Property. Mashreq. Economic Overview. Wealth Gauge.

Transcription

1 FOR THE PRIVILEGED FEW Mashreq Volume 10 June 20 Economic Overview As per the National Bureau of Statistics, the economic growth in UAE for 20 stands at 5.2 which was well supported by Trade & Tourism, Hospitality and Real Estate. 70 of Real Gross Domestic Product growth has come the non-oil based sector. One of the factors that led to GDP improvements in 20 was due to the development of oil output and good and stable oil price levels in the previous years. Central Bank expects the economic growth in UAE to remain strong which will be driven by non - oil based economy given the current oversupply of oil in global markets and the limited growth in oil production. On a broader scale, the UAE s economy is well supported by strong economic fundamentals. Tourism has been a major sector accounting for about 20 of GDP in 20 and is expected to grow anywhere between 7 to 9 through For the month of April 20, the overall Consumer Price Index (CPI) has reached , as compared to previous month an increase of 0.25 was recorded and as compared to April 20 an increase of 2.12 has been recorded. Top 3 groups where major increase was recorded for April were Furniture & Household Goods by +0.85, Communications by and Transportation by CPI s fluctuations recorded across various Emirates were 0.29 for Abu Dhabi, 0.09 for Dubai & 0.19 for Sharjah. Infrastructural Investments and spendings on account of Expo 2020 is on a rise and are in line with the spending plans. The site for the trade exhibition is located at Dubai Trade Centre Jabel Ali. The theme chosen for the Expo is Connecting Minds, Creating the Future. The site area covering 400 hectares will be subdivided into multiple themed sections each containing an entertainment zone and a pavillion showcasing the theme. Work on the prestigious Dubai Canal Project worth AED 1.76 Billion is underway, Phase 1 worth AED 580 Million has been awarded to Turkish firms Mapa and Gunal which includes construction of 16 lane flyover on Shaikh Zayed Road. Phase 2 contract worth AED 384 Million has been awarded to China State Corporation. Phase 3 contracts worth AED 802 Million has been awarded to Belhasa Six Construct Co. RTA estimates the Marine Transport to attract 6 million customers per annum once the project is completed.

2 Real Estate Sector Highlights The real estate sector has seen a rapid growth in property prices in 20 across all major areas, which prompted the IMF & Central Bank to impose positive measures to weed out speculators and bring in the much needed stability to the sector. Inspite of the various measures that were taken, Dubai Real Estate Sector is up by 3.4 for Q1 (Courtsey: Knight Frank), which has been good enough to continue topping the global rankings for highest growth in residential property values for a fourth straight quarter. The rental yeilds observed are in the range of 6 which still remains attractive against 2 to 3 observed in other major locations across the globe. However the overpricing and high expectations that were unjustifiable are being lowered to reflect actual demand. The market has reached a stage where the gap between the seller s asking price and what the buyers are willing to pay is narrowing down. The Dubai Decree on Determining the increase in the Real Estate Rentals in the Emirates of Dubai which was issued, has had a direct impact on rental increases across locations. This decree though did not cover freezones earlier now covers all freezones and expressely refers to the properties in DIFC as well. The Decree clealry sets out the mechanism to calculate the amount of rental increase that can be levied by the landlords and also stipulates that the average rent will be determined only by Real Estate Regulatory Agency. The Rental Dispute Settlement Centre appointed by DLD will handle all such disputes arising between landlords & tenants which will cover freezones as well, however an exception is made to freezones where competent courts are available to settle such disputes. 02

3 Mashreq Wealth Gauge At Mashreq we have been tracking the property prices by indexing them community wise on a scale of 100. On the basis of the Mashreq Price Indexing, the percentage over a period of time has been indicated both for Apartments and Villas for major communities. 03 Mashreq Price Index as of end 20 Location - Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- - in Last 12 Months - Arabian Ranches ,378 Burj Khalifa Tower ,788 Downtown ,851 Business Bay ,385 DIFC ,850 Dubai Land Dubai Marina ,752 Greens ,406 International City Beach Residences Lake Towers , ,038 Islands ,825 Park ,281 Village Old Town ,188 Palm ,810 Springs/Meadows ,469 *Index of Median prices, Base = 100 (October 2008) Per Sq. Ft (AED)

4 Mashreq Wealth Gauge contd. Prominent Villa communities & Apartments have witnessed a significant increase in prices over the last 12 months: Villas Village has witnessed a significant increase of 38 in property prices followed by Park which has witnessed an increase of 15 in property prices since 20. Apartments Dubai Marina has witnessed a significant increase of 25 in property prices followed by JLT which has witnessed a significant increase of 22 in property prices since 20. Price Watch Villa Price Trend Mashreq Price Index as of end 20 in Last 12 Months Location Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Per Sq. Ft (AED) Arabian Ranches Islands Park Village Springs/ Meadows , , , ,469 04

5 Apartment Price Trend Mashreq Price Index as of end 20 in Last 12 Months Location Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Per Sq. Ft (AED) Burj Khalifa Tower Downtown , ,851 Dubai Marina ,752 Beach Residences Lake Towers , ,038 Outlook The economic growth on account of Expo 2020 will be spread over the long run Rentals are expected to have an upside. Rental Yields on Villas & Apartments are attractive Net Absorption is expected to remain stable Lower interest rate regimes will prevail. New entrants to the mortgage sector will fuel competitiveness New legislations DLD will impact the Real Estate sector positively 05