dubai real estate market overview 2017 - … · transaction analysis for off-plan properties 11...

Confidential

DUBAI REAL ESTATEMARKET OVERVIEW – 2017

Cityscape 2017

Confidential

2

Market Overview Q2 2017

Political & Economic

Dubai’s population stood at 2.8 million at the end of the secondquarter of 2017 according to DSC.

Dubai International Airport’s passengers reached 36.9 million up untilMay, a 6.7% increase Y-o-Y.

Dubai Customs reported that non-oil foreign trade grew by 2.7% andreached AED 327 billion in the first quarter of 2017.

The Dubai Chamber of Commerce and Industry have had 8,900 newmembers joining them within the first six months of 2017, a 10.9% yearon year increase.

The IMF has lowered its 2017 and 2018 growth forecasts for the UAEciting the impact of low oil prices.

Dubai’s non-oil private sector grew faster in the first half of the year ascompared to the same period last year, according to reports byEmirates NBD. The Dubai economy tracker index registered at 56.5 inJune, up from May’s seven-month low of 55.

Confidential

3

Real Estate Market

Mortgage Market

Apartment sales prices are up by 0.1% when compared to the previousquarter. While, apartment prices rose by 0.1%, villa prices rose by 1%when compared to the first quarter of 2017 indicating a bottoming outphase.

Average rent prices across various districts in Dubai have been fallingdown as massive residential supply have been added to the market. Adecline in the oil prices and job openings have added further pressureon the rentals.

Rental drops have led to a reduction in the rental incomes which inreturn is pulling the yield rates down.

More than 7,000 residential units have been added in the secondquarter of 2017.

EIBOR will likely to perform in an uptick direction albeit on a lowerlevel to US rates as FED is projected to three rate increases this yearwhich would be followed by another three increases in both 2018 and2019.

Due to the lower oil prices, local market liquidity had been affected,leading to a rise in EIBOR over the past year.

Confidential

Transaction Analysis for Ready Properties

4

Dubai Real Estate Market Overview 2017

Confidential

5

No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)

Sales Transactions 13% down 1% down

Mortgage Transactions 1% up 15% up

Value of Transactions

Sales Transactions 5% down 7% up


3,073

3,562

2,807

3,7514,043

3,532

1,926 1,858 1,7092,067 2,116 2,128

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Residential & Commercial Transactions [Ready]

Sales Transactions Mortgage Transactions

5.4

6.1

4.8

6.56.8

6.5

3.8 4.13.5 3.7 3.9

4.2

0

1

2

3

4

5

6

7

8

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Residential & Commercial Transactions [Ready]


Residential and Commercial Unit Transaction Analysis (Ready)

Confidential

6

Apartment Transaction Analysis (Ready)

2,353

2,732

2,148

2,8293,011

2,413

1,3141,096 1,072

1,313 1,319 1,348

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Apartment Transactions [Ready]


3.0

3.5

2.7

3.5

4.1

3.4

1.7 1.61.4

1.7 1.7 1.8

0

1

1

2

2

3

3

4

4

5

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Apartment Transactions [Ready]








Confidential

7

369

465

378

519 539597

437

548

476

594 577618

0

100

200

300

400

500

600

700

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Villa Transactions [Ready]


1.92.0

1.6

2.12.0

2.5

1.8

2.1

1.8 1.8 1.8

2.1

0

1

1

2

2

3

3

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Villa Transactions [Ready]



Sales Transactions 11% up 28% up




Mortgage Transactions 16% up 0%

Villa Transaction Analysis (Ready)

Confidential8

1.25

1.29 1.28

1.23

1.35

1.40

1.28

1.42

1.30

1.29

1.311.34

1.1

1.2

1.2

1.3

1.3

1.4

1.4

1.5

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Mill

ion

s

Average Ticket Price of Apartment Transactions [Ready]

Average Sales Ticket Price Average Mortgage Ticket Price

5.06

4.35 4.23 4.123.74

4.17

4.163.91 3.86

2.993.20

3.47

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Mill

ion

s

Average Ticket Price of Villa Transactions [Ready]


Apartments Ticket Size Q-o-Q (% Change) Y-o-Y (% Change)


Mortgage Transactions 2% up 6% down

Villas Ticket Size

Sales Transactions 11% up 4% down


Average Sales & Mortgage Transaction Ticket Price (Ready)

Confidential9

351 365

281

388 379

418

175

214

161 160

216

141

3

53

103

153

203

253

303

353

403

453

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Commercial Transactions [Ready]


560530

423

850

544477

323366

252 241

323

202

0

100

200

300

400

500

600

700

800

900

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Mill

ion

s

Value of Commercial Transactions [Ready]




Mortgage Transactions 35% down 34% down




Commercial Transaction Analysis (Ready)

Confidential10

0

100

200

300

400

500

Area-wise Transactions - Sales vs Mortgage Number

Sales Mortgage

0.00.20.40.60.81.01.21.4

BIL

LIO

NS

Areawise Transactions - Sales vs Mortgage Value

Sales Mortgage

➢ According to the property registrations,

Dubai Marina, International City and

Jumeirah Lake Towers accounted for

the highest number of completed

sales.

➢ During Q1 2017, Villa communities had

shown a better mortgage penetration

when compared to apartment

communities, due to nature of

investment. A similar trend can be seen

in Q2 2017 as well.

➢ While Mortgage usage is subdued in

the affordable location, areas such

as Dubai Marina, JLT and Palm

Jumeirah have had a high number of

mortgage usage.

Area-wise Transaction Analysis (Ready)

Confidential

Transaction Analysis for Off-Plan Properties

11


Confidential12

2,956

4,5554,978

3,1112,678

4,300 4,055 4,146

7,082

4,714

28 105 78 71 54 141 227 290 218 197

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Residential & Commercial Transactions [Off-Plan]


5.5

7.77.3

4.53.8

6.0

7.3

6.0

10.7

5.9

0.1 0.2 0.2 0.1 0.1 0.3 0.5 0.5 0.4 0.3

0

2

4

6

8

10

12

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Residential & Commercial Transactions [Off-Plan]




Mortgage Transactions 10% down 40% up




Residential and Commercial Unit Transaction Analysis (Off-Plan)

Confidential13

2,750

4,181 4,111

2,8282,493

3,9033,688 3,726

5,545

4,195

26 55 62 47 28 104 181 269 191 143

0

1,000

2,000

3,000

4,000

5,000

6,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Unit Transactions [Off-Plan]


5.0

7.0

6.0

3.83.3

5.1

6.1

5.0

7.9

4.8

0.1 0.1 0.1 0.1 0.0 0.1 0.3 0.5 0.4 0.2

0

1

2

3

4

5

6

7

8

9

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Unit Transactions [Off-Plan]








Unit (Apt. &Service Apt. & Office) Transaction Analysis (Off-Plan)

Confidential14

206

374

867

283185

397 367 420

1,537

519

2 50 16 24 26 37 46 21 27 54

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

No of Villa Transactions [Off-Plan]


0.4

0.7

1.2

0.70.4

0.9

1.2

0.9

2.8

1.1

0.0 0.1 0.0 0.0 0.00.2 0.3

0.0 0.1 0.1

0

1

1

2

2

3

3

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Bill

ion

s

Value of Villa Transactions [Off-Plan]








Villa Transaction Analysis (Off-Plan)

Confidential15

1.831.68

1.471.34 1.34 1.32

1.64

1.35 1.421.15

3.33

2.28 2.27

1.67

1.21 1.131.41

1.832.02

1.45

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Mill

ion

s

Average Ticket Price of Unit Transactions [Off-Plan]


2.04 1.891.43

2.44 2.40 2.27

3.35

2.261.85

2.100.77

1.30

0.73

1.241.56

4.64

5.51

1.531.92

1.25

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Mill

ion

s

Average Ticket Price of Villa Transactions [Off-Plan]


Units Ticket Size Q-o-Q (% Change) Y-o-Y (% Change)



Villas Ticket Size

Sales Transactions 14% up 8% down


Average Sales & Mortgage Ticket Price (Off-Plan)

Confidential16

0100200300400500600700

Area-wise Transactions - Sales vs Mortgage Number

Sales Mortgage

0.0100.0200.0300.0400.0500.0600.0700.0

MIL

LIO

NS

Areawise Transactions - Sales vs Mortgage Value

Sales Mortgage

➢ About 34% of the total sales transactions,

totaling to 1,612 transactions, were

concentrated in three areas: JVC, Al

Furjan and Business Bay.

➢ A boost in the supply in the mid-income

housing communities have caused an

upwards movement in the transactions

activities in the affordable housing

communities. Developers are getting

aggressive with their off plan units pricing

to sell their off-plan inventory.

Area-wise Transaction Analysis (Off-Plan)

Confidential

Investor Profile

17


Confidential18

26

.04

9.5

7

2.8

0

3.5

7

1.0

0

1.2

8

16

.90

20

.81

8.5

0

10

.88

34

.49

22

.00

8.0

0

2.0

0

2.0

0

0.5

0

0.5

0

12

.00

12

.00

4.4

0 5.8

0

22

.00

U A E S A U D I A R A B I A

Q A T A R K U W A I T B A H R A I N O M A N A R A B I N V E S T O R S

I N D I A P A K I S T A N I B R I T I S H O T H E R F O R E I G N E R S

In A

ED B

illio

ns

Value of Real Estate Investments by Nationality

2015 2016

Investor Profile Analysis

Confidential19

65

59

32

59

79

9 11

17

29

4

41

3

83

25

87

56

61

06

48

89

15

41

1

70

00

32

94

10

06

77

0

20

4

30

1

64

16

62

63

33

72

33

72

98

27

U A E S A U D I A R A B I A

Q A T A R K U W A I T B A H R A I N O M A N A R A B I N V E S T O R S

I N D I A P A K I S T A N I B R I T I S H O T H E R F O R E I G N E R S

No of Real Estate Investments by Nationality

2015 2016

Investor Profile Analysis

Confidential

Price Movements

20


Confidential21

60

70

80

90

100

110

120

130

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

REN

T P

RIC

E (A

ED/S

QF/

AN

NU

M)

SALE

S P

RIC

E (A

ED/S

QF)

Price Movements: Dubai Apartments

Sales Price (AED/Sqf) Rent Price (AED/Sqf/Annum)

60

70

80

90

100

110

120

130

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

REN

T P

RIC

E (A

ED/S

QF/

AN

NU

M)

SALE

S P

RIC

E (A

ED/S

QF)

Price Movements: Dubai Villas

Sales Price (AED/Sqf) Rent Price (AED/Sqf/Annum)

Residential Price Movements Over Last 2 Years

Confidential22

-2%

1%

5%

-2%

0%

-4%

0%

0%

-2%

1%

-1% -1% -1%-2%

-1%

-4%-3%

-1% -2%-3%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Business Bay DowntownDubai

DiscoveryGardens

Dubai Marina Dubai SportsCity

The Greens InternationalCity

JumeirahLake Towers

JumeirahVillage Circle

PalmJumeirah

Areawise Apartment Price Changes (Q-o-Q)

Sales Price Change Rent Price Change

-4%

2% 2%0% 0%

-1% -1% -1% 0%

3%

-2%

0%

-5%

1%

-3%-4%

-1%

-5% -4%

-1%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Al Furjan ArabianRanches

VictoryHeights

JumeirahIslands

JumeirahPark

The Lakes The Springsand The

Meadows

JumeirahGolf Estates

JumeirahVillageCircle

PalmJumeirah

Areawise Villa Price Changes (Q-o-Q)

Sales Price Change Rent Price Change

Residential Price Changes by Area – Q2 2017

Confidential23

6.6

%

6.0

%

9.1

%

6.9

% 8.3

%

7.7

% 9.1

%

7.8

%

8.4

%

5.7

%

Gross Rental Yields: Apartments

5.2

%

5.8

%

5.3

%

4.2

% 5.3

%

5.4

%

5.9

%

5.0

% 6.4

%

3.6

%

Gross Rental Yields: Vi l las

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Gross Rental Yields (%)

Yields - Apartments Yields - Villa

Residential Gross Rental Yields

Confidential24

5%3% 3%

-6%-7% -7%

-3%

-10%

-5%

0%

5%

10%

15%

20%

0

50

100

150

200

250

DIFC DowntownDubai

DubaiInternet City

Trade Center(SZR)

Business Bay JumeirahLake Towers

BarshaHeights

Ren

t P

rice

(A

ED/S

qf/

An

nu

m)

Areawise Office Rentals

Average Price (AED/SQF/YEAR) Price Change (Y-o-Y)

100

105

110

115

120

125

130

135

140

145

150

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017

REN

T P

RIC

E (A

ED/S

QF/

AN

NU

M)

SALE

S P

RIC

E (A

ED/S

QF)

Price Movements: Dubai Offices

Sales Price Rent Price

Office Price Analysis

Confidential

Dubai residential & Office Market Supply Anaysis

25


Confidential26

4,2

34

17

,05

6

4,8

25

17

,48

5

1,9

05

7,6

75

3,5

00

7,8

68

2,9

70

7,1

88

Q 1 2 0 1 7 Q 2 2 0 1 7 Q 3 2 0 1 7 Q 4 2 0 1 7

Projected Residential Supply in 2017

Announced Supply by Developers Projection Actual Supply

0200400600800

100012001400160018002000

Realized Units by Area (Ytd 2017)

Actual Residential Supply – 2017

Confidential27

82%

18%

Units Launched in 2017 - By Property Type

Apartment Villa

3754

2409 21511629

1153 875 743 563 300 216 144 134 97 96 95 80 40 36

12

23

4 4

21 1

21 1 1 1 1 1 1 1 1

012345678910111213

0

500

1000

1500

2000

2500

3000

3500

4000

Nu

mb

er o

f P

roje

cts

Nu

mb

er o

f U

nit

s

Projects & Units Launched in 2017 - By Developer

5,116

2,168

1,457 1,333824 645 620 505 479 419 418 360

95 760

1,000

2,000

3,000

4,000

5,000

6,000No of Units Launched in 2017 - By Upcoming

Supply

New Residential Project Launches – 2017

Confidential28

232 247 258 271 281 293

12

37

0

50

100

150

200

250

300

350

2013 2014 2015 2016 2017 2018

Tho

usa

nd

sAnnounced Residential Supply

Completed Units Announced Supply by the Developers*Only freehold

➢ 22,000 units are in the pipeline as per announcements made by developers.

➢ Around 12,000 units are expected to enter to the market in the remainder of 2017 with a 55%

materialization rate.

➢ As the global economic condition remains unstable, it is causing greater market uncertainty which will

effect the current stable market and prevent projected market bottoming out, further price falls

may follow soon.

Projected Residential Supply – 2017 & 2018

Confidential29

8.8 9.19.7 10.2 10.4 10.6 10.7

0.20.3

-

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017 F 2018 F

Sqm

in M

illio

ns

Dubai Office Supply

Existing GLA (Sqm) Upcoming Office GLA (Sqm)

➢ Tamani Arts Tower in Business Bay and Duja Tower on Sheikh Zayed Road have added around

48k sqm of GLA to the market during the second quarter of 2017.

➢ The pipeline for the remainder of the year is around 165k sqm of office space.

Projected Office Supply – 2017 & 2018

Confidential

Conclusion

30

Dubai Real Estate Market Overview Q2 2017

Confidential31

➢ Domestic Trade was the main driver of Dubai’s GDP growth in 2016. However, tourism, real

estate and manufacturing are predicted to lead economic activity in the future. According to

Dubai Economy (formerly DED) the real estate sector within the emirates is projected to grow

by 4.3% and 3.8% in 2017 and 2018.

➢ Legislations in the UAE, such as Abu Dhabi Law No. 3 of 2015 and Dubai Law No. 8 of 2008

requires Developers to maintain an Escrow Account. This is encouraging Institutions to fund

new developments and is providing protection to mortgagees of off-plan purchases. The

legislations are also increasing the confidence level of investors.

➢ A reduction in the government spending due to slow-moving oil prices have reduced demand

for housing within the country and has slowdown the real estate revenues.

➢ A downwards pressure on the apartments rental rates is expected to continue as various new

projects have been completed and delivered into the market. As for the sales market,

developers have increased the range and number of incentives to attract buyers which might

stabilize the sales prices in Dubai.

➢ The US Federal Reserves, have plans to raise interest rates once more this year, with

expectations for that to happen in either September or December. UAE has hiked interest

rates twice this year (in March and in June), in line with the Federal Reserve’s rate hikes

which will lead to higher mortgage rates.

Conclusion

Confidential32

REIDIN – DUBAI OFFICEConcord Tower. No: 2304.

Dubai Media City. PO Box 333929Dubai. United Arab Emirates

Tel: +971 4 277 68 35Fax: +971 4 360 47 88

www.reidin.com [email protected]

dubai real estate market overview 2017 - … · transaction analysis for off-plan properties 11...

Documents