Property Review UAE Real Estate Report Q1 2020

Northern Special Note Abu Dhabi 32 11 20

26 Al Ain 30 Emirates NBD 31 Al Tamimi & Co. SPECIAL NOTE FROM MANAGEMENT

The COVID-19 pandemic has created an environment of acute uncertainty. The implications for world markets and the Real Estate sector have yet to be quantified. What is certain, significant levels of volatility will extend across the economy, financial markets and Real Estate sector until the extent of the health and economic impact has become more apparent. This high degree of ambiguity is likely to remain for the foreseeable future. Whilst it is probable that all sectors will be impacted, it is almost certain that some will be affected to a greater extent. This may stem from a loss in confidence, preventive measures (such as social distancing), and/or developments yet to unfold. The UAE Central Bank, together with Central Banks and Governments around have made unprecedented moves to stabilise the economy and markets. To date, significant stimulus packages have been announced at both the Federal and Municipal levels. To complicate matters further, in the midst of the COVID-19 crisis we are witnessing significant fluctuations in oil prices (a key export for the UAE). Oil price changes are reflective of both demand consequences of COVID-19 and wider supply factors. Oil price volatility is also likely to prevail for the foreseeable future. Elaine Jones To date, Asteco has not recorded a discernible change in demand, or values. However, it is likely that activity FRICS will diminish, at least over the short – medium term. Moreover, price declines grow increasingly likely in the event of a prolonged economic downturn. Until greater stability returns to the market it is difficult to predict Executive Chairman and Founder when conditions will normalise and how transactional volumes, and values will be affected. It should therefore be explicitly noted that the following data reflects Q1 2020 activity, and as such, reflects sentiment and trends largely recorded prior to the designation of the COVID-19 pandemic.

2 ABU DHABI MARKET OVERVIEW

SUPPLY* RENTAL RATES SALES PRICES Approximately 1,000 Residential units were completed in Q1 2020 The continuous delivery of new supply during a period of Sales transaction volumes and activity remained low in Q1 2020. (850 Apartments and 150 Villas), predominantly located across restrained economic growth has put pressure on Residential rents projects in Al Raha Beach, Danet Abu Dhabi and Al Reem Island. with Apartment and Villa rates declining by 2% and 3% since Q4 Average Apartment and Villa Sales prices softened by 3% since Q4 2019, and 5% and 4% compared with the same period last year. 2019, and recorded an annual decline of 9% and 7%, respectively. Another 10,000 units are expected for handover before the end of 2020, the majority of which is expected to be delivered within the Whilst mid and high quality units noted the highest Rental rate Whilst the drop in Villa Sales prices was less pronounced, it should Investment Zones of Al Reem Island, Al Raha Beach, Saadiyat declines, prime and high-end projects recorded a significant rise be noted that large villas with high price points struggled to Island and Yas Island. in vacancy levels. generate interest.

Similar to previous years, a number of projects are expected to be Incentives, such as multiple cheques (with some offering up to 8 Demand for off-plan and newly completed projects continued to delayed and will ultimately spill over into 2021, particularly taking cheques) and rent free periods, have become a norm, and outweigh that for existing ones. Investors preferred affordable into consideration current market conditions. Tenants are increasingly looking for value-for-money properties. properties, particularly value-for-money units.

Office demand levels continued to be low, and similar to the Residential sector, Landlords provided discounted rates on contract renewal in order to retain Tenants.

On average, Office Rental rates decreased by 1% over the quarter and by more than 5% annually. However, some mid to low quality buildings recorded annual declines of 7% to 10%.

Rental rates across all asset classes are expected to face further drops in 2020. In addition, Asteco expects an increase in vacancy rates and reduced demand for properties priced above market rates.

* 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.

3 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI SUPPLY

COMPLETED IN COMPLETED IN EXPECTED BY 2019 Q1 2020 END OF 2020

5,200 850 9,100 APARTMENTS NO. OF UNITS

1,400 1,050 900 VILLAS NO. OF UNITS

4 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020 PRIME PROPERTIES ABU DHABI ISLAND - - 75 115 105 165 150 235 -3% -5% INVESTMENT AREA 65 100 90 155 128 210 175 285 -1% -2% HIGH END PROPERTIES Central Abu Dhabi 50 55 60 65 80 125 120 150 -2% -5% ABU DHABI ISLAND Corniche 50 55 65 77 85 120 125 160 -3% -15% Khalidya / Bateen 65 75 75 85 75 135 115 170 -1% -4% Al Raha Beach 60 70 70 90 100 135 135 185 -3% -5% Marina Square 45 50 55 75 72 125 110 145 -4% -6% INVESTMENT AREA Shams Abu Dhabi 47 55 60 80 82 120 120 155 -3% -4% Saadiyat Beach - - 75 90 115 140 145 165 -5% -11% Yas Island 55 60 75 85 105 125 165 175 -1% -7% MID END PROPERTIES ABU DHABI ISLAND 40 45 50 60 70 75 100 110 -1% -9% Shams Abu Dhabi - - 55 65 69 95 105 130 -2% -6% INVESTMENT AREA Najmat & Tamouh 39 50 55 63 70 95 95 135 -2% -5% Al Raha Beach - - 60 75 80 110 - - n/a n/a OFF ISLAND Khalifa & MBZ City 26 45 45 75 60 115 117 130 -5% -6% LOW END PROPERTIES Central Abu Dhabi 35 38 42 50 50 60 65 95 -2% -8% ABU DHABI ISLAND Corniche 40 40 45 55 60 65 75 90 0% -4% Khalidiya / Bateen 38 40 45 50 55 70 65 90 -1% -5% INVESTMENT AREA Al Reef 37 45 50 55 60 75 80 95 -2% -4% OFF ISLAND Khalifa & MBZ City 28 40 32 42 45 60 65 80 0% -4%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q2 2012 -2% -5% -28% -9%

5 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI APARTMENT SALES PRICES

% CHANGE

(All figures in AED per sq.ft.) 0 500 1,000 1,500 2,000 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

AL BANDAR 1,100 1,425 -3% -5%

AL MUNEERA 925 1,150 -8% -14%

AL ZEINA 800 1,050 -3% -12%

CITY OF LIGHTS 750 850 0% 0% (HYDRA)

CITY OF LIGHTS 800 1,000 n/a n/a (OTHER PROJECTS*)

MARINA SQUARE 800 1,000 -4% -5%

REEF DOWNTOWN 650 850 0% -6%

SAADIYAT BEACH RESIDENCES 1,150 1,350 -4% -6%

SUN & SKY TOWERS 850 975 -4% -13%

THE GATE 850 975 -4% -17%

YAS ISLAND 950 1,150 -3% -13%

7%

Q-o-Q Y-o-Y Since peak Since market low * Includes Meera Towers, Park view % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q2 2012 -3% -9% -33%

6 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

Khalidiya / Bateen - - 140 165 150 178 165 210 -4% -6% ABU DHABI ISLAND Mushrif / Karama / Manaseer - - 145 160 145 175 150 210 -2% -4% Nahyan Camp / Muroor - - 125 160 145 170 150 180 -1% -2% Al Raha Beach - - 165 185 185 260 240 260 -2% -4% Al Reef 72 80 90 100 125 135 130 150 -4% -7% Hydra Village 55 62 65 78 - - - - -4% -16% INVESTMENT AREA Saadiyat Beach Villas - - 270 310 270 350 350 670 -2% -3% Hidd Al Saadiyat - - - - 290 330 310 730 -1% -3% Yas West - - - - 200 210 215 220 n/a n/a Al Raha Gardens - - 130 145 140 160 180 210 -2% -7% Golf Gardens - - 170 200 170 220 220 265 0% -2% OFF ISLAND Khalifa City - - 105 120 105 130 130 155 -3% -7% Mohamed Bin Zayed - - 100 105 105 130 110 145 -1% -7%

4%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2012 -3% -4% -17%

7 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI VILLA SALES PRICES

% CHANGE

(All figures in AED Million) 0 1 2 3 4 5 6 7 8 9 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020 2 BR 1.13 3 BR 1.43 AL REEF VILLAS -4% -12% 4 BR 1.80 5 BR 2.20 - 3 BR 3.10 GOLF GARDENS -1% -1% 4 BR 3.75 5 BR 4.88 - - HIDD AL SAADIYAT 0% 0% 4 BR 6.35 5 BR 8.00 2 BR 0.92 3 BR 1.20 HYDRA VILLAGE 0% 0% - - - 3 BR 2.05 RAHA GARDENS -8% -12% 4 BR 2.33 5 BR 3.45 2 BR SAADIYAT BEACH VILLAS 3 BR 5.13 -7% -11% (STANDARD) 4 BR 6.13 5 BR 8.63 - - YAS WEST VILLAS n/a n/a 4 BR 4.10 5 BR 4.63

4%*

Q-o-Q Y-o-Y Since peak Since market low * Includes Raha Gardens, Golf Gardens & Al Reef Villas only. Later averages are reflective of an increase in new developments % Change of higher quality. Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2012 -3% -7% -18%

8 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI OFFICE RENTAL RATES

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

AVERAGE RENTAL RATES % CHANGE FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020 PRIME STOCK FITTED* 1,450 2,300 -2% -6% QUALITY STOCK FITTED 750 1,180 -1% -3% SHELL AND CORE 630 900 0% -6% OLDER STOCK GOOD 580 780 -1% -3% TYPICAL BUILDING 500 650 0% -5% LOW QUALITY BUILDING 450 550 -1% -7%

Q-o-Q Y-o-Y Since peak Since market low * Includes developments such as Al Maryah Island, Aldar HQ, International Tower, Nation Towers, Ittihad Towers, etc. % Change** ** The average percentage change calculation excludes Prime Stock Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2012 -1% -5% -23% -19%

9 Abu Dhabi Real Estate Report - Q1 2020 ABU DHABI PROPERTY MAP

1 Al Bandar – Raha Beach 2 Al Bateen Wharf 11 3 Al Gurm 4 Al Maqtaa 5 Al Muneera – Al Raha Beach 37 6 Al Nahyan Camp 21 7 Al Raha Gardens 8 Al Rayanna 9 Al Reef 10 Al Zeina – Al Raha Beach 27 33 YAS 11 Baniyas 25 34 35 ISLAND 12 Bateen Airport Area 16 31

13 Bateen Area 32 17 14 Bawabat Al Sharq 22 6 15 Capital District (ADNEC) 10 1 16 CBD / Tourist Club Area 2 9 13 17 Corniche 19 5 28 18 Danet Abu Dhabi 18 7 19 Eastern Mangroves 12 15 3 20 20 Golf Gardens 30 23 33 21 Hydra Village 36 8 4 22 Khalidia / Al Hosn / Al Manhal 38 23 Khalifa City A 29 24 Khalifa City B 25 Maryah Island 26 MBZ City 24 11 27 Mina 26 22 28 Mushrif / Karama / Manaseer / Muroor 29 Officer’s City 30 Rawdhat Abu Dhabi 31 Reem Island - Marina Square 32 Reem Island – Najmat Abu Dhabi 14 33 Reem Island – rest of Shams Abu Dhabi 11 34 Reem Island – City of Lights 35 Reem Island – The Gate District 36 Rihan Heights 37 Saadiyat Beach District 38 The Hills

10 Abu Dhabi Real Estate Report - Q1 2020 DUBAI MARKET OVERVIEW

SUPPLY* RENTAL RATES SALES PRICES New Apartment supply slowed significantly in the first quarter of 2020 with the handover Apartment, Villa and Office Rental rates continued a Sales price movement for Apartments, Villas and of 5,750 units, compared to over 8,000 in the previous quarter. downward trajectory and recorded quarterly declines Offices recorded drops of 2% compared to the of 3%, 2% and 3%, respectively. previous quarter, and declines of between 11% and Similarly, new Office inventory delivered in Q1 reached 500,000 sq.ft., down from 1.25 12% since Q1 2019. million sq.ft. in the last three months of 2019. Annual changes remained more or less in double digits with drops of 12%, 9% and 12%, respectively. Government initiatives continued to be rolled out to Villa stock declined marginally by 550, recording an additional 2,150 units in Q1 2020. Asteco anticipates that this trend is likely to intensify increase transparency, boost confidence and in part due to the volume of supply expected for ultimately increase investment into the market. Despite ambitious handover plans, new supply is likely to fall short of earlier estimates, handover in the short to medium term, but mainly as especially given the current situation. Delivery is now expected to reach a total of just a result of uncertainties surrounding the impact of the The most recent development is the reduction of the over 25,000 Apartments and 9,000 villas in 2020 (by year-end). These figures are likely current pandemic. LTV ratio by 5%, which is expected to stimulate going to be revised as circumstances change. pent-up Buyer demand, although the current Whilst the softening market conditions may be good lockdown means almost a complete hiatus on new Whilst these numbers represent a marked decline on previous projections, it is still a news for some residents looking for discounts and Sales due to practicalities of viewings, arraying significant volume and an increase from 2019, which recorded deliveries of 23,600 incentives, we expect a reduced number of new financing and general uncertainty. Apartments and 7,400 Villas. leases and relocations as Tenants are likely to adopt a wait-and-see approach to re-evaluate their Despite these efforts, prolonged economic headwinds Government initiatives such as the formation of the Higher Real Estate Planning circumstances once the restrictions have been lifted. mainly due to oil price tensions and the global Committee (early September) to restore the supply-demand imbalance has yet to take pandemic, are likely to continue to weaken effect and whilst this establishment is expected to boost the Real Estate market and Further pressure on Rental rates across all asset employment growth and spending, which will dampen economy over the medium to long term, no further details as to its implementation have classes is expected for the year as global events weigh Real Estate investment. been announced. down heavily on market sentiment.

* 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.

11 Dubai Real Estate Report - Q1 2020 DUBAI SUPPLY

COMPLETED IN COMPLETED IN EXPECTED BY 2019 Q1 2020 END OF 2020

23,600 5,750 20,000 APARTMENTS NO. OF UNITS

7,400 2,150 7,000 VILLAS NO. OF UNITS

3.1 0.5 1.75 OFFICES MILLION SQ.FT.

12 Dubai Real Estate Report - Q1 2020 DUBAI APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020 HIGH TO LUXURY END DIFC 45 65 65 105 75 150 95 215 -1% -11% 40 65 55 85 75 125 110 190 -4% -12% PALM 50 70 60 120 90 170 120 200 -1% -9% SHEIKH ZAYED ROAD 50 60 55 90 65 120 85 155 -2% -10% MID TO HIGH END 35 50 45 70 65 105 95 135 -5% -13% 35 65 40 80 60 120 80 175 -4% -11% GREENS 37.5 50 47.5 75 70 110 95 145 -2% -8% 50 65 60 80 72.5 105 95 145 -3% -11% JUMEIRAH LAKES TOWERS 32.5 45 40 65 47.5 85 70 130 -3% -10% AFFORDABLE DEIRA 15 42.5 25 60 37.5 75 55 100 -5% -12% 25 32.5 37.5 50 65 80 - - -2% -10% DUBAI SPORTS CITY 20 32.5 32.5 47.5 45 70 60 85 -4% -15% INTERNATIONAL CITY 17.5 25 25 35 35 55 65 80 -1% -10% JUMEIRAH VILLAGE 22.5 35 30 50 45 70 65 90 -4% -17%

5%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q2 2014 Q3 2011 -3% -12% -39%

13 Dubai Real Estate Report - Q1 2020 DUBAI APARTMENT SALES PRICES

% CHANGE

(All figures in AED per sq.ft.) 0 500 1,000 1,500 2,000 2,500 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020 HIGH TO LUXURY END

DIFC 800 1,750 -2% -7%

DOWNTOWN DUBAI 800 1,850 -2% -10%

PALM JUMEIRAH 725 1,900 -2% -8%

MID TO HIGH END

BUSINESS BAY 650 1,300 -3% -8%

DUBAI MARINA 600 1,600 -3% -11%

THE GREENS AND THE VIEWS 650 1,150 -3% -13%

JUMEIRAH BEACH RESIDENCE 675 1,250 -3% -10%

JUMEIRAH LAKES TOWERS 600 1,100 -3% -11%

AFFORDABLE

DISCOVERY GARDENS 450 650 -5% -17%

DUBAI SPORTS CITY 475 775 -4% -18%

INTERNATIONAL CITY 350 550 -6% -19%

JUMEIRAH VILLAGE 425 825 -4% -18%

12%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q2 2014 Q3 2011 -2% -11% -38%

14 Dubai Real Estate Report - Q1 2020 DUBAI VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

ARABIAN RANCHES 80 120 90 160 130 240 170 270 -2% -7% DUBAI SILICON OASIS (CEDRE VILLAS) - - 125 137.5 130 140 150 160 -4% -14% DUBAI SPORTS CITY (VICTORY HEIGHTS) - - 100 127.5 130 180 170 245 -2% -12% JUMEIRAH - - 110 190 125 215 140 250 0% -6% JUMEIRAH PARK - - 145 175 155 210 210 250 0% -4% JUMEIRAH VILLAGE 75 110 80 120 80 135 120 150 -3% -11% MEADOWS - - 145 185 160 200 175 250 0% -8% 55 85 65 110 80 125 85 130 -2% -10% - - 165 260 225 385 280 680 -1% -9% SPRINGS 75 115 100 140 - - - - -1% -7% THE LAKES - - 135 170 180 250 240 280 -2% -5% - - 115 200 130 235 155 300 0% -7%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q2 2014 Q2 2012 -2% -9% -39% -6%

15 Dubai Real Estate Report - Q1 2020 DUBAI VILLA SALES PRICES

% CHANGE

(All figures in AED per sq.ft.) 0 1,000 2,000 3,000 4,000 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

ARABIAN RANCHES 550 1,050 -3% -14%

DUBAI SILICON OASIS 525 700 -4% -14% (CEDRE VILLAS)

DUBAI SPORTS CITY 625 950 -3% -11% (VICTORY HEIGHTS)

JUMEIRAH PARK 575 850 -4% -13%

JUMEIRAH VILLAGE 375 725 -4% -12%

MEADOWS 750 1,000 0% -11%

PALM JUMEIRAH 700 3,500 0% -7%

SPRINGS 550 825 -4% -13%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q2 2014 Q3 2011 -2% -12% -41% -2%

16 Dubai Real Estate Report - Q1 2020 DUBAI OFFICE RENTAL RATES

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

AVERAGE RENTAL RATES % CHANGE FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

BARSHA HEIGHTS (FORMER TECOM) 50 80 -4% -19% 50 100 -3% -9% BUSINESS BAY 40 85 -4% -14% DIFC 95 275 -5% -12% JUMEIRAH LAKES TOWERS 30 85 -4% -20% SHEIKH ZAYED ROAD 60 130 -3% -17%

6%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q3 2015 Q4 2012 -3% -12% -27%

17 Dubai Real Estate Report - Q1 2020 DUBAI OFFICE SALES PRICES

% CHANGE

(All figures in AED per sq.ft.) 0 500 1,000 1,500 2,000 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

BARSHA HEIGHTS 450 800 -4% -15% (FORMER TECOM)

BUSINESS BAY 575 1,275 0% -12%

DIFC 950 1,850 -2% -10%

JUMEIRAH LAKES TOWERS 400 950 0% -8%

1%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q1 2015 Q2 2012 -2% -12% -35%

18 Dubai Real Estate Report - Q1 2020 1 Veneto 45 Jumeirah Village 2 Badrah Triangle DUBAI 3 Bluewater Island 46 Jumeirah Village Circle 4 JBR 47 PROPERTY MAP 5 Dubai Marina 48 Arjan 6 , 49 Dubai Hills Estate 50 Living Legends & Knowledge Village 51 Al Barari 7 Palm Jumeirah 52 MBR City 8 Umm Suqeim 53 Meydan 9 Jumeirah 54 Harbour 10 Jumeirah Bay Island 55 Commercial District 11 City Walk 56 Golf District 12 57 Logistic District 13 Sheikh Zayed Road 58 Aviation District 14 La Mer 59 Expo 2020 A 15 Pearl Jumeirah 60 Residential District 16 Bur Dubai 61 Dubai Investment 17 Dubai Maritime City Park 18 Port Rashid 62 Green Community 19 Deira Island 63 Dubai Production 20 Deira City (IMPZ) 21 Downtown 64 Jumeirah Golf Estates 22 Wasl Gate 65 Victory Heights 66 Dubai Sports City 23 67 MotorCity 24 Discovery Gardens 68 Dubai Studio City 25 Jumeirah Park 69 Damac Hills 26 70 Remraam 27 Jumeirah Lakes T A Towers 71 Mudon 28 Springs / Meadows 72 Arabian Ranches T 29 73 30 The Lakes 74 Falcon City of 31 The Greens Wonders 32 Barsha Heights 75 The Villa (Tecom C) 76 Liwan 33 77 Dubai Residence 34 Business Bay Complex 35 Downtown Dubai 78 Dubai Silicon Oasis 79 Dubai Academic 36 DIFC International City 37 Dubai Design District 80 International 38 Phase 2 & 3 City Phase 2 81 International City 39 Al Jadaf 82 Al Warqaa 40 Jaddaf Waterfront () 83 Mirdif 41 84 Uptown Mirdiff 42 Al Nahda 85 Town Square 43 86 Mira 44 87 Akoya Oxygen

19 Dubai Real Estate Report - Q1 2020 NORTHERN EMIRATES MARKET OVERVIEW

Apartment Rental rates in the Northern Emirates continued to decline, with average rates softening by The Emirate of Sharjah is also focusing on the digital transformation of the Real Estate market. In Q4 2% from Q4 2019, and annual drops settling around the 12% mark. 2019, SRERD launched a digital service platform ‘Developers Gate’ for Real Estate Developers and Investors to access all the services related to property registration and complete the attestation of the Rental rates for high-end properties in Sharjah and Fujairah proved to be the most resilient with initial Sales contract. marginal quarterly decreases of 1%. During ACRES Real Estate exhibition in Q1 2020, the Emirate also saw the launch of the first digital The continuous softening of office Rental rates in Dubai, coupled with limited overall demand, resulted platform in the Real Estate market (similar to Dubizzle), namely ‘Sharjahhre.com’. in declines in Sharjah with drops of 3% over the quarter and 15% compared with the same period last year. As part of the five year plan (2017 – 2021), the Fujairah government announced a AED 1 billion infrastructure budget for 2020, of which AED 400 million is allocated to build a Residential complex in The government of Sharjah announced the largest-ever budget of AED 29.1 billion for 2020 (up 2% Khor Fakkan under the Sheikh Zayed Housing Program. from last year), which is earmarked for infrastructure, economic, cultural and social development. With approximately 33% of that budget intended for infrastructure projects (up 10%), the increase in In addition, the launch of the AED 1.9 billion Sheikh Mohamed Bin Zayed Residential City represented expenditure is expected to directly benefit the Real Estate sector. another milestone for the Real Estate market in the Emirate and will offer 1,100 Villas for 7,000 Residents. According to the Sharjah Real Estate Registration Directorate (SRERD), 61,357 transactions valued at AED 24.2 billion were recorded in 2019, a significant increase (13.4%) compared to 2018. Arada The short to medium term outlook for the Real Estate market remains ambiguous with Rents expected (Master Developer of AlJada and Nasma Residences), for example, announced a 33% increase in to continue to decline across all sectors and Emirates, particularly given current global and regional property Sales in 2019, compared to last year. In 2019, the Developer sold over 5,400 homes across events. both projects, leading to a total of 85% of sold inventory. Aljada also opened ‘Madar’ in the first quarter of 2020, Sharjah’s new entertainment and leisure destination.

Prominent new launches so far this year included the second phase of Uptown Al Zahia by Sharjah Holding adding three new Residential buildings to the Master Plan development. The Al Zahia project is scheduled to be completed by 2023 and will include 2,400 homes in total. By Q1 2020, 55% of the project had been sold with 800 families already in residence.

20 Northern Emirates Real Estate Report - Q1 2020 NORTHERN EMIRATES APARTMENT RENTAL RATES

(All figures in AED 000's p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

Typical 10 15 12 24 16 25 29 37 -3% -13% SHARJAH High End 16 23 24 38 26 60 42 70 -1% -10% Typical 10 13 12.5 16 14 23 24 33 -4% -19% AJMAN High End 13 19 17 27 22 36 31 41 -2% -10% UMM AL QUWAIN 11 15 15 22 20 26 28 32 -2% -9% Typical 12 16 16 22 18 34 33 42 -2% -15% RAS AL KHAIMAH High End 17 25 24 40 34 52 54 73 -2% -12% Typical 14 18 18 24 23 28 35 43 -3% -9% FUJAIRAH High End 19 24 28 36 32 50 52 65 -1% -8%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q1 2015 Q4 2012 -2% -12% -34% -9%

21 Northern Emirates Real Estate Report - Q1 2020 SHARJAH APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE FROM TO FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

AL MAJAZ 14 20 19 34 24 55 31 70 -2% -7% AL QASIMIAH 13 18 14.5 28 18 38 30 46 -1% -9% AL NAHDA 14 21 16 32 20 48 36 60 -2% -8% AL KHAN () 15 20 19 34 25 54 34 68 -3% -10% ABU SHAGARA 12 19 16 25 20 36 32 40 -2% -11% AL BUTINA 11 14 13 23 19 26 30 40 -1% -14% AL YARMOOK 12 15 14.5 20 17 25 30 40 -3% -9% ROLLA 12 14 14 22 18 25 30 40 -3% -11% AL WAHDA 14 21 19 27 23 38 30 50 -4% -12% CORNICHE 15 22 23 36 25 52 36 68 -2% -11%

2%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q1 2015 Q4 2011 -2% -10% -36%

22 Northern Emirates Real Estate Report - Q1 2020 SHARJAH APARTMENT SALES PRICES

% CHANGE

(All figures in AED per sq.ft.) 0 100 200 300 400 500 600 700 800 900 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

AL KHAN 300 425 -1% -19% (MID-END)

AL KHAN 425 650 -1% -26% (HIGH END)

AL TAAWUN 300 425 -1% -24%

AL NAHDA 300 475 -2% -23%

AL MAJAZ 350 475 -2% -25% (MID-END)

AL MAJAZ 450 600 0% -13% (HIGH END)

AL MAMSHA* 500 700 0% -14%

AL ZAHIA* 750 875 0% -12%

ALJADA* 700 850 0% -13%

Q-o-Q Y-o-Y * Leasehold ownership (up to 100 years) for all nationalities % Change Since Q4 2019 Since Q1 2019 -3% -15%

23 Northern Emirates Real Estate Report - Q1 2020 SHARJAH OFFICE RENTAL RATES

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

AVERAGE RENTAL RATES % CHANGE FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

AL TAAWUN ROAD 26 40 -3% -13% CORNICHE AREA 36 48 -2% -14% AL WAHDA 30 40 -3% -16% AL QASEMEH 24 40 -6% -18% CLOCK R/A 32 40 -1% -12% AL YARMOOK 20 35 -2% -13% INDUSTRIAL AREA 20 36 -5% -19%

Q-o-Q Y-o-Y % Change Since Q4 2019 Since Q1 2019 -3% -15%

24 Northern Emirates Real Estate Report - Q1 2020 11

NORTHERN EMIRATES Arabian Gulf

MAP SHARJAH

RAS AL KHAIMAH 1 Abu Shagara 2 Al Khan UMM AL QUWAIN 3 Al Majaz AJMAN 4 Al Nahda SHARJAH 5 Al Qasimiyah FUJAIRAH 6 Al Taawun 7 Al Wahda DUBAI 11 8 Corniche / Buhaira 9 Khaledia 10 King Faisal and King Abdul Aziz Streets 5 10

8 1 ABU DHABI 9

7 311 3

RAS AL KHAIMAH Mina Al Arab

1 Mina Al Arab 1

2 Marjan Island 2

3 Al Hamra 6

Al Hamra 4 Marjan Island

3 2

11

25 Northern Emirates Real Estate Report - Q1 2020 AL AIN MARKET OVERVIEW

Real Estate market activity in Al Ain remained limited across all asset classes.

Whilst average Residential Rental rates only noted marginal declines, Landlords continued to offer discounts and incentives including rent free periods and flexible payment terms.

Villa Rental rates decreased by 2% in Q1 2020, with more pronounced drops at the lower end of the market.

Annually, Apartment and Villa rents softened by 2%, however, since 2015 drops of 15% to 21% were recorded.

Good quality communities with supporting facilities continued to be the preferred choice for Tenants and generally achieved higher occupancy levels.

Whilst, demand for Office space was limited across all areas, Senaya Street recorded the lowest level of interest and the highest drop in rents.

The Retail market has also come under pressure, and despite Rental rates remaining more or less unchanged, Landlords offered incentives such as rent free periods to attract new Tenants.

Due to current events, further drops in Rental and occupancy rates are expected for the short term.

26 Al Ain Real Estate Report - Q1 2020 AL AIN APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

MATURE BUILDINGS 23 26 32 36 43 48 0% -4% NEW BUILDINGS 27 30 37 40 52 63 0% -3% PRIME COMPOUNDS 34 38 45 50 63 85 0% 0%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2012 AL AIN 0% -2% -15% -12% VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE FROM TO FROM TO FROM TO Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

Al Jimi, Town Centre, Zaker, Other(*) 48 55 65 73 82 93 -3% -4% MATURE VILLAS Al Towaya 65 70 85 90 97 100 0% 0% Prime Compounds 85 90 98 103 118 123 -1% -1% Al Jimi, Town Centre, Zaker, Other(*) 58 68 75 82 95 107 -2% -2% RECENT BUILD Al Towaya 75 80 92 95 105 115 0% 0% Prime Compounds 95 100 105 115 135 140 -2% -2%

12%

Q-o-Q Y-o-Y Since peak Since market low * Includes , Al Muwaiji, Al Manasir and Al Masoudi areas % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2012 -2% -2% -21%

27 Al Ain Real Estate Report - Q1 2020 AL AIN OFFICE RENTAL RATES

% CHANGE

(All figures in AED per sq.m. p.a.) 0 100 200 300 400 500 600 700 800 900 1,000 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

KHALIFA STREET 570 855 0% 0%

AUD AL TOUBA STREET 570 855 0% 0%

MAIN STREET 570 855 0% 0%

SENAYA STREET 350 550 0% -5%

Q-o-Q Y-o-Y Since peak Since market low % Change AL AIN Since Q4 2019 Since Q1 2019 Q4 2015 Q3 2012 0% 0% -11% -29% RETAIL RENTAL RATES

% CHANGE

(All figures in AED per sq.m. p.a.) 0 500 1,000 1,500 2,000 2,500 3,000 Q4 2019 - Q1 2020 Q1 2019 - Q1 2020

KHALIFA STREET / MAIN STREET 900 2,150 0% 0%

PRIME MALL 1,350 2,850 0% 0%

SENAYA STREET 630 1,500 0% -3%

Q-o-Q Y-o-Y Since peak Since market low % Change Since Q4 2019 Since Q1 2019 Q4 2015 Q4 2011 0% -1% -9% -8%

28 Al Ain Real Estate Report - Q1 2020 AL AIN Al Foaa PROPERTY MAP

Emirates St

Hili East Airport District Al Masoudi

Ardh Jow St

Baniyas St Al Oattara SULTANATE OF OMAN Al Ain International Airport Al Towaya Al Buraimi Al Dahmaa Al Jimi

Mohd Bin Khalifa St Al Yahar North Al Khabisi Al Mutaredh Al Markhaniya Town Centre

Al Jahili Khalifa Bin Zayed St. Al Yahar South Al Muwaiji Al Al Bateen Mutawa’a

Asharej

Al Sarooj Falaj Hazza’a Al Salamat District Khalifa Bin Zayed St. Al Shuwaimah Zayed Bin Sultan St. Al Maqam Al Aqabiyya

Aflaj

Zoo District

Gharebah Al Shuaibah

Al Khrair Defence Zaker

29 Al Qisais Neima Al Ain Real Estate Report - Q1 2020

Jebel Hafeet Al Dhahir Um Ghafah Author: Khatija Haque, Head of MENA Research, Emirates NBD

The speed with which events have evolved globally and in the region over the last month, and the still-high level of As a result of both lower oil and non-oil revenue, the UAE budget deficit uncertainty combined with a lack of actual economic data points in the GCC have made it even more difficult than usual is likely to widen to 7.5-8% of GDP this year. While this is a large deficit by to forecast key economic indicators. Besides Saudi Arabia, no GCC country has published GDP statistics for 2019 yet. The UAE standards, the UAE’s overall fiscal position is one of the strongest in decision by OPEC+ to abandon production curbs in March, together with the sharp decline in the demand for oil, led to a the region, with official data showing a budget surplus was recorded in significant drop in oil prices with negative consequences for GCC budgets. both 2018 and 2019.

The near daily changes in how governments around the world are responding to the spread of the coronavirus with new Real estate is likely to be one the main sectors affected by the impact travel curbs, closure of entertainment and leisure services and in some countries complete lockdown; and the uncertainty of the coronavirus on economic activity, along with tourism, hospitality, about how long all this will last suggests that there will continue to be downside risks to the outlook. The consensus view is wholesale & retail trade, transport & logistics. The requirements to stay that the global economy is in recession following widespread restrictions on business and activity, which have resulted in a at home, as well as the potentially longer-lasting uncertainty over possible sharp decline in demand. While stimulus measures have been passed in many countries, they have not been uniform, nor salary cuts and job security will have a significant impact on already always easy for businesses and consumers to benefit from. relatively weak consumer confidence and spending.

Against this background, the non-oil sectors of the GCC are unlikely to expand this year. Add to this the impact of sharply The Central Bank did announce an increase in the maximum loan-to- lower oil revenues and the ability of governments in the region to increase spending to offset the weaker global backdrop is value of mortgages for first time buyers as part of its broader package much more limited. In the UAE, the PMI survey data for Q1 2020 indicate a contraction in the non-oil private sector, with the of measures to boost liquidity in the UAE financial sector and to support headline PMI falling to a record low in March. Limits on the movement of individuals and the shuttering of businesses have both individuals and businesses over the next few months. The US Fed’s extended through April, which will weigh on Q2 activity. Even if economic activity starts to recover in Q3 and strengthens in decision to slash interest rates to 0-0.25% has also translated into much Q4, we still expect the non-oil sector to contract overall in 2020. The recent decision between OPEC+ and other oil producers lower borrowing costs in the UAE. These factors may contribute to some to curb oil production by 9.7mn b/d from May is also likely to lead to a sharp contraction in the UAE’s hydrocarbon sector this recovery in the demand for real estate in the UAE, once the “stay at home” year, if the proposed cuts are fully implemented. restrictions are lifted and economic activity normalises.

UAE PMI signals contraction in the non-oil sectors in Q1 2020 UAE budget likely to move into deficit this year UAE budget balance (% GDP)

75 6.0 2018 70 4.0 2019 65 2.0 60 0.0 55 -2.0 2017 50 -4.0 45 2016 40 -6.0

35 -8.0 2015 Jan Apr Jul Oct Jan Apr Jul Oct Jan 2020 2018 2018 2018 2018 2019 2019 2019 2019 2020 Source: UAE Ministry of Finance, Emirates NBD Research

New orders Output prices Headline PMI Employment

Source: IHS Markit, Emirates NBD Research

30 Emirates NBD - Q1 2020 Author: Sebastian Roberts, Associate, Real Estate, Al Tamimi & Company, Email: [email protected]

JOINTLY OWNED Functions of the Owners’ Committee Can the developer be on the Owners’ Committee? • Article 24 of the New JOP Law sets out the functions of the Provided that the developer owns unsold units in the project, Owners’ Committee, some which are as follows: the developer will be entitled to be a member on the Owners’ PROPERTY: Committee (subject to RERA’s approval of such nomination). • Review the annual budget prepared by the Managing Agent of THE OWNERS’ the project; • Submit recommendations to the Managing Agent regarding When does the Owners’ Committee meet? COMMITTEE the management, operation, maintenance and repair of the The Owners’ Committee is required to meet quarterly, with the common areas of the project; first meeting to held within 30 days from the date of formation. • Receive complaints and suggestions from owners and Each member shall have one vote when voting on the decisions Following the introduction of Law No. (6) of 2019 Regulating occupiers regarding the project and notifying the Managing and recommendations of the Owners’ Committee. Jointly-Owned Property in the Emirate of Dubai (the “New JOP Agent of the same. If the Managing Agent does not address the Law”), the Real Estate Regulatory Agency (RERA) issued the complaint or suggestion within 14 days, the Owners’ Committee ‘Declaration of Compliance of Ethical for Owners’ Committee’ (the shall refer the complaint or suggestion to RERA; Guidelines “Declaration”), to provide further clarity and guidance on the • Co-ordinate with RERA, the Managing Agent and any other responsibility of those owners who are members of the owners’ Given that there will only be up to nine committee members in relevant authority regarding matters pertaining to the safety, total, it is necessary that appropriate guidelines are put in place committee formed for the project (the “Owners’ Committee”). environment and security of the project; and to ensure the Owners’ Committee represents the interests of all • For projects other than large scale projects (i.e. master owners and occupiers to the best extent possible. What is the Owners’ Committee? community) and hotel projects, submit a request to replace the The Declaration issued by RERA sets out the general obligations Managing Agent (should the Managing Agent not be performing of a committee member and should an owner wish to be a As outlined in our recent article in Al Tamimi & Company’s its functions to a satisfactory standard) and assist in the member of the Owners’ Committee, it is important that the February edition of Law Update, a key difference between the selection and appointment of the replacement Managing Agent. owner has a thorough understanding of its obligations under the New JOP Law and the previous law is the role that the owners of New JOP Law and the Declaration. An owner who fails to comply units in a project will now play in the administration, operation with its obligations in this respect may have their membership and management of a project. Who can be on the Owners’ Committee? terminated by RERA.. Moving forward, the Owners’ Committee will be appointed by In accordance with Article 22(c) of the New JOP Law, an owner RERA and will consist of up to nine owners, who will represent who wishes to be a member of the Owners’ Committee must: the collective body of all owners in the project and there will no Moving Forward longer be an ‘Owners’ Association’. • Have full legal capacity; Al Tamimi has a wealth of experience in advising developers, The Owners’ Committee (which will be formed when title to • Be a resident of the project; owners and other stakeholders on jointly owned property and is in regular contact with RERA to clarify matters arising out of the at least 10% of the units in the project has been registered in • Be of good conduct; the name of owners) will play an advisory role in the day-to- New JOP Law and the issuance of the directions to the New JOP day running of the project. The primary responsibility for the • Have paid all of the service charges owing in respect of its unit; Law. administration, operation and management of a project remains and Should you have any queries regarding the Owners’ Committee with the appointed RERA licensed and approved management • Must regularly attend and actively participate in the meetings or how the New JOP Law affects your project (both as a developer company (the “Managing Agent”). of the Owners’ Committee. or a unit owner), Al Tamimi would be happy to assist. Once the directions for the New JOP Law are issued, Al Tamimi will be If at any time a member of the Owners’ Committee fails to satisfy running workshops on the New JOP Law, the directions and what the above requirements, that member will no longer be eligible to stakeholders can do to align their project with the new jointly be on the Owners’ Committee and that owner’s membership may owned property regime. Should you be interested to attend this be terminated by RERA. workshop, please get in touch and we will ensure that you are notified once dates for the workshop(s) are confirmed. 31 Al Tamimi & Co. - Q1 2020 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 many of the projects that have defined the Our valuations are carried out in accordance 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 Surveyors (RICS) and International Valuation Emirates. 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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