Dubai House Price Index - Colliers International · followed by Jumeirah Lakes Towers at 7%. Both Downtown Dubai and Jumeirah Park obtained a 6% share. 10% 8% 7% 6% 6% 0% 2% 4% 6%

Dubai House Price IndexFourth Quarter 2015

Dubai House Price Index | Q4 2015 | Colliers International2

DUBAI HOUSE PRICE INDEX:

YEAR ON YEAR

Q4 2014 / Q4 2015

171

167

152

148

144

130

135

140

145

150

155

160

165

170

175

Q4 Q1 Q2 Q3 Q4

2014 2015

Index

Poin

ts

1% -3% -3% -3%-9%

171

144

130

135

140

145

150

155

160

165

170

175

Q4 2014 Q4 2015

Index

Poin

ts

-16%

Source: Colliers International


Executive Summary

Overview

The overall quarterly index registered a 3% decrease in Q4 2015, decreasing from 148 index points to 144

index points. The blended average rate for residential property in Q4 2015 was AED 1,283 per sq ft(AED

13,810 sq m) compared to AED 1,318 sq ft (AED 14,187 sq m) in Q3 2015.

The Annual Dubai House Price Index registered a 16% Y-O-Y decrease in Q4 2015. The

blended average rate for residential property in Q4 2015 was AED 1,283 sq ft (AED 13,810

sq m) compared with AED 1,524 per sq ft (AED 16,404 sq m) in Q4 2014.

DUBAI HOUSE PRICE INDEX:

QUARTER ON QUARTER

Q4 2014 / Q4 2015

Dubai House Price Index | Q4 2015 | Colliers International


The Villa development saw the largest

year on year decrease, (24%), while

Dubai Marina recorded the second

largest decrease (16%) over the period

Q4 2014 to Q4 2015.

-24%

-16%-15%

-13% -13%

-30%

-25%

-20%

-15%

-10%

-5%

0%The Villa Dubai Marina The Views Downtown Dubai The Springs

TOP 5 DEVELOPMENTS BY DECLINE IN SALE PRICE YEAR ON YEAR

59%

15%

26%

3

BREAKDOWN OF TRANSACTIONS

BY PROPERTY TYPE Q4 2015

Q4

2015

Apartments Townhouses Villas


Dubai Marina recorded the highest number of transactions

in the HPI, equating to 10% of the total transactions. The

Springs obtained an 8% share of the total transactions

followed by Jumeirah Lakes Towers at 7%. Both

Downtown Dubai and Jumeirah Park obtained a 6%

share.

10%

8%

7%

6% 6%

0%

2%

4%

6%

8%

10%

12%

Dubai Marina The Springs Jumeirah LakesTowers

Downtown Dubai Jumeirah Park

TOP 5 DEVELOPMENTS BY VOLUME OF TRANSACTIONS Q4 2015


3% 5%


Factors Influencing the Residential

Real Estate Market

Over 2012 to 2013, the Dubai residential real estate market registered a growth of 50% reaching 156

index points in Q4 2013, compared to 104 index points in Q4 2011. In 2014 the index increased by a

further 10%, to reach 171 points in the last quarter of 2014. Over Q1 to Q4 2015 the HPI registered 14%

decrease from 167 to 144 index points. The total number of transactions decreased 11% over the same

period, from 438 to 389 transactions in Q4 2015. Compared to Q2 2008 (the peak of Dubai’s residential

real estate market), the total volume of transactions remains 35% lower in Q4 2015, highlighting the

successful measures introduced by the government to dampen property speculation.

1. Cost of Buying Property

With the implementation of the mortgage cap by the Central Bank in 2013 and the increase in transfer

fees by the Dubai Land Department in 2014, the cost of buying property increased significantly. In some

cases the cost doubled, such as in cases of over AED 5 million villas. These regulations were

implemented back then to safeguard the market. They appear to have been successful.

The following graph is a comparison of the cost of buying a AED 2 million apartment and a AED 6 million

villa in 2013 and today. Following the increase in transfer fees and the implementation of the mortgage

cap, the average cost of buying an apartment increased by 63% from AED 381,500 in 2013 to AED

621,500 today, while the average cost of buying a villa increased by 116% from AED 1,141,500 to AED

2,461,500.

381,500

1,141,500

621,500

2,461,500

- 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

Apartment

Villa

Cost (AED)

OVERALL COST INCREASE2013 / 2016


0

100

200

300

400

500

600

130

135

140

145

150

155

160

165

170

175

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015

Sam

ple

Siz

e

Index

Poin

ts

Index Points vs. Sample Size

Index Points Sample Size

63%

116%



Factors Influencing

the Residential

Real Estates market

2. Oil Prices

Since Q3 2014 oil prices have recorded a

significant decline of 61% approximately, the price

per barrel dropped from around USD 94 per barrel

in Q3 2014 to around USD 37 per barrel in Q4

2015. In Q4 2014 oil prices drastically decreased

by 43% to land at USD 54 per barrel compared to

USD 94 per barrel in Q3 2014. On the other hand,

the HPI was stable in the period from Q2 to Q4

2014 standing at 171 index points in Q4 2014,

however, in Q1 2015 we noted a 2% decrease

followed by another 9% and 3% in Q2 and Q3 2015

respectively. In Q4 2015 the Dubai House Price

Index decreased by another 3% to stand at 144

index points. The following graph shows the impact

of oil prices on Dubai’s residential real estate

market.

156 165 170 170 171 167152 148 144

0

100

200

300

400

500

0

20

40

60

80

100

120

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015

HP

I

Oil (

US

D / B

arr

el)

Oil Prices vs. HPI

HPI (Index Points) HPI (Volume of Transactions) Oil Prices



70%

75%

80%

85%

90%

95%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

2014 2015 2016 2017 2018 2019 2020

Additio

nal

Units

Demand vs. Supply2014 / 2020

Demand Supply Occupancy Levels

6

Forthcoming Supply

In 2015 the occupancy level for both owner

occupied and rented properties in Dubai was 88%.

Colliers’ projections estimate that by the end of

2016, occupancy levels are expected to stay at

88% as demand and supply are expected to grow

side by side. By 2020 the number of household

units supplied is estimated to increase by an

additional 16% adding approximately 73,300 units

to the market.

However, demand is also estimated to increase by

28% (approximately 111,100 units), adding further

pressure and potentially leading to an

undersupplied market.

At the end of 2015, there were approximately

212,300 freehold Units. In Q4 2016 the number of

freehold units is expected to increase by 7%,

reaching an estimated 227,500 units, adding

around 15,200 units and this constitutes 47% of

the total number of residential units in Dubai. In

2019, the total number of freehold units is

expected to increase by another 20% adding

around 43,100 units to the market.



8,415

39,315

50,685

15,754

13,975 12,383

9,880

19,118

10,587

14,760 15,211 15,096 12,802

-

10,000

20,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Additio

nal

Units

Additional Freehold Units


0

25

50

75

100

125

150

175

200

225

250

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011 2012 2013 2014 2015

DFM / HPI ComparisonInvestment Performance

DFM HPI

-80%

-60%

-40%

-20%

0%

20%

40%

60%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011 2012 2013 2014 2015

DFM / HPI ComparisonVolatility of Returns - Quarter on Quarter

DFM HPI

7

Alternative Analysis

Real Estate Returns

In Q4 2015, Dubai Financial Market registered a

12% decrease of its value while the HPI has seen

3% decrease, standing at 144 index points.

The second chart shows that the HPI has, since

its inception in Q1 2007, outperformed the DFM

index. In this regard, a residential investment

purchased in Q1 2007 has to date, over the eight

years period, generated returns of circa 44%. A

similar investment in the DFM for the same period

has generated 16% in losses in Q4 2015, down

from a 10% recorded in Q4 2014.




0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011 2012 2013 2014 2015

Price to Rent Ratio

Ratio LTA

8

Price to Rent Ratio

To provide further analysis of the residential real

estate market, Colliers International introduced the

concept of Price-to-Rent Ratio (PRR). This ratio is

widely used as an indicator of the fundamental

value, generated from rental income, of real estate

assets.

The ratio simply measures the relationship

between the prices (taken from the HPI) of

purchasing a residential property and the rental

income. A high property price associated with a

flat rental market (as in most western markets)

increases the value of the ratio, indicating that

property values are expensive. However, if rents

are falling there would be the expectations of a

greater fall in property prices as investors

receiving less income would pay less for

residential property.

For the purpose of this analysis, Q2 2007 is

assumed as the base quarter and the ratio is

rebased at 1 (Q2 2007 = 1).

The ratio in Q4 2015 has seen 2.1% decrease

compared to Q3 2015, standing at 1.32. The long

term average (excluding the mid-2008 boom)

stands at 1.335, meaning that in Q4 2015 the

average is 1% below the long term average.

When comparing the ratio during this quarter (Q4

2015) to the ratio in Q4 2014, there has been a

7.1% decrease.



Apartment Index

Year on Year

The Annual Overall Apartment Index decreased

13% in Q4 2015 compared to Q4 2014, decreasing

to 136 points from 156 points.

The blended average rate per sq ft for apartments

in Dubai in Q4 2015 was AED 1,376 (AED 14,808

per sq m) compared to AED 1,582 per sq ft (AED

17,028 per sq m) in Q4 2014.

Quarterly

The Quarterly Overall Apartment index decreased

5% in Q4 2015.

The blended average rate per sq ft for apartments


per sq m) compared to AED 1,446 (AED 15,570

per sq m) in Q3 2015.



156155

143 143

136

125

130

135

140

145

150

155

160

Q4 Q1 Q2 Q3 Q4

2014 2015

Index

Poin

ts

APARTMENT INDEX: QUARTERLYQ4 2014 / Q4 2015

1% -1% 0% -5%-8%

156

136

125

130

135

140

145

150

155

160

Q4 2014 Q4 2015

Index

Poin

ts

APARTMENT INDEX: YEAR ON YEARQ4 2014 / Q4 2015

-13%


Townhouse Index

Year on Year

The Annual Overall Townhouse Index decreased

11% in Q4 2015 compared to Q4 2014,

decreasing to 134 points from 151 points.

The blended average rate per sq ft for townhouses



12,853 per sq m) in Q4 2014.

Quarterly

The Quarterly Overall Townhouse index saw a 4%

increase in Q4 2015 compared to a 3% decrease

in Q3 2015.

The blended average rate per sq ft for townhouses







151

134

125

130

135

140

145

150

155

Q4 2014 Q4 2015

Index

Poin

ts

TOWNHOUSE INDEX: YEAR ON YEARQ4 2014 / Q4 2015

-11%

151150

133

129

134

115

120

125

130

135

140

145

150

155

Q4 Q1 Q2 Q3 Q4

2014 2015

Index

Poin

ts

TOWNHOUSE INDEX: QUARTERLYQ4 2014 / Q4 2015

-8% 0% -3% 4%-11%


Villa Index

Year on Year

The Annual Overall Villa Index decreased 22% in

Q4 2015, compared to Q4 2014, decreasing to

167 points from 213 points.

The blended average rate per sq ft for villas in

Dubai in Q4 2015 was AED 1,204 (AED 12,957


16,536 per sq m) in Q4 2014.

Quarterly

The Quarterly Overall Villa index saw no major

change in Q4 2015 compared to an 8% decrease

in Q3 2015.

The blended average rate per sq ft for villas in

Dubai in Q4 2015 was AED 1,204 (AED 12,957





213

167

0

50

100

150

200

250

Q4 2014 Q4 2015

Index

Poin

ts

VILLA INDEX: YEAR ON YEARQ4 2014 / Q4 2015

-22%

213

200

181

167 167

0

50

100

150

200

250

Q4 Q1 Q2 Q3 Q4

2014 2015

Index

Poin

ts

VILLA INDEX: QUARTERLYQ4 2014 / Q4 2015

4% -6% -8% 0%-9%


About the Index

The Colliers International House Price Index (HPI) was created in 2007 and established in January 2008 by

Colliers International and five leading banks and financial institutions in the Emirate of Dubai to provide

statistics specifically designed to reflect the average growth - decline rate of house prices across certain

foreign ownership areas of Dubai, United Arab Emirates. The data that forms the basis of the indices

presented in this HPI has been provided by all the member financial institutions and relates to properties

which have been mortgaged through these institutions. The member banks - financial institutions associated

with the Colliers International House Price Index are as follows:

• HSBC Bank Middle East Limited

• Emirates NBD

• Standard Chartered Bank

• Amlak Finance

• Noor Bank

• Citi Bank

We have used the weighted average method to construct the overall index. Based on our coverage of 21

master developments in Dubai, weighting has been apportioned on the basis of unit type (Apartment, Villa

or Townhouse). Apartments, Villas and Townhouses have been weighted at 59%, 26% and 15%

respectively in order to provide an accurate representation of market trends. The Recommended minimum

sample size for this HPI is 10 property transactions.

Primary Authors:

Ian Albert, BSc (Hons) MRICS

Regional Director | MENA

[email protected]

Tremaine Ferreira NDPV CIEA

Director | Residential Valuations

[email protected]

Tel +971 4 453 7400

Fax +971 4 453 7401

Colliers International | Dubai

Al Shafar Tower 1

Tecom, Dubai | UAE

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 15,800

professionals operating out of more than 485 offices in 63 countries. Colliers International delivers a

full range of services to real estate users, owners and investors worldwide, including global corporate

solutions, brokerage, property and asset management, hotel investment sales and consulting,

valuation, consulting and appraisal services and insightful research. The latest annual survey by the

Lipsey Company ranked Colliers International as the second-most recognized commercial real estate

firm in the world. In MENA Colliers International has been providing leading advisory services

through its regional offices since 1996. Colliers International currently has four corporate offices in

Dubai, Abu Dhabi, Riyadh and Jeddah.

colliers.com

Copyright © 2014 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has

been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers

are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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Documents

Dubai House Price Index - Colliers International · followed by Jumeirah Lakes Towers at 7%. Both Downtown Dubai and Jumeirah Park obtained a 6% share. 10% 8% 7% 6% 6% 0% 2% 4% 6%