Q1 2018 Dubai Market Report

Q1 2018

Dubai Market Report

FOREWORD Cavendish Maxwell is a highly respected independent firm of chartered surveyors and property consultants, focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell is now one of the most influential property consultancies in the region.

As a fully qualified member firm of the Royal Institution of Chartered Surveyors (RICS), and with extensive knowledge of the region, Cavendish Maxwell has the necessary experience, expertise and insight to deliver property advice of the highest standard. Our reports are used for loan security, audit, insurance reinstatement, dispute resolution, risk management, debt recovery, performance analysis, project financing, development strategy and government initiative implementation.

We provide a comprehensive range of property services across all our departments, each of which is headed by highly skilled, experienced and fully qualified RICS chartered surveyors.

Our various teams provide valuation, agency, advisory, management, capital investment, research and building consultancy services across all property types and sectors.

Our Q1 2018 report provides a summary of the Dubai residential market as well as a sector focus on the commercial property market. Price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties are provided through Property Monitor, a real estate intelligence platform, powered by Cavendish Maxwell.

The report also incorporates the Property Monitor Residential Survey, conducted among partner agents operating within Dubai. The survey showcases how new enquiries, leasing activity and transactions, among other metrics, changed over the previous quarter. It also provides an outlook on the following quarter and predictions by professionals, which are studied against real performance.

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Q1 2018

Dubai Market Report

CONTENTS 4

House Price Timeline

6

Price Performance

8

Rent Performance

10

2018 Upcoming Supply Map

12

Transferred Sales Overview

13

Property Monitor Residential Survey

14

Sector Focus - Industrial and Warehousing

18

Methodology

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3

Q1 2018

Dubai Market Report

HOUSE PRICE

In Q1 2018, villas/townhouses have traded at around AED 2.7 million and apartment transactions have averaged AED 1.2 million.

TIMELINE 4.0M

3.5M

Dubai House Price Timeline

Sales Price (AED) from the period January 2008 to March 2018

3.0M

Average Sales Price AED

2.5M

2.0M

1.5M

1.0

0.5M

UAE real estate Lehman Brothers boom collapse

Q3-2012

Q2-2012

Q1-2012

Q4-2011

Q3-2011

Q2-2011

Q1-2011

Q4-2010

Q3-2010

Q2-2010

Q1-2010

Q4-2009

Q3-2009

Q2-2009

Bond issuance Abu Dhabi’s $10 by the Dubai billion loan to Dubai Central Bank Q1-2009

Q4-2008

Rebound growth for the general market - oil prices above $100

debt restructuring

Oil price collapse at $32/barrel Q3-2008

Q2-2008

Q1-2008

Oil price peak at $145/barrel

Early sign of Nakheel and DWC announcing plans for trouble

Note: Dubai House Price Timeline tracks residential property transactions from Dubai Land Department (off-plan and secondary)

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Q1 2018

Dubai Market Report

Transacted prices for villas/townhouses have settled above the 2017 average during Q1 2018, which is mainly due to limited lower priced inventory entering the market this year compared to the launches in the first half of 2017. Meanwhile, trading prices for apartments continue to shift towards the lower end of the price band, averaging AED 1.2 million in Q1 2018. The middle-income population (AED 15,000 to 25,000 per month income bracket) has been the key target segment for the majority of ‘affordable housing’ apartment launches by developers in recent months. The majority of this new inventory offers smaller unit sizes to keep prices attractive, along with providing incentives, such as Dubai Land Department (DLD) fee waivers and payment plans with limited commitment (20-30%) during pre-construction period and extended post-handover payment options.

Average Sales Price Q1 2018

AED 2.7 Million

AED 1.2 Million

VILLAS/TOWNHOUSES

APARTMENTS

Russian currency crisis

OPEC limits crude output

Q 1-2018

Q4-2017

Q3-2017

Q2-2017

Q1-2017

Affordable housing arrived Q4-2016

Q3-2016

Q2-2016

Brexit

Q1-2016

Q4-2015

Q3-2015

Oil price deregulation Q2-2015

Oil Price collapse at $47/barrel Q1-2015

Q3-2014

Q2-2014

New market peak

Q1-2014

Q4-2013

Q3-2013

Q2-2013

Q1-2013

Q4-2012

Expo 2020 announcement

Q4-2014

Central Bank mortgage cap

Source: Property Monitor to derive monthly and quarterly average transacted prices for apartments and villas/townhouses.

© Property Monitor 2018 | propertymonitor.me

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Q1 2018

Dubai Market Report

PRICE

PERFORMANCE

According to the Property Monitor Index, apartment and villa/townhouse prices have registered 12 month declines of 2% on average.

Apartment Change in Price (%) -0.3

International City (Clusters) -0.1

Discovery Gardens Jumeirah Village Circle

-2.4

-0.3 -0.3

-1.3

-0.1

IMPZ

-1.4

-0.6

Dubai Silicon Oasis Al Furjan

-0.1

Dubai Sports City

-0.1

-2.4 -1.7

-0.8 -0.7

Jumeirah Village Triangle

-2.4

-0.3

Jumeirah Lakes Towers

-1.3

-0.1

The Greens

12 month % change Q1 2017 - Q1 2018

-0.9

-0.2

Uptown Motor City

-1.7

-0.3

Business Bay

-1.7

-0.2

Dubai Marina The Views

-0.3

Jumeirah Beach Residence

-0.3

DIFC

-0.2

Palm Jumeirah

-0.2

-1.0 -1.6 -2.5 -1.5 -1.5

-0.3

Downtown Burj Khalifa

QoQ% change Q4 2017 - Q1 2018

0

-2.3 -0.5%

-1.0%

-1.5%

-2.0%

-2.5%

-3.0%

-3.5%

-4.0%

Average Price per Sq ft (AED)

Jumeirah Lakes Towers

Palm Jumierah

1,204

2,175 sq ft

Jumeirah Beach Residence 1,639

Dubai Marina

The Greens

1,631

Business Bay

1,480

Downtown Burj Khalifa

2,394

1,328

Discovery Garden

DIFC

The Views

817

1,796

1,566

Al Furjan 904

Jumeirah Village Triangle

1,085

Uptown Motor City

848

IMPZ

International City (Clusters)

841

604

Dubai Sports City 957

Jumeirah Village Circle

819

Dubai Silicon Oasis 860

Source: Property Monitor 6

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Q1 2018

Dubai Market Report

Price movement in the last 12 months has varied not only between communities but also among different buildings within the same community, thus reflecting greater differentiation in how available properties are now trading. This differentiation is expected to continue as buyers have an increasing supply base to choose from and property fundamentals such as developer track record, proximity to social and public infrastructure, ease of access, maintenance, among other factors will drive price movement.

Villa/Townhouse Change in Price (%) -0.6

Al Furjan Villas

-2.2

-1.0

Cedre Villas Silicon Oasis

-0.4

Jumeirah Village Triangle

-1.2

-0.4

Green Community Motor City -0.1

The Springs

12 month % change Q1 2017 - Q1 2018

-1.3

-0.4

-0.7

Jumeirah Park

-1.6

-0.3

Arabian Ranches

-1.4

-0.7

Victory Heights

-1.7

-0.6

The Meadows

-1.5

-0.7

The Lakes

-0.2

Jumeirah Golf Estates

-1.3

-0.8 -0.8

Jumeirah Islands

-3.0

-0.8

Garden Homes Palm Jumeirah 0.0%

QoQ% change Q4 2017 - Q1 2018

-2.2

-0.5%

-1.0%

-1.5%

-1.9 -2.0%

-2.5%

-3.0%

-3.5%

-4.0%

Average Price per Sq ft (AED) Garden Homes Palm Jumeirah

2,653

Jumeirah Park

1,060

Jumeirah Islands

1,488

The Lakes 1,368

Al Furjan Villas

The Meadows

837

1,334

Jumeirah Village Triangle 939

Green Community Motor City

The Springs

978

1,035

Arabian Ranches 1,188

Cedre Villas Silicon Oasis 910

Jumeirah Golf Estates

1,203

* Average price per sq ft as of March 2018 Š Property Monitor 2018 | propertymonitor.me

Victory Heights

1,195

Source: Property Monitor 7

Q1 2018

Dubai Market Report

RENT

PERFORMANCE

Rent declines for residential properties in Dubai have been more pronounced than sales price declines in Q1 2018.

Declines were more pronounced in Business Bay, Discovery Gardens, International City (Clusters), Jumeirah Golf Estates, The Springs and Al Furjan Villas averaging 12 month declines of more than 5%. Rent declines are expected to continue during the second quarter of 2018, with new handovers planned in both freehold and leasehold communities across Dubai. The pressure on housing allowances has also impacted rental market performance and the pool of tenants at the higher end of the spectrum continues to shrink. It has been a tenant-led market and the increasing stock levels each quarter have provided ample opportunities for negotiation on base rents as well as payment terms such as number of cheques. Declines will be more pronounced in areas with increasing supply and those located away from central business districts and public infrastructure. Additionally, building maintenance and quality remain significant drivers of occupancy levels, thus impacting net realised yields on investment properties.

AED 59,575 AED 79,000

AED 66,420

AED 121,277

AED 73,941

AED 92,370 AED 126,737

AED 120,469 AED 133,465

The Greens -4.6

Jumeirah Beach Residence -3.1

Annual Rent by Bedroom Level Apartment

Villa/Townhouse

Studio Rent

3 BR Rent

1 BR Rent

4 BR Rent

2 BR Rent

5 BR Rent

12 month % change

12 month % change

Source: Property Monitor

AED 277,201

AED 72,024 AED 99,704

Jumeirah Lakes Towers -3.7

-4.3 Jumeirah Island

AED 274,804

-4.0 The Meadows

AED 271,544

AED 156,840

AED 356,800

Discovery Garden -5.2

AED 176,344

-5.8 The Springs

AED 60,402

AED 40,700

-4.9 Jumeirah

AED 81,893

Park

AED 103,597

AED 157,443 AED 197,600

Al Furjan Villas -6.4 8

AED 218,760

The Lakes -2.8

Dubai Marina -3.1

AED 55,000

AED 182,358

AED 403,416

AED 134,078

* Data as of March 2018

-3.3 The Views

AED 182,442

AED 249,600 AED 266,550

AED 184,608 AED 226,739 AED 240,488

AED 314,520

Jumeirah Golf -5.0 Estates

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Q1 2018

Dubai Market Report

-3.5 DIFC AED 74,000 AED 102,835 AED 176,333

-4.0 Downtown Burj Khalifa AED 84,271

Business Bay -5.0

AED 111,337 AED 151,919

International City -5.0

AED 74,005

AED 32,046

AED 85,000

AED 41,925

AED 130,500

AED 56,880

Rental Cheques For Apartments and Villas/ Townhouses AED 191,400 AED 293,186

AED 45,848

AED 187,318

AED 71,437

AED 253,540

AED 116,188

AED 292,800

Arabian Ranches -3.9

According to the Property Monitor’s database of rental contracts, the majority of the rental agreements for residential properties in Q1 2018 were in one cheque (50% of total), followed by 24% rent payments made through four cheques. The top areas where four cheques were prominent during Q1 2018 include Mirdif, Emirates Living, Arabian Ranches, Jumeirah Village Triangle and Jumeirah Park. The trend has reversed since Q1 2017 where the majority of rent contracts (43% of total) were four cheque payments. This is mainly because some tenants are negotiating larger discounts on base rents and agreeing to make one cheque payments instead of multiple payments.

-3.6 Dubai Sports City -3.2 Motor City -3.3 Victory Heights

AED 55,300 AED 77,256 AED 114,480

Š Property Monitor 2018 | propertymonitor.me

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Q1 2018

Dubai Market Report

2018 UPCOMING

SUPPLY MAP

Approximately 3,800 residential units have been handed over across Dubai in Q1 2018.

83%

APARTMENTS

17%

VILLAS/TOWNHOUSES

The majority of handovers during the first quarter of 2018 were in International City, Jumeirah Village Circle and Dubai Studio City, with more than 250 units being handed over in each location. More than 92% of the handed over units were apartments. For the remainder of the year, the majority of upcoming supply is concentrated in Business Bay, Jumeirah Village Circle and Town Square, all of which have more than 2,000 units scheduled for handover before the year end. Of the total scheduled handovers due for the remaining three quarters, approximately 46% of the upcoming supply is expected to be handed over during Q2.

Increasing handovers will continue to impact rents in most locations across Dubai as tenants have more choice. This will also impact occupancies in existing stock and should be factored into net yield estimations for the forthcoming period.

Palm Jumeirah

Dubai Marina

PROPERTY MONITOR

Al Sufouh

Jumeirah Lakes Towers

SUPPLY TRACKER Supply scheduled to be completed by end of 2018

Al Furjan 0 - 200

200 - 400

400 - 600

1,000 - 1,500

1,500 - 2,000

2,000+

Al

The Hills

600 - 1,000

Jumeira Village Jumeirah Circle Village Du Triangle Spo IMPZ

Ci

Jumeirah Golf Estates

Source: Property Monitor

Dubai Investments Park Dubai South 10

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Q1 2018

Dubai Market Report

Deira

Mirdif

Jumeirah

Downtown Burj Khalifa

The Lagoons

Business Bay

Meydan City

International City

Nad Al Sheba

Mohammed bin Rashid City

Barsha

ah e e

ubai orts ity

Dubai Land

Dubai Science Park Motor City

Dubai Silicon Oasis

Arabian Ranches

Damac Mudon Hills

Town Reem Square Mira

Š Property Monitor 2018 | propertymonitor.me

Akoya Oxygen

11

Q1 2018

Dubai Market Report

TRANSFERRED SALES

Transferred Sales Q1 2018

OVERVIEW

5,698

Off-plan transfers accounted for 61% of the total transfers in Q1 2018.

622

APARTMENTS

VILLAS/TOWNHOUSES

Business Bay, Mohammed Bin Rashid City and Jumeirah Village Circle dominated the off-plan transfers tally during the first quarter of the year. Meanwhile, traditional favourites including Dubai Marina and International City led the secondary market apartment transfers, along with Dubai Sports City, which accounted for 13% of the total apartment resale transfers during Q1 2018. Secondary market transfers among villas/townhouses surpassed the off-plan transfers in this category in Q1 2018, led by Emirates Living and Arabian Ranches, which together accounted for more than 42% of the total villa/townhouse secondary market transfers registered during the first quarter.

Top Five Locations for Apartment Transfers in Q1 2018 Off-plan Transfers

Secondary Market Transfers

700 616

600

573

257 212

200

300

0

216

Dubai Marina

Al Furjan

0 Jumeirah Village Circle

100

Mohammed Bin Rashid City

274

200

100

Business Bay

311

120

115

Palm Jumeirah

300

400

Jumeirah Lakes Towers

424

400

International City

No. of Transfers

500

The Lagoons

No. of Transfers

500

Dubai Sports City

600

700

Source: Property Monitor

Top Five Locations for Villa/Townhouse Transfers in Q1 2018 Off-plan Transfers 100

80

80

70

70

60 50 40 33

30

60

59

50

46

40 30

20

20

27

20 12

10

10

22

10

Jumeirah Village Circle

Reem (Mira)

Town Square

Arabian Ranches

Emirates Living

Villanova

Reem (Mira)

Serena

Town Square

0 Mohammed Bin Rashid City

0

12

Secondary Market Transfers

90

87

No. of Transfers

No. of Transfers

90

100

100

Source: Property Monitor Š Cavendish Maxwell 2018 | cavendishmaxwell.com

Q1 2018

Dubai Market Report

SURVEY

RESULTS

Looking Back – Q1 2018

Predictions

Reality

The majority of agents surveyed had predicted apartment and villa/ townhouse prices to decrease by up to 5% in Q1 2018.

vs

The majority of agents had predicted that apartment and villa/

townhouse rents would decrease by up to 5% in Q1 2018.

The majority of agents had predicted new buyer enquiries, seller instructions and agreed sales would increase in Q1 2018.

Apartment and villa/townhouse prices have remained largely stable in Q1 2018 with a 12 month decline of 2% on average.

Apartment and villa/townhouse rents declined by 1% QoQ though 12 month decline is around 4% on average.

According to data from real estate agencies, transaction levels for Q1 2018 are higher than Q4 2017.

Q2 2018 Transaction Outlook

Looking Forward – Q2 2018 Q2 2018 Price Outlook Apartments Percentage of agents who predict apartment prices will:

Villas/Townhouses Percentage of agents who predict villa/ townhouse prices will:

4.3% 1.6%

6.5%

0.5%

Percentage of agents who predict new buyer enquiries will: 22.2% 35.4%

26.6% 30.5%

23.9%

23.4%

42.4% Decrease

Increase

Remain the same

Percentage of agents who predict new seller instructions will:

Increase by more than 5%

Increase by up to 5%

Not change

Decrease by up to 5%

15.7%

28.8%

38.6%

44.0%

Decrease by more than 5%

Source: Property Monitor and Residential Survey

Q2 2018 Rent Outlook Apartments Percentage of agents who predict apartment rents will:

Villas/Townhouses Percentage of agents who predict villa/ townhouse rents will:

4.3% 0%

3.8% 0.5% 26.1% 28.3%

21.7%

23.4%

55.6% Decrease

Increase

Remain the same

Percentage of agents who predict agreed sales will: 25.3% 35.9%

46.2% Increase by more than 5%

Increase by up to 5%

45.7% Not change

Source: Property Monitor and Residential Survey © Property Monitor 2018 | propertymonitor.me

Decrease by up to 5%

38.9%

Decrease by more than 5% Decrease

Increase

Remain the same

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Q1 2018

Dubai Market Report

SECTOR FOCUS

INDUSTRIAL AND WAREHOUSING 2017 witnessed a continuation of trends from the previous 18 months with a difficult and competitive market place. Enquiry levels picked up as the year progressed and rallied strongly in the final quarter, after a quiet summer period. The vast majority of enquiries were for the small to mid-sized sector of the market with requirements for 50,000 sq ft or less accounting for 79% of demand*. There were also a number of significant occupier requirements above this level, including the big box market of more than 100,000 sq ft*. Many of these requirements have remained unsatisfied due to the lack of good quality stock available in the market, which has led to more occupiers exploring the Build to Suit (BTS) route, therefore delaying take up.

There has been an increase in vacancy levels with many occupiers feeling financial pressure due to the current economic climate. Some businesses within certain industries, such as oil, gas and commodities, are now looking to rationalise their real estate holdings in a bid to reduce overheads and are therefore looking to either sell facilities which are considered excess to requirement or downsize operations. This is a trend which is even more apparent in the Free Zones where businesses are also facing increases in their land rents at rent review or lease renewal. In addition to this there are a number of speculative developers bringing new supply to the market leading to an unprecedented level of disposal instructions.

The key driving forces in the market throughout 2016-2017 were from the logistics and distribution sectors and the traders of fast moving consumer goods (FMCG) and we expect this trend to continue throughout the course of 2018. This demand is not being met by the specification of existing warehouses, whereby occupiers in such industries prefer more modern European specification distribution warehouses which are not as readily available in the region. However we are seeing a shift in developers being more conscious towards the needs of the end users reflected in the new products they are bringing to the market in locations such as in Jebel Ali Free Zone and National Industries Park.

Among the influential factors of 2017 affecting take up levels was the disparity between landlord/seller pricing expectations and what the market is willing to pay; often with asking prices 25-30% above market levels. We did witness deals concluding where landlords and sellers were able to realign expectations with the market which is encouraging. However, in still too many cases, there was little room for negotiation, with some landlords and sellers unwilling to change their pricing aspirations which have likely resulted in their properties continuing to sit vacant. When paired with increasing holding costs in the form of land rent and maintenance, this could be a costly and risky strategy.

Occupiers remained cautious of the market since the drop in the oil price in 2014, however there was an improvement at the end of 2017 as oil prices recovered above the US $60 mark. Although there has been wider geopolitical instability from events such as the Brexit referendum, the uncertainty attached to a Trump Administration and more locally the break down in relations between Qatar and the rest of the GCC, occupiers are starting to factor in and account for external market forces within their decision making strategies similarly to more developed markets.

5% International Media Production Zone

8% 100,000+ 5% 75,001 - 100,000

16% 0 - 5,000

8% 50,001 - 75,000

1% Dubai South

2% Jebel Ali Industrial

38% Jebel Ali Free Zone

6% Ras Al Khor

11% Other

30% General Trading

2% Commodities 2% Oil and Gas 6% Services

ENQUIRY SIZE REQUIREMENTS (SQ FT)

ENQUIRY LOCATION REQUIREMENTS

ENQUIRY SECTOR REQUIREMENTS

6% Cold Strore

20% 5,001 - 10,000

22% 25,001 - 50,000

9% L&D 9% Food Production

21% 10,001 - 25,000

28% Al Quoz

19% Dubai Industrial Park

9% Engineering

16% Manufacture

Source: Cavendish Maxwell Research

*This excludes buildings which are incomplete and specialist units such as fitted cold stores. *The figures reported are exclusive of master authority sub-leasing fees which vary between 15 - 30%

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Q1 2018

Dubai Market Report

MARKET CHALLENGES

AND OPPORTUNITIES 1 2 3 4 5 6

There is opportunity for developers/land owners to build European style warehouses especially in Non-Free Zone locations.

Buyers/tenants are being more cautious and carrying out further due diligence on their available options prior to making real estate related decisions. This is prolonging the timeframe to conclude a transaction but is also characteristic of a more mature and stable market.

There remains an imbalance between landlord/seller expectations and the market prices which is stalling the market.

If landlords are willing to be flexible, it is likely they could attract and secure occupiers to their warehouses.

The introduction of VAT which applies to the sale and lease transactions of commercial property, in addition to increasing regulations, will cause a period of readjustment in the market conditions.

Some businesses within the oil, gas and commodities sectors struggle, often looking to rationalise real estate holdings in a bid to reduce operational costs. However, it is likely that the increase in oil price toward the US $70 a barrel mark will positively impact these sectors and encourage more activity and/or investment.

Onerous ground lease terms and significant increases in ground rents, are pinching occupiers bottom lines at a time when there has been much contraction across a range of industries. Master industrial authorities should keep a watchful eye on such strategies to ensure they don’t lose tenants.

INDUSTRIAL

INVESTMENT 1 2 3 4 5 6 7 8 9

There has been an increase in requirements from investors looking for institutional grade assets with long term income.

Prime yields now stand a little under 8.5% which is a high yield compared to European markets.

New funds entering the market are both listed and non-listed, as well as increased activity from high net worth individuals.

There is a misalignment in seller and buyers pricing aspirations. Yields sought by sellers are too low and not reflective of the market, either because of the poor quality of the underlying asset, lack of growth potential or security of income.

Problems remain with land tenure; almost all warehouse and industrial land is leasehold. The biggest restraint restricting investment flow is short land leases and land lease rents. The rise in the underlying ground rents have resulted in investors seeking higher gross occupational rents, but with occupiers unable to pay these, it is often a case that transactions will not be financially viable.

There are very few investment grade commercial options available to investors which might suggest why yields across asset sectors do not fluctuate significantly as one would expect.

Occupiers with obsolete buildings, or those unwilling to sign long term occupational leases or with weaker balance sheets, can expect double digit yields.

Given the weight of money chasing transactions, international or strong regional tenants who can sign long leases could potentially achieve yields of less than 8%.

Going into 2018, prime yields are expected to remain stable with more opportunities for sale and leaseback deals as end users seek to free up liquidity which is otherwise tied up in real estate.

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Q1 2018

Dubai Market Report

INDUSTRIAL PROPERTY

SUPPLY (PER SQ FT) Jebel Ali Free Zone

Dubai Investments Park

Al Quoz

National Industries Park

Dubai Industrial Park

Source: Cavendish Maxwell Research

ASKING SALE PRICES Jebel Ali Free Zone 248.5

Average price AED / sq ft

Dubai Investments Park

Locations

359.5

Al Quoz

391.5

National Industries Park

231

Dubai Industrial Park

273 0

(AED per sq ft)

100

200

(AED per sq ft)

300

400

500

(AED per sq ft)

600

700

Source: Cavendish Maxwell Research

ASKING LEASE PRICES Jebel Ali Free Zone

Locations

Dubai Investments Park

Average price AED / sq ft

27.5

33

Al Quoz

35

National Industries Park 30

Dubai Industrial Park

27 0

(AED per sq ft)

16

10

(AED per sq ft)

20

30

(AED per sq ft)

40

50

60

70

Source: Cavendish Maxwell Research

© Cavendish Maxwell 2018 | cavendishmaxwell.com

Q1 2018

Dubai Market Report

2018 MARKET

OUTLOOK Whilst we expect transaction levels to remain below 2015 take up, strong enquiry levels since the start of 2018 suggest there will be a modest increase from 2017. Nevertheless, it is anticipated that occupiers will continue to carry out greater due diligence and analysis, which will impact decision making times and there will be a continuing differentiation in pricing expectations between sellers and buyers.

There will continue to be many properties sitting stagnant on the market however if landlords and sellers are willing to adjust to the current market levels, then they should secure occupiers and buyers. We anticipate an increase in the level of occupiers looking to relocate to other emirates in a bid to reduce occupational costs incurred where they are more responsive to the challenges facing many businesses. However, the additional benefits of working within Dubai such as a better legislative and legal framework, more developed infrastructure, working in closer conjunction with suppliers and consumers and easier access to a greater labour force will continue to outweigh any occupational cost savings which may be achievable in other emirates.

Due to the low levels of good quality supply in the wellestablished areas such as Dubai Investments Park and Al Quoz, which have no development land remaining, it is likely that interest in the areas around Al Maktoum International Airport, such as Dubai South and Dubai Industrial Park will increase as occupiers are forced to look at alternative locations to find suitable properties. Prices in free zones are expected to decline as increased supply and high vacancy levels, coupled with rising land rents, continue to compress capital values. Nevertheless, with an increase in the oil price, Expo 2020, further capital investment in the expansion of Jebel Ali Port on the horizon and the overall maturing of the market, the general sentiment is more positive than it has been for the past couple of years.

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17

Q1 2018

Dubai Market Report

METHODOLOGY Sale prices and rents are derived from Property Monitor (www.propertymonitor. me), a real estate intelligence platform established by Cavendish Maxwell in 2014. Property Monitor provides real-time, market-wide transactional data and trends. Working with governments, agencies, banks, developers and corporate investors, it provides deeper insight into real estate advisory, investment, and lending activities. The average sales price per sq ft is based on the Property Monitor Index which incorporates signed contracts, registered transactions, valuations and listings verified by Cavendish Maxwell’s market leading valuation department.

Property Monitor Residential Survey is a quarterly study of agent opinion 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 Property Monitor Supply Tracker which tracks supply in real time, 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. Indices and average prices are produced using Property Monitor Index, which was introduced in January 2014. The data is drawn from various data sources. Some figures are recalibrated each month and the data is continuously updated from government entities, which may result in revisions to historical data.

KEY

SERVICES Market Research

Asset Management

Due Diligence for Land Acquisition

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40

BANKS

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

STRATEGIC CONSULTING AND RESEARCH By working with our strategic consulting team, our clients immediately gain access to our knowledge base, technical expertise and highly skilled individuals, making us the development partner of choice. Our rigorous analysis, research and unique access to Property Monitor allows our team to produce reports and advice with a refreshingly different vision leading to creative and effective strategies.

We have advised on schemes with a gross development value of over AED 3 billion in the last year. Our reports are used internally for business planning purposes and to satisfy the criteria of external financiers and auditors.

Our name is trusted by all major banks across the UAE, supported by our presence on over 40 bank panels across the region.

Education Advisory and Valuation 18

© Cavendish Maxwell 2018 | cavendishmaxwell.com

Q1 2018

Dubai Market Report

PEOPLE Jay Grant MSc IRRV (Hons)

Nigel Armstrong FMAAT

E: jay.grant@cavendishmaxwell.com

E: nigel.armstrong@cavendishmaxwell.com

Founder and Chairman

Miles Phillips BSc (Hons) MRICS Senior Partner

E: miles.phillips@cavendishmaxwell.com

Manika Dhama BA (Hons), MBA

Chief Executive Officer

Sofia Underabi MRICS AAPI Partner Head of Residential Valuation

E: sofia.underabi@cavendishmaxwell.com

Andrew Love MA (Hons) MRICS

Senior Consultant Strategic Consulting and Research

Partner Head of Investment and Commercial Agency

E: manika.dhama@cavendishmaxwell.com

E: andrew.love@cavendishmaxwell.com

Paul McCambridge

James Cresswell BA (Hons) MSc MRICS

Head of Sales Property Monitor

Partner Head of Commercial Valuation

E: paul.mccambridge@propertymonitor.ae

E: james.cresswell@cavendishmaxwell.com

Š Property Monitor 2018 | propertymonitor.me

19

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