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DubaiREAL ESTATEMarketOverviewQ3 2019
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Macroeconomic Overview of DubaiThe overall real GDP of UAE is expected to grow by 2.4% in 2019 (up from previous expectation of 2%) driven mainly by the growth in the non-oil sector, which is projected to reach 1.4% in 2019 compared to 1.3% in 2018. The oil sector is expected to grow by 5% in 2019 compared to 2.8% in 2018. The improved outlook for growth is due to expected rise in public and private spending, higher investment and continued regional economic recovery, in light of the monetary policy easing in the US.
As the global economic and regional political conditions remain unstable, it is causing great market uncertainty which will affect the current market situation further. However, the UAE & Dubai government have launched various initiatives to increase demand, these announcements and regulation changes will be a positive boost to the overall economy.
350
300
250
200
150
100
50
0
2015Q4
2016Q1
2016Q2
2016Q3
2015Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
Source: Oi lprice.com
1 Brent OPEC Oil Basket Price in UAE (AED)
2019Q2
2019Q3
124 127
168 184 204 207183
204 237243
278 299
192
247241 224
112
111
110
109
108
107
106
105
104
103
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
Source: Dubai Statist ics Center , National Bureau of Statist ics
Consumer Price Index (CPI) – UAE & Dubai
UAE CPI Dubai CPI
107.
78 109.
1
107.
94
107.
6 108.
87 109.
3610
9.36
111.4
111.0
6
111.5
110.9
1
110.9
3110
.12
109.
7410
8.95
108.
6410
7.02
2019Q1
109.
9910
8.2210
9.46
6%
5%
4%
3%
2%
1%
0%
2015 2016 2017 2018 2019F
Source: Ministry of Economy, Central Bank, DED
UAE & Dubai GDP Growth Rates
UAE GDP Dubai GDP
5.1%
4.1%
3.0% 3.1%
3.1%
1.7%
1.9% 2.
4%2.
1%
0.8%
18
16
14
12
10
8
6
Mi
ll
io
n
2014 2015 2016 2017 2018 2019 YTDAUGUST
Source: Dubai Statistics Center, National Bureau of Statistics
Visitors in Dubai per year
13.2% 14.2% 14.9%15.8% 15.9%
10.9%
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Dubai Residential Sales Transactions (Volume & Value)
12000
10000
8000
6000
4000
2000
0
Q3-2018 Q4-2018 Q1-2018
Off Plan
Volume of Residential Sales Transactions
Q2-2018 Q3-2019
3,163
3,805
4,537 3,441
3,663
4,964
3,476
5,169
3,494
5,943
4,060
Secondary
Off-plan Sales transactions contributed around 59% of the overall sales activity in the first 9 months of this year. Even though the number of new launches has reduced this year the off-plan segment can be seen holding ground, mainly due to incentives offered by Developers.
On a quarterly basis, the volume & value of off-plan residential transactions have increased by 15% and 12% respectively. In the secondary market, the volume of transactions has increased by 16% while no significant changes can be seen in the value of transactions.
Investor confidence has improved in the third quarter of 2019.
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0
Q3-2018 Q4-2018 Q1-2018
Off Plan
Value of Residential Sales Transactions
Q2-2018 Q3-2019
4.52
6.27
5.84
6.72
7.85
6.47
7.02
7.07
8.10
7.07
Secondary
5
Dubai Apartment Sales Transactions (Volume & Value)
The value of secondary apartment sales transactions can be seen increasing steadily since the third quarter of 2018. Volume and value of secondary sales transactions are up by 28% and 16% respectively on a quarterly basis. Falling prices have attracted many first-time buyers.
While, the volume of off-plan apartment sales transactions is up by 4% on a quarterly basis. The value of transactions during the same period are down by 3%.
8000
7000
6000
5000
4000
3000
2000
1000
0
Q3-2018 Q4-2018 Q1-2019
Off Plan
Volume of Apartment Sales Transactions
Q2-2019 Q3-2019
2,734
2,029
3,686
2,325
3,841
2,324
3,985
2,191
4,134
2,801
Secondary
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
Q3-2018 Q4-2018 Q1-2018
Off Plan
Value of Apartment Sales Transactions
Q2-2018 Q3-2019
3.37
2.53
4.43
2.71
5.79
2.70
5.53
2.81
5.34
3.25
Secondary
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Dubai VillasSales Transactions (Volume & Value)
The launches of new villa projects have boosted the volume and value of off-plan villa transactions in the third quarter of 2019, volume and value of transactions have drastically increased by 97% and 98% respectively.
2500
2000
1500
1000
500
0
Q3-2018 Q4-2018 Q1-2019
Off Plan
Volume of Vil la Sales Transactions
Q2-2019 Q3-2019
389
939
464
1,260
770
960
661
1,116
1,302
1,012
Secondary
6.00
5.00
4.00
3.00
2.00
1.00
0
Q3-2018 Q4-2018 Q1-2019
Off Plan
Value of Vil la Sales Transactions
Q2-2019 Q3-2019
0.72
3.47
0.88
3.64
1.49
3.48
1.03
4.00
2.04
3.53
Secondary
7
Dubai Residential Sales Transactions (Changes)
Qtr
Volume of Transactions
Off-Plan -31% 32% 9% 4% 15%
Secondary
Value of Transactions
Off-Plan
Secondary
Residential Sales Changes
Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019
-4% 20% -9% 1% 16%
7% -4% 9% 0%
-33% 29% 34% -8% 12%
0%
Qtr
Volume of Transactions
Off-Plan -31% 35% 4% 4% 4%
Secondary
Value of Transactions
Off-Plan
Secondary
Apartment Sales Changes
Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019
-7% 15% 0% -6% 28%
7% -1% 4% 16%
-33% 32% 31% -4% -3%
-7%
Qtr
Volume of Transactions
Off-Plan -17% 19% 66% -14% 97%
Secondary
Value of Transactions
Off-Plan
Secondary
Villa Sales Changes
Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019
-2% 34% -24% 16% -9%
5% -4% 15% -12%
-28% 21% 70% -31% 98%
5%
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Qtr
Volume of Transactions
Off-Plan 7% 3% 73%
Secondary
Value of Transactions
Off-Plan
Secondary
Residential Sales Changes Y-O-Y
Q1 2018 - Q1 2019 Q2 2018 - Q1 2019 Q3 2018 - Q3 2019
-10% 6% 28%
13% 13%
30% 7% 79%
-4%
Qtr
Volume of Transactions
Off-Plan 9% 0% 51%
Secondary
Value of Transactions
Off-Plan
Secondary
Apartment Sales Changes (Y-O-Y)
Q1 2018 - Q1 2019 Q2 2018 - Q2 2019
-12% 1% 38%
3% 28%
32% 11% 59%
-14%
Q3 2018 - Q3 2019
Qtr
Volume of Transactions
Off-Plan 301% 42% 235%
Secondary
Value of Transactions
Off-Plan
Secondary
Villa Sales Changes (Y-O-Y)
Q1 2018 - Q1 2019 Q2 2018 - Q2 2019 Q3 2018 - Q3 2019
4% 17% 8%
21% 2%
186% 2% 181%
9%
Dubai Residential Sales Transactions (Y-O-Y Changes)
9
Dubai ResidentialSupply
The creation of the real estate planning committee by Sheikh Mohammed bin Rashid Al Maktoum in September 2019 will play a key role in balancing the gap between demand and supply. As per announcements by developers, around 117,900 residential units are expected to enter the market by the end of 2020 (however, the actual materialization rate will be lower).
JVC, Dubai Land and Dubai World Central accounted for the highest number of delivered units. The top 3 areas contributed around 51% to the total supply
600
500
400
300
200
100
0
upto2013
2014 2015 2016 2017 2018 2019 2020 2021
Residential Supply (Dubai)
Completed Under Construction
231 252 265 282 309 338 356381
474
43
93
25
Dubai Residential Supply by Type[Completed]
Apartments / Serviced apartmentsVillas
13%
87%
Dubai Residential Supply by Type[Under-Construction]
Apartments / Serviced apartmentsVillas
21%
79%
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Around 2,100 residential units have entered the Abu Dhabi real estate market so far this year.5,600 units are in the pipeline in the remainderof 2019 as per announcements made by developers.
Almost 31% of the existing residential supply in Abu Dhabi consists of Villas. However, a decline in the contribution of villas can be seen in the under-construction segment.
Abu Dhabi Residential Supply
80
70
60
50
40
30
20
10
0
upto2013
2014 2015 2016 2017 2018 2019 2020 2021
Residential Supply (Abu Dhabi)
Completed Under Construction
38 43 46 50 54 59 6166
70
38
4 2
6
Abu Dhabi Residential Supply by Type[Completed]
Apartments / Serviced apartmentsVillas
30%
70%
Abu Dhabi Residential Supply by Type[Under-Construction]
Apartments / Serviced apartmentsVillas
29%
71%
11
Dubai Apartment Sales & Rental Price Series (Value & Changes)
Dubai Apartment Price Trends
Sales Price(AED/SQF) Rent Price(AED/SQF)
1600
1400
1200
1000
800
600
400
200
0
150
130
110
90
70
50
30
10
(10)
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Sep 19
Sales and Rental price in Dubai have fallen further in the third quarter of 2019 as well.
Sales and Rental prices in the apartment segment have declined by 0.4% and 2.7% respectively.When compared to the peak in 2014 sales prices in the apartment segment are down by 26%.
Homebuyers and tenants have more bargaining power currently due to the inflow of new residential supply, which has led to further price declines.
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%
-16.0%
-18.0%
-20.0%
Last 3 months Last 6 months Last 1 year Last 2 years
Dubai Apartment Price Movements
Rental Price MovementSales Price Movement
The addition of new residential supply remains the primary drive for price declines.
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Dubai Villa Sales & Rental Price Series (Value & Changes)
Dubai Apartment Price Trends
Sales Price(AED/SQF) Rent Price(AED/SQF)
1600
1400
1200
1000
800
600
400
200
0
150
130
110
90
70
50
30
10
(10)
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Sep 19
An inverse movement can be seen in the villa segment, sales prices are dropping at a faster pace than rental prices. On a quarterly basis, sales and rental prices have dropped by 2.0% and 1.8% respectively.
When compared to the peak in 2014 sales price in the villa segment are down by 28%.In order to maintain occupancy, landlords have become more flexible when it comes to payment terms.
A similar movement can be seen in the villa segment as well.
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%
-16.0%
-18.0%
-20.0%
Last 3 months Last 6 months Last 1 year Last 2 years
Dubai Vil la Price Movements
Rental Price MovementSales Price Movement
13
Abu Dhabi Apartment Sales & Rental Price Series (Value & Changes)
Abu Dhabi Apartment Price Trends
Sales Price(AED/SQF) Rent Price(AED/SQF)
1600
1400
1200
1000
800
600
400
200
0
150
130
110
90
70
50
30
10
(10)
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Sep 19
The Abu Dhabi real estate market remained subdued during the third quarter of 2019.
On a quarterly basis, selling and rental prices in the apartment segment have declined by 1.8% and 1.9% respectively.
Incentives such as multiple cheque payments and rent-free periods have become a norm in the market, to ensure tenant retention.
Abu Dhabi Apartment Price Movements
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%
-16.0%
-18.0%
Last 3 months Last 6 months Last 1 year Last 2 years
Rental Price MovementSales Price Movement
Sales and Rental prices in the apartment segment have dropped by 1.2% and 1.4% respectively in the first quarter of 2019.
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Abu Dhabi Vil la Price Movements
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%
-12.0%
-14.0%
-16.0%
-18.0%
-20.0%
Last 3 months Last 6 months Last 1 year Last 2 years
Rental Price MovementSales Price Movement
Abu Dhabi VillaSales & Rental Price Series (Value & Changes) In the villa segment, sales and rental prices have further dropped by 0.9% and 1.6%
respectively on a quarterly basis.
Abu Dhabi Vil la Price Trends
Sales Price(AED/SQF) Rent Price(AED/SQF)
1200
1000
800
600
400
200
0
120
100
80
60
40
20
0
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Sep 19
15
Dubai & Abu Dhabi Gross Rental Yield
Gross Rental Yields - Dubai
Apartments Villas
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19
Gross Rental Yields - Abu Dhabi
Apartments Villas
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19
As of September 2019, the gross rental yields in Dubai for the apartment segment stands at 7.0% while the villa segment currently provides a yield of 5.5%. While, gross rental yields in Abu Dhabi for the apartment segment stands at 7.3% while the villa segment currently provides a yield of 5.7%.
Despite price declines over the last few years, Dubai & Abu Dhabi still provide investors with higher yield when compared to other emerging markets.
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Rent prices of office buildings continued to drop in the third quarter of 2019 as well owing to slow economic growth coupled with a demand supply mismatch. Tenants can be seen moving into A Grade office with reduced rentals.
The office market is expected to remain favorable for tenants as landlords continue to offer incentives such as rent-free months, fit-out contributions among other benefits.
Rental prices in the Office segment have fallen by 5.3% in the last 1 year
Dubai OfficeRental Price (Value & Changes)
Office Rental Price [AED/Sqf/Year]
Apartments Villas
130
120
110
100
90
80
70
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q32017
Dubai Office Price Movements
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
Last 3 months Last 6 months Last 1 year Last 2 years
Rental Price Movement
17
Dubai Office Supply
Dubai Retail Prices & Changes
Around 286,000 Sqm of office supply has been added in the first 9 months of 2019.
Approximately 69,800 Sqm of office GLA was added in Q3 of 2019.Around 622,000 Sqmis expected to enter the Dubai real estate market by the end of 2020which is likely to put further pressure on rentals.
The retail sector continues to feel downwards pressure mainly due to additional supply, reduced demand and a drop-in consumer spending.
In the last 1 year, the average retail rental prices in Dubai have declined by 12.8%
14
12
10
8
6
4
2
0
upto2013
2014 2015 2016 2017 2018 2019 2020 2021
Office Supply (Dubai)
Completed Under Construction
9.1 9.7 10.2 10.4 10.7 10.9 11.111.4
11.7
0.3 0.10.4
125
120
115
110
105
100
95
0
Q2 2018 Q3 2018 Q4 2018 Q1 2019
Dubai Average Retail Rental Prices
Completed Under Construction
Q2 2019 Q3 2019
Q-on-Q-2.1 %
Y-on-Y-12.8%
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Dubai RentalSupply
The retail sector in Dubai currently faces the highest gap between demand and supply, which has led to price declines. Around 600,000 SQM of retail space is expected to enter the market in 2019, however, the actual materialization rate will be lower to overcome the oversupply risk.
Dubai Area wise Rental Prices
300 200 100 0 0 100 200 300
Minimum [AED/SQF/YEAR] Maximum [AED/SQF/YEAR]
Jumeirah Village Circle
Barsha Heights (Tecom)
Palm Jumeirah
JLT
International City
Dubai Silicon Oasis
Dubai Marina
Discovery Garden
Business Bay
6
5
4
3
2
1
0
SQM
in M
illio
ns
upto2013
2014 2015 2016 2017 2018 2019 2020 2021
Retail Supply
Completed Under Construction
2.9 2.9 3.1 3.4 3.5 3.6 3.74.4
5.2
0.80.5
0.6
19
Dubai Hospitality Market
Average Daily Rates (ADR)
140
120
100
80
60
40
20
0
Thou
sand
s
upto2013
2014 2015 2016 2017 2018 2019 2020 2021
Hotel & Hotel Apartments Room Supply
Completed Under Construction
85 92 98 103 107 116 120131
140
9
1
11
Hotel Room Occupancy Rates100
90
80
70
60
50
40
30
20
10
0
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Q3 2018[AED]
704
Q3 2019[AED]
630
Y-on-Y-10.5%
The Average Daily Rates continue to decline further by 10.5% on a yearly basis, from AED 704 in Q3 2018 to AED 630 in Q3 2019. New supply remains the primary driver behind the price declines which has made the overall market more competitive.
As of Q3 2019, the occupancy rate of hotels in Dubai stands at 73%.
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Dubai Industrial Market
Average Warehouse Rental Rates [AED/SQF/YEAR]
Average Labour Camp Rental Rates [AED/SQF/YEAR]
Minimum
Minimum
Dubai Investment Park
Al Quoz
Al Quoz
Dubai Investment Park
Jebel Ali
Jebel Ali
Ras Al Khor
Sonapur/Muhaisnah
Maximum
Maximum
Average
Average
20
160
25
120
20
155
20
140
55
240
60
190
35
230
50
210
26.5
190
34.6
143
28.5
194
29
181
DubaiREAL ESTATEMarketUnited Arab Emirates(Dubai)
1612, Clover Bay TowerBusiness BayP.O.BOX: 6025Dubai, United Arab Emirates
P: +971 4 2675572E: [email protected]
India(Gurugram) – Registered Office
UG – 10, Malibu shopping arcadeMalibu town, sector 47Gurugram, HaryanaIndia, Pin Code: 122001
T: +91 8288880792E: [email protected]