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 | 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 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 and villas located in 100 96.8 93.7 Mohamed Bin , 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 , 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 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

108 305 147 -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 retail mall GLA is estimated at 978,334 sq m (10.5 million sq ft) from a total of 11 projects up until 2021

• Above includes Al Reem Mall, Al Maryah 43 Central, The District, Al Falah Mall, Mall, Mafraq Mall, My City Centre 15 Masdar, and City Centre Al Jazira

7 59 157 674 599

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

• UAE debit and credit card retail spending in Number of Malls and Shopping Centres 2018 grew 6% YoY in Abu Dhabi City • Online purchases in the UAE rose 48% YoY as per Mashreq Bank 4 • Chinese tourists retail spending through 2 2 3 major credit and debit cards in the UAE jumped 50% YoY

• Fitch Solutions Micro Research estimated e-commerce spending in the UAE will witness unprecedented growth of 170% in three years 3 10 10 12 4 • Aldar announced 88% occupancy across all its retail assets, as per the company’s full year Convenience Neighbourhood Community Regional Super Regional (< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m) 2018 results

Retail Completed Retail Under Construction Source: REIDIN, MEED Projects, ValuStrat

7 | Abu Dhabi Real Estate Market 1st Quarter 2019 Review Hotel Supply

• As of December 2018, Abu Dhabi City had a Abu Dhabi City Hotel Room Supply total stock of 29,271 keys within a mix of 138 2016-2020 different hospitality establishments (’000 KEYS) 1.6 • Al Wathba Desert Resort (103 keys) was the only recorded new hotel opening in Abu Dhabi 0.3 City, with the exemption of Radisson Blu Abu Dhabi Corniche (327 rooms) which was rebranded from Hilton Abu Dhabi

• There have been no notable announcements 30 and launches made during the quarter. 29 However, three more hotels are expected for 29 27 27 completion before end of 2019 to add approximately 300 keys

• During the next three years, the capital could 2016 2017 2018 2019E 2020E receive an additional 3,423 rooms from 14 hospitality projects expected for delivery Hotel & Hotel Apt Rooms New Supply Source: DCTAD, MEED Projects, ValuStrat

Hotel Performance

• Total international hotel guests in full year Source of Abu Dhabi City Visitors by Nationality 2018 grew 4.1% YoY to 4,445,154 visitors Jan-Dec 2018

• Average occupancy rate during 2018 remained relatively stable at 74%, which is an uptick of 0.4% from the previous year

40% 28% • However, the Average Room Rate (ARR) and Revenue Per Available Room (RevPAR) have continued to experience downward pressures and fell 4.4% and 4.0% YoY, respectively

• Local tourists (28%) remained to be the top source market for Abu Dhabi visitors, followed 9% by Chinese (9%), Indian (9%) and British (6%) 9%

4% • Interfaith visit and 17th edition of Asian Football 4% 6% Cup positively affected hotel performance in the capital with preliminary results posting best KPIs after a decade, STR announced UAE United States China Philippines • in the Presidential Palace India Others compound was opened to the public as part United Kingdom the government’s initiative to promote Abu Dhabi as a centre for cultural preservation and Source: DCTAD human heritage www.valustrat.com | 8 Industrial Investment/Supply

• Total direct investments in Khalifa Industrial Industrial Prices Zone Abu Dhabi (KIZAD) amounted to AED 70 (AED/sq m) billion in 2018

• KIZAD’s China-UAE Industrial Capacity Cooperation Demonstration Zone broke 3,000 2,691 2,476 ground to 275,000 sq m (2.96 million sq ft) tyre manufacturing facility equivalent to AED 2.2 2,000 1,938 billion investment 1,776

• Construction of a third-party logistics (3PL) 1,000 and an Inland Container Depot (ICD) facilities with total area measuring 65,000 sq m ICAD (699,734 sq ft) commenced in KIZAD

Price High Price Low • As of March 2019, sixteen (16) industrial projects consists of warehouses, light Source: ValuStrat industrial units, manufacturing, and storage facilities with estimated total net projects value of AED 3.2 billion are subject for completion before year end

Industrial Performance

• Industrial property prices remained stable • Average asking rents observed stood at AED during Q1 leading on from late last year 323 per sq m per annum (AED 30 per sq ft per annum), depending on factors such as • Prices generally ranged between AED 1,776 industrial-grade specifications / quality, age / per sq m to AED 2,691 per sq m (AED 165 per condition, and size of industrial facility. sq ft to AED 250 per sq ft) in the established Primary industrial areas such as ICAD were in industrial areas with high specification/quality the range of AED 269 to 484 per sq m per built, and modern cold storage facilities annum (AED 25 to 45 per sq ft per annum) and priced higher at AED 4,306 per sq m Mussafah Industrial Area between AED 194 to (AED 400 per sq ft) and above 431 per sq m per annum (AED 18 to 40 per sq ft per annum) • Industrial rents in monitored locations were static during the first three months of this year

Industrial Rental Rates (AED/sq m) 484 431 431 377 269 215 183 194

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

9 | Abu Dhabi Real Estate Market 1st Quarter 2019 Review Valustrat In Media

1st March, 2019 16th January, 2019 At least 2,000 jobs up for grabs when UAE Relies on Visa Reforms to Stimulate Dubai retail giant Majid Al Futtaim Property Market opens first mall in Abu Dhabi this year “Absorption demand for the expected glut of new Abu Dhabi has been drawing a lot of interest from housing supply over the next few years will likely investors looking to tap into the emirate’s growing depend on high population growth, households moving population. As of 2018, the capital’s gross leasable area from being tenants to home owners and residents stood at 1.5 million square metres distributed in a mix shifting from the northern emirates towards Dubai due of convenience, neighbourhood, community, regional to improved affordability,” added Haider Tuaima, Head and super regional retail centres, according to real of Real Estate Research at ValuStrat. estate appraisal company ValuStrat.

25th February, 2019 14th January, 2019 UAE Supports Education Technology Will government initiatives boost UAE Market Topping USD 40 Billion by 2022 property market?

Connected campuses, digital student records, “There’s no doubt that the new government initiatives cybersecurity systems, tablets, digital collaboration will increase demand for real estate, whether it’s the tools, and high-performance research and 10-year visa for investors, specialists, scientists and development labs are transforming learning outstanding students or the 5-year visa targeting experiences. The global education technology market people aged over 55 wishing to retire in the country. will grow at 18 percent CAGR to reach USD 40 billion by However, these are strategic initiatives aimed as a 2022, according to ValuStrat Dubai. long-term contribution to the economy,” said Haider Tuaima, Head of Real Estate Research at ValuStrat.

24th January, 2019 7th January, 2019 Abu Dhabi villas buck trend of falling UAE property outlook ‘encouraging’ for rents, post 1.5% increase 2019 after cautious approach last year

Some properties in Abu Dhabi have recently Middle East leading consulting group ValuStrat also experienced a rise in leasing rates, bucking the overall pointed to a renewed sense of optimism in its 2019 trend of decline experienced in many locations. Villa outlook last month, although it noted that the “tenant’s asking rents in the UAE capital posted a 1.5 per cent market” that characterised 2018 will continue next increase in December 2018 compared to the previous year. “Prime residential areas, which saw relative quarter. It’s the first time in three years that villa rents resilience in 2018, may continue to see some have shown a positive trend, according to Cheryl improvement,” ValuStrat said. McAdam MRICS, Director and Head of Residential Valuations at ValuStrat

www.valustrat.com | 10 About ValuStrat is a firm regulated by RICS

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 Also accessible via 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. 2019 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.