Historic Review and Outlook Real Estate Report Q4 2017

Property Historic Highlights 2 map 3 Review 4 and Outlook

Apartment Villa and Office Apartment Villa and In the Middle East for over 30 Years 5 Rentals 6 Rentals 7 Sales 8 Office Sales Dubai | Property Map

1 Akoya 32 IMPZ Most Expensive 2 Al Barari 33 International City 3 34 JBR Expensive 4 35 Mid Priced Arabian Gulf 5 Al Nahda 36 Jumeirah Golf Estates 6 37 Affordable 7 Al Warqaa 38 Jumeirah Park 8 39 Jumeirah Village Circle 9 40 Jumeirah Village 49 10 Triangle 50 11 City Walk 41 Jumeirah 12 Lakes Towers 35 34 9 13 Deira 42 Living Legends 61 25 11 11 41 53 13 14 DIFC 43 Liwan 52 57 56 14 11 15 44 Meydan 3 11 58 16 5 16 45 38 37 10 15 30 44 17 Downtown 46 MotorCity 11 17 54 4 21 18 47 Mudon 19 12 6 44 44 19 48 40 311 22 48 39 20 49 32 31 20 21 Dubai Healthcare 50 Pearl Jumeirah

44 311 18 City Phase 2 51 36 63 28 22 Dubai Hills 52 Rigga To Abu Dhabi To Sharjah 46 23 23 Dubai Investment 53 Sheikh Zayed Road

27 55 311 Park 54 Springs / Meadows 42 62 8 2 24 55 Studio City 311 45 1 Residential Complex 56 Tecom C 7 51 29 47 25 57 The Greens 611 33 43 26 Dubai Silicon Oasis 58 The Lakes 59 26 60 27 59 The Villa 24 28 60 29 Dubailand 61 611 30 Hills 62 Uptown Mirdif

611 31 Green Community 63 Victory Heights

Note: Area classification by affordability is provided for indicative purposes only as many areas in Dubai offer various types of residential units, from affordable to high end. As such, the map colour coding takes into account the most prevalent type of product and exceptions of a lower and / or higher price could be available. 611

2 DUBAI Dubai | Historic Review

Recession Recovery and Growth Stabilisation Downturn 2009-2011 2012-2013 2014-2015 2016-2017

• The Dubai real estate market has gone through significant fluctuations over • The market began to show signs of • The market peaked in Q2 2014 • 2016 and 2017 saw a significant amount the years. Following the introduction of a decree allowing International recovery in 2012 when the Euro Crisis and corrected thereafter due to a of new project launches and deliveries Freehold Ownership in 2002, the market recorded rapid growth up until Q1 and Arab Spring conflict led to Dubai combination of factors such as the resulting in moderate but steady 2009. being an attractive alternative and ’safe’ reduction in LTV’s, low oil prices and a declines in sales prices and rental rates. haven to invest and live in. strong US dollar. • This period was marked by large scale developments and project launches. • Tenants and Investors drove the market The real estate market was fuelled by both strong demand from a rapidly • In November 2013, Dubai was awarded • Due to the substantial number of as more and more people looked for expanding economy and workforce (leading to double digit rental growth to host Expo 2020, which led to growth in launches witnessed in the previous value-for-money options, which resulted and Investor returns) and, more problematically, Investor speculation. market confidence, a rise in new project years, concerns of an oversupply and in affordable developments out- launches and increased sales prices and lack of demand particularly for high-end performing luxury accommodation in • With the onset of the global financial crisis, loss of confidence, erosion of rental rates. properties motivated Developers to terms of transaction activity. capital and drying-up of liquidity, speculators were driven from the market. focus on the mid and affordable housing This resulted in significant value contractions and ultimately the collapse of • Established communities and quality sector, and to offer incentives such as • The number and range of incentives fundamentals underpinning the real estate market. buildings experienced increased extended payment plans during the post increased as Landlords tried to retain demand whilst newer developments completion stage. Tenants and increase take-up. • Asteco also recorded noticeable Tenant migration from neighbouring saw improved take-up in line with emirates due to decreased rental rates in Dubai. enhancements in infrastructure and • Lower deposits also made off-plan sales • Developers increasingly offered smaller, connectivity. a more attractive option compared off-plan units at lower price points • Sales activity remained subdued although transaction levels picked up with flexible post-completion payment slightly by the end of 2011. to the minimum 25% down payment • Whilst increased job security and market required for a mortgaged property. plans, which resulted in an increase in • Many projects were delayed, put on hold or cancelled. confidence created demand for Tenants first-time Buyers and End-users as home to upgrade, rapid rental growth also ownership became more accessible to restricted Residents to move within people who were previously unable to Dubai and thus resulted in an upsurge in jump on the property ladder due to high relocations to the Northern Emirates in down payments. This resulted in a drop search of more affordable housing. in demand for completed properties. 240 • In anticipation of the growing Investor demand, the Dubai Government doubled 200 the land registration fee to 4%, and introduced new loan-to-value rules to limit property speculation. 160

120

Index Base 100 = March 2010 80

40 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2009 2010 2011 2012 2013 2014 2015 2016 2017

Apartment Sales Villa Sales Office Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis.

© Asteco Property Management, 2018 3 Sales Rental Project Incentives Supply Demand - Demand - Prices Rates Launches Off-plan Completed

Dubai 2017

2018 Highlights and Outlook TRENDS

2017 Highlights 2018 Outlook

• Apartment rental rates recorded steady declines throughout 2017 ranging from 2% to 4% per • Asteco expects 2018 to follow similar trends as compared with the previous year, although project quarter, on average. Drops in sales prices were slightly less pronounced with variations of 0% to launches are anticipated to ease off as the market finds a new equilibrium. 4%. • The centre of Dubai continues to shift away from its traditional core (around the Dubai • The villa market fared similarly with average quarterly decreases in sales prices and rental rates of International Airport and along Sheikh Zayed Road (E11)), and towards the new Al Maktoum 2% and 3%, respectively. International Airport and the area surrounding the Sheikh Mohammed Bin Zayed Road (E311), a move encouraged by ongoing infrastructure and development projects in the lead up to the Expo • 2017 recorded a significant number of new project launches, particularly targeting the mid-income 2020. market, with a marked shift to smaller units offering lower price points, together with a greater choice of incentives such as guaranteed returns, reduced/no commissions, low down payments • Sales prices and rental rates are expected to continue to come under pressure with a more and post-completion payment plans. This resulted in a rise in End-users and first-time Buyers pronounced drop anticipated for the latter as a result of the sheer amount of supply projected for entering the market. delivery this year.

• Consequently, off-plan sales far exceeded secondary property transactions, mainly due to the • Investors will continue to be more sensitive to the price point of properties as opposed to the ‘high’ loan-to-value ratios stipulated by the UAE Central Bank, which make real estate investment price per square foot, meaning units that were previously advertised below the AED 1,000 per difficult to Buyers with limited equity. sq.ft., mark will be marketed for instance at below AED 500,000 for studios or AED 1 million for one bedroom apartments to entice take-up. Residential • There has also been a steady rise in project completions, which has put the bargaining power firmly in the hands of Tenants who have taken advantage of the increased choice and competitive • In order to stimulate demand for completed properties and increase transaction activity in rates to relocate to new properties or renegotiate existing contracts. this sector, the UAE Central Bank would need to relax their LTV ratios to make home ownership more accessible to a large proportion of the local and overseas population. However, there is no • Proactive Landlords looking to secure new leases and/or retain Tenants increasingly offered indication of any such changes in the short-term. incentives including, but not limited to rent-free periods of up to two months, increased payment frequency (up to 12 cheques) and all/part of the utilities absorbed. • Although residential sales and leasing is generally exempt, the introduction of the VAT will indirectly affect Tenants and Investors as the tax is applicable to items such as maintenance, utility and agency fees. However, given current market conditions, some of these charges are expected to be initially absorbed by Owners/Landlords.

• Despite recording only marginal quarterly drops in sales prices and rental rates, the office sector • Although the oversupply situation, particularly in regards to secondary strata stock, will continue has arguably proven the most challenging asset class in 2017 underpinned by a bearish market in 2018, we expect healthy appetite for quality Grade A commercial properties. sentiment, low oil prices and limited business growth. • Overall, sales prices and rental rates are likely to see further adjustments until market conditions • Grade A office space under single ownership, which constitutes a fraction of the overall office and economic sentiment improve. space, fared better when compared to strata title properties. • The newly implemented value-added tax of 5% is likely to affect market sentiment and demand • In fact, development around the DIFC and Trade Centre area is particularly active due to good in the short-term; however, it is important to note that the levy is still below the global average of

Office levels of demand. 15% and will ultimately boost the economy through increased Government spending, business development and hiring. • Similar to the residential market, Landlords negotiated terms and offered incentives to improve occupancy rates.

13,900 APARTMENTS 23,000 APARTMENTS 3,600 VILLAS 8,500 VILLAS

Supply 2.6m SQ.FT. OFFICE SPACE 2.8m SQ.FT. OFFICE SPACE Dubai -4% Apartment Rental Rates Q-o-Q % Change

(All figures in AED 000’s p.a.)

TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS

YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

HIGH TO LUXURY END

DIFC - - - 73 80 103 113 113 105 100 - - - 115 130 158 173 158 160 145 - - - 145 170 198 235 230 190 190 Downtown Dubai 133 85 70 68 80 98 118 115 115 95 185 120 100 100 125 160 170 175 160 130 275 165 150 150 180 228 245 240 225 190 Dubai Marina 130 78 63 63 75 105 113 98 90 70 180 110 90 80 100 140 158 143 125 105 245 160 125 115 135 178 210 205 190 155 115 85 73 70 80 108 118 115 105 95 168 118 95 90 100 135 163 148 140 115 203 148 115 110 140 175 200 193 185 160 Palm Jumeirah 200 113 90 90 95 135 150 135 130 110 228 145 120 120 140 175 208 198 175 155 300 200 170 170 190 223 243 255 235 200 Sheikh Zayed Road 160 83 70 68 83 98 113 100 95 90 203 130 105 100 110 148 148 130 125 115 290 175 120 120 135 195 200 175 165 150 HIGH TO LUXURY END AVERAGE 148 89 77 75 88 112 123 116 112 98 193 125 113 108 124 151 167 164 151 133 263 170 143 141 175 194 215 225 211 184

MID TO HIGH END

Business Bay - - 55 45 60 90 93 93 85 70 - - 85 70 85 130 135 135 125 105 - - 115 100 125 178 180 185 170 150 Greens 120 65 58 55 65 85 83 95 95 75 160 88 78 75 100 135 148 143 130 115 180 130 115 105 130 155 173 175 175 145 Jumeirah Lakes Towers 110 65 50 45 55 83 90 90 75 65 160 85 65 65 75 110 133 125 115 95 210 118 85 85 100 148 168 153 150 130 MID TO HIGH END AVERAGE 114 66 55 49 57 79 86 90 84 71 153 91 77 70 83 117 127 126 119 101 217 138 120 105 123 158 166 171 161 141

AFFORDABLE

Al Barsha 100 60 45 44 50 78 78 75 75 60 145 75 58 55 65 100 103 95 95 80 175 95 80 78 100 145 148 135 120 110 Bur Dubai 105 43 43 43 45 73 75 73 65 58 153 80 68 65 63 103 105 108 100 85 190 80 83 80 83 125 135 138 130 115 Deira 88 48 40 37 35 68 65 65 60 50 103 55 55 53 53 85 90 90 85 70 138 83 75 70 75 135 133 113 115 95 Discovery Gardens 100 58 45 38 45 70 70 72 65 55 135 85 70 53 70 83 80 80 85 85 ------Dubai Sports City - - - 35 40 59 65 74 65 55 - - - 45 55 88 98 105 90 75 ------125 100 International City 70 44 27 23 24 43 46 50 45 40 93 63 39 38 38 65 63 65 63 55 ------Jumeirah Village - - - 35 45 70 65 73 60 55 - - - 53 70 95 103 105 95 80 - - - 80 90 120 130 138 135 110 AFFORDABLE AVERAGE 93 51 40 35 39 64 65 66 60 53 126 72 58 48 55 86 88 91 85 73 168 86 79 76 86 125 128 120 115 100

DUBAI AVERAGE 118 68 57 53 61 85 91 90 85 74 157 96 82 75 88 118 127 127 118 102 216 131 114 107 128 159 170 172 162 142

Annual % Change - -42% -16% -7% 15% 39% 7% -1% -6% -13% - -39% -14% -8% 16% 35% 8% 0% -7% -14% - -39% -13% -6% 19% 24% 7% 2% -6% -13%

% Change since peak (2008) -38% -35% -34%

% Change since market low (2011) 39% 35% 32%

% Change since 2nd peak (2014) -19% -20% -16%

Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily correspond to the actual quarter the market peaked/bottomed-out and marginal variations may occur.

© Asteco Property Management, 2018 5 Dubai -3% Villa Rental Rates Q-o-Q % Change

(All figures in AED 000’s p.a.)

TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS

YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Al Barsha - - - 120 140 175 195 213 175 165 - - - 160 180 240 255 230 200 190 - - - 195 210 265 285 273 270 240 Arabian Ranches 275 140 125 125 155 213 215 203 195 155 335 180 160 160 220 285 300 243 235 190 425 265 250 250 285 365 343 303 285 250 Victory Heights - - - 150 155 205 195 180 175 155 - - - 165 180 220 250 215 210 180 - - - 220 275 320 313 305 300 245 Jumeirah 325 160 140 140 155 195 215 190 190 175 400 190 160 160 185 238 275 253 210 195 450 225 200 200 220 310 350 285 270 230 Jumeirah Park - - - - - 195 220 218 210 175 - - - - - 250 290 245 245 200 - - - - - 295 340 290 275 255 Jumeirah Village - - - 90 125 155 163 160 160 145 - - - 110 150 165 178 170 170 145 - - - 145 165 180 210 208 185 160 Meadows 325 180 180 180 210 230 238 233 210 195 350 240 200 200 225 250 275 260 260 225 425 265 225 225 265 285 310 285 285 250 Mirdif 240 100 80 80 90 138 133 130 120 105 260 120 110 105 115 165 155 150 150 130 275 165 125 125 140 175 175 175 170 150 Palm Jumeirah 375 270 275 275 325 350 350 333 320 275 550 340 315 315 400 495 485 420 400 390 800 450 450 450 500 723 725 675 600 500 Springs 250 125 105 105 140 163 195 180 180 145 ------The Lakes - - - 170 200 220 228 223 220 190 - - - 260 280 290 283 275 270 245 - - - 340 350 350 400 363 350 330 Umm Suqeim 325 160 140 135 160 215 250 195 190 180 400 190 160 160 180 290 275 260 240 220 490 230 210 210 220 313 305 290 270 245

DUBAI AVERAGE 314 179 162 152 179 213 225 206 195 175 388 223 204 186 219 261 271 244 231 206 482 274 246 224 259 311 314 290 274 245

Annual % change - -43% -9% -6% 18% 19% 5% -8% -5% -11% - -43% -8% -9% 18% 19% 4% -10% -5% -11% - -43% -10% -9% 15% 20% 1% -8% -6% -11%

% Change since peak (2008) -44% -47% -49%

% Change since market low (2011) 15% 11% 9%

% Change since 2nd peak (2014) -22% -24% -22% Dubai (All figures in AED per sq.ft. p.a.) YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Office Barsha Heights 350 105 75 60 55 85 100 110 95 95 Bur Dubai 360 150 110 90 80 95 105 108 100 100 Business Bay - - - 75 70 100 103 88 90 90 Rental Rates DIFC 525 370 230 220 225 220 235 255 250 245 0% Dubai Investment Park 205 95 50 40 40 55 65 70 70 70 Jumeirah Lakes Towers 235 100 60 50 50 90 95 98 95 95 Q-o-Q Sheikh Zayed Road 425 215 160 140 140 175 180 185 165 150 Note: The Dubai Average and resulting Percentage Changes are based on a wide selection of areas, not all of which % Change DUBAI AVERAGE 350 173 114 96 94 117 126 130 127 122 are shown in this table. The addition of newly handed over communities may result in varying average rates. The Percentage Change (since peak, market low, 2nd peak) is Annual % change - -51% -34% -16% -2% 24% 8% 3% -2% -4% calculated using the last quarter of the year for reasons of consistency in the table. However, this may not necessarily % Change since peak (2008) -65% correspond to the actual quarter the market peaked/ bottomed-out and marginal variations may occur. % Change since market low (2012) 27%

6 DUBAI % Change since 2nd peak (2014) -3% Dubai -4% Apartment Sales Prices Q-o-Q % Change AED per sq.ft.

0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000

2,050 1,800 1,400 1,000 1,100 850 750 1,000 700 700 925 650 900 1,050 750

1,225 1,900 JLT 1,200 1,300 1,750 1,250 Business Bay Dubai Marina 1,210 1,600 1,150 1,300 1,450 1,150 1,175 1,250 1,125

2,700 1,700 1,100 1,600 1,050 600 1,500 825 500 1,300 775 475 1,350 950 500

DIFC 1,875 1,400 875 Greens 1,875 1,375 925

1,700 1,365 Jumeirah Village 938 1,750 1,350 900 1,650 1,250 800

1,250 1,050 2,800 550 500 1,500 500 425 1,175 450 325 1,100 450 350 1,400 825 675 2,000 885 710 2,000 Palm Jumeirah

850 International City 688 1,720 Discovery Gardens 855 700 1,700 800 650 1,500

2,700 2,000 1,400 1,100 1,300 925 1,100 925 1,300 1,000

2,200 JBR 1,525 2,325 1,625

Downtown Dubai 2,200 1,370 1,900 1,300 1,700 1,200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

© Asteco Property Management, 2018 7 Dubai -3% Dubai -4% Villa Sales Prices Office Sales Q-o-Q Q-o-Q % Change % Change AED per sq.ft. Prices 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

2,200 2,200 2,500 850 1,000 1,100 750 850 850 750 850 750 950 1,000 750 1,225 1,300 825

1,150 Meadows 1,350 975 Barsha Heights Arabian Ranches 1,000 1,150 975 1,150 1,300 900 1,100 1,200 800

1,500 2,750 2,200 850 1,800 1,250 750 1,550 900 750 1,500 750 900 1,800 700 1,125 3,000 975 1,250 2,850 1,225 Business Bay Palm Jumeirah

Dubai Sports City 1,150 2,475 1,250 1,150 2,500 1,250 1,050 2,400 1,000

1,500 1,800 4,250 725 850 1,900 650 650 1,900 550 650 1,800 800 900 1,700

1,175 1,100 DIFC 1,800 Springs 1,175 1,075 1,875 Jumeirah Park 1,110 950 1,925 1,100 1,100 1,900 1,000 1,000 1,650

1,100 2,000 600 900 500 650 475 550 550 550 850 925 975 1,075

Jumeirah Village 950 975

850 Jumeirah Lakes Towers 850 750 800

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

8 DUBAI About Asteco

The Middle East’s largest full service Real VALUATION & ADVISORY SALES OWNERS ASSOCIATION Estate services company, Asteco was formed Our professional advisory services are Asteco has established a large regional Asteco has the experience, systems, in Dubai in 1985. Over the years, Asteco has conducted by suitably qualified personnel property Sales division with representatives procedures and manuals in place to provide gained enormous respect for consistently all of whom have had extensive Real Estate based in the UAE, Qatar and Jordan. Our streamlined comprehensive Association delivering high quality, professional, value- experience within the Middle East and Sales teams have extensive experience in the Management and Consultancy services added services in a transparent manner. It is internationally. negotiation and sale of a variety of assets. to residential, commercial and mixed-use also widely recognised for its involvement with communities throughout the GCC Region. Our valuations are carried out in accordance many of the projects that have defined the LEASING landscape and physical infrastructure of the with the Royal Institution of Chartered Asteco has been instrumental in the Leasing SALES MANAGEMENT Emirates. Surveyors (RICS) and International Valuation of many high-profile developments across the Our Sales Management services are Standards (IVS) and are undertaken by GCC. comprehensive and encompass everything Asteco has an essential combination of local appropriately qualified valuers with extensive required for the successful completion and knowledge and international expertise. local experience. ASSET MANAGEMENT handover of units to individual unit Owners. A deeply established brand, renowned for Asteco provides comprehensive Asset its application of the latest technological The Professional Services Asteco conducts Management services to all property Owners, LICENSING advances, its commitment to transparency, throughout the region include: whether a single unit (IPM) or a regional Our brand, network, system and procedures winning strategies and human expertise. mixed-use portfolio. Our focus is on maximising are now available in territories across the • Consultancy & Advisory services Undisputed Real Estate experts, Asteco value for our Clients. MENA region. Our Licensing services currently represents a significant number of the • Market research include Real Estate Brokerage Franchising and associated support services with many of the region’s top property Owners, Developers and • Valuation services key elements designed specifically around Investors. the Franchisee, making it a truly unique and

bespoke franchise opportunity.

John Stevens John Allen Derrick Maguire James Joughin Jenny Weidling Ghada Amhaz Tamer Ibrahim Chaaban MSc, BSc (Hons), MRICS BSc, MRICS ARLA, NAEA BSc (Hons), MRICS BA (Hons) MSc BE Managing Director/ Director - Valuation & Advisory Associate Director - Associate Director - Valuation Manager - Research and Manager - Research and Branch Manager - Al Ain office Director - Asset Services +971 600 54 7773 Transactional Services +971 600 54 7773 Advisory, Dubai Advisory, Abu Dhabi +971 3 7666097 +971 600 54 7773 [email protected] +971 600 54 7773 [email protected] +971 600 54 7773 +971 2 626 2660 [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