2019 UAE Property Market Report - A Year in Review

ABOUT Established in 2008, Cavendish Maxwell is one of the largest and most respected property consultancies in the region. An influential partner and trusted advisor to key stakeholders in real estate markets throughout the Middle East and North Africa, we offer a comprehensive range of exceptional property services across a diverse mix of sectors and asset classes.

Cavendish Maxwell is a certified member firm of the Royal Institution of Chartered Surveyors (RICS), bringing together a world-class team of handpicked property consultants and surveyors, unmatched elsewhere in the region.

Our team of highly qualified professionals is trusted by real estate market stakeholders throughout the region, including international and domestic banks, property developers, governments, owners and investors, asset managers and professional services firms. We service a diverse mix of specialist property sectors including retail, offices, hospitality, healthcare, education, industrial and logistics.

Cavendish Maxwell also publishes independent reports, prepared to globally accepted standards, for loan security, bank lending, audit, insurance reinstatement, dispute resolution, risk management, debt recovery, performance analysis, purchase and sale advice, and third-party reliance purposes.

Our quarterly market reports provide updates on price movement, rent and yield statistics, residential transactions, and upcoming supply of residential properties through Property Monitor, the real estate intelligence platform, powered by Cavendish Maxwell. The reports also incorporate the Property Monitor Residential Survey, conducted among partner agents operating within the UAE. The survey provides an overview of how new enquiries, leasing activity and transactions, among other metrics, changed compared to the previous quarter.

FOREWORD The year 2019 marked a period of extended pressure on property prices and rents across communities in the UAE. However, it was also the year where the highest number of property transactions took place, surpassing levels of previous years, as investors and end-users increasingly recognise value amid early signs of stabilisation.

A question still on the minds of many is whether we have seen the end of the correction. Indicators might provide mixed signals as we head into 2020, a year of exceptional significance to the UAE being the year Dubai hosts the Expo. Whilst the event itself is expected to have far-reaching positive effects on the economy, government initiatives to address oversupply fears and encourage investments are doing their part to boost confidence in the economy.

Cavendish Maxwell’s full year report for 2019 explores these developments and their impact on the UAE real estate market, giving an overview of the residential, office, retail, hospitality and industrial sectors in Dubai, Abu Dhabi and the Northern Emirates.

CONTENTS 4

Key Policy Changes

6

Residential Market Overview

28

Commercial Market Overview

32

Hospitality Market Overview

34

Industrial Market Overview

2O19

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

KEY POLICY CHANGES The year 2019 saw a number of landmark policy changes introduced to boost investor confidence and spur investments in sectors such as real estate, an important pillar of the UAE economy. Along with Expo 2020, these changes are likely to have a significant positive impact on the economy for years to come.

LEHMAN BROTHERS COLLAPSE

NAKHEEL AND DWC ANNOUNCE PLANS FOR DEBT RESTRUCTURING

OIL PRICES COLLAPSE TO $32/BARREL

ABU DHABI’S $10 BILLION LOAN TO DUBAI

NEW MARKET PEAK

Property Monitor Dynamic Price Index Value

170

160

150 UAE REAL ESTATE BOOM

REBOUND GROWTH FOR THE GENERAL MARKET - OIL PRICES

EARLY SIGNS OF TROUBLE

EXPO 2020 ANNOUNCEMENT

OIL PRICES COLLAPSE TO $47/BARREL

CENTRAL BANK MORTAGE CAP

RUSSIAN CURRENCY CRISIS

140 OIL PRICES PEAK TO $145/BARREL

BOND ISSUANCE

BY THE UAE CENTRAL BANK

130

120

110

100

90

2008

2009

2010

2011

2012

2013

2014

The Property Monitor Dynamic Price Index (DPI) tracks trends of property prices throughout 42 key communities in Dubai and is indexed to a base period of January 2008.

4

2015

5

2O19

Interest rate cut AUGUST

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Higher Committee for Real Estate Planning formed DLD and RERA split responsibilities

Real Estate Investment Opportunities initiative launched JULY

Golden Card, a permanent residency system announced

Interest rate cut SEPTEMBER

Age limit removed for last mortgage repayment 3% early settlement fee for mortgages removed

MAY

OIL PRICE DEREGULATION

New joint ownership law announced

OPEC LIMITS CRUDE OUTPUT

Interest rate cut Abu Dhabi updates freehold ownership law

OCTOBER

APRIL

20% cap for banks’ property lending removed BREXIT VOTE

2016

AFFORDABLE HOUSING ARRIVES

2017

2018

NOVEMBER

JANUARY 2019

APRIL 2019

JULY 2019

OCTOBER 2019

2020

5

2O19

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI APARTMENT PRICE PERFORMANCE According to Property Monitor, average apartment prices declined by 15% over the 12-month period from Q4 2018 to Q4 2019.

Apartments in International Media Production Zone (IMPZ) registered the steepest decline of more than 24% followed by Discovery Gardens and Jumeirah Village Triangle at over 23% each.

Whilst supply remains the primary driver for price declines, some locations have started to show signs of stabilisation, and even recovery.

Softening prices have also generated buyer interest as displayed in the higher volume of sales transactions during the year, with November 2019 marking one of the strongest months in the past decade.

-7.7%

Palm Jumeirah

-18.0% -1.5%

DIFC Al Furjan

-11.8% 6.9% 9.8% -7.8%

The Views

-18.9% -0.7%

Jumeirah Village Circle (JVC)

-12.3% -3.1%

Business Bay

-15.0% -7.1%

Jumeirah Beach Residence (JBR) Dubai Marina

-13.9% -5.2%

Uptown Motor City

-16.2%

-3.5%

Dubai Sports City International City (Clusters)

-18.3%

-1.2%

-15.2% 7.7% -5.5% -3.2%

Jumeirah Village Triangle

-23.3% -2.3%

Downtown Burj Khalifa

-16.4%

-1.6%

Dubai Silicon Oasis

-13.0% -3.3%

Jumeirah Lakes Towers (JLT)

-18.1% -0.8%

The Greens

-15.9% -8.4%

Discovery Gardens

-23.6% -1.5%

IMPZ

-24.3%

10

8

6

4

2

0

-2

-4

-6

-8

-10 -12 -14 -16 -18 -20 -22 -24 -26 -28 -30

% change

Quarterly Q3 2019 - Q4 2019 Source: Property Monitor 6

Yearly Q4 2018 - Q4 2019

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Business Bay AED 1,181/sq ft

DIFC AED 1,480/sq ft

Downtown Burj Khalifa AED 1,882/sq ft

Palm Jumeirah

International City (Clusters)

AED 1,693/sq ft

AED 520/sq ft

Jumeirah Beach Residence AED 1,250/sq ft

Dubai Silicon Oasis AED 670/sq ft

Jumeirah Lakes Towers AED922/sq ft

The Greens AED 1,032/sq ft

The Views AED 1,206/sq ft

Jumeirah Village Circle AED680/sq ft

Dubai Marina AED 1,336/sq ft

Jumeirah Village Triangle AED 767/sq ft

Uptown Motor City AED 663/sq ft

Discovery Gardens

Dubai Sports City

AED 573/sq ft

AED 737/sq ft

IMPZ Al Furjan

AED 598/sq ft

AED 930/sq ft

7

RESIDENTIAL

2O19

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI VILLA/TOWNHOUSE PRICE PERFORMANCE According to Property Monitor, average villa/townhouse prices declined nearly 18% over the 12-month period from Q4 2018 to Q4 2019.

Price declines were more pronounced in villas/townhouses compared to apartments during the period as buyer interest generally gravitated towards the affordable properties segment. Communities such as The Meadows, Jumeirah Village Triangle and Victory Heights registered declines of over 20% each.

-3.1%

Victory Heights

-22.3% -3.4%

Cedre Villas Silicon Oasis

-17.5% -5.8%

The Meadows

-24.3% -7.4%

Jumeirah Islands

-20.2% -5.3%

Arabian Ranches

-18.9% -3.3%

Al Furjan Villas

-15.4%

-2.3%

The Lakes

-13.7% -5.4%

The Springs

-15.9% -8.9%

Jumeirah Park

-19.5% -12.8%

Jumeirah Village Triangle

-22.8% -3.5%

Jumeirah Golf Estates

-11.5% -2.0%

Green Community Motor City

-9.7% -8.2%

The Fronds Gardens Homes Palm Jumeirah

-18.1% 0

-1

-2

-3

-4

-5

-6

-7

-8

-9 -10 -11 -12 -13 -14 -15 -16 -17 -18 -19 -20 -21 -22 -23 -23 -24 -25

% change

Quarterly Q3 2019 - Q4 2019

Source: Property Monitor 8

Yearly Q4 2018 - Q4 2019

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

The Fronds Garden Homes Palm Jumeirah AED 1,997/sq ft

Jumeirah Park AED 805/sq ft

Jumeirah Islands Cedre Villas Silicon Oasis

AED 1,091/sq ft

AED 700/sq ft

The Meadows AED 923/sq ft

The Lakes AED 1,107/sq ft

Green Community Motor City AED 835/sq ft

Arabian Ranches

The Springs

AED 892/sq ft

AED 816/sq ft

Jumeirah Village Triangle AED 691/sq ft

Victory Heights AED 843/sq ft

Al Furjan Villas

Jumeirah Golf Estates

AED 662/sq ft

AED 1,044/sq ft

9

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI RENT PERFORMANCE Rental declines for apartments in Dubai averaged 13.4%, whilst villas/ townhouses registered a single-digit 9% fall over the 12-month period from Q4 2018 to Q4 2019.

Tenants appear to have taken advantage of falling rentals and incentives from landlords, such as rent-free periods and multiple cheque payments, to upgrade to larger units and sought-after villa communities. In areas such as The Meadows, prices declined at a faster pace than rents, improving the yields on properties here for new buyers.

-15.8

Annual rent by bedroom * Data as of November 2019

-12.3

Dubai Marina

The Greens

AED 54,040

AED 50,140 AED 59,250

AED 78,910 AED 114,530

APARTMENT Studio

VILLA/TOWNHOUSE 3 BR

1 BR

4 BR

2 BR

5 BR

12-month % change

12-month % change

AED 91,000

-15.9 -14.4

JLT

JBR

AED 42,250

AED 63,850 AED 82,440

AED 64,240

-12.2 The Views

AED 85,800

AED 110,610

AED 57,340 AED 75,225

-6.9

AED 100,100

The Lakes AED 162,500 AED 250,100 AED 333,320

-5.4 The Meadows AED 156,750 AED 196,000

-8.4

AED 239,200

Jumeirah Islands

-10.1

AED 228,800 AED 316,800

-7.9 -11.3

Jumeirah Park

Discovery Gardens

AED 155,200

AED 31,470

AED 187,050

AED 46,465

AED 213,900

AED 78,270

-12.5

Al Furjan Villas AED 122,150 AED 121,060 AED 162,330

Source: Property Monitor 10

The Springs AED 135,600 AED 142,800

-6.6 Jumeirah Golf Estates AED 222,300 AED 237,500 AED 276,000

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

-9.7 Downtown Burj Khalifa AED 63,450 AED 91,140 AED 132,890

-14.4 -16.9 Business Bay AED 54,840

DIFC AED 63,000

-9

AED 86,925 AED 134,125

International City (Clusters)

AED 74,160

AED 24,640 AED 34,930

AED 101,300

AED 50,940

-14.0

-15.4

-12.8

Dubai Sports City

Motor City

Arabian Ranches

AED38,500

AED 46,000

AED 56,840

AED 53,170

AED 149,730 AED 198,000

AED 86,800

AED 88,475

AED 252,000

-12.5 Victory Heights AED 152,250 AED 225,600

NUMBER OF RENTAL CHEQUES FOR APARTMENTS AND VILLAS/TOWNHOUSES 3.7% 6 cheques

0.2% 7 cheques

0.6% 5 cheques

1.7% 12 cheques

28.2% 4 cheques

42.4% 1 cheque

6.0% 3 cheques

17.2% 2 cheques

11

RESIDENTIAL

2O19

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI 2020 UPCOMING SUPPLY According to Property Monitor, over 4,500 apartments and 2,300 villas/ townhouses were handed over in Dubai during Q4 2019.

Developers announced fewer than half the launches in 2019 compared to 2018 and seem to instead focus on completing existing projects in their pipeline.

Our research indicates that over 50,000 new units from projects already under construction will hit the market in early 2020, with apartments making up majority of the upcoming supply. Â The higher number of deliveries can be attributed to the spill over of expected handovers from 2019.

APARTMENTS

83%

VILLAS/TOWNHOUSES

17%

SUPPLY SCHEDULED TO BE COMPLETED BY Q1 2020 >2,500 1,501 - 2,500 1,001 - 1,500 501 - 1,000 <500

Source: Property Monitor 12

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Deira

The World Islands

Downtown Burj Khalifa

Mohammed Bin Rashid City

Al Barsha Dubai Marina

Dubai Silicon Oasis

Dubailand

Wadi Al Safa 7

Jumeirah Village Circle

Arjan

Dubai Production City Al Furjan

Mudon

Akoya Oxygen

Damac Hills

Dubai South (Dubai World Central)

13

RESIDENTIAL

2O19

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI TRANSACTION OVERVIEW

Off-plan transfers continued to dominate in Q4 2019, accounting for more than 60% of total transfers. The total number of transfers in this period was 12,444 for both villas/townhouses and apartments.

Dubai Creek Harbour, Mohammad Bin Rashid City and Business Bay were the most sought-after locations for off-plan apartment transfers in Q4 2019.

For villas/townhouses, the total volume of off-plan transactions increased from 491 to 1,944 transactions between Q4 2018 and Q4 2019.

14

450

400

350

300

250

200

150

100

50

145 0

OFF-PLAN

600

550

0 352 309 265 257 Jumeirah Village Circle

308

Bluewaters Island

100

Al Khail Heights

200

Dubai Marina

300

International City

400

Number of transfers

500

148

134

112

95

68

Damac Hills (Akoya By Damac)

500

Number of transfers

375

Downtown Burj Khalifa

600

Mudon

156

Serena

545

La Mer

700

Emirates Living

309

Cherrywoods

Business Bay

800

Akoya Oxygen

447

Arabian Ranches 3

582

Mohammed Bin Rashid City

Number of transfers

OFF-PLAN

Mohammed Bin Rashid City

555

Villanova

0 1,036

Dubai Creek Harbour

0

Dubai South (Dubai World Central)

Number of transfers

2O19

TOP 5 LOCATIONS FOR APARTMENT TRANSFERS IN Q4 2019 SECONDARY MARKET

582

1,000

900

400

350

300

250

200

150

100 50

164

TOP 5 LOCATIONS FOR VILLA TRANSFERS IN Q4 2019

SECONDARY MARKET

150

125

100

75

50

25

Source: Property Monitor

15

RESIDENTIAL

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

2O19

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

LOOKING FORWARD – Q1 2020 Q1 2020 PRICE OUTLOOK Decrease by more than 5%

Decrease by up to 5%

Increase by more than 5%

Increase by up to 5%

Remain the same

APARTMENTS

VILLAS/TOWNHOUSES

% of agents who predicted apartment prices would:

% of agents who predicted villa/townhouse prices would:

18%

28%

22% 28%

12%

12%

38%

4%

4%

34%

Q1 2020 RENT OUTLOOK Decrease by more than 5%

Decrease by up to 5%

Increase by up to 5%

Remain the same

APARTMENTS

VILLAS/TOWNHOUSES

% of agents who predicted apartment rents would:

% of agents who predicted villa/townhouse rents would:

26%

22%

24%

28%

4%

8% 6%

6%

38%

38%

Q1 2020 TRANSACTION OUTLOOK Decrease

Increase

Remain the same

NEW BUYER ENQUI‫سبيس‬R‫ههههههه‬IES‫ييشيسشيش‬

NEW SELLER INSTRUCTIONS

AGREED SALES

% of agents who predicted new buyer enquiries would:

% of agents who predicted new seller enquiries would:

% of agents who predicted agreed sales would:

27%

16%

57%

31%

22%

47%

27%

16%

57%

Source: Property Monitor 16

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

SURVEY RESULTS Q4 2019

PREDICTIONS

REALITY

The majority of agents surveyed predicted apartment and villa/townhouse prices would decrease by up to 5%.

Apartment and villa/townhouse prices declined by 3.7% on average in Q4 2019, with a 12-month decline of 16% on average.

For apartment and villa/townhouse rents, the majority of agents surveyed predicted that rates would decrease by up to 5%.

New buyer enquiries and agreed sales were predicted to increase by the majority of agents surveyed.

vs

Apartment and villa/townhouse rents declined by 1% on average in Q4 2019, with a 12-month decline of 11.6% on average.

According to data from real estate agencies, transaction levels in Q4 2019 were higher than Q3 2019.

17

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

ABU DHABI PRICE PERFORMANCE Average sales prices declined in Abu Dhabiâ&#x20AC;&#x2122;s major investment zones by 13% for apartments from Q4 2018 to Q4 2019. Villa/townhouse prices registered an average decline of 11% over the same period, outperforming apartments.

18

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Although the pace of declines in the capital slowed overall, price depreciation in certain areas such as Al Reem Island were more pronounced than others. The location witnessed prices drop over 20% on a yearly basis and close to 5% on a quarterly basis due to increased supply and rental declines in communities such as Saadiyat Beach Residences. Recent launches in Jawaher, Mamsha, and Yas Acres may also impact price performance going forward.

After the long-term UAE residency visa announcement, the other big announcement that is likely to continue to positively influence purchase decisions, and therefore property prices in the capital, is the opening up of the real estate market to foreigners, allowing them to buy property or land within 15 designated investment zones. Previously Abu Dhabi granted a 99-year lease to investors but not full ownership.

Areas that generated maximum buyer interest include Al Reem Island, Al Raha Beach, Al Reef and Saadiyat Island because of their popularity and, in the case of some, increased affordability after the price correction.

In a bid to improve transparency and leverage data to drive investment in the region, Abu Dhabi released its first biannual report on real estate transactions, which showed that the capital witnessed deals worth AED 31 billion in the first six months of 2019.

APARTMENT PRICE PERFORMANCE

Al Raha Beach % change

-2.2%

-11%

-2.9%

-12%

Al Reem Island

1,310

1,150

-4.8%

-13.5%

Al Ghadeer

-12%

Al Reef Downtown

-12%

915

-3.2%

745

-2.7%

-22% -20% -18% -16% -14% -12% -10% -8%

-6%

Yearly Q4 2018 - Q4 2019

AED/sq ft

Saadiyat Beach Residences

-4%

670

-2%

0

200

400

600

800

1000

1200

1400

1600

Average Price Per Sq Ft

Quarterly Q3 2019 - Q4 2019

Source: Property Monitor

VILLA/TOWNHOUSE PRICE PERFORMANCE

Al Reef Villas Saadiyat Beach Villas

-2.8%

-12%

-2.2%

-8%

620

-3.6%

-11.5%

-14% -12% -10% -8%

Yearly Q4 2018 - Q4 2019

765

-6%

-4%

AED/sq ft

% change

Al Raha Gardens

1,345

-2%

0

200

Quarterly Q3 2019 - Q4 2019

400

600

800

1000

1200

1400

1600

Average Price Per Sq Ft

Source: Property Monitor 19

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

ABU DHABI RENT PERFORMANCE Rents in Abu Dhabi continued to fall in Q4 2019, for both apartments and villas/townhouses. The average annual decline was 12% for the 12-month period from Q4 2018 to Q4 2019, with apartments facing steeper declines compared to villas/townhouses.

Communities such as Al Raha Beach saw lower rental averages due to more affordable offerings such as Muzoon and Amirah within the same location. A similar situation is likely to play out in Saadiyat Island due to the launch of competitively- priced products such as Park View and Soho Square.

Efforts by developers continued to retain and attract tenants and turn them into owner-occupiers in view of the increased affordability of properties. Looking to target a larger pool of investors, including those who might have limited resources for a lump sum down payment, Aldar Properties launched a rent-to-own scheme at three of its developments - Ansam, Al Hadeel and Meera. The scheme allows customers to build equity in apartments over a 1-3 year period with the opportunity to exercise the option each year with no rent escalations or additional fees.Â

APARTMENT RENT PERFORMANCE

88,500

-13%

85,000

-14%

Al Reem Island

61,500 45,000

-5.7%

51,925 38,500 27,100

-13%

Al Ghadeer

-4.2%

-13%

Al Reef Downtown

52,000 36,200

-8%

-16%

104,500

71,000 55,000

-3.5%

Rent (AED/annum)

-7%

Al Raha Beach % change

140,000

-11.5%

Saadiyat Beach Residences

-14%

-12%

-10%

-8%

-6%

-4%

-2%

Quarterly Q3 2019 - Q4 2019

Yearly Q4 2018 - Q4 2019

0

50,000

Studio

78,125

100,000

1 BR

150,000

200,000

2 BR

Source: Property Monitor

% change

-2.7%

-2.4%

368,230 321,480 304,100

-10.8%

Saadiyat Beach Residences

-1.5%

-15%

-14%

-12%

Yearly Q4 2018 - Q4 2019

20

129,520 121,388 101,730

-13.1%

Al Reef Villas

Source: Property Monitor

182,585 157,180 124,750

-14.4%

Al Raha Gardens

-10%

-8%

-6%

-4%

Quarterly Q3 2019 - Q4 2019

-2%

0

3 BR

100,000

4 BR

200,000

300,000

5 BR

400,000

Rent (AED/annum)

VILLA/TOWNHOUSE RENT PERFORMANCE

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

ABU DHABI 2020 UPCOMING SUPPLY According to Property Monitor, apartments will dominate deliveries in Q1 2020.

Al Raha Beach, Al Reem Island and Abu Dhabi City will witness the highest number of apartment deliveries whilst Yas Island will have an increased number of villa/townhouse handovers.

One of the major announcements of the year was the launch of Saadiyat Grove by Aldar Properties, an AED 8 billion community located in the Cultural District of Saadiyat Island.

Supply scheduled to be completed in Q1 2020

APARTMENTS

77%

>1,000 501 - 1,000

VILLAS/TOWNHOUSES

100 - 500

23%

<100

Source: Property Monitor

Sowwah Square

Wahat Al Zaweya

Saadiyat Island Al Zahiyah

Abu Dhabi City

Shams Abu Dhabi Al Reem Island

Al Raha Beach Yas Island Khor Al Raha (Samaliyah Island)

Danet Abu Dhabi Rawdhat

Khalifa City

21

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

NORTHERN EMIRATES RESIDENTIAL MARKET OVERVIEW

Yields in the Northern Emirates remain attractive with average apartment gross rental yields ranging between 5-7%.

AVERAGE APARTMENT RENTAL RATES Q4 2019 45,000

20,000

22,000

16,000

14,000

15,000

15,000

20,000

15,000

25,000

21,000

28,000

30,000

17,000

Rent (AED/annum)

35,000

25,000

40,000

10,000 5,000 0 Studio

1 BR

Sharjah

Source: Cavendish Maxwell 22

Ajman

Ras Al Khaimah (excluding premium locations)

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Market conditions remained largely similar to the previous quarters with few areas displaying signs of stabilisation.

However, with prices and rents still softening in Dubai and Abu Dhabi, we exercise caution in interpreting the quarterly changes as an accurate gauge of the overall market condition.

2 BR

Fujairah

30,000

40,000 33,000

37,000

23,000

32,000

27,000

30,000

34,000

42,000

Tenants and investors continued their flight to Dubai as the emirate continued to offer increasingly affordable property options for those keen to move out of the Northern Emirates and closer to their place of work.

3 BR

Umm Al Quwain

23

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

SHARJAH RESIDENTIAL MARKET OVERVIEW

Extending the trend of the year, rents in Sharjah continued their decline, mirroring the situation in Dubai.

Tenants continued their flight to quality, upgrading to better areas and bigger homes and even relocating altogether from nearby emirates like Ajman. In turn, existing tenants in Sharjah were seen taking advantage of the lower rents in Dubai.

Increasingly more homeowners and investors seem to find Sharjah property affordable, as reflected in the healthy growth of 31% in sales transactions for the first nine months of the year versus a year ago. Most of the sales transactions were recorded in Al Khan, whilst the highest transaction value, worth AED253 million, was recorded for the Muwaileh Commercial Area.

Among the upcoming projects, the focus is on prime developments in Sharjah including the Sharjah Waterfront City, a collection of eight natural islands offering villas, town houses, apartments, commercial and retail facilities, and Al Maryam Island â&#x20AC;&#x201C; comprising luxurious residential ventures such as Azure Beach Residences and Sapphire Beach Residences.

AVERAGE RENTAL RATES (AED/ANNUM) Q4 2019 PRIME APARTMENTS

PRIME APARTMENTS

Studio

1 BR

2 BR

3 BR

Studio

1 BR

2 BR

3 BR

18,000 - 20,000

23,000 - 27,000

30,000 - 34,000

40,000 - 45,000

23,000

37,000

50,000

60,000

SECONDARY APARTMENTS

SECONDARY APARTMENTS

Studio

1 BR

2 BR

3 BR

Studio

1 BR

2 BR

3 BR

12,000 - 15,000

20,000 - 23,000

25,000 - 27,000

35,000 - 37,000

18,000

25,000

32,000

40,000

Note: Abu Shagara trades at a premium to Rolla

24

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

Al Azra Rolla Wasit Suburb Abu Shagara Al Majaz Al Khan

Al Rahmaniya

Al Taawun Al Nahda

Al Jurainah

Hoshi

Al Suyoh

Al Tai

PRIME VILLAS 4 BR

5 BR

6 BR

90,000 - 100,000

110,000 - 120,000

130,000 - 140,000

4 BR

5 BR

6 BR

75,000 - 85,000

90,000 - 100,000

110,000 - 115,000

SECONDARY VILLAS

25

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

AJMAN RESIDENTIAL MARKET OVERVIEW Increased affordability, a wide range of accommodation options and attractive yields are helping attract investor interest to Ajman.

Al Jurf

Al Bustan

Al Rashidiya Bucking the trend of declining rental prices in neighbouring emirates such as Sharjah, rental rates and sales prices in Ajman are displaying signs of stabilisation after a prolonged softness.

Al Rawda

Al Naemiya

AVERAGE RENTAL RATES (AED/ANNUM) Q4 2019 Areas that showed resilience included Al Rashidya, Corniche Ajman, Emirates City and Al Jurf, among others.

PRIME APARTMENTS Studio

1 BR

2 BR

3 BR

17,000

24,000

31,000

40,000

2 BR

3 BR

26,000

35,000

SECONDARY APARTMENTS Studio

1 BR

14,000

18,000

Source : Property listings as of December 2019

UMM AL QUWAIN RESIDENTIAL MARKET OVERVIEW

As of Q4 2019, the annual rent for apartments in Umm Al Quwain ranged from AED 13,000 to 16,000 per annum for studios to AED 25,000 to 30,000 per annum for three-bedroom apartments based on the property location, condition and specification.

There are masterplans underway in the emirate by private developers, which could impact the relatively quiet landscape of Umm Al Quwain in the medium term.

26

UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

RAS AL KHAIMAH RESIDENTIAL MARKET OVERVIEW In the three months ending December, apartment rents in older developments have slightly declined from the previous quarter.

Al Marjan Island Al Hamra Village Mina Al Arab Al Seer Al Uraibi

During Q4, rents ranged between AED 14,000 per annum for studios to AED 30,000 per annum for three-bedroom apartments.

In the newer areas of Mina Al Arab, Al Hamra Village and Al Marjan Island, rents were stable over the previous quarter, ranging between AED 20,000 per annum for studios to AED 60,000 per annum for three-bedroom apartments.

Upcoming projects in the emirate include the 2020 completion of the two phases of Bateen Al Samar and the Sheikh Zayed Housing Programme providing public housing for Emiratis. By July 2022, Emaar Properties is set to complete The Address Residential Apartments on Al Marjan Island.

In a bid to digitalise all its services, the Ras Al Khaimah Municipality is offering 12 electronic services free of charge, of which four are in the field of real estate management marking a positive move for the sector.

AVERAGE RENTAL RATES (AED/ANNUM) Q4 2019 PRIME APARTMENTS Studio

1 BR

2 BR

3 BR

20,000

30,000

45,000

60,000

2 BR

3 BR

25,000

30,000

SECONDARY APARTMENTS Studio

1 BR

14,000

20,000

Source : Property listings as of December 2019

FUJAIRAH RESIDENTIAL MARKET OVERVIEW

Rental rates in Fujairah were largely unchanged from the previous quarter.

As of Q4 2019, the annual rent for apartments in Al Fujairah ranged from AED 16,000 to 20,000 per annum for studios to AED 35,000 to 40,000 per annum for three-bedroom apartments based on the property location, condition and specification.

Work is progressing on several projects aimed at diversification, including Sheikh Khalifa Central Hospital, a crude oil storage facility, the airport expansion, and housing developments in Sheikh Mohammed Bin Zayed City and the Fujairah Beach project.

27

RESIDENTIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI OFFICE MARKET OVERVIEW Office rental rates in Q4 extended declines from the previous quarter falling around AED 5 per sq ft as demand remained tepid while newer supply came into the market. Landlords focussed on maintaining headline rents but settled on lower net effective rates. They also continued to provide incentives such as rent-free periods of up to one year on long-term leases, capex contribution for the upgrade of units and extended car-parking facilities in a bid to raise or retain occupancy levels.

Shared and co-working office spaces continue to grow in popularity as they offer more cost-effective options for start-ups and early-stage companies. Even the larger multinational companies are recognising and responding to the need for flexible office spaces fully integrated with technology and experience-based infrastructure by their younger workforce. New licensing schemes that ease requirements for free zone and onshore locations in Dubai are also working in favour of the sector.

Landlords and owners of existing traditional spaces are responding to their higher vacancy rates by offering units or floors to co-working and serviced office operators to cater to the demand from this sector.

Dubai World Trade Centre

DUBAI OFFICE RENT PERFORMANCE (AED RANGE PER SQ FT PER ANNUM)

70-185 240-260

Sheikh Zayed Road

Dubai Marina

Shell and Core (Min/Max)

80-95

Fitted (Min/Max)

but excluding chiller/utilities)

Downtown Dubai

60

Business Bay 45-75 85-105

Barsha Heights 50-75

Dubai Healthcare City

95-115 145-160

85-95 175-205

80-95

150-170 240-260

Dubai Media City, Internet City, Knowledge Village

(Rates quoted are inclusive of service charge

DIFC

60-95 115-135

95-115

Deira 50-80

115

Dubai Design District 135-150 170-190

75-95

JLT 25-85 80-95

JAFZA 40-135 165-175

Dubai South (Dubai World Central) 40-50

60-70

Dubai Investment Park 20-60

6% 8%

Source : Cavendish Maxwell

35%

Office

16%

10%

85-105

DUBAI OFFICE ENQUIRIES BY SIZE (SQ FT) - Q4 2019

4%

8%

28

40-60

50-70

DUBAI OFFICE ENQUIRIES BY SECTOR - Q4 2019

6%

Dubai Silicon Oasis

55%

Professional Services

0-1,000

Technology

1,001 - 5,000

Construction-related

5,001 - 10,000

Financial Services

>10,000

Healthcare, Beauty and Pharma

51%

UAE MARKET REPORT A YEAR IN REVIEW

DUBAI RETAIL MARKET OVERVIEW Retail rental rates remained similar to the previous quarters despite significant new supply entering the market. Among the new openings were Palm Jumeirah’s very own 5-storey Nakheel Mall with over 1.1 million sq ft of leasable area, Festival Plaza by Al Futtaim in Jebel Ali which also houses an IKEA store, and the Souq Extra extension in Dubai Silicon Oasis, spread over 77,000 sq ft. The Dubai Mall Zabeel, an extension of the largest mall in the world, is another popular project, though it is yet to see many stores open to the public.

The expansion in the retail sector is expected to meet the demand anticipated during and after Expo 2020. The year will also see the Dubai Festivals and Retail Establishment supported by various retail groups step up efforts to further enhance the overall Dubai offering to the world.

The 25th edition of the Dubai Shopping Festival on 26 December 2019 kicked off Dubai’s Retail Calendar 2020 which boasts a gamut of activations, festivals and events throughout the year.

In parallel, e-commerce continues to gain ground as factors such as high smartphone penetration rates and a young and digitally-driven population increasingly prioritises convenience and comfort. Efforts are underway to execute the e-commerce strategy of the Dubai Government to increase the contribution of e-commerce to AED 12 billion in the local economy by 2023.

To ensure that the retail sector remains competitive and resilient, Smart Dubai and the Dubai Department of Economic Development also announced a joint data initiative for the sector which would help formulate successful strategies depending on variables such as demographics, spending and visiting patterns.

RETAIL RENTAL RATES Q4 2019 (AED/SQ FT) Retail Type

Minimum

Maximum

Strip Retail or retail in residential buildings

60

250

Community Malls

60

275

Regional Mall/Destination Retail

165

350

Central Business District (DIFC/Downtown/ Sheikh Zayed Road/City Walk)

150

400

Super Regional Malls

250

1,500

* Rates are inclusive of service charge and exclude rent fee/CapEx

Source: Cavendish Maxwell

FUTURE MALL SUPPLY Malls

Gross Leasable Area (sq ft)

Meydan One

3,000,000

Nakheel JVC - The Circle Mall

44,500

Meadows Village (Expansion)

95,000

Dubai Hills Mall

2,000,000

Burj Al Nahar

240,000

The Avenue - Dubai Silicon Oasis

775,000

Source: Cavendish Maxwell 29

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

ABU DHABI OFFICE MARKET OVERVIEW In Q4, office rents extended their declines from the previous quarter as tenants adjusted to renewed requirements of smaller or consolidated spaces and continued to settle on lower rates in a relatively subdued market. There were increasing instances where landlords accepted payments in multiple cheques, absorbed service charges and prolonged rent-free periods for tenants. In some areas, the spread between the rental range is seen shrinking as rates at the higher end of the band decline whilst the lower end remains stable.

From the upcoming office supply, whilst projects such as Eclipse Twin Towers and Reem Tower 1 were expected to be completed by the end of the year, the Parsons regional headquarters in Capital District is now slated for completion in 2020, altogether bringing close to 1.5 million sq ft of office space to the market.

OFFICE RENT PERFORMANCE (AED/SQ FT) Al Reem Island/Al Maryah Island Shell and Core

Fitted High Low

Grade A

-

95

175

Grade B

58

65

85

Grade C

35

40

60

Note: Prices on Al Reem Island range from 40 – 100 AED/sq ft, whereas prices on Al Maryah Island range from 120 – 175 AED/sq ft.

Abu Dhabi MainIand Shell and Core

Fitted Low High

Grade A

-

100

130

Grade B

50

60

75

Grade C

30

35

55

Mussafah Shell and Core

Fitted Low High

Grade B

40

55

70

Grade C

-

27

40

RETAIL MARKET OVERVIEW The momentum after the opening of the extension of The Galleria Al Maryah Island, which had over 400,000 people visit in the first few days post the launch, seems to have continued into Q4, with footfall at elevated levels, prompting retailers to request additional space to expand.

This is, however, in contrast to the situation with older malls struggling to attract visitors and retain tenants. With the 450-store Reem Mall in Reem Island and Forsan Central Mall in Khalifa City expected to open doors to the public in 2020, older establishments will need to devise new tactics to remain relevant and adequately compete with the newer entrants.

Majid Al Futtaim marked its entry into Abu Dhabi this year with its 18,500 sq m mall, My City Centre Masdar which has a focus on sustainability.

Another player expanding its footprint in the capital is Jumbo Electronics who launched a new store, a regional office, warehouse facilities and a service centre.

Another retail project in the capital is the upcoming Midfield Terminal of the Abu Dhabi International Airport, which includes 28,000 sq m of retail space for duty-free shopping, dining, relaxing and entertainment. Lulu Group will operate a specialist gifting retail space and a dedicated nonfood department store spread across 1,833 sq m at the terminal.

30

UAE MARKET REPORT A YEAR IN REVIEW

NORTHERN EMIRATES OFFICE MARKET OVERVIEW Office rates have largely remained unchanged from the previous quarter with only some areas displaying a marginal decrease in rents.

Looking at efforts on an emirate-wide level, the Department of Economic Development in Umm Al Quwain has lowered trade licence fees by 20% to boost economic activity in the emirate and encourage investment.

With advantages such as cost-effectiveness, regulations that are easy to understand and accessibility to the hubs of Dubai and Abu Dhabi, Ras Al Khaimah is increasingly gaining popularity among businesses of all sizes. In a major development for the emirate, India’s secondlargest airline SpiceJet recently announced plans to set up its first international hub in Ras Al Khaimah.

Earlier in the year it was also announced that the AED 460 million Fujairah Business Centre project, comprising a 19-level office tower and 19-level hotel and apartment tower along with a retail area, is on track for an early completion by June 2020.

SHARJAH OFFICE RENTAL RATES (AED/SQ FT) Abu Shagara/Al Qasemiah Shell and Core 25 - 30

Fitted 40 - 50

Corniche Area (Al Khan, Al Majaz) Shell and Core 25 - 35

Fitted 40 - 60

Al Taawun Road Shell and Core 25 - 35

Fitted 40 - 60

Industrial Area Shell and Core 25 - 30

Fitted 40 - 50

RETAIL MARKET OVERVIEW In the run up to the end of 2019, a spate of new malls and mall expansions opened in the Northern Emirates. The Safari Mall in Sharjah, with a leasable area of 1.2 million sq ft, opened in September and houses the largest hypermarket in the UAE. In neighbouring Ajman, City Centre Ajman completed its multi-phase redevelopment, transforming into a shopping and lifestyle destination that houses a diverse mix of 130 international brands and restaurants. In Ras Al Khaimah the Grove Village was inaugurated, a community and lifestyle boutique mall spread across 73,200 sq ft and made entirely out of containers.

Among the upcoming projects, the Tilal Mall, part of the Tilal City project in Sharjah, will become the emirate’s largest mall upon completion, spread over 21 million sq ft. In Umm Al Quwain, plans are progressing for the Umm Al Quwain Coop commercial and residential project managed by Union Coop - comprising shops, residences and a hypermarket.

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

DUBAI HOSPITALITY MARKET OVERVIEW According to STR Global, for the year to date period, occupancy declined across hotel categories in Dubai barring the Upper Midscale segment where it rose over 6% versus the same period a year ago. However, Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) declined across categories over the year ago, with increased supply being the prime driver of declines. Supply is expected to increase further as the emirate readies itself to welcome an expected 25 million visitors during the course of the six-month Expo 2020 event kickstarting in October 2020. According to Dubai Tourism, Dubai’s hotel room inventory was expected to reach 132,000 by the end of 2019, up from 107,000 at the end of 2017.

Among the new openings towards the end of 2019, Dubai counted Hyatt’s Hotels’ Andaz Dubai The Palm, Avani Ibn Battuta and Address Sky View.

The emirate is also set to break its own record of having the world’s tallest hotel, a title currently held by the Gevora Hotel on Sheikh Zayed Road.

Expected to be complete in 2023, the new 82-storey Ciel in Dubai Marina will be four metres taller than Gevora and feature 1,209 luxury hotel suites and serviced residences.

OCCUPANCY % AND REVPAR (AED)

74.2%

600

75% 74%

550

73%

500

72%

450

616

538

2018

2019

ADR

71%

500 Rate (AED)

75%

Occupancy

Rate (AED)

650

75%

75% 74.2%

450

300

74% 73%

400 350

Occupancy

OCCUPANCY % AND ADR

461

399

2018

2019

OCC %

Rev PAR

72% 71%

OCC %

Data as of Nov 2019

Source: STR Global

ABU DHABI HOSPITALITY MARKET OVERVIEW In the first nine months of 2019, the Department of Culture and Tourism Abu Dhabi figures showed that the capital welcomed 3.8 million hotel guests, a 2.9% increase from 2018, with locations such as Saadiyat Island and Abu Dhabi National Exhibition Centre performing particularly well.

Through the year, events such as the Special Olympics, AFC Asian Cup 2019, and Abu Dhabi Showdown Week, among others, were key drivers of visitor numbers. The higher numbers corresponded to an increase in occupancy whilst RevPAR held steady or increased slightly across property types.

The last quarter of the year also saw the debut of W Hotels’ W Abu Dhabi – Yas Island with 499 rooms and suites. Other anticipated projects include the opening of the Fairmont Marina Abu Dhabi in 2020 and the first Warner Bros. themed hotel in the world, The WB Abu Dhabi is set to open in 2021 adjacent to the Warner Bros. World Abu Dhabi amusement park on Yas Island.

OCCUPANCY % AND REVPAR (AED)

76.7%

260

200

32

77%

280

75% 289

302

2018

2019 ADR

Data as of Nov 2019

300

76%

240 220

78%

OCC %

74% 73%

Rate (AED)

Rate (AED)

280

77.3%

Occupancy

300

77.3%

78% 77%

76.7%

260

76%

240

75%

220 200

222

233

2018

2019

Rev PAR

74%

Occupancy

OCCUPANCY % AND ADR

73%

OCC % Source: STR Global

UAE MARKET REPORT A YEAR IN REVIEW

NORTHERN EMIRATES HOSPITALITY MARKET OVERVIEW Among the Northern Emirates in the year-to-date period, Ras Al Khaimah recorded an increase in occupancy over the previous year but saw double-digit declines in ADR and RevPAR. Meanwhile, Fujairah registered lower levels across all - occupancy, ADR and RevPAR - from a year ago.

The emirate of Ras Al Khaimah is set to open several projects in line with its 3-year strategy launched earlier in 2019 which aims to attract 1.5 million tourists to the emirate by 2021. The Mövenpick Resort Al Marjan Island, set to begin operations in 2021, will be an addition to the island which has over 1,600 operational five-star hotel keys.

Adventure tourism is a key pillar of the tourism strategy of the Ras Al Khaimah with the government launching various interactive competitions in 2019 to create innovative attractions. These include creating a unique resort and designing a new mountain attraction on Jebel Jais, which already boasts the Jebel Jais Flight: The World’s Longest Zipline, the Jebel Jais Via Ferrata and the Jebel Jais Viewing Deck Park.

With the aim to enhance the visitors’ experience in Sharjah, the emirate has launched new standards to classify hotel establishments in the emirate as supply increased over the past few years. The new standards include parameters such as minimum expectations of the guest, quality of the hotel infrastructure and added value to the guest experience.

OCCUPANCY % AND REVPAR (AED) 450

72%

550

400

72%

350

70%

70%

500

68%

450

66%

66%

400

63%

350 300

605

250

388

511

2018

352

64%

Rate (AED)

Rate (AED)

600

74%

Occupancy

650

Ras Al-Khaimah ADR Ras Al-Khaimah OCC

74% 72%

72% 70%

300

68% 66%

200

66%

150 100

60%

50

58%

0

63%

424

256

367

2018

Ras Al-Khaimah OCC

Fujairah+ OCC

64% 62%

Ras Al-Khaimah RevPAR

Fujairah+ ADR

70%

250

62%

2019

76%

Occupancy

OCCUPANCY % AND ADR

222

2019

60% 58%

Fujairah+ RevPAR Fujairah+ OCC Source: STR Global

Data as of Nov 2019

UPCOMING SUPPLY SPLIT BY CLASS - Q1 2020

DUBAI

ABU DHABI

NORTHERN EMIRATES

Segment

Upcoming supply

Segment

Upcoming supply

Segment

Economy Class

6%

Upscale Class

100%

Upscale Class

Luxury Class

10%

Midscale Class

5%

Upper Midscale Class

15%

Upper Upscale Class

38%

Upscale Class

23%

Upcoming supply 100%

33

HOSPITALITY

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UAE MARKET REPORT A YEAR IN REVIEW

DUBAI INDUSTRIAL MARKET OVERVIEW Supply continued to outpace demand in the last quarter and 2019 overall, but market participants displayed higher levels of cooperation to close deals. An increasing number of transactions continued, despite vacancy levels rising. However, the rate at which supply enters the market appears to have slowed.

The general trading sector remained the most active, accounting for over 40% of onshore enquiries and 37% of freezone enquiries followed by manufacturing.

The last quarter of the year also saw retail giant Landmark Group open an AED 1 billion fully-automated distribution and warehousing centre in Jebel Ali Free Zone. Spread across 700,000 sq ft, the facility is largest of its kind in the GCC. The other launch was of EZDubai, a 9.9 million sq ft purposebuilt e-commerce zone within Dubai South’s Logistics District. The hub will provide leasable area for businesses intended to be centres for last mile logistics, e-fulfillment, repair and return, and supply.

Looking ahead, government initiatives such as the “one free zone passport” scheme, which allows businesses to operate across free zones through a single licence, are expected to lower operational costs for businesses and promote mobility and flexibility, stimulating domestic and international investment.

Rent (AED/sq ft)

WAREHOUSE RENTS IN DUBAI 40

40

30

30

20

20

20 15-20

20

20

20

15-20

10

10

0 JAFZA

22 45

18 28

18 30

25 35

Al Quoz

NIP Techno Park

Dubai Industrial Park

Dubai South (DWC)

20 35

20 30

Dubai Investment Park

Source: Cavendish Maxwell

Minimum

Maximum

0

Sub Lease Fee in %

*Transacted prices not listing/asking prices. * Assumes logistics warehouse, min 8 m height, 2 loading bays without air conditioning * Sub-lease fee is paid on top of rent to the freeholder/government

FREEZONE WAREHOUSES ENQUIRIES

BY SECTOR – Q4 2019 8%

ONSHORE WAREHOUSES ENQUIRIES

BY SECTOR – Q4 2019

1%

3%

1%

2% 2%

10%

5% 5%

37%

1% 5%

2%

40%

2% 5%

10%

5%

17% 17%

Source: Cavendish Maxwell 34

5% 3%

13%

General Trading Manufacturing Logistic and Distribution (L & D) Engineering Commodities E-Commerce F&B Oil and Gas Construction Services Warehouses Learning and Development Cold store

UAE MARKET REPORT A YEAR IN REVIEW

ABU DHABI INDUSTRIAL MARKET OVERVIEW Through the year, several initiatives were launched by the government to stimulate activity in Abu Dhabiâ&#x20AC;&#x2122;s industrial sector. These included the lowering of electricity bills for companies and implementing a dual license policy allowing free zone companies to operate in the mainland. Recently, Khalifa Industrial Zone Abu Dhabi (KIZAD) waived charges for over 75% of its services whilst lowering fees for many of the remaining services.

Abu Dhabi Ports, which operates the Zayed and Khalifa Ports and the associated KIZAD free zone, saw its container volumes jump over 82% in the first six months of 2019. It is now looking to boost capacity of Khalifa Port with plans underway for a AED 3.8 billion expansion by 2021. In a technological upgrade for KIZAD, a high-tech facility was launched in the freezone, with the view to provide a full suite of quality, conformity and testing services for a range of sectors.

The oil and gas industry is one of the main drivers of demand for industrial spaces in the capital and the Industrial Internet of things is a key enabler of digital transformation projects. Driving the digital transformation agenda of the capital and the UAE, state owned oil company ADNOC has signed a 10-year contract with Honeywell to use its Forge analytics and asset management platform to improve reliability, uptime and preventative maintenance. It has also partnered with Group 42 (G42), an artificial intelligence (AI), cloud and supercomputing company to develop AI products for oil and gas industry.

NORTHERN EMIRATES INDUSTRIAL MARKET OVERVIEW Warehouse lease rates held steady in the Northern Emirates in the last quarter of the year. With rates ranging between AED 15 - 25 per sq ft in Ajman and Ras Al Khaimah, Sharjah continued to face stiff competition, where rates were in the range of AED 15 -30 per sq ft.

In line with economic diversification efforts in other emirates, Fujairah is also progressing with a raft of measures in areas including downstream petrochemicals, urban development, tourism and infrastructure.

Source : Cavendish Maxwell 35

INDUSTRIAL

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

A WORD FROM OUR CHIEF ECONOMIST Few governments receive such plaudits as the IMF gave in its November 2019 mission to the UAE1. If real estate markets were determined only and directly by the quality of macroeconomic management, then in a turbulent world the success of the UAE in developing a globally competitive and increasingly diversified economy, with quick visa turnaround times, 100% foreign ownership in many sectors and streamlined business regulations, for example the new insolvency rules, would all serve as a guarantee of continued real estate market value growth. As the IMF recognised, Expo 2020 will also surely provide a short-term boost to the UAE economy. It could even easily add another 1% to the 2-3% growth projected by the IMF, World Bank and UAE Central Bank. Liberalisation in Saudi Arabia, a dominant narrative of 2019, and the resultant development of the Saudi economy provide not just a competitor, but synergy. Rising incomes in the region benefit the Emirates as much, if not more, than domestic economies.

Yet in the short term, the IMFâ&#x20AC;&#x2122;s 2.5% growth projection for 2020 sits comfortably above most forecasts for the real estate market, which will continue to be driven in the short term primarily by supply and land issues. The result has been wide differences in performance between localities and sub-sectors, and plenty of opportunities for experienced investors who have carried out extensive due diligence and succeeded in obtaining good returns, for example in the emerging warehouse sector. Investors are now also studying the implications of future changes in fiscal policy structure for valuations and real estate returns.

Longer-term, it is wise for the UAE Government to recognise, as they undoubtedly do, that success in diversifying the economy and the success of the real estate market are inextricably entwined. For the long-term investors in the UAE economy we must look further afield than hitherto. Certainly, we should look to India, powering along still and providing a steady stream of investment into the UAE. Options vary as to what Indian growth will be in 2020, from the relatively pessimistic view of the Asian Development Bank at 5.1%2 to the more optimistic view of the OECD at 6.6% 3, with the majority of opinion clustered around the 6% mark. And equally certainly to China, growing at a reduced pace, but still almost 6% in 2020 according to the IMF4 and now a major player not just in infrastructure, but real estate, petrochemicals and other sectors. Both of these economies, however, will continue to generate surplus investment capital.

And as a result of sustained economic growth in Asia, albeit at slower than the breakneck pace of a decade ago, the Dubai real estate sector is now within reach for an order of magnitude more of Indian and Chinese nationals than a decade ago 5. At the same time, regulations governing the acquisition of real estate by non-nationals throughout the UAE are being progressively eased, whilst taxes still remain lower than anywhere in Asia, Europe or America. The current challenge for the sector is how to adapt to this very different future UAE population and economy, and to do so within the timeframe of the current real estate cycle before opportunities are lost yet without losing accuracy in marketing focus or control over budgets. The challenge for policymakers in the region is to provide the necessary stability for them to do so.

JULIAN ROCHE CHIEF ECONOMIST

36

1

https://www.imf.org/en/News/Articles/2019/11/06/pr19398-united-arab-emirates-imf-staff-completes-2019-article-iv-mission

2

https://economictimes.indiatimes.com/news/economy/indicators/adb-trims-indias-gdp-growth-forecast-to-5-1-in-fy20/articleshow/72468252.cms

3

https://economictimes.indiatimes.com/news/economy/finance/indias-economy-to-grow-6-6-in-2020-24-oecd/articleshow/71864940.cms

4

https://www.imf.org/en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019

5

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CN-IN

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UAE MARKET REPORT A YEAR IN REVIEW

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UAE PROPERTY MARKET REPORT - A YEAR IN REVIEW

METHODOLOGY Residential sales prices and rents are derived from Property Monitor (www.propertymonitor.ae), the region’s leading real estate intelligence platform and the only data source powered by RICS-accredited professionals; bringing unprecedented transparency and accuracy to local property markets.

Through Property Monitor, market stakeholders can directly access real-time, transparent and accurate intelligence, unmatched anywhere else in the region. The platform empowers investors, property specialists and banking professionals with authoritative data, analytics and insights that closely correlate with market movements, empowering confident and informed property-related decisions.

The average residential sales price per sq ft is taken from Property Monitor which incorporates signed contracts, registered transactions, valuations and listings verified by Cavendish Maxwell’s market-leading valuation department.

The Property Monitor Residential Survey is a quarterly study of agent opinions designed to identify residential market sentiment. This research highlights how new enquiries, leasing activity and transactions, among other metrics, changed from quarter to quarter with agent predictions compared to actual real market performance.

Supply projections for residential projects are based on the Cavendish Maxwell Supply Tracker, which tracks supply in real time, including regular tracking of construction projects, new launches and delays.

This is achieved through site inspections as well as regular feedback from developers, contractors, Cavendish Maxwell’s building consultancy team and related government entities.

STRATEGIC CONSULTING AND RESEARCH Cavendish Maxwell’s Strategic Consulting and Research team has some of the region’s most highly qualified data analysts with a wealth of international real estate advisory experience. We work closely with a broad portfolio of banks, property developers, government entities and private clients, providing authoritative, industry-specific research and advice to maximise portfolio performance.

Our strategic consulting and research expertise spans a variety of sectors including residential, office, hospitality, education and mixed-use developments, and our team draws on reliable proprietary data to allow for thorough and accurate analysis of trends and market fluctuations.

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BANKS

38

Our documents and advice meet banking and audit criteria, proven by our presence on over 40 bank panels across the Middle East.

Q 3 2O19

UAE PROPERTY MARKET REPORT

KEY SERVICES Market research Development recommendations Highest and best use studies Advisory services Portfolio strategy Feasibility studies Property data Market entry strategies

39

D U BA I

ABU DHABI

M U S CAT

2205 Marina Plaza Dubai Marina P.O. Box 118624 Dubai United Arab Emirates

605 West Tower, Abu Dhabi Mall Tourist Club Area P.O. Box 126609 Abu Dhabi United Arab Emirates

Villa 836, Way 3012 Al Sarooj P.O. Box 3438 Muscat Sultanate of Oman

T: +971 4 453 9525

T: +971 2 448 4677

T: +968 24 694 150

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