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UnitasConsultancy(AGLOBALCAPITALPARTNERSGROUPCOMPANY) Q12016STRICTLYCONFIDENTIAL
OfficeNo.103,ThePalladium,PlotNo.C3,JumeriahLakeTowers,Dubai,UAE1
TheTheoryoftheLeisureClass:ALookintoEmiratesHillsThis document is provided by Unitas Consultancy solely for the use by its clients. No part of itmay be circulated,quoted,orreproducedfordistribuRonoutsidetheorganizaRonwithoutpriorwriVenapproval.
OfficeNo.103,ThePalladium,PlotNo.C3,JumeriahLakeTowers,Dubai,UAE
• AlookintothemostpresRgiouscommunityinDubai,EmiratesHills,revealsthatitsplotpriceshaveout-performedanyotherreal estate product by a factor of nearly 3x since the incepRonof Freehold. These staggering returns that have accrued toinvestors and end-users are inline with other blue-ribbon communiRes around the world. For instance Beverley Hills hasappreciatedby50%,whereasthetheaverageUSpriceindexhasremainedflatlinedoverthelast10years.
• Amin-maxanalysisofEmiratesHillsrevealsthatthegaphasdoubledintransactedvillasoverthelast5years.Thiswideningofthe gap canbeaVributed towards theunderlyingproperRes thathavebeen constructed in this communityover the years.Moreoverit illustratesthedemandthathasandconRnuestoincreasefor“bespoke”villacommuniReswithagildedaddresscode.
• A granular break-downof the community reveals thatmajority of the villas are distributed between Sector E and P,whichaccountsfornearly1/3rdoftheenRresupply.Moreoever,apriceanalysisoflisRngsshowthatSectorRhasthehighestpricepersquarefootratefollowedbyWandV.WhilstthisbreakdownmaysomehowshedsomelightontherelaRve“premium”ofthesesectors, thevastlydifferingsizesof thevillas ineachof theseareasplaysa far largerrole in the listedandtransactedprices.
• A transacRonalacRvityanalysisof thecommunityover the last5years reveals that cash transacRonsaccounted for80%ofacRvity.However,inthelast18months,therehasbeenaspikein‘othertransacRons’(whichincluderefinances),whichhavecoincidedwiththecrashofoilprices.Duetotheliquiditycrunchprevalentinthemarket,weopinethatthistrendwillconRnuetogrowashomeownersseektomoneRzethesubstanRalhomeequitybuiltintheirvillas.
• TherecentopRonofultra-luxuryvillas,whereyoucanbuildyourownfaçadebyEmaarhasbeenintheformofDubaiHills.AcomparisonbetweenDubaiHillsandEmiratesHillsplotprices,showsthathelaVertradesatroughly1/3rdtheprice.AnanalysisofEmiratesHillsduringitsdevelopmentstagesrevealsthatpricesaccelerateddramaRcallyassurroundinginfrastructurebegantorollout.WeopinethatthesamephenomenawilltranspireinDubaiHillsassurroundinginfrastructurecomesonline.Itwillbelikelybeacceleratedbydemandfromtheupperstratathat“missedthebus”onthepriceanddevelopmenttrajectoryofEmiratesHills,andthis‘me-too’phenomena.ThisexplainstheproliferaRonofhighincomecommuniRessuchasalBarariandPearljumeirahwhichoffersimilarproduct.
ExecuRveSummary
1 AMacrolookintoEmirateHills2 AGranularlookInside
2 TransacRonalAnalysis3 EmiratesHillsandDubaiHills
Contents
4
AMacrolookintoEmirateHills
"Thebiggertherisks,thebeVeroffyouare.Otherwiseyou'rejustboring.”–BillieJoeArmstrong
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Springs4m JBRStudio PalmJumeirahVillas
EmiratesHills(Plot)
EmiratesHillsLandhasAppreciatedMorethan10RmessinceitsLaunch
UNITAS
ReturnonInvestmentbyProduct
Apriceanalysisoflaunchesinthefirstcycle,revealsthatEmiratesHillsplotsout-performedanyotherrealestateproductbyafactorofnearly3x.Whilstthiscomparisonisofreadyunitsagainstlandprices, itservestohighlightthestaggeringappreciaRonthathasaccruedtoinvestorsinthisblueribboncommunity,faroutpacingrealizedreturnsthroughouttherestofthecitysincetheadventoffreeholdin2002.ThisappreciaRonatthetrophyendofthemarkethasbeeninsyncwithsimilarspikeswitnessedinotherpartsoftheworld,wheresuchpremiumgatedcommuniReshavebeenlaunchedattheupperstrataofthemarket.
EmiratesHillsPlotsLaunchandMarketPrice(Aed/Sqp)
UNITAS
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Jan2006
Jul2006
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Jan2012
Jul2012
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Jan2015
Jul2015
PriceIndexBeverlyHills USPriceIndex
BeverlyHillsOutperformstheRestoftheUnitedStates
Zillow
TheabovechartdepictsthegrowthratesofBeverlyHillsagainsttheUSprice index.Since2006theUSmarkethasremainedflat,while Beverley Hills has appreciated by 50%. This highlights the outperformance of ultra luxury properRes against the citywideperformance.ThepricebehaviorinthisinstanceissynonymouswiththatbeingwitnessedinEmiratesHills.MoreinteresRngly,acomparisonofEmiratesHillsagainstthecitywideindexsince2011suggestsonlyamarginaloutperformanceoftheformer,implyingthatasopRonshaveopenedupforendusersandinvestorsforsimilarblueribboncommuniResrecently,theperiodofpriceoutperformancemaybecomingtoanend.WeopinethatInvestorswillincreasinglyshiptheirmoneyflowstowardsupcomingblueribboncommuniRes,thusarbitragingawaythedifferencethatcurrentlyexists.
PriceIndex(BeverlyHillsVsUSNaRonalAverage) PriceIndex(EmiratesHillsVsDubai)
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EmiratesHills(ListedPriceIndex) DubaiPriceIndex
REIDIN
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2010 2011 2012 2013 2014 2015
Min-MaxAnalysisofTransactedPricesinEmiratesHills
REIDIN
Amin-maxanalysisoftransactedpricesrevealsthethegaphasdoubledinthelast6years.ThewideningofthegapisafuncRonofthelargedifferencesintheunderlyingproperResthathavebeenconstructedinthiscommunityovertheyears;itfurtherservestoillustratethedemandthathasandconRnuestoincreasefor“bespoke”villacommuniReswithagildedaddresscode.SuchvariaRonsarethenormincommuniResthatdeveloporganically,asopposedtobeingconstructedbyasinglemasterdeveloper.
Min-MaxofEmiratesHillsTransactedPrices
8
AGranularLookInside
“Thequasi-peaceablegentlemanofleisure,then,notonlyconsumesofthestaffoflifebeyondtheminimumrequiredforsubsistenceandphysicalefficiency,buthisconsumpRonalsoundergoesaspecializaRonasregardsthequalityof
thegoodsconsumed”–ThorsteinVeblen
Break-DownofEmiratesHillsSupplyStructure
EmiratesHillsisbifurcatedinto10sectors,wheresectorEandPaccountforapproximatelyonethirdofsupply.The622villassizesvary from 10,000 too 45,000 square feet. The community is spread across lakes interspersed with a golf course, and values ofdifferingvillasarebasedonlocaRonwithinthecommunity,althoughtransacRonvaluesfortheenRresectorremainsatasignificantpremiumtotherestofthecitybecauseoftheembeddedpremiumthathasbeenbuiltintotheaddress.
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311351
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55EmiratesHills-SectorE
EmiratesHills-SectorH
EmiratesHills-SectorHT
EmiratesHills-SectorJ
EmiratesHills-SectorL
EmiratesHills-SectorP
EmiratesHills-SectorR
EmiratesHills-SectorS
EmiratesHills-SectorV
EmiratesHills-SectorW
3,059.862,944.40
2,598.00
3,546.10
2,591.22
2,125.50
2,600.002,716.94
2,573.52
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EmiratesHills-SectorW
EmiratesHills-SectorV
EmiratesHills-SectorS
EmiratesHills-SectorR
EmiratesHills-SectorP
EmiratesHills-SectorL
EmiratesHills-SectorJ
EmiratesHills-SectorH
EmiratesHills-SectorE
ListedPricesofVillasbySector
ListedPricesbySector(2015)
REIDIN
Agranularanalysisbysectorof listedpricesrevealsthatSectorRhasthehighestpricepersquarefootratefollowedbyWandV.Whilst thisbreakdownmaysomehowshedsomelightontherelaRve“premium”ofthesesectors, thevastlydifferingsizesofthevillas in each of these areas plays a far larger role in the listed and transacted prices. In point of fact, whilst there is a relaRvepremiumforgolfandlakefrontagevillas,individualnuancesofeachvillaseemtobethepredominantweightageindeterminingtheoverallvalueoftheprice.
11
TransacRonalAnalysis
“Lifeismadeupofaseriesofjudgmentsoninsufficientdata,andifwewaitedtorundownallourdoubts,itwouldflowpastus”-LearnedHand
TransacRonalBreak-DownofEmiratesHills
REIDIN
The above charts depicts a granular transacRonal analysis of the Emirate Hills area, illustraRng that the bulk of the transacRons(upwards of 80%) have been on a cash basis. However, we opine that this trend has already started to ship, with the surge inrefinancing's,as illustrated in thenextslide,a trendthatwill likelyconRnue,asendusersseektomoneRzethesubstanRalhomeequitybuiltin.
TransacRonalAcRvitybyType
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Others WTI
SpurinRefinancesand‘Othertypes’ofTransacRonsaspricesdecline
REIDIN
Thecrashofoilpricesoverthelast18monthshasleadtoaliquiditycrunchintheregion,whichhascoincidedwithaspikein‘other’typesoftransacRons,thepredominantonebeingaVributedto‘refinancing's’.InordertoraiseliquiditythefallinoilpricesinDubaitherefore appears to be a reasonable proxy for liquidity condiRons, and the surge in refinancing reflect themarket response tomoneRzethe“homeequity”componentthathasbecomeembeddedinthiscommunity.
‘OtherTransacRons’inEmiratesHills
14
EmiratesHillsandDubaiHills
“Lookbackoverthepast,withitschangingempiresthatroseandfell,andyoucanforeseethefuture,too”-
MarcusAurelius
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DubaiHills EmiratesHills
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AcomparisonofPlotPricesofDubaiHillsandEmiratesHills
UNITAS
Amin-maxanalysisofplotsinbothcommuniResrevealsthatDubaiHillsplotstradecloseto1/3rdthepricesofEmiratesHills.Thisreflectsthelackofdevelopmentoftheformer,andasitdevelops,weopinethattherewillbeanarrowingofthepricegapbetweenthetwocommuniRes.
PlotPricesbyCommunity(HighsandLows)
DubaiHillsWillMirrorthePriceAcRonofEmiratesHills?
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Launch ParRallyDeveloped Developed
EmiratesHills
DubaiHills
ThedevelopmentofacommunityinfluencespriceacRon.Thefurtherthecommunityisalongitsinfrastructurerolloutthehigherthepriceswillescalate.ThistrendcanbewitnessedinthedevelopmentofEmiratesHills.WeopineasDubaiHillsbeginstoroll-outitsancillaryinfrastructure,priceswillbegintotrendupwards,mirroringthetrajectoryofEmiratesHills.Thiswilllikelybeacceleratedbydemandfromtheupperstratathat“missedthebus”onthepriceanddevelopmenttrajectoryofEmiratesHills,andthis ‘me-too’phenomenapartlyexplainstheriseofotherblueribbonupperRercommuniRessuchasJumeirahPearl,whereincreasinglybespokeopRonsarebeingmadeavailablefortheenduserintermsofconstrucRngtheirownvilla.
CurrentSupplyStructure(2002-2015)
UNITAS
DubaiHillsEstateFollowingSameTrajectoryasEmiratesLiving
Community NumberofUnits
PricesAed/SqM Type
EmiratesHills 622 2,500 Mansions
Meadows 2,162 1,580 Villas
Springs 4,730 1,167 Townhouses
Greens 3,245 1,322 Low-Rise
Views 3,340 1,600 High-Rise
Community NumberofUnits
PricesAed/SqM Type
DubaiHills 520 1,700 Mansions
Sidra - 1,100 Villas
Maple 610 1,000 Townhouses
ParkHeights 700 1,100 Low-Rise
REIDIN
TherolloutofdevelopmentsinDubaiHillsEstatesismimickingthatofEmiratesliving.BothcommuniResshareasimilarstructureofthemasterplanwiththetypeofunits.However, In each instance the launch price of a Dubai Hills Estate projects is lower than the current prevailing prices of itscounterpartinEmiratesLiving,makingtheformeranaVracRvebuyforinvestorsandend-users.
EmiratesLiving DubaiHillsEstates
Conclusions AMacroLookintoEmiratesHills AGranularLookInside
TransacRonalAnalysis EmiratesHillsandDubaiHills
Emirates Hills plot prices haveout-performed any other realestate product by a factor ofnearly3xsincetheincep:onofFreehold
The bulk of the transac:ons(upwardsof80%)havebeenonacashbasisinEmiratesHills
A comparison between Dubai Hills and EmiratesHillsplotprices reveals the laVer tradesatnearly1/3rdthepricetotheformer.We opine as the surrounding infrastructure ofDubai Hills begin to come online, plot prices willbegin to accelerate, mimicking the trajectory ofEmiratesHills.This price acceleraRonwill be further exuberatedby theupper strata that “missed thebus”on thepriceanddevelopmenttrajectoryofEmiratesHills,andthis‘me-too’phenomena
Since the launch of Emirates Hills plots priceshaveincreasedmorethan10fold,outperforminganyotherreal-estateassetinDubai.Similar blue-ribbon communiRes, such asBeverley Hills, have had superior growth ratescompared to theUSaverageprice Indexby50%inthelast10years.A min-max analysis of transacted villa prices inEmiratesHillsrevealsthethegaphasdoubledinthe last 6 years. The widening of the gap is afuncRonofthelargedifferencesintheunderlyingproperRes that have been constructed in thiscommunityovertheyears
EmiratesHills consistsof622villas, spreadover10sectors.SectorEandP,accountfornearly1/3rdoftheenRresupplyAgranularanalysisbysectoroflistedpricesrevealsthatSectorRhas thehighestpriceper square footratefollowedbyWandV.Whilstthere isarelaRvepremiumforgolfand lakefrontagevillas,individualnuancesofeachvillaseemto be the predominant weightage in determiningtheoverallvalueoftheprice.
4/5th of the overall transacRonal acRvity can beaVributed towards cash buyers over the last 5yearsHowever, as the market faces a liquidity crisis asurge in ‘other transacRons’ have transpired.Refinances account for a certain porRon of thesetransacRons.Weopineas liquidity inthemarkethasRghtened,home-owners have refinanced their homes tomoneRzethecashcomponentoftheirvilla.
REIDIN.com is the leading real estate informaRoncompanyfocusingonemergingmarkets.REIDIN.comoffers intelligentanduser-friendlyonlineinformaRon soluRons helping professionals accessrelevant data and informaRon in a Rmely and costeffecRvebasis.ReidinisthedataproviderfortheseresearchreportsConcordTower,No:2304,DubaiMediaCity,POBox333929Dubai,UnitedArabEmiratesTel.+97142776835Fax.+97143604788www.reidin.cominfo@reidin.com
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“Nobarriercanwithstandthestrengthofpurpose”
HHGeneralSheikhMohammedBinRashidAlMaktoumTheRulerofDubaiandPrimeMinisterofUAE