dubai real estate market · 2016 q1 2016 q2 2016 q3 2015 q4 2017 q1 2017 q2 2017 q3 2017 q4 2018 q1...

DubaiREAL ESTATEMarketOverviewQ1 2019

32 www.reliantsurveyors.com

Macroeconomic Overview of DubaiThe overall real GDP of UAE is expected to grow by 2.4% in 2019 (up from previous expectation of 2%) driven mainly by the growth in the non-oil sector, which is projected to reach 1.4% in 2019 compared to 1.3% in 2018. The oil sector is expected to grow by 5% in 2019 compared to 2.8% in 2018. The improved outlook for growth is due to expected rise in public and private spending, higher investment and continued regional economic recovery, in light of the monetary policy easing in the US.

As the global economic and regional political conditions remain unstable, it is causing great market uncertainty which will affect the current market situation further. However, the UAE & Dubai government have launched various initiatives to increase demand, these announcements and regulation changes will be a positive boost to the overall economy.

350

300

250

200

150

100

50

0

2015Q4

2016Q1

2016Q2

2016Q3

2015Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

Source: Oi lprice.com

1 Brent OPEC Oil Basket Price in UAE (AED)

2019Q2

2019Q3

124 127

168 184 204 207183

204 237243

278 299

192

247241 224

112

111

110

109

108

107

106

105

104

103

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

Source: Dubai Statist ics Center , National Bureau of Statist ics

Consumer Price Index (CPI) – UAE & Dubai

UAE CPI Dubai CPI

107.

78 109.

1

107.

94

107.

6 108.

87 109.

3610

9.36

111.4

111.0

6

111.5

110.9

1

110.9

3110

.12

109.

7410

8.95

108.

6410

7.02

2019Q1

109.

9910

8.2210

9.46

6%

5%

4%

3%

2%

1%

0%

2015 2016 2017 2018 2019F

Source: Ministry of Economy, Central Bank, DED

UAE & Dubai GDP Growth Rates

UAE GDP Dubai GDP

5.1%

4.1%

3.0% 3.1%

3.1%

1.7%

1.9% 2.

4%2.

1%

0.8%

18

16

14

12

10

8

6

Mi

ll

io

n

2014 2015 2016 2017 2018 2019 YTDAUGUST

Source: Dubai Statistics Center, National Bureau of Statistics

Visitors in Dubai per year

13.2% 14.2% 14.9%15.8% 15.9%

10.9%


Dubai Residential Sales Transactions (Volume & Value)

Dubai Apartment Sales Transactions (Volume & Value)

12000

10000

8000

6000

4000

2000

0

Q3-2018 Q4-2018 Q1-2018

Off Plan

Volume of Residential Sales Transactions

Q2-2018 Q3-2019

3,163

3,805

4,537 3,441

3,663

4,964

3,476

5,169

3,494

5,943

4,060

Secondary

Off-plan Sales transactions contributed around 59% of the overall sales activity in the first 9 months of this year. Even though the number of new launches has reduced this year the off-plan segment can be seen holding ground, mainly due to incentives offered by Developers.

On a quarterly basis, the volume & value of off-plan residential transactions have increased by 15% and 12% respectively. In the secondary market, the volume of transactions has increased by 16% while no significant changes can be seen in the value of transactions.

Investor confidence has improved in the third quarter of 2019.

The value of secondary apartment sales transactions can be seen increasing steadily since the third quarter of 2018. Volume and value of secondary sales transactions are up by 28% and 16% respectively on a quarterly basis. Falling prices have attracted many first-time buyers.

While, the volume of off-plan apartment sales transactions is up by 4% on a quarterly basis. The value of transactions during the same period are down by 3%.

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0

Q3-2018 Q4-2018 Q1-2018

Off Plan

Value of Residential Sales Transactions

Q2-2018 Q3-2019

4.52

6.27

5.84

6.72

7.85

6.47

7.02

7.07

8.10

7.07

Secondary

8000

7000

6000

5000

4000

3000

2000

1000

0

Q3-2018 Q4-2018 Q1-2019

Off Plan

Volume of Apartment Sales Transactions

Q2-2019 Q3-2019

2,734

2,029

3,686

2,325

3,841

2,324

3,985

2,191

4,134

2,801

Secondary

10.00

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0

Q3-2018 Q4-2018 Q1-2018

Off Plan

Value of Apartment Sales Transactions

Q2-2018 Q3-2019

3.37

2.53

4.43

2.71

5.79

2.70

5.53

2.81

5.34

3.25

Secondary


Dubai VillasSales Transactions (Volume & Value)

The launches of new villa projects have boosted the volume and value of off-plan villa transactions in the third quarter of 2019, volume and value of transactions have drastically increased by 97% and 98% respectively.

2500

2000

1500

1000

500

0

Q3-2018 Q4-2018 Q1-2019

Off Plan

Volume of Vil la Sales Transactions

Q2-2019 Q3-2019

389

939

464

1,260

770

960

661

1,116

1,302

1,012

Secondary

6.00

5.00

4.00

3.00

2.00

1.00

0

Q3-2018 Q4-2018 Q1-2019

Off Plan

Value of Vil la Sales Transactions

Q2-2019 Q3-2019

0.72

3.47

0.88

3.64

1.49

3.48

1.03

4.00

2.04

3.53

Secondary

Dubai Residential Sales Transactions (Changes)

Qtr

Volume of Transactions

Off-Plan -31% 32% 9% 4% 15%

Secondary

Value of Transactions

Off-Plan

Secondary

Residential Sales Changes

Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019

-4% 20% -9% 1% 16%

7% -4% 9% 0%

-33% 29% 34% -8% 12%

0%

Qtr


Off-Plan -31% 35% 4% 4% 4%

Secondary


Off-Plan

Secondary

Apartment Sales Changes

Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019

-7% 15% 0% -6% 28%

7% -1% 4% 16%

-33% 32% 31% -4% -3%

-7%

Qtr


Off-Plan -17% 19% 66% -14% 97%

Secondary


Off-Plan

Secondary

Villa Sales Changes

Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019

-2% 34% -24% 16% -9%

5% -4% 15% -12%

-28% 21% 70% -31% 98%

5%


Dubai ResidentialSupply

The creation of the real estate planning committee by Sheikh Mohammed bin Rashid Al Maktoum in September 2019 will play a key role in balancing the gap between demand and supply. As per announcements by developers, around 117,900 residential units are expected to enter the market by the end of 2020 (however, the actual materialization rate will be lower).

JVC, Dubai Land and Dubai World Central accounted for the highest number of delivered units. The top 3 areas contributed around 51% to the total supply

600

500

400

300

200

100

0

upto2013

2014 2015 2016 2017 2018 2019 2020 2021

Residential Supply (Dubai)

Completed Under Construction

231 252 265 282 309 338 356381

474

43

93

25

Dubai Residential Supply by Type[Completed]

Apartments / Serviced apartmentsVillas

13%

87%

Dubai Residential Supply by Type[Under-Construction]


21%

79%

Qtr


Off-Plan 7% 3% 73%

Secondary


Off-Plan

Secondary

Residential Sales Changes Y-O-Y

Q1 2018 - Q1 2019 Q2 2018 - Q1 2019 Q3 2018 - Q3 2019

-10% 6% 28%

13% 13%

30% 7% 79%

-4%

Qtr


Off-Plan 9% 0% 51%

Secondary


Off-Plan

Secondary

Apartment Sales Changes (Y-O-Y)

Q1 2018 - Q1 2019 Q2 2018 - Q2 2019

-12% 1% 38%

3% 28%

32% 11% 59%

-14%

Q3 2018 - Q3 2019

Qtr


Off-Plan 301% 42% 235%

Secondary


Off-Plan

Secondary

Villa Sales Changes (Y-O-Y)

Q1 2018 - Q1 2019 Q2 2018 - Q2 2019 Q3 2018 - Q3 2019

4% 17% 8%

21% 2%

186% 2% 181%

9%

Dubai Residential Sales Transactions (Y-O-Y Changes)


Around 2,100 residential units have entered the Abu Dhabi real estate market so far this year.5,600 units are in the pipeline in the remainderof 2019 as per announcements made by developers.

Almost 31% of the existing residential supply in Abu Dhabi consists of Villas. However, a decline in the contribution of villas can be seen in the under-construction segment.

Abu Dhabi Residential Supply

80

70

60

50

40

30

20

10

0

upto2013

2014 2015 2016 2017 2018 2019 2020 2021

Residential Supply (Abu Dhabi)


38 43 46 50 54 59 6166

70

38

4 2

6

Abu Dhabi Residential Supply by Type[Completed]


30%

70%

Abu Dhabi Residential Supply by Type[Under-Construction]


29%

71%

Dubai Apartment Sales & Rental Price Series (Value & Changes)

Dubai Apartment Price Trends

Sales Price(AED/SQF) Rent Price(AED/SQF)

1600

1400

1200

1000

800

600

400

200

0

150

130

110

90

70

50

30

10

(10)

Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Sep 19

Sales and Rental price in Dubai have fallen further in the third quarter of 2019 as well.

Sales and Rental prices in the apartment segment have declined by 0.4% and 2.7% respectively.When compared to the peak in 2014 sales prices in the apartment segment are down by 26%.

Homebuyers and tenants have more bargaining power currently due to the inflow of new residential supply, which has led to further price declines.

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

-14.0%

-16.0%

-18.0%

-20.0%

Last 3 months Last 6 months Last 1 year Last 2 years

Dubai Apartment Price Movements

Rental Price MovementSales Price Movement

The addition of new residential supply remains the primary drive for price declines.


Dubai Villa Sales & Rental Price Series (Value & Changes)

Dubai Apartment Price Trends


1600

1400

1200

1000

800

600

400

200

0

150

130

110

90

70

50

30

10

(10)


An inverse movement can be seen in the villa segment, sales prices are dropping at a faster pace than rental prices. On a quarterly basis, sales and rental prices have dropped by 2.0% and 1.8% respectively.

When compared to the peak in 2014 sales price in the villa segment are down by 28%.In order to maintain occupancy, landlords have become more flexible when it comes to payment terms.

A similar movement can be seen in the villa segment as well.

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

-14.0%

-16.0%

-18.0%

-20.0%


Dubai Vil la Price Movements


Abu Dhabi Apartment Sales & Rental Price Series (Value & Changes)

Abu Dhabi Apartment Price Trends


1600

1400

1200

1000

800

600

400

200

0

150

130

110

90

70

50

30

10

(10)


The Abu Dhabi real estate market remained subdued during the third quarter of 2019.

On a quarterly basis, selling and rental prices in the apartment segment have declined by 1.8% and 1.9% respectively.

Incentives such as multiple cheque payments and rent-free periods have become a norm in the market, to ensure tenant retention.

Abu Dhabi Apartment Price Movements

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

-14.0%

-16.0%

-18.0%



Sales and Rental prices in the apartment segment have dropped by 1.2% and 1.4% respectively in the first quarter of 2019.


Abu Dhabi Vil la Price Movements

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

-14.0%

-16.0%

-18.0%

-20.0%



Abu Dhabi VillaSales & Rental Price Series (Value & Changes) In the villa segment, sales and rental prices have further dropped by 0.9% and 1.6%

respectively on a quarterly basis.

Abu Dhabi Vil la Price Trends


1200

1000

800

600

400

200

0

120

100

80

60

40

20

0


Dubai & Abu Dhabi Gross Rental Yield

Gross Rental Yields - Dubai

Apartments Villas

10.00

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0

Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19

Gross Rental Yields - Abu Dhabi

Apartments Villas

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19

As of September 2019, the gross rental yields in Dubai for the apartment segment stands at 7.0% while the villa segment currently provides a yield of 5.5%. While, gross rental yields in Abu Dhabi for the apartment segment stands at 7.3% while the villa segment currently provides a yield of 5.7%.

Despite price declines over the last few years, Dubai & Abu Dhabi still provide investors with higher yield when compared to other emerging markets.


Rent prices of office buildings continued to drop in the third quarter of 2019 as well owing to slow economic growth coupled with a demand supply mismatch. Tenants can be seen moving into A Grade office with reduced rentals.

The office market is expected to remain favorable for tenants as landlords continue to offer incentives such as rent-free months, fit-out contributions among other benefits.

Rental prices in the Office segment have fallen by 5.3% in the last 1 year

Dubai OfficeRental Price (Value & Changes)

Office Rental Price [AED/Sqf/Year]

Apartments Villas

130

120

110

100

90

80

70

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q32017

Dubai Office Price Movements

0%

-1%

-2%

-3%

-4%

-5%

-6%

-7%

-8%

-9%


Rental Price Movement

Dubai Office Supply

Dubai Retail Prices & Changes

Around 286,000 Sqm of office supply has been added in the first 9 months of 2019.

Approximately 69,800 Sqm of office GLA was added in Q3 of 2019.Around 622,000 Sqmis expected to enter the Dubai real estate market by the end of 2020which is likely to put further pressure on rentals.

The retail sector continues to feel downwards pressure mainly due to additional supply, reduced demand and a drop-in consumer spending.

In the last 1 year, the average retail rental prices in Dubai have declined by 12.8%

14

12

10

8

6

4

2

0

upto2013

2014 2015 2016 2017 2018 2019 2020 2021

Office Supply (Dubai)


9.1 9.7 10.2 10.4 10.7 10.9 11.111.4

11.7

0.3 0.10.4

125

120

115

110

105

100

95

0

Q2 2018 Q3 2018 Q4 2018 Q1 2019

Dubai Average Retail Rental Prices


Q2 2019 Q3 2019

Q-on-Q-2.1 %

Y-on-Y-12.8%


Dubai RentalSupply

The retail sector in Dubai currently faces the highest gap between demand and supply, which has led to price declines. Around 600,000 SQM of retail space is expected to enter the market in 2019, however, the actual materialization rate will be lower to overcome the oversupply risk.

Dubai Area wise Rental Prices

300 200 100 0 0 100 200 300

Minimum [AED/SQF/YEAR] Maximum [AED/SQF/YEAR]

Jumeirah Village Circle

Barsha Heights (Tecom)

Palm Jumeirah

JLT

International City

Dubai Silicon Oasis

Dubai Marina

Discovery Garden

Business Bay

6

5

4

3

2

1

0

SQM

in M

illio

ns

upto2013

2014 2015 2016 2017 2018 2019 2020 2021

Retail Supply


2.9 2.9 3.1 3.4 3.5 3.6 3.74.4

5.2

0.80.5

0.6

Dubai Hospitality Market

Average Daily Rates (ADR)

140

120

100

80

60

40

20

0

Thou

sand

s

upto2013

2014 2015 2016 2017 2018 2019 2020 2021

Hotel & Hotel Apartments Room Supply


85 92 98 103 107 116 120131

140

9

1

11

Hotel Room Occupancy Rates100

90

80

70

60

50

40

30

20

10

0

Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Q3 2018[AED]

704

Q3 2019[AED]

630

Y-on-Y-10.5%

The Average Daily Rates continue to decline further by 10.5% on a yearly basis, from AED 704 in Q3 2018 to AED 630 in Q3 2019. New supply remains the primary driver behind the price declines which has made the overall market more competitive.

As of Q3 2019, the occupancy rate of hotels in Dubai stands at 73%.


Dubai Industrial Market

Average Warehouse Rental Rates [AED/SQF/YEAR]

Average Labour Camp Rental Rates [AED/SQF/YEAR]

Minimum

Minimum

Dubai Investment Park

Al Quoz

Al Quoz

Dubai Investment Park

Jebel Ali

Jebel Ali

Ras Al Khor

Sonapur/Muhaisnah

Maximum

Maximum

Average

Average

20

160

25

120

20

155

20

140

55

240

60

190

35

230

50

210

26.5

190

34.6

143

28.5

194

29

181

DubaiREAL ESTATEMarketUnited Arab Emirates(Dubai)

1612, Clover Bay TowerBusiness BayP.O.BOX: 6025Dubai, United Arab Emirates

P: +971 4 2675572E: [email protected]

India(Gurugram) – Registered Office

UG – 10, Malibu shopping arcadeMalibu town, sector 47Gurugram, HaryanaIndia, Pin Code: 122001

T: +91 8288880792E: [email protected]

dubai real estate market · 2016 q1 2016 q2 2016 q3 2015 q4 2017 q1 2017 q2 2017 q3 2017 q4 2018 q1...

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