UAE Real Estate Report Q4 2018

Transcription

1 Property Review UAE Real Estate Report Q In the Middle East for over 30 Years

2 CONTENT EDITORIAL NOTE ABU DHABI DUBAI NORTHERN EMIRATES AL AIN UAE PRICE COMPARISON OXFORD ECONOMICS AL TAMIMI & CO.

3 Editorial Note Despite regional/global economic and geopolitical headwinds, the UAE managed to return to growth following the impact of the 2008/09 global financial downturn. The return to growth has been assisted on federal and municipal levels with strategies and initiatives aimed at diversifying the economy, building resilience and improving the UAE s competitiveness on the global stage. The publicity around and final announcement of the Expo 2020 helped re-instil confidence in the market and saw Real Estate performance improve over the short-term; however, markedly declining oil prices and subsequent spending cuts instigated a reversal of the trend. Although the Real Estate market has come under pressure over the last 3 years, it is much better equipped to weather the trough than post financial crisis and appears to be entering a more mature phase, and whilst market sentiment remains bearish, mainly due to fluctuating oil prices, rising interest rates and trade tensions, key economic performance indicators show signs of cautious optimism. This report looks back at the changes that have occurred in Abu Dhabi, Dubai, the Northern Emirates and Al Ain since 2008, and provides Asteco s opinion on the Prospects for 2019 and beyond. JOHN STEVENS MSC, BSC (HONS), MRICS Managing Director / Director - Asset Management 2018 HIGHLIGHTS Transactional volumes and values declined across all sectors and Emirates, but there is still liquidity in the market, which is reflected in the rise in secondary market sales and the positive response to a number of off-plan developments launched in Whilst there has evidently been a decline in new project launches/announcements (as Developers take a wait-and see-approach in light of saturation concerns), committed projects are proceeding at pace. Developers have also become increasingly innovative when trying to attract potential Purchasers. With traditional sales incentives almost exhausted (e.g. absorbing DLD & Agent fees, reducing down-payments and offering flexible/longer post-handover payment terms), some Developers are offering buy-back options in case of job loss and annual stipends for project delays. Although competitive/low price points continued to dominate transaction activity, Asteco recorded some demand for luxury properties. Residential and commercial rental demand continued to lag ever-increasing supply. This exerted further downward pressure on rental rates over the course of As a result of these conditions, landlords have generally been more open to negotiate discounts, &/or offer incentives such as lease-free periods and flexible payment terms (multiple cheques) to retain Tenants and/or entice new ones. MEDIUM TO LONG TERM OUTLOOK Asteco, in partnership with the National Bank of Fujairah and Direct Debit System FZ LLE launched a Direct Debit System allowing monthly payment options to Tenants, which is a first for the UAE Real Estate market OUTLOOK In addition to the freezing of school fees for , a number of new initiatives were announced (see below). Whilst published in 2018, they require further clarifications and the effect of these initiatives can only be judged after implementation, although they are anticipated to be positive. Publication of the 10-year residency visa for Investors and certain professionals 100% ownership of companies outside Free Zones Retiree residency visa These government initiatives, coupled with a number of other catalyst such as increased federal and local budgets, stimulus packages, diversification/growth strategies and reduced cost of doing business, are expected to increase investment and facilitate economic growth and play positively on market sentiment. Despite these efforts further pressure on sales prices and rental rates is expected well into 2019 due to the sheer volume of supply, although the rate of decline is likely to soften. This also translates into more attractive/competitive offers from Landlords/Sellers, and greater choice for Tenants and Investors. Whilst the downward trajectory in the Real Estate market for the short-term is unavoidable due to tepid economic/market conditions and the expected supply glut, the outlook for the medium- and long-term for the UAE is encouraging, fuelled by a pro-active government response and clear focus on economic progress and sustainability. With the advanced and ever-improving regulatory, financial and physical infrastructure, the UAE will continue as a leading land-sea-air multimodal transport hub connecting the Far East with the West, and thus attract human and physical capital with a long-term view on living, investing and doing business in the country. As the UAE Real Estate market matures (just as in other markets), it is reasonable to assume that underlining market fundamentals will eventually come to the fore. Whilst achieving demand/supply equilibrium is unlikely, in the medium-long term we should look forward to more stable conditions with shallower peaks and troughs.

4 Abu Dhabi THE CAPITAL CITY

5 ABU DHABI HISTORIC REVIEW RECESSION RECOVERY AND GROWTH STABILISATION 2015 DOWNTURN Index Base 100 = March 2010 Rapid Real Estate demand growth in an undersupplied market was followed by substantial corrections in rental rates and sales prices, which dropped in excess of 60% from their peak in Q as a result of the global financial crisis. The decline in rental rates led to a strong leasing market with increased internal Tenant movement to quality properties. Transaction levels picked up towards the end of 2011 leading to take-up of new residential properties in well planned projects. However, with the amount of stock available, sales prices continued to decline. Subdued business growth put pressure on the office market resulting in decreased rental rates across all quality grades The market began to show signs of recovery in 2012 and rates stabilised throughout the year. Asteco recorded a marked increase in rental rates and sales prices from the end of 2012 due to improved sentiment. Several new prime and high-end projects were handed over during this period. As a result, rates for inferior quality stock advertised at above market averages corrected. Internal Tenant movement and flight-to-quality prevailed as people took advantage of the options available. Transaction levels improved in line with increased job security and market confidence leading to tenancy upgrades and a rise in home ownership. Off-plan sales also recommenced during 2013 and Residential sales prices rose considerably (by approximately 50%) compared to their lowest point. The office market was relatively stable, with lower quality space noting marginal declines whilst superior units recorded minimal increases. Limited new supply resulted in moderate increases in rental rates and sales prices in 2015, especially during the first half of the year, whilst remaining broadly stable thereafter. The drop in oil prices prompted a general slowdown in investment, whilst sales demand focused on completed rather than off-plan properties. Bearish market sentiment, coupled with a number of major mergers and companies downsizing, had an adverse effect on Real Estate demand. Approximately 11,900 units were delivered between 2016 and 2018, which put further pressure on rates. As a result, apartment and villa rental rates recorded an average decrease of 25% and 17%, respectively, since the end of 2015, whilst sales prices declined by 22% and 8%. Although demand for completed projects softened, mainly due to the high down payment required by the Central Bank, transaction volumes for newly launched projects offering competitive sales prices and payment plans increased. However, the number of new project launches declined markedly in 2018 and so did off-plan transactions. The increase in supply resulted in a greater choice for Residents and Landlords continued to offer incentives to retain Tenants and increase occupancy levels Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Apartment Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis. 5 Abu Dhabi Real Estate Report - Q4 2018

6 ABU DHABI SUPPLY COMPLETED IN COMPLETED IN EXPECTED IN Q1 - Q Q APARTMENTS NO. OF UNITS 4, ,300 VILLAS NO. OF UNITS 670 1,000 1,900 OFFICES SQ.M. 0 50,000 40,000 6 Abu Dhabi Real Estate Report - Q4 2018

7 ABU DHABI HIGHLIGHTS AND OUTLOOK 2018 HIGHLIGHT 2019 OUTLOOK SUPPLY Although a number of projects were delayed and spilled over into 2019, Asteco recorded the delivery of circa 6,200 residential units in 2018 including 4,500 apartments and 1,700 villas. About half of this supply was concentrated on the Islands (mainly Al Reem and Yas Islands). The ADIB HQ located on Airport Road has been delivered, whereas the anticipated Omega Tower on Reem Island is experiencing further delays. The number of project launches was limited in 2018 and principally included the Reflection Towers and Al Ghadeer - Phase 2 by Aldar, the Riviera by IMKAN and Al Fahid Island by Al Nahda Investment. Approximately 11,200 residential units are anticipated for completion in The majority of this supply will be delivered in the Investment Zones including, but not limited to: - Reem Island comprising 2,350 units; - Al Raha Beach with 2,500 units; - Yas Island with 1,300 units; and - Saadiyat Island totaling 1,250 units. The number of new project announcements is expected to be subdued until economic conditions and market sentiment improve. RENTAL RATES The Abu Dhabi Real Estate market continued to follow a similar downward trend as observed over the previous two years. Apartments and villas recorded average annual rental declines of 10% and 9%, attributed to increased supply and bearish market conditions. Demand for office space was limited due to subdued business/employment growth. As a result, rental rates dropped by 4% on average over the year, although several mid- to low-quality commercial buildings recorded decreases of 10% and above. Conversely, demand for office space in Free Zone areas was more buoyant translating into high occupancy rates. New supply is expected to exert further pressure on rental rates. Whilst some residents are expected to downsize and seek value-for-money properties, others will take advantage of the increased choice at lower rates to upgrade. Demand for office space will remain tepid and result in moderate rental rate declines, particular for buildings with lower quality specifications. Landlords will continue to offer incentives in the form of discounts on renewal and flexible payment options. SALES PRICES Whilst transactional activity for completed projects was limited, off-plan properties offered at attractive rates with flexible payment plans continued to generate interest with some developments achieving high demand levels. Apartment sales prices decreased on average by 9% in 2018, with the highest decline recorded in Marina Square and Sun & Sky Towers on Al Reem Island. The annual drop in villas sales prices was less pronounced, recording a softening of 4% with the highest decrease noted in Al Raha Gardens and Al Reef Villas. Sales prices will continue to soften with the focus on competitive price points and attractive payment plans for off-plan and nearly completed projects. Whilst further drops are anticipated for 2019, we believe the rate of decline is likely to slow towards the end of the year. TRENDS SALES PRICES RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND - OFF PLAN DEMAND - COMPLETED Abu Dhabi Real Estate Report - Q4 2018

8 ABU DHABI APARTMENT RENTAL RATES (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS PRIME PROPERTIES ABU DHABI ISLAND INVESTMENT AREA HIGH END PROPERTIES Central Abu Dhabi ABU DHABI ISLAND Corniche Khalidya / Bateen Al Raha Beach Marina Square INVESTMENT AREA Saadiyat Beach Shams Abu Dhabi MID TO LOW END PROPERTIES Central Abu Dhabi ABU DHABI ISLAND Corniche Khalidiya / Bateen INVESTMENT AREA Al Reef OFF ISLAND Khalifa & MBZ City ABU DHABI AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -15% -11% -2% 14% 8% 4% -7% -10% -10% - -45% -3% -8% -6% 15% 8% 4% -6% -11% -10% - -45% -1% -9% -9% 18% 8% 3% -9% -10% -8% -52% -4% -25% -56% -4% -25% -55% -1% -25% 8 Abu Dhabi Real Estate Report - Q4 2018

9 ABU DHABI APARTMENT SALES PRICES AED per sq.ft ,000 1,500 2,000 2, ,000 1,500 2,000 2,500 1,750 AL BANDAR 1,350 1,300 1,225 1,100 1,425 1,550 1,650 1,700 1,600 1,425 REEF DOWNTOWN ,000 1, AL MUNEERA 1,750 1, ,175 1,425 1,500 1,500 1,275 1,200 SUN & SKY TOWERS 2,450 1,250 1,250 1,130 1,050 1,325 1,475 1,500 1,400 1,275 1,100 1,750 1, AL ZEINA 1, ,175 1,200 1,300 1,300 1,225 1,100 THE GATE 1,175 1,475 1,500 1,375 1,225 1,100 2,000 MARINA SQUARE 1,025 1,025 1, ,175 1,375 1,375 1,250 1, YAS ISLAND 1, Abu Dhabi Real Estate Report - Q4 2018

10 ABU DHABI VILLA RENTAL RATES (All figures in AED 000 s p.a.) TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS Khalidiya / Bateen ABU DHABI Mushrif / Karama / Manaseer ISLAND Nahyan Camp / Muroor Al Raha Beach Al Reef INVESTMENT Hydra Village AREA Saadiyat Island - Beach Villas Hidd Al Saadiyat Al Raha Gardens Golf Gardens OFF ISLAND Khalifa City Mohamed Bin Zayed ABU DHABI AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -13% -14% -3% 6% 0% 2% -3% -6% -4% - -41% -13% -9% 2% 3% 0% 2% -4% -7% -7% - -43% -2% -12% 3% 4% 5% -3% -8% -9% -4% -59% -58% -57% -7% -13% -14% -13% -17% -19% 10 Abu Dhabi Real Estate Report - Q4 2018

11 ABU DHABI VILLA SALES PRICES AED per sq.ft ,000 1,500 2,000 2, ,000 1,500 2,000 2,500 AL REEF VILLAS RAHA GARDENS 1, ,115 1,115 1, HYDRA VILLAGE HIDD AL SAADIYAT GOLF GARDENS 1, ,020 1, WEST YAS SAADIYAT BEACH VILLAS 1,375 1,550 1,550 1,550 1,535 1, Abu Dhabi Real Estate Report - Q4 2018

12 ABU DHABI OFFICE RENTAL RATES (All figures in AED per ft 2 p.a.) TYPE PRIME PROPERTIES FITTED* QUALITY STOCK FITTED SHELL AND CORE MATURE STOCK GOOD TYPICAL BUILDING ABU DHABI AVERAGE** ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -21% -16% -14% 0% 0% 3% -7% -6% -5% -67% -15% -17% * Includes developments such as Al Maryah Island, Aldar HQ, International Tower, Nation Towers, Ittihad Towers, Capital Plaza, Etihad Tower, etc. **Average excluding prime 12 Abu Dhabi Real Estate Report - Q4 2018

13 ABU DHABI PROPERTY MAP 1 Al Bandar Raha Beach 2 Al Bateen Wharf 3 Al Gurm 4 Al Maqtaa 5 Al Muneera Al Raha Beach 6 Al Nahyan Camp 7 Al Raha Gardens 8 Al Rayanna 9 Al Reef 10 Al Zeina Al Raha Beach 11 Baniyas 12 Bateen Airport Area 13 Bateen Area 14 Bawabat Al Sharq 15 Capital District (ADNEC) 16 CBD / Tourist Club Area 17 Corniche 18 Danet Abu Dhabi 19 Eastern Mangroves 20 Golf Gardens 21 Hydra Village 22 Khalidia / Al Hosn / Al Manhal 23 Khalifa City A 24 Khalifa City B 25 Maryah Island 26 MBZ City 27 Mina 28 Mushrif / Karama / Manaseer / Muroor 29 Officer s City 30 Rawdhat Abu Dhabi 31 Reem Island - Marina Square 32 Reem Island Najmat Abu Dhabi 33 Reem Island rest of Shams Abu Dhabi 34 Reem Island City of Lights 35 Reem Island The Gate District 36 Rihan Heights 37 Saadiyat Beach District 38 The Hills YAS ISLAND Abu Dhabi Real Estate Report - Q4 2018

14 Dubai THE CITY OF INNOVATION

15 DUBAI HISTORIC REVIEW RECESSION RECOVERY AND GROWTH STABILISATION 2015 DOWNTURN Index Base 100 = March 2010 The Dubai Real Estate market has gone through significant fluctuations over the years. Following the introduction of a decree allowing International Freehold Ownership in 2002, the market recorded substantial growth up until Q This period was marked by large scale developments and project launches. The Real Estate market was fuelled by both strong demand from a rapidly expanding economy and workforce (leading to double digit rental growth and Investor returns) and, more problematically, Investor speculation. With the onset of the global financial crisis, loss of confidence, erosion of capital and drying-up of liquidity, speculators were driven from the market. This resulted in significant value contractions and ultimately the collapse of fundamentals underpinning the Real Estate market. Asteco also recorded noticeable Tenant migration from neighbouring Emirates due to decreased rental rates in Dubai. Sales activity remained subdued although transaction levels picked up slightly by the end of Many projects were delayed, put on hold or cancelled The market began to show signs of recovery in 2012 when the Euro Crisis and Arab Spring conflict led to Dubai being an attractive alternative and safe haven to invest and live in. In November 2013, Dubai was awarded to host Expo 2020, which led to growth in market confidence, a rise in new project launches and increased sales and rental rates. Established communities and quality buildings experienced increased demand and newer developments saw improved take-up in line with enhancements in infrastructure. Whilst increased job security and market confidence prompted Tenants to upgrade, rapid rental growth also restricted Residents to move within Dubai and thus resulted in an upsurge in relocations to the Northern Emirates. In anticipation of the growing Investor demand, the Dubai Government doubled the land registration fee to 4%, and introduced new loan-to-value rules to limit property speculation. The market peaked in Q and corrected thereafter due to a combination of factors such as the reduction in LTV ratios, low oil prices and a strong US dollar. Rental rates remained broadly stable as the handover of new supply was slower than anticipated. Due to the substantial number of launches witnessed in the previous years, concerns of an oversupply and lack of demand particularly for high-end properties motivated Developers to focus on the mid and affordable housing sector, and to offer incentives such as extended payment plans during the post-completion stage. Lower deposits stipulated by Developers also made off-plan sales a more attractive option compared to the minimum 25% down payment required by the Central Bank for a mortgaged property and 2017 recorded a significant amount of new project launches and deliveries resulting in steady declines in sales prices and rental rates. Whilst new project announcements eased off in 2018, additional supply continued to have a downward effect on rates. The number and range of incentives increased as Landlords tried to retain Tenants and increase take-up, whilst Developers tried to motivate Buyers. A market driven by Tenants and Investors and an increased number of people looking for value-for-money options resulted in affordable developments outperforming luxury accommodation in terms of transaction activity. Developers increasingly offered smaller, off-plan units at lower price points with flexible post-completion payment plans, which resulted in an increase in first-time Buyers and End-users as home ownership became more accessible to people who were previously unable to jump on the property ladder due to high down payments. Initially, this resulted in a drop in demand for completed properties, but the slowdown in new project launches and the increased affordability lead to a rise in transaction volumes in the secondary market Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Apartment Sales Villa Sales Office Sales Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage sales and rental trend on a quarterly basis. 15 Dubai Real Estate Report - Q2 2018

16 DUBAI SUPPLY COMPLETED IN COMPLETED IN EXPECTED IN Q1 - Q Q APARTMENTS NO. OF UNITS 9,250 2,835 24,300 VILLAS NO. OF UNITS 2, ,500 OFFICES MILLION SQ.FT Dubai Real Estate Report - Q4 2018

17 DUBAI HIGHLIGHTS AND OUTLOOK 2018 HIGHLIGHT 2019 OUTLOOK SUPPLY Asteco recorded the delivery of nearly 15,000 residential units over the course of 2018, comprising 12,000 apartments and 2,750 villas. Office supply volumes picked up towards the end of the year adding 2.86 million sq.ft. in total. As forecasted at the end of 2017, the pace of new project launches eased over 2018 as Developers adopted a more cautious approach in response to lower demand and growing supply. Construction activity during 2019 (for committed projects) is expected to continue unabated, despite a slowdown in new project launches. This is largely due to construction-linked and post-completion payment plans, which ensure payments are only received when milestones are met. This supply, in addition to many project handovers previously scheduled for 2018 spilling over into 2019, will contribute to the total delivery of over 30,000 residential units. Commercial supply is earmarked to account for 3.6 million sq.ft. of office space. RENTAL RATES Despite lower than anticipated handover volumes, the additional supply was still significant and resulted in steady rental rate declines across all asset classes throughout the year. Average declines of 10% for apartments, 10% for villas and 5% for offices were recorded for 2018, although some areas significantly under/outperformed. Landlords continued to offer incentives such as rent-free periods and multiple cheque payments. Dubai s Real Estate market will continue to mature throughout 2019 in line with increased transparency and improved regulatory conditions. Whilst the additional supply earmarked for 2019 will put further pressure on rental rates, the rate of decline is expected to slow towards the end of the year. Lower rental rates will enable more Tenants to upgrade in term of size/quality and/or location. SALES PRICES Similar to the leasing market, apartment, villa and office sales prices continued their downward trajectory during 2018, declining by an average of 13%. Emphasis continued to be unit price points, as opposed to the rate per sq.ft. A number of off-plan projects received a positive response from Investors. The steady decline in sales prices for completed projects has improved affordability and hence opened the market to a wider Investor pool and facilitated a rise in End-users and first-time Buyers. Further sale price declines are expected in 2019 and although the focus will remain on affordable developments, transaction volumes are anticipated to rise as Residents take a longer-term view on living in Dubai. Whilst market conditions mean that it is unlikely LTV ratios will change, we believe that Developers, banks and other financial institutions will become more creative and introduce solutions to bypass the high down payment required to avail a mortgage. TRENDS SALES PRICES RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND - OFF PLAN DEMAND - COMPLETED Dubai Real Estate Report - Q4 2018

18 DUBAI APARTMENT RENTAL RATES (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS HIGH TO LUXURY END DIFC DOWNTOWN DUBAI PALM JUMEIRAH SHEIKH ZAYED ROAD MID TO HIGH END BUSINESS BAY DUBAI MARINA GREENS JUMEIRAH BEACH RESIDENCE JUMEIRAH LAKES TOWERS AFFORDABLE DEIRA DISCOVERY GARDENS DUBAI SPORTS CITY INTERNATIONAL CITY JUMEIRAH VILLAGE DUBAI AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2011) % CHANGE SINCE 2ND PEAK (2014) % -16% -7% 15% 39% 7% -1% -6% -13% -12% - -39% -14% -8% 16% 35% 8% 0% -7% -14% -11% - -39% -13% -6% 19% 24% 7% 2% -6% -13% -11% -45% 23% -29% -42% 21% -28% -41% 19% -25% 18 Dubai Real Estate Report - Q4 2018

19 DUBAI APARTMENT SALES PRICES AED per sq.ft. BUSINESS BAY ,000 1,500 2,000 2,500 3, ,000 1,500 2,000 2,500 3, ,000 1,500 2,000 2,500 3,000 2,050 1, ,225 1,300 1,210 1,300 1, DUBAI MARINA 1,800 1,100 1, ,050 1,900 1,750 1,600 1,450 1,250 1,125 JUMEIRAH BEACH RESIDENCE 2,000 1, ,000 1,525 1,625 1,370 1,300 1,200 1,025 DIFC 2,700 1,600 1,500 1,300 1,350 1,875 1,875 1,700 1,750 1,650 1,425 DUBAI SPORTS CITY 1, JUMEIRAH LAKES TOWERS 1, ,200 1,250 1,150 1,150 1, DISCOVERY GARDENS 1, GREENS 1,700 1, ,400 1,375 1,365 1,350 1,250 1,050 JUMEIRAH VILLAGE 1, DOWNTOWN DUBAI 2,700 1,400 1,300 1,100 1,300 2,200 2,325 2,200 1,900 1,700 1,525 INTERNATIONAL CITY 1, PALM JUMEIRAH 2,800 1,500 1,175 1,100 1,400 2,000 2,000 1,720 1,700 1,500 1, Dubai Real Estate Report - Q4 2018

20 DUBAI VILLA RENTAL RATES (All figures in AED 000 s p.a.) TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS ARABIAN RANCHES DUBAI SILICON OASIS (CEDRE VILLAS) DUBAI SPORTS CITY (VICTORY HEIGHTS) JUMEIRAH JUMEIRAH PARK JUMEIRAH VILLAGE MEADOWS MIRDIF PALM JUMEIRAH SPRINGS THE LAKES UMM SUQEIM DUBAI AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2011) % CHANGE SINCE 2ND PEAK (2014) % -9% -6% 18% 19% 5% -8% -5% -11% -13% - -43% -8% -9% 18% 19% 4% -10% -5% -11% -11% -43% -10% -9% 15% 20% 1% -8% -6% -11% -9% -52% 0% -32% -53% -2% -33% -54% -1% -29% 20 Dubai Real Estate Report - Q4 2018

21 DUBAI VILLA SALES PRICES AED per sq.ft ,000 1,500 2,000 2,500 3, ,000 1,500 2,000 2,500 3,000 ARABIAN RANCHES 2, ,225 1,150 1,000 1,150 1, JUMEIRAH VILLAGE 1, DUBAI SILICON OASIS (CEDRE VILLAS) 1, MEADOWS 2,200 1, ,000 1,300 1,350 1,150 1,300 1,200 1,000 DUBAI SPORTS CITY (VICTORY HEIGHTS) 1, ,125 1,250 1,150 1,150 1, PALM JUMEIRAH 2,750 1,800 1,550 1,500 1,800 3,000 2,850 2,475 2,500 2,400 2,100 JUMEIRAH PARK 1, ,175 1,175 1,100 1,100 1, SPRINGS 1, ,100 1, ,100 1, Dubai Real Estate Report - Q4 2018

22 DUBAI OFFICE RENTAL RATES (All figures in AED per ft 2 p.a.) TYPE BARSHA HEIGHTS (FORMER TECOM) BUR DUBAI BUSINESS BAY DIFC JUMEIRAH LAKES TOWERS SHEIKH ZAYED ROAD DUBAI AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2014) % -34% -16% -2% 24% 8% 3% -2% -4% -7% -67% 19% -10% 22 Dubai Real Estate Report - Q4 2018

23 DUBAI OFFICE SALES PRICES AED per sq.ft ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 BARSHA HEIGHTS (FORMER TECOM) 2,500 1, JUMEIRAH LAKES TOWERS DIFC BUSINESS BAY 2,200 1, ,225 1,250 1,250 1, ,250 1,900 1,900 1,800 1,700 1,800 1,875 1,925 1,900 1,650 1,500 2, , Dubai Real Estate Report - Q4 2018

24 DUBAI PROPERTY MAP To Abu Dhabi Arabian Gulf To Sharjah Akoya 32 Emirates Hills 2 Al Barari 33 Green Community 3 Al Barsha 1 34 International City 4 Al Furjan 35 JBR 5 Al Nahda 36 Jumeirah 6 Al Qusais 37 Jumeirah Golf Estates 7 Al Warqaa 38 Jumeirah Islands 8 Arabian Ranches 39 Jumeirah 9 Barsha Heights (Tecom C) Lakes Towers 40 Jumeirah Park 10 Bur Dubai 11 Business Bay 12 City Walk 13 Culture Village 41 Jumeirah Village Circle 42 Jumeirah Village Triangle 43 Living Legends 14 Deira 44 Liwan 15 DIFC 45 Meydan 16 Discovery Gardens 46 Mirdif 17 Downtown Dubai 47 MotorCity 18 Downtown Jebel Ali 48 Mudon 19 Dubai Creek Harbour 49 Muhaisnah 20 Dubai Design District 21 Dubai Festival City 50 Palm Jumeirah 51 Pearl Jumeirah 22 Dubai Healthcare 52 Remraam City Phase 2 23 Dubai Hills Estate 24 Dubai Investment Park 25 Dubailand Residential Complex 26 Dubai Marina 27 Dubai Production City (IMPZ) 28 Dubai Silicon Oasis 29 Dubai South 30 Dubai Sports City 53 Residential City 54 Rigga Al Buteen 55 Sheikh Zayed Road 56 Springs / Meadows 57 Studio City 58 The Greens 59 The Lakes 60 The Villa 61 Town Square 62 Umm Suqeim 63 Uptown Mirdiff 64 Victory Heights 31 Dubailand 24 Dubai Real Estate Report - Q4 2018

25 Northern Emirates THE CULTURAL CAPITAL OF ARAB WORLD

26 NORTHERN EMIRATES HISTORIC REVIEW RECESSION RECOVERY AND GROWTH STABILISATION 2015 DOWNTURN Following strong rental growth due to Residents being priced out of neighbouring Dubai, rental rates recorded rapid declines as a result of the financial crisis at the end of Consequently, a large number of Tenants took the opportunity to relocate to Dubai to avoid the long commute to work. Leasing activity in the Northern Emirates was slow and many new buildings that were delivered during this period remained vacant. Whilst Dubai and Abu Dhabi saw signs of recovery at the end of 2011 and 2012, the Northern Emirates only started to gain momentum in early Ras Al Khaimah was the exception and witnessed limited traction due to partially completed master-planned communities. 160 Rental rates in the Northern Emirates bottomed out in the beginning of Rising rates in Dubai accelerated increases in Sharjah, which fuelled the recommencement of previously stalled projects, specifically in the areas closest to Dubai, namely Al Nahda and Al Khan. In 2014, the government allowed non-arabic Investors with a UAE residency visa to purchase property in the Emirate on a 100 year lease. The villa market in Ras Al Khaimah recorded strong sales activity as value-for-money options were readily available. The Sharjah office sector, however, remained stagnant and experienced only a 4% growth over the period due to limited demand. The interdependence between Dubai and the Northern Emirates manifested due to the slowdown recorded in Dubai, which resulted in a stagnant rental market in the Northern Emirates. The availability of superior products led to marginal rate reductions in more mature buildings as Tenants upgraded to newly-built accommodation. Continuous handovers of affordable units in Dubai encouraged Tenants to move (back) to the Emirate, and stalled relocations to the Northern Emirates. The office sector in Sharjah remained flat due to the supply-demand imbalance. Subdued market activity resulted in modest average declines in rental rates across all sectors and Emirates. Despite rent reductions and increased incentives, Tenants still opted for affordable units in Dubai. Early 2018, the law proposed in 2014 to allow non-arab property investments was amended to include Investors without UAE residency visas. This, coupled with ongoing infrastructure development and diversification strategies, resulted in the rise of master-plan communities and large-scale projects. Diverse government initiatives announced and implemented during this period focused on promoting long-term economic sustainability. Index Base 100 = March Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Sharjah Ajman Umm Al Quwain Ras Al Khaimah Fujairah The line graph above demonstrates the average percentage apartment rental trend on a quarterly basis. 26 Northern Emirates Real Estate Report - Q4 2018

27 NORTHERN EMIRATES HIGHLIGHTS AND OUTLOOK 2018 HIGHLIGHT 2019 OUTLOOK The Northern Emirates remained an affordable alternative for mid-income earners. However, the continuous delivery of supply in Dubai and consequent drop in rental rates resulted in further rent declines in the Northern Emirates, particularly in Sharjah and Ajman due to their proximity to Dubai. Sharjah s commercial sector also came under pressure with office rents recording quarterly and annual reductions of 1% and 6% respectively. There has been a marked increase in master-plan communities and individual project launches/announcements throughout 2018 and whilst some of the more ambitious projects have been scaled back, Developers, sometimes in conjunction with the local governments, are committed to completing them. This, coupled with the legislation published early in the year, allowing non-arab nationals without a UAE residency visa to purchase properties in Sharjah on a 100-year renewable lease, has resulted in an increase in transaction volumes. Asteco expects a significant amount of new supply across all Northern Emirates but particularly within Sharjah, which will result in further declines in rental rates. In addition, new inventory at reduced rates in neighbouring Dubai is likely to prompt more Commuter-Residents to relocate closer to their place of work. Similar to Dubai and Abu Dhabi, the local governments of the Northern Emirates are introducing larger budgets and more diversification strategies to stimulate the economy and boost investment, which is expected to translate into employment/business growth and hence increased transaction activity in the Real Estate market. TRENDS RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY DEMAND SHARJAH AJMAN UMM AL QUWAIN RAS AL KHAIMAH FUJAIRAH 27 Northern Emirates Real Estate Report - Q4 2018

28 NORTHERN EMIRATES APARTMENT RENTAL RATES (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS TYPICAL SHARJAH HIGH END AJMAN UMM AL QUWAIN TYPICAL RAS AL KHAIMAH HIGH END FUJAIRAH NORTHERN EMIRATES AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -16% -6% 5% 28% 7% 9% -4% -15% -10% - -35% -14% -3% 13% 22% 7% 1% -1% -7% -12% - -27% -14% -3% 16% 21% 9% 0% 0% -11% -11% -37% 10% -27% -33% 8% -18% -27% 4% -21% 28 Northern Emirates Real Estate Report - Q4 2018

29 SHARJAH APARTMENT RENTAL RATES (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS AL MAJAZ AL QASIMIAH AL NAHDA AL KHAN (AL MAMZAR) ABU SHAGARA AL YARMOOK AL WAHDA CORNICHE SHARJAH AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -19% -5% -4% 31% 19% -2% -5% -10% -13% - -36% -19% -6% -3% 35% 13% 2% -5% -16% -9% - -31% -16% -6% -3% 39% 8% -1% -4% -13% -6% -41% 11% -26% -47% 12% -27% -38% 17% -22% 29 Northern Emirates Real Estate Report - Q4 2018

30 SHARJAH OFFICE RENTAL RATES (All figures in AED per ft 2 p.a.) TYPE AL TAAWUN ROAD CORNICHE AREA AL WAHDA AL QASEMEH CLOCK R/A AL YARMOOK INDUSTRIAL AREA SHARJAH AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -11% 0% -1% 1% 2% -3% 0% -9% -8% -64% -17% -16% 30 Northern Emirates Real Estate Report - Q4 2018

31 NORTHERN EMIRATES MAP SHARJAH Arabian Gulf UNITED ARAB EMIRATES UMM AL QUWAIN AJMAN SHARJAH DUBAI RAS AL KHAIMAH FUJAIRAH 1 Abu Shagara 2 Al Khan 3 Al Majaz 4 Al Nahda 5 Al Qasimiyah 6 Al Taawun 7 Al Wahda 8 Corniche / Buhaira 9 Khaledia 10 King Faisal and King Abdul Aziz Streets 5 10 ABU DHABI RAS AL KHAIMAH Mina Al Arab 1 Mina Al Arab 2 Marjan Island 3 Al Hamra Marjan Island Al Hamra Northern Emirates Real Estate Report - Q4 2018

32 Al Ain THE GARDEN CITY

33 AL AIN HISTORIC REVIEW RECESSION RECOVERY AND GROWTH STABILISATION 2015 DOWNTURN Index Base 100 = March 2010 As with the other Emirates, the residential sector in Al Ain recorded a rapid drop in rental rates in 2009 following the recession. Apartment and villa rental rates decreased by 46% and 29% respectively, from their peak in 2008 until the end of The office sector followed a different trend as rental rates continued to increase until late 2009, but declined significantly thereafter. This was mainly due to a general lack of supply at the time Residential rental rates stabilised in the beginning of 2013 and recorded notable growth in the latter half of the year. The delivery of new, quality villa projects resulted in a rapid increase in rental rates due to good levels of demand. Apartment rental growth was less pronounced with moderate increases of 9% and 8% in 2013 and Office rental rates continued to decrease due to the delivery of new office inventory. This had an adverse effect on occupancy rates, particularly in existing commercial villas with lower quality specifications. Whilst apartment rental rates recorded minor increases in 2015, villa and office rents remained broadly stable until the end of the year when they softened marginally. Low oil prices led to a reduction in government spending in the UAE as a whole, and thus to a slowdown in Al Ain Real Estate market activity. The reduction in staff housing allowances coupled with job cuts across several government departments put pressure on Real Estate demand. Apartment and villa rental rates recorded average declines of 21% and 20% since the end of 2015, whereas office and retail rents decreased by 10% and 12%, respectively. Quality residential communities with supporting facilities enjoyed healthy demand levels translating into higher occupancy rates. Several buildings were delivered in Al Ain during this period, including and predominantly located within the Hazza Bin Zayed (HBZ) Stadium project, a mixed-use development benefitting from healthy demand. 60 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Apartment Rentals Villa Rentals Office Rentals The line graph above demonstrates the average percentage rental trend on a quarterly basis. 33 Al Ain Real Estate Report - Q4 2018

34 AL AIN HIGHLIGHTS AND OUTLOOK 2018 HIGHLIGHT 2019 OUTLOOK SUPPLY 2018 saw the delivery of approximately 200 apartments, 250 villas and circa 10,000 sq.m. of office space. The majority of the apartment and office supply was focused within the Town Centre, Al Jimi and Asharej areas. The distribution of villas was more scattered, although more than 50% was located within the Ain Al Faida development. A number of projects anticipated for delivery in 2018 have been delayed and are now expected for handover in About 500 residential units and 10,000 sq.m. of office space are anticipated for completion in Al Jimi Mall extension is due for handover during the first quarter of the year, whilst the Al Ain Hospital is earmarked to open by the end of RENTAL RATES Similar to 2016 and 2017, apartment and villa rental rates continued to decline with annual drops of 5% and 10%, respectively. Whilst Asteco recorded more pronounced rental decreases for buildings with lower quality specifications, premium communities with supporting facilities benefitted from higher demand, occupancy and rental levels. Headline office rental rates softened marginally by 4% over the year, although some commercial buildings recorded decreases of more than 10%. In order to retain Tenants and encourage take-up, landlords offered incentives including rent-free periods of up to two months and flexible payment terms (up to 12 cheques). Rental rates are expected to decline further across all asset classes in line with subdued demand and market sentiment. Occupancy levels in more mature building are expected to soften as Tenants relocate to better quality properties. Further discounts, particularly for units still priced above market rates, are expected in order to encourage retention. TRENDS RENTAL RATES PROJECT LAUNCHES INCENTIVES SUPPLY Al Ain Real Estate Report - Q4 2018

35 AL AIN APARTMENT RENTAL RATES (All figures in AED 000 s p.a.) TYPE 1 BEDROOM 2 BEDROOMS 3 BEDROOMS MATURE BUILDINGS NEW BUILDINGS AL AIN AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -26% -19% 0% 20% 16% 0% -6% -13% -3% - -17% -14% -15% -9% 5% 8% 7% -9% -13% -5% - -14% -17% -19% -2% 8% 4% 5% -2% -10% -3% -49% 10% -21% -50% -9% -25% -43% 0% -15% 35 Al Ain Real Estate Report - Q4 2018

36 AL AIN VILLA RENTAL RATES (All figures in AED 000 s p.a.) TYPE 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS Town Centre Other MATURE Zaker VILLAS Al Towaya Al Jimi Town Centre Other RECENT Zaker BUILD Al Towaya Al Jimi AL AIN AVERAGE ANNUAL % CHANGE % CHANGE SINCE PEAK (2008) % CHANGE SINCE MARKET LOW (2012) % CHANGE SINCE 2ND PEAK (2015) % -11% -14% -7% 28% 18% -4% -8% -9% -8% - -9% -8% -7% -9% 21% 12% -4% -6% -3% -9% - -7% -1% -8% -6% 27% 15% -4% -5% -7% -15% -31% 14% -22% -24% 7% -16% -16% 5% -24% 36 Al Ain Real Estate Report - Q4 2018

37 AL AIN OFFICE RENTAL RATES AL AIN RETAIL RENTAL RATES AED per sq.ft. AED per sq.ft ,000 1,500 2,000 2, ,000 1,500 2,000 2,500 KHALIFA STREET AUD AL TOUBA STREET 950 1,000 1,125 1, ,050 1,150 1, MAIN STREET KHALIFA STREET 975 1,500 1,700 1,650 1,825 1,825 1,825 1,700 1,700 1,700 1,575 1,075 1,350 1,700 1,650 1,825 1,825 1,825 1,700 1,700 1,700 1,575 SENAYA STREET MAIN STREET ,150 1, MAJOR MALLS SENAYA STREET 1,250 1,550 2,250 2,250 2,225 2,225 2,225 2,225 2,225 2,225 2,150 1,000 1,200 1,350 1,300 1,500 1,500 1,500 1,700 1,250 1,250 1, Al Ain Real Estate Report - Q4 2018

38 AL AIN PROPERTY MAP East Airport District Al Masoudi Hili Ardh Jow St Baniyas St Al Oattara Al Ain International Airport Al Dahmaa Al Towaya Al Jimi Mohd Bin Khalifa St Al Buraimi SULTANATE OF OMAN Al Yahar North Al Khabisi Al Mutaredh Al Yahar South Al Bateen Al Markhaniya Khalifa Bin Zayed St. Al Muwaiji Al Jahili Al Mutawa a Town Centre Asharej Al Salamat District Khalifa Bin Zayed St. Falaj Hazza a Al Sarooj Al Shuwaimah Al Maqam Al Aqabiyya Zayed Bin Sultan St. Aflaj Zoo District Gharebah Al Shuaibah Zaker Defence Al Khrair 38 Al Ain Real Estate Report - Q4 2018

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