In the Middle East for over 30 Years

Property Review

Dubai Real Estate Report Q4 2018

Inde

x Ba

se 1

00 =

Mar

ch 2

010

The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis.

240

220

200

180

160

140

120

100

80

60

40

Mar Jun DecDec SepSep MarMar JunJunSep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep Dec

2009 2010 2011 2012 2013 2014 2015 2016 20182017

DUBAI | HISTORIC REVIEW

Apartment Sales Villa Sales Office Sales Apartment Rentals Villa Rentals Office Rentals

Dubai Real Estate Report -

RECESSION

2009 - 2011RECOVERY AND GROWTH

2012 - 2014STABILISATION

2015DOWNTURN

2016 - 2018

Q2 20182

The Dubai Real Estate market has gone through significant fluctuations over the years. Following the introduction of a decree allowing International Freehold Ownership in 2002, the market recorded substantial growth up until Q1 2009. This period was marked by large scale developments and project launches. The Real Estate market was fuelled by both strong demand from a rapidly expanding economy and workforce (leading to double digit rental growth and Investor returns) and, more problematically, Investor speculation. With the onset of the global financial crisis, loss of confidence, erosion of capital and drying-up of liquidity, speculators were driven from the market. This resulted in significant value contractions and ultimately the collapse of fundamentals underpinning the Real Estate market. Asteco also recorded noticeable Tenant migration from neighbouring Emirates due to decreased rental rates in Dubai. Sales activity remained subdued although transaction levels picked up slightly by the end of 2011. Many projects were delayed, put on hold or cancelled.

• • • • • •

The market began to show signs of recovery in 2012 when the Euro Crisis and Arab Spring conflict led to Dubai being an attractive alternative and ’safe’ haven to invest and live in. In November 2013, Dubai was awarded to host Expo 2020, which led to growth in market confidence, a rise in new project launches and increased sales and rental rates. Established communities and quality buildings experienced increased demand and newer developments saw improved take-up in line with enhancements in infrastructure. Whilst increased job security and market confidence prompted Tenants to upgrade, rapid rental growth also restricted Residents to move within Dubai and thus resulted in an upsurge in relocations to the Northern Emirates. In anticipation of the growing Investor demand, the Dubai Government doubled the land registration fee to 4%, and introduced new loan-to-value rules to limit property speculation.

• • • • •

The market peaked in Q2 2014 and corrected thereafter due to a combination of factors such as the reduction in LTV ratios, low oil prices and a strong US dollar. Rental rates remained broadly stable as the handover of new supply was slower than anticipated. Due to the substantial number of launches witnessed in the previous years, concerns of an oversupply and lack of demand particularly for high-end properties motivated Developers to focus on the mid and affordable housing sector, and to offer incentives such as extended payment plans during the post-completion stage. Lower deposits stipulated by Developers also made off-plan sales a more attractive option compared to the minimum 25% down payment required by the Central Bank for a mortgaged property.

• • • •

2016 and 2017 recorded a significant amount of new project launches and deliveries resulting in steady declines in sales prices and rental rates. Whilst new project announcements eased off in 2018, additional supply continued to have a downward effect on rates. The number and range of incentives increased as Landlords tried to retain Tenants and increase take-up, whilst Developers tried to motivate Buyers. A market driven by Tenants and Investors and an increased number of people looking for value-for-money options resulted in affordable developments outperforming luxury accommodation in terms of transaction activity. Developers increasingly offered smaller, off-plan units at lower price points with flexible post-completion payment plans, which resulted in an increase in first-time Buyers and End-users as home ownership became more accessible to people who were previously unable to jump on the property ladder due to high down payments. Initially, this resulted in a drop in demand for completed properties, but the slowdown in new project launches and the increased affordability lead to a rise in transaction volumes in the secondary market.

• • • • •

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESMILLION SQ.FT.

COMPLETED IN COMPLETED IN EXPECTED IN

DUBAI SUPPLY

Dubai Real Estate Report -

9,250 2,835

2,195

Q1 - Q3 2018 Q4 2018 2019

24,300

550 8,500

1.36 1.5 3.6

Q4 20183

DUBAI HIGHLIGHTS AND OUTLOOK

TRENDS SALES PRICES RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND - OFF PLAN DEMAND - COMPLETED

2018

2019

Dubai Real Estate Report - Q4 20184

SUPPLY

RENTAL RATES

SALES PRICES

2018 HIGHLIGHT 2019 OUTLOOK

• • •

Asteco recorded the delivery of nearly 15,000 residential units over the course of 2018, comprising 12,000 apartments and 2,750 villas. Office supply volumes picked up towards the end of the year adding 2.86 million sq.ft. in total. As forecasted at the end of 2017, the pace of new project launches eased over 2018 as Developers adopted a more cautious approach in response to lower demand and growing supply.

• • •

Despite lower than anticipated handover volumes, the additional supply was still significant and resulted in steady rental rate declines across all asset classes throughout the year. Average declines of 10% for apartments, 10% for villas and 5% for offices were recorded for 2018, although some areas significantly under/outperformed. Landlords continued to offer incentives such as rent-free periods and multiple cheque payments.

• • • •

Similar to the leasing market, apartment, villa and office sales prices continued their downward trajectory during 2018, declining by an average of 13%. Emphasis continued to be unit price points, as opposed to the rate per sq.ft. A number of off-plan projects received a positive response from Investors. The steady decline in sales prices for completed projects has improved affordability and hence opened the market to a wider Investor pool and facilitated a rise in End-users and first-time Buyers.

• • •

Construction activity during 2019 (for committed projects) is expected to continue unabated, despite a slowdown in new project launches. This is largely due to construction-linked and post-completion payment plans, which ensure payments are only received when milestones are met. This supply, in addition to many project handovers previously scheduled for 2018 spilling over into 2019, will contribute to the total delivery of over 30,000 residential units. Commercial supply is earmarked to account for 3.6 million sq.ft. of office space.

• • •

Dubai’s Real Estate market will continue to mature throughout 2019 in line with increased transparency and improved regulatory conditions. Whilst the additional supply earmarked for 2019 will put further pressure on rental rates, the rate of decline is expected to slow towards the end of the year. Lower rental rates will enable more Tenants to upgrade in term of size/quality and/or location.

• •

Further sale price declines are expected in 2019 and although the focus will remain on affordable developments, transaction volumes are anticipated to rise as Residents take a longer-term view on living in Dubai. Whilst market conditions mean that it is unlikely LTV ratios will change, we believe that Developers, banks and other financial institutions will become more creative and introduce solutions to bypass the high down payment required to avail a mortgage.

DIFCDOWNTOWN DUBAIPALM JUMEIRAHSHEIKH ZAYED ROAD

BUSINESS BAYDUBAI MARINAGREENSJUMEIRAH BEACH RESIDENCEJUMEIRAH LAKES TOWERS

DEIRADISCOVERY GARDENSDUBAI SPORTS CITYINTERNATIONAL CITYJUMEIRAH VILLAGE

(All figures in AED 000’s p.a.)

HIGH TO LUXURY END

MID TO HIGH END

AFFORDABLE

DUBAI APARTMENT RENTAL RATES

TYPE 3 BEDROOMS2 BEDROOMS1 BEDROOM

Dubai Real Estate Report -

DUBAI AVERAGEANNUAL % CHANGE% CHANGE SINCE PEAK (2008)% CHANGE SINCE MARKET LOW (2011)% CHANGE SINCE 2ND PEAK (2014)

Q4 20185

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

- - - 73 80 103 113 113 105 100 90 - - - 115 130 158 173 158 160 145 120 - - - 145 170 198 235 230 190 190 175

133 85 70 68 80 98 118 115 115 95 83 185 120 100 100 125 160 170 175 160 130 115 275 165 150 150 180 228 245 240 225 190 170

200 113 90 90 95 135 150 135 130 110 98 228 145 120 120 140 175 208 198 175 155 138 300 200 170 170 190 223 243 255 235 200 180

160 83 70 68 83 98 113 100 95 90 80 203 130 105 100 110 148 148 130 125 115 110 290 175 120 120 135 195 200 175 165 150 125

- - 55 45 60 90 93 93 85 70 65 - - 85 70 85 130 135 135 125 105 90 - - 115 100 125 178 180 185 170 150 140

130 78 63 63 75 105 113 98 90 70 68 180 110 90 80 100 140 158 143 125 105 98 245 160 125 115 135 178 210 205 190 155 145

120 65 58 55 65 85 83 95 95 75 68 160 88 78 75 100 135 148 143 130 115 100 180 130 115 105 130 155 173 175 175 145 135

115 85 73 70 80 108 118 115 105 95 80 168 118 95 90 100 135 163 148 140 115 103 203 148 115 110 140 175 200 193 185 160 140

110 65 50 45 55 83 90 90 75 65 58 160 85 65 65 75 110 133 125 115 95 83 210 118 85 85 100 148 168 153 150 130 110

88 48 40 37 35 68 65 65 60 50 48 103 55 55 53 53 85 90 90 85 70 63 138 83 75 70 75 135 133 113 115 95 88

100 58 45 38 45 70 70 72 65 55 48 135 85 70 53 70 83 80 80 85 85 83 - - - - - - - - - - -

- - - 35 40 59 65 74 65 55 48 - - - 45 55 88 98 105 90 75 68 - - - - - - - - 125 100 85

70 44 27 23 24 43 46 50 45 40 35 93 63 39 38 38 65 63 65 63 55 53 - - - - - - - - - - 75

- - - 35 45 70 65 73 60 55 50 - - - 53 70 95 103 105 95 80 70 - - - 80 90 120 130 138 135 110 100

118 68 57 53 61 85 91 90 85 74 65 157 96 82 75 88 118 127 127 118 102 91 216 131 114 107 128 159 170 172 162 142 127

- -42% -16% -7% 15% 39% 7% -1% -6% -13% -12% - -39% -14% -8% 16% 35% 8% 0% -7% -14% -11% - -39% -13% -6% 19% 24% 7% 2% -6% -13% -11%

-45%

23%

-29%

-42%

21%

-28%

-41%

19%

-25%

DUBAI APARTMENT SALES PRICES

DO

WN

TOW

N D

UBA

I

INTE

RNA

TIO

NA

L CI

TY

PALM

JUM

EIRA

H

DIS

COVE

RY G

ARD

ENS

GRE

ENS

JUM

EIRA

H V

ILLA

GE

DIF

C

DU

BAI S

PORT

S CI

TY

JUM

EIRA

H L

AKE

S TO

WER

S

BUSI

NES

S BA

Y

DU

BAI M

ARI

NA

JUM

EIRA

H B

EACH

RES

IDEN

CE

AED per sq.ft.

0 0 0500 500 5001,000 1,000 1,0001,500 1,500 1,5002,000 2,000 2,0003,0002,500 3,0002,500 3,0002,500

2,7001,4001,3001,1001,3002,200

1,9001,7001,525

2,2002,325

1,050500425325350675

700650550

700710

2,8001,5001,1751,1001,4002,000

1,7001,5001,350

1,7202,000

1,250550500450450825

855800650

850885

1,7001,0508257759501,400

1,3501,2501,050

1,3651,375

1,100600500475500875

900800725

950925

2,7001,6001,5001,3001,3501,875

1,7501,6501,425

1,7001,875

1,600700550550600825

900850725

950975

1,4008507006507501,200

1,1501,125975

1,1501,250

2,0501,0007507009001,225

1,3001,175975

1,2101,300

1,8001,1001,0009251,0501,900

1,4501,2501,125

1,6001,750

2,0001,1009259251,0001,525

1,3001,2001,025

1,3701,625

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dubai Real Estate Report - Q4 20186

ARABIAN RANCHESDUBAI SILICON OASIS (CEDRE VILLAS)

DUBAI SPORTS CITY (VICTORY HEIGHTS)

JUMEIRAHJUMEIRAH PARKJUMEIRAH VILLAGEMEADOWSMIRDIFPALM JUMEIRAHSPRINGSTHE LAKESUMM SUQEIMDUBAI AVERAGEANNUAL % CHANGE% CHANGE SINCE PEAK (2008)% CHANGE SINCE MARKET LOW (2011)% CHANGE SINCE 2ND PEAK (2014)

(All figures in AED 000’s p.a.)

TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS

DUBAI VILLA RENTAL RATES

Dubai Real Estate Report -

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

275 140 125 125 155 213 215 203 195 155 145 335 180 160 160 220 285 300 243 235 190 183 425 265 250 250 285 365 343 303 285 250 220

- - - 150 175 220 223 205 170 165 150 - - - 170 200 230 225 213 195 170 168 - - - 180 260 275 253 235 200 190 190

- - - 150 155 205 195 180 175 155 150 - - - 165 180 220 250 215 210 180 175 - - - 220 275 320 313 305 300 245 220

325 160 140 140 155 195 215 190 190 175 163 400 190 160 160 185 238 275 253 210 195 185 450 225 200 200 220 310 350 285 270 230 215

- - - - - 195 220 218 210 175 165 - - - - - 250 290 245 245 200 188 - - - - - 295 340 290 275 255 230

- - - 90 125 155 163 160 160 145 120 - - - 110 150 165 178 170 170 145 125 - - - 145 165 180 210 208 185 160 150

325 180 180 180 210 230 238 233 210 195 190 350 240 200 200 225 250 275 260 260 225 210 425 265 225 225 265 285 310 285 285 250 230

240 100 80 80 90 138 133 130 120 105 93 260 120 110 105 115 165 155 150 150 130 115 275 165 125 125 140 175 175 175 170 150 135

375 270 275 275 325 350 350 333 320 275 245 550 340 315 315 400 495 485 420 400 390 350 800 450 450 450 500 723 725 675 600 500 465

250 125 105 105 140 163 195 180 180 145 135 - - - - - - - - - - - - - - - - - - - - - -

- - - 170 200 220 228 223 220 190 175 - - - 260 280 290 283 275 270 245 235 - - - 340 350 350 400 363 350 330 260

325 160 140 135 160 215 250 195 190 180 170 400 190 160 160 180 290 275 260 240 220 210 490 230 210 210 220 313 305 290 270 245 235

314 179 162 152 179 213 225 206 195 175 152 388 223 204 186 219 261 271 244 231 206 183 482 274 246 224 259 311 314 290 274 245 222

- -43% -9% -6% 18% 19% 5% -8% -5% -11% -13% - -43% -8% -9% 18% 19% 4% -10% -5% -11% -11% -43% -10% -9% 15% 20% 1% -8% -6% -11% -9%

-52%

0%

-32%

-53%

-2%

-33%

-54%

-1%

-29%

Q4 20187

2,2008507507509501,225

1,1501,100950

1,0001,150

DUBAI VILLA SALES PRICES

JUM

EIR

AH

PA

RK

SPR

ING

S

DU

BA

I SPO

RTS

CIT

Y (V

ICTO

RY H

EIG

HTS

)

PALM

JUM

EIR

AH

DU

BA

I SIL

ICO

N O

ASI

S (C

EDRE

VIL

LAS)

MEA

DO

WS

AR

AB

IAN

RA

NCH

ES

JUM

EIR

AH

VIL

LAG

E

AED per sq.ft.

0 0500 5001,000 1,0001,500 1,5002,000 2,0003,0002,500 3,0002,500

1,5007256505508001,175

1,1001,000800

1,1001,175

1,8008506506509001,100

1,1001,000825

9501,075

1,5008507507509001,125

1,1501,050925

1,1501,250

2,7501,8001,5501,5001,8003,000

2,5002,4002,100

2,4752,850

1,000700550475500725

800750725

825850

2,2001,0008508501,0001,300

1,3001,2001,000

1,1501,350

1,100600500475550850

850750650

950975

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dubai Real Estate Report - Q4 20188

BARSHA HEIGHTS (FORMER TECOM)BUR DUBAIBUSINESS BAYDIFCJUMEIRAH LAKES TOWERSSHEIKH ZAYED ROADDUBAI AVERAGEANNUAL % CHANGE% CHANGE SINCE PEAK (2008)% CHANGE SINCE MARKET LOW (2012)% CHANGE SINCE 2ND PEAK (2014)

(All figures in AED per ft2 p.a.)

TYPE

DUBAI OFFICE RENTAL RATES

Dubai Real Estate Report - Q4 20189

-67%

19%

-10%

350 105 75 60 55 85 100 110 95 95 85

360 150 110 90 80 95 105 108 100 100 85

- - - 75 70 100 103 88 90 90 75

525 370 230 220 225 220 235 255 250 245 215

235 100 60 50 50 90 95 98 95 95 80

425 215 160 140 140 175 180 185 165 150 120

350 173 114 96 94 117 126 130 127 122 114

- -51% -34% -16% -2% 24% 8% 3% -2% -4% -7%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DUBAI OFFICE SALES PRICES

JUM

EIR

AH

LA

KES

TO

WER

SD

IFC

BU

SIN

ESS

BAY

BA

RSH

A H

EIG

HTS

(F

ORM

ER T

ECO

M)

AED per sq.ft.

0 500 1,000 1,500 2,000 4,5002,500 3,000 3,500 4,000

2,000900650550550925

850800675

9751,075

4,2501,9001,9001,8001,7001,800

1,9001,6501,500

1,9251,875

2,2001,250900750700975

1,2501,000875

1,2501,225

2,5001,100850750750825

900800725

975975

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dubai Real Estate Report - Q4 201810

DUBAI PROPERTY MAP

611

1 Akoya2 Al Barari3 Al Barsha 14 Al Furjan5 Al Nahda6 Al Qusais7 Al Warqaa8 Arabian Ranches9 Barsha Heights

(Tecom C)10 Bur Dubai11 Business Bay12 City Walk13 Culture Village14 Deira15 DIFC16 Discovery Gardens17 Downtown Dubai18 Downtown Jebel Ali19 Dubai Creek Harbour20 Dubai Design District21 Dubai Festival City22 Dubai Healthcare

City Phase 223 Dubai Hills Estate24 Dubai Investment

Park25 Dubailand

Residential Complex26 Dubai Marina27 Dubai Production

City (IMPZ)28 Dubai Silicon Oasis29 Dubai South30 Dubai Sports City31 Dubailand

32 Emirates Hills33 Green Community34 International City35 JBR36 Jumeirah37 Jumeirah Golf Estates38 Jumeirah Islands39 Jumeirah

Lakes Towers40 Jumeirah Park41 Jumeirah Village Circle42 Jumeirah Village

Triangle43 Living Legends44 Liwan45 Meydan46 Mirdif47 MotorCity48 Mudon49 Muhaisnah50 Palm Jumeirah51 Pearl Jumeirah52 Remraam53 Residential City54 Rigga Al Buteen55 Sheikh Zayed Road56 Springs / Meadows57 Studio City58 The Greens59 The Lakes60 The Villa61 Town Square62 Umm Suqeim63 Uptown Mirdiff64 Victory Heights

60

611

611

311

11

11

11

11

44

44

44

311

311

311

611

611

3526

39

4

1640

3

62

33

18

37

29

24

52

3064

47

57

8

1

48

61

43 2

23

31

41

42

27

2844

25

34

63

46

50

58

32

59

56

38

9

17

45

21

2022

11

36

51

10

15

12

55 14

54

5

6

7

49

13

19

53

To SharjahTo Abu Dhabi

Arabian Gulf

Dubai Real Estate Report - Q4 201811

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

20181111/astrep866

About Asteco

The Middle East’s largest full service Real Estate Services Company, Asteco was formed in Dubai in 1985. Over the years, Asteco has gained enormous respect for consistently delivering high quality, professional, value-added services in a transparent manner. It is also widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the Emirates.

Asteco has an essential combination of local knowledge and international expertise. A deeply established brand, renowned for its application of the latest technological advances, its commitment to transparency, winning strategies and human expertise. Undisputed Real Estate experts, Asteco represents a significant number of the region’s top property Owners, Developers and Investors.

VALUATION & ADVISORY Our professional advisory services are conducted by suitably qualified personnel all of whom have had extensive Real Estate experience within the Middle East and internationally.

Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with extensive local experience.

The Professional Services Asteco conducts throughout the region include:

• Consultancy & Advisory services• Market research• Valuation services

SALES Asteco has established a large regional property Sales division with representatives based in the UAE, Qatar and Jordan. Our Sales teams have extensive experience in the negotiation and sale of a variety of assets.

LEASING Asteco has been instrumental in the Leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT Asteco provides comprehensive Asset Management services to all property Owners, whether a single unit (IPM) or a regional mixed-use portfolio. Our focus is on maximising value for our Clients.

OWNERS ASSOCIATION 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.

BUILDING CONSULTANCY The Building Consultancy Team at Asteco have a wealth of experience supporting their Clients throughout all stages of the built asset lifecycle. Each of the team’s highly trained surveyors have an in-depth knowledge of construction technology, building pathology and effective project management methods which enable us to provide our clients with a comprehensive building consultancy service.

FRANCHISE Our brand, network, system and procedures are now available in territories across the MENA region. Our Licensing services currently include Real Estate Brokerage Franchising and associated support services with many of the key elements designed specifically around the Franchisee, making it a truly unique and bespoke franchise opportunity.

Elaine JonesFRICS

Executive Chairman and Founder / Director - Transactional Services+971 4 403 7777ElaineJ@Asteco.com

John Stevens MSc, BSc (Hons), MRICS

Managing Director/ Director - Asset Management+971 4 403 7777JohnS@Asteco.com

John Allen BSc, MRICS

Executive Director - Valuation & Advisory+971 4 403 7777JohnA@Asteco.com

James Joughin BSc (Hons), MRICS

Senior Associate Director - Head of Valuations +971 4 403 7777JamesJ@Asteco.com

Jenny Weidling BA (Hons)

Manager - Research and Advisory, Dubai+971 4 403 7777JennyW@Asteco.com

Ghada Amhaz MSc

Manager - Research and Advisory, Abu Dhabi+971 2 626 2660GhadaA@asteco.com

Tamer Ibrahim Chaaban BE

Associate Director / General Manager - Al Ain+971 3 766 6097TamerI@asteco.com

20181111/astrep866