 billion during the first nine months of 2018 2,023,600 2018E 1,912,300 • Oil GDP reached AED 98.2 billion, up 46.3% 2017E YoY and contributing 41.5% to Abu Dhabi’s economy during third quarter of 2018 1,807,000 2016 • Federal government surplus for full year 1,720,000 2018 reached AED 67.5 billion, attributed to 2015 favourable oil price performance 1,640,000 • Total annual value of non-oil foreign 2014 merchandise trade increased 6.8% YoY in 2018 and amounted AED 166.9 billion 1,537,000 2013 • Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) merger was approved, which in turn will take over Al Hilal Bank and become the country’s third largest lender with an estimated asset base of AED 420 billion • State owned Abu Dhabi National Oil Company (ADNOC) earned the highest credit rating of AA amongst middle eastern oil producers, including world’s largest Saudi Aramco, as Source: Statistics Centre Abu Dhabi, ValuStrat per Fitch Ratings Consumer Price Index vs. Housing Index • Estimated population as of January 2016 – YTD 2018 was more than 2 million with 5-year average 125 growth rate approximately at 5.8% 120 115 • As of January 2019, the annual inflation rate dipped 110 0.8% and up 1% MoM 105 • Housing and Utilities 100 Expenses fell 3.4% YoY but 95 remained stable compared to the month before Jul Jul Jul Oct Oct Oct Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Feb Feb Feb Sep Sep Sep Dec Dec Dec Nov Nov Nov Aug Aug Aug Mar Mar Mar May May May 2016 2017 2018 2019 General Index (2014=100) Housing, Water, Electricity, Gas and Other Fuels Source: Statistics Centre Abu Dhabi 3 | Abu Dhabi Real Estate Market 1st Quarter 2019 Review Residential Supply • A total of 4,292 homes were completed during Abu Dhabi Residential Supply 2018, 3,365 apartments and 927 villas 2016-2020 (’000 UNITS) • 3,357 apartments and 2,867 villas/townhouses are expected to be delivered during 2019 • Key expected deliveries this year include 2,315 villas in Yas Island, Al Reem Island with 2,177 apartments, Saadiyat Island with 763 2020E apartments and 121 villas 2.9 240 2019E 2.9 3.4 234 • Updated residential projects data for 2020 2018 includes 2,933 apartments to be added, 234 mostly concentrated in Al Reem Island and 2017 230 Masdar City 2016 226 Current Stock New 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 Residential Asking Prices was relatively stable dipping 0.4% QoQ, but falling 2.7% when compared to last year -7.2% -2.7% Last 2 Years Last Year • The average asking price for ready apartments stood at AED 13,476 per sq m (AED 1,252 per sq ft) displaying a decline of 1.0% QoQ, and 2.3% lower than the same period last year • For ready villas, the average asking price was AED 11,248 per sq m (AED 1,045 per sq ft) -2.6% -0.4% indicating prices are still 3.7% lower than a Last 6 Months Last Quarter year ago, however, have seen an uptick of 1.0% QoQ • On average, a 10% to 20% gap separates listed asking sale prices and our valuation-based index - VPI Source: REIDIN, ValuStrat *Ready Properties Only www.valustrat.com | 4 Residential Rents • Overall average residential asking rents fell Residential Asking Rents 6.9% when compared to the same period last year -16.4% -6.9% Last 2 Years Last Year • On a quarterly basis, citywide average asking rents fell 2.1% • Average apartment asking rents in Abu Dhabi City dropped 6.1% YoY and 2.2% QoQ • Citywide villa asking rents declined 8.0% YoY and dipped 1.9% QoQ -5.1% -2.1% Last 6 Months Last Quarter • Villas in Al Raha Beach saw asking rents stabilise, while Al Reef, MBZ City and Saadiyat Island saw rents decline 1.5% to 3.6%. Apartments in Al Reef saw highest fall in asking rents amounting to 4.3% QoQ stemming from recently handed over units Source: REIDIN, ValuStrat • The average occupancy rate among a sample of 31,073 residential units stood at 77% Apartment Average Asking Rents (’000 AED Villas Average Asking Rents (’000 AED per annum) and Quarterly Change (%) per annum) and Quarterly Change (%) 57 94 Al Reef 74 -4.3% MBZ City 139 -1.5% 93 150 65 111 Al Reem 95 -3.9% Al Reef 138 -3.6% 133 150 90 149 Al Raha Al Muneera 124 -2.1% 178 -0.2% Beach 161 237 108 305 Al Bandar 147 -3.4% Saadiyat 338 -2.1% 204 420 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 1st Quarter 2019 Review Office Supply • Last year, an estimated 66,984 sq m Abu Dhabi City Office Supply (721,000 sq ft) Gross Leasable Area 2016-2020 (GLA) of commercial office space was (Million sq m GLA) completed which brought the total to approximately 3.58 million sq m (38.53 million sq ft) GLA • During the first three months of 2019, 0.08 data suggests 44,800 sq m (482,209 0.28 sq ft) GLA has been completed, which 3.57 3.58 roughly is equivalent to 16% of total 3.58 3.51 supply projections for this year at 282,358 sq m (3.04 million sq ft) GLA 3.10 • Notable expected completions included Eclipse Twin Towers with 51,590 sq m (555,294 sq ft) GLA, Reem Tower 1 with 27,650 sq m (297,614 sq ft) GLA and Al Mansouri Commercial Tower having 14,364 sq m (154,608 sq ft) GLA 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 saw a 1.9% QoQ drop and were 3.6% less compared to a year ago -13.3% -3.6% Last 2 Years Last Year • The average citywide asking rent for offices sized between 93 sq m to 186 sq m (1,000 sq ft to 2,000 sq ft) stood at AED 904 per sq m (AED 84 per sq ft) • Abu Dhabi island commanded average lease rates of AED 936 per sq m (AED 87 per sq ft) while average office rents in Al Reem Island -4.6% -1.9% stood at AED 829 per sq m (AED 77 per sq ft) Last 6 Months Last Quarter • The average occupancy rate among a sample of 44 office buildings within the city’s business districts stood at 76% Source: REIDIN, ValuStrat www.valustrat.com | 6 Retail Supply • The year begun with an estimated 1,495,920 Abu Dhabi City Retail Malls and sq m (16.1 million sq ft) GLA from 39 malls Shopping Centres 720 and shopping centres (‘000 sq m GLA) • During the first three months of 2019, there have been no notable mall or shopping centre openings and announcements in Abu Dhabi 200 city • Under construction