Dubai Review Outlook www.valustrat.com ValuStrat Price Index – VPI Dubai Residential Base: January 2014=100 ValuStrat Price Index – VPI Dubai Office Base: January 2015=100 All prices are quoted in UAE Dirhams unless otherwise stated Sales and Rent performance are measured on a quarterly basis while hotel performance are on yearly basis 2020 Review FIRST QUARTER REVIEW 2020 VPI Residential VPI Residential VPI Office Capital Values Rental Values Capital Values 73.3 69.6 63.1 -10.1% -8.9% -14.7% Y-o-Y Y-o-Y Y-o-Y Residential Ready Residential Ready Ticket Size Sales Volume 1.71m 3,491 AED Transactions 0.6% -0.3% Q-o-Q Q-o-Q Residential Off-Plan Residential Off-Plan Ticket Size Sales Volume 1.45m 5,224 AED Transactions -8.6% -26.3% Q-o-Q Q-o-Q Office Sales Office Sales Office Ticket Size Volume Rent 0.92m 269 863 per sq m AED Transactions AED -17.9% 11.2% -5.2% Q-o-Q Q-o-Q Q-o-Q Jan COVID - 19 PANDEMIC • The VPI – residential capital values for Dubai as of March 2020 stood at 73.3 points, dipping 0.9% since February, -10% annually. 1W • First confirmed case in the UAE recorded on 29th January • The Dubai VPI for residential rental values during Q1 2020 stood at 69.6 points, • Suspension of all flights except cargo, halting operation of major public mass declining 1.7% quarterly and 8.9% annually. On an annual basis, apartment and transport (Dubai Metro and Tram) villa asking rents fell 9.4% and 8% respectively • Countrywide curfew and disinfection drive started • VPI for Dubai’s office capital values stood at 63.1 points, suggesting that average 2W capital values were 36.9% lower than the base period Q1 2015, 14.7% lower than • Temporary closure and suspension of public and private educational institutions Q1 2019 and 4.8% below the previous quarter with implementation of distance learning • Conditional measures affecting non-essential retail and businesses including financial institutions 3W • Office staff attendance capped at 30% with the remaining workforce on remote work PROJECT LAUNCHES • Provisional closure of all leisure, entertainment, cultural, and fitness establishments including places of worship • Danube announced its first off-plan property for 2020, Olivz with 741 units located on Al Warsan • Prohibition, postponement or cancellation of all public events, gatherings, and 4W sporting activities • Emaar unveiled Burj Crown with 425 units in Downtown and Beach Isle with 396 units in Emaar Beachfront • UAE Central Bank announced AED 100 billion stimulus package • Deyaar launched Noor district with 593 units in Midtown • Private sector launched various initiatives to help its partners and clients get through lockdown periods which included rental reliefs, waiver of some charges and fees and related packages • Sobha Realty revealed Creek Vista Reserve with 330 units in MBR City Feb • HH Sheik Mohammed Bin Rashid Al Maktoum launched Dubai Future District in • Reported job cuts and salary reductions due to slow down in business activities an area behind Museum of the Future most probably to tourism, retail, and interrelated sectors • Correspondingly, decreasing expat population in both blue and white-collar workers increased downward pressures on the overall economy 5W • The pandemic began to show its impact during the second half of March as demand decreased due to the stay-at-home campaign supporting the nationwide disinfection program ECONOMY • Early official economic growth outlook for 2020 was estimated at 3.2% 6W • Overall GDP retreated 3.5% YoY down to AED 99.234 million, as per preliminary estimates from Dubai Statistics Centre TOURISM • Dubai Fateh, crude oil price stood at USD 33.75 during March, down 49% YoY • EXPO 2020 rescheduled for another year • UAE Central Bank reduced repo rate for short-term liquidity by 50 basis points 7W • Total international guests reached 3.84 million, down 16% YoY • Dubai’s external trade reached AED 323 billion, exports grew 2% YoY to AED 43 billion • Global Village placed as 4th most visited entertainment destination in the world in terms of average daily guests of 42,000 visitors, as per Global Attractions Attendance Report 8W RESIDENTIAL RETAIL • Secondary market cash sales volume up 30.4% YoY and off-plan cash sales Mar volume grew 18.2% YoY • The Dubai Mall launched virtual presence through Noon.com and Noon mobile • Apartment and villa asking rents fell 9.4% YoY and 8% annually application • Loan-To-Value (LTV) ratios applicable on mortgage for first time home buyers adjusted 5%, as per UAE Central Bank 9W • March 2020 off-plan sales transaction volume plunged 42% when compared to February. Ready homes sales volume dipped 2% month on month HOTEL • Top off-plan locations transacted during March were in Downtown Dubai, Business Bay, Jumeirah Village and Dubailand Residence Complex • ME Dubai with total 93 keys opened in The Opus by Omniyat, building designed 10W by world renowned architect Zaha Hadid • Most transacted ready homes were in Dubai Marina, International City, Jumeirah Beach Residence, Jumeirah Village and Dubai Hills Estate • Shangri-La Dubai hotel sold for AED 697.3 million • Ciel Hotel was announced with 1,042 rooms and will hold the record as world’s tallest hotel upon completion 11W • Hotel occupancy dropped 15% in March 2020 when compared to the same period last year OFFICE • An estimated 3,332 keys from 12 hotel projects finished construction • Mashreq Bank HQ in Downtown Dubai finished construction boasting an estimated 39,700 sq m (427,327 sq ft) GLA of Grade A office space 12W • Additionally, 53,156 sq m (572,166 sq ft) workspace GLA was added SECOND QUARTER REVIEW 2020 VPI Residential VPI Residential VPI Office Capital Values Rental Values Capital Values 69.3 66.0 62.3 -11.6% -10.7% -10.1% Y-o-Y Y-o-Y Y-o-Y Residential Ready Residential Ready Ticket Size Sales Volume 1.88m 1,516 AED Transactions 10.2% -56.6% Q-o-Q Q-o-Q Residential Off-Plan Residential Off-Plan Ticket Size Sales Volume 1.41m 2,943 AED Transactions -2.3% -43.7% Q-o-Q Q-o-Q Office Sales Office Sales Office Ticket Size Volume Rent 0.87m 74 864 per sq m AED Transactions AED -6.1% -72.5% 0.1% Q-o-Q Q-o-Q Q-o-Q Apr COVID - 19 PANDEMIC • The VPI – residential capital values for Dubai as of June 2020 stood at 69.3 points, declining 1.9% monthly, continuing the same accelerated rate of decline 1W • Movement restrictions due to the COVID-19 pandemic were eased in June, we witnessed during April and May. Annually, residential capital values declined allowing increased number of home sales in the city, showing transactional 12.5% improvement over the previous two months, however these figures were yet to indicate a full recovery when compared to pre-lockdown data • The residential rental VPI in Dubai stood at 66.0 points, declining 5.2% quarterly and 10.7% annually. Dubai’s net yields averaged 5.8%, for apartments at 5.9% • Moody’s Investor Service revealed Dubai is the most vulnerable business hub in and villas with 4.9% the Middle East exposed to impacts of the coronavirus pandemic 2W • VPI for Dubai’s office capital values stood at 62.3 points, suggesting that average • Government of Dubai initiated an AED 1.5 billion three-month economic capital values were 37.7% lower than Q1 2015, 10.1% lower than Q2 2019 and stimulus package to help minimise the impact of the pandemic and support vital 1.3% below the previous quarter business sectors • Some hospitality establishments were converted into isolation and quarantine 3W facilities, or as accommodation for medical staff • Relaxation of restrictions and procedures related to the health crisis commenced ECONOMY • With expected economic slump due to lock-downs, interrelated sectors including tourism, aviation, hospitality could face headwinds 4W • Dubai Economy launched Price Monitor portal to track daily prices at Price.ded.ae • Sectors could possible perform better during this unprecedented times include healthcare, pharmaceuticals, e-commerce, and telecommunications • Bank of America estimated Dubai could face a 5.5% recession for this year • Department of Finance issued a directive to reduce capital spending as an economic precautionary measure May • Dubai World made its final payment to its creditors amounting to more than AED 30 billion (USD 8.2 billion) MARKET SENTIMENT • Foreign direct investments fell 74% YoY by end of H1 • Price drops, lower lending rates and sweetened LTV rules may have encouraged 5W some potential buyers to make a purchase. • A survey by Dubai Chamber of Commerce revealed 70% of businesses expect to cease trading and operations within six months RESIDENTIAL 6W • Residential home sales transactions totaled 4,459, down 48.8% QoQ and 39.3% YoY LAWS & REGULATIONS • Cash sales volume was 97% higher than May. However, June’s off-plan homes sales declined 7% when compared to May 7W • New Dubai International Financial Centre (DIFC) data protection law enacted • Top off-plan locations transacted during June were in Jumeirah Village, Downtown Dubai, District One, and International City • UAE has released the full list of 122 categories for 100 per cent ownership in the mainland under the Foreign Direct Investment (FDI) Law • Most transacted ready homes were Dubai Residence Complex, Business Bay, Dubai Marina, Town Square and Dubai Sports City 8W INFRASTRUCTURE HOTEL Jun • Dubai Maritime City announced 25% completion of infrastructure for its Phase 1 commercial development • Occupancy rate plunged to 23%, a record low as per STR Global • Roads and Transport Authority (RTA) and Dubai Municipality signed a service • Approximately