Emirates NBD Research UAE Sector Chart Pack

Emirates NBD Research UAE Sector Chart Pack Thanos Tsetsonis athanasiost@emiratesnbd.com May 218 1

mn b/d USD / b UAE: Downside risks to 218 growth forecast due to lower oil production estimates Highlights Oil prices revised higher We have revised our oil market forecasts and now anticipate that Brent crude futures will record an average of USD 69/b in 218. A potential move to as high as USD 8/b appears possible in the current climate. Prices should begin to taper off slightly by the end of the year even with a relatively wide market deficit as we think the risk of a broader slowdown in global growth will become more apparent by the end of 218, weighing on commodity prices. UAE s non-oil private sector growth increased slightly in April, with PMI reaching 55.1 (54.8 in March). However, strong output and new order growth has not translated into faster employment growth. UAE bank loan and deposit growth 9.5 9. 9.1 9.3 8.5 8.8 8.8 8.5 8.6 8.7 8.7 8.5 8. 7.5 Q2 Q3 Q4 Q2 Q3 Q4 216 217 218 UAE oil output (LHS) Brent oil (RHS) Source: Bloomberg, Emirates NBD Research UAE PMI: Export orders recovered in April 8 7 6 5 4 3 2 1 12 1 % y/y Loans and Advances Total Bank Deposits 6 57 Headline PMI (rhs) Employment New Export Orders 8 6 54 4 51 2 48 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Source : Haver Analytics, Emirates NBD Research 45 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Source : Markit, Emirates NBD Research 2

UAE s trading partners, 217 Highlights UAE s trading partners by region, % of total trade, 217 In terms of trading partners, Asia (developing & advanced) topped the list with 4.4% of the total trade volume amounting to USD 197.1bn in 217. EU followed with USD 5.8bn (1.4% of total trade), GCC with USD 36.9bn (7.6%) and North America with USD 25bn (5.1%). In 217, the countries with the highest y/y trade growth were Turkey, Iran and UK. Since this can be misleading as total trade volumes might be insignificant for some countries, we have included those with an already significant trade balance in USD billion in order to identify potential markets. Sub-Saharan Africa, 5. North America, 5.1 Other, 31.5 GCC, 7.6 Developing Asia, 21.9 European Union, 1.4 Advanced Asia, 18.5 UAE s top 1 trading partners, 217 Highest y/y growth rates, 217 5 4 3 2 1 41.1 35.8 29.8 26.6 23.4 USD bn. 14.2 13.9 13.6 13.6 13.5 75 6 45 3 15 61. 4.4 3.1 27.2 22.9 22. 18.1 y/y growth 12.3 1.6 1.5 Source : Bloomberg, UAE Central Bank, Emirates NBD Research 3

UAE credit growth by economic activity, 218 Highlights Credit in construction & real estate Appetite for business credit in the UAE as a whole increased moderately in 218, with a decrease in demand reported in Abu Dhabi, according to the latest credit sentiment survey by UAE Central Bank. Demand for personal loans decreased in. Consistent with previous quarters in terms of credit availability, more than 9% of survey results cited that the credit standard were unchanged across all the categories. In terms of outlook, demand for business loans is expected to increase further in Q2 218 while demand for personal loans in aggregate is expected to remain weak for the same quarter. 35 3 25 2 15 1 5 AED bn 21.6 267. 267. 3.5 215 216 217 218 Construction and Real Estate, AED bn (LHS) 3 2 1-1 Credit in transport & logistics Credit in wholesale & retail trade 218 7 6 5 4 3 AED bn 42.6 59.5 6.4 6.4 52.7 6 4 2-2 -4-6 Financial Institutions (Excl. Banks) 9.1% Government 11.7% Manufacturing 5.1% Other 15.3% Trade 1.7% % of total Trade - Wholesale 7.2% Trade - Retail 3.5% 2 214 215 216 217 218 Transport, AED bn (LHS) Transport, y/y growth (RHS) -8 Construction & Real Estate Personal Loans 27.7% Source : Bloomberg, UAE Central Bank, Emirates NBD Research 4

UAE: Credit growth in manufacturing 218 Credit in manufacturing Breakdown of manufacturing credit, % of total 218 1 8 6 AED bn 3 2 1 Textile and Leather Products 1.8% Other Manufactured Products 24.4% Chemicals and Petrochems 21.7% 4 2-1 75.5 66.5 68.3 68.3 58. -2-3 -4 214 215 216 217 218 Manufacturing, AED bn (LHS) Manufaturing, y/y growth (RHS) Paper And Paper Products 3.2% Furniture and Other Wood Products 4.4% Food, Beverages and Tobacco 9.1% Fabricated Metal Products 16.6% Basic Metal Products (Including Aluminium) 18.8% Evolution of manufacturing credit, % of total Credit to petrochemicals 1% 8% 6% 4% 2% % 36.3 36.3 33.8 1.2 1.2 9.1 24.1 24.1 21.7 9.5 9.5 16.6 19.8 19.8 18.8 216 217 218 Other Food, beverages & tobacco Chemicals, petroleum and petrochemicals Fabricated metal products & machinery Basic metal products (incl. aluminium) 2 16 12 8 4 AED bn 7.8 14.6 16.5 16.5 16.4-8 214 215 216 217 218 Petrochemicals, AED bn (LHS) Petrochemicals, y/y growth (RHS) 12 8 4-4 Source : Bloomberg, UAE Central Bank, Emirates NBD Research 5

UAE education strategy on track Highlights Students in Dubai, 217 Federal government expenditure is expected to increase in 218 to AED 51.4bn, out of which 17.1% or AED 1.4bn will be directed to the education sector. Under UAE vision 221, educational programs are to be focused on improving education infrastructure by equipping all schools, universities and colleges with smart systems. Dubai s private education market remains one of the most attractive and fastest growing markets globally with AED 6.8bn of tuition revenues (academic year 216/17). During the academic year 216/17, a total of 26 schools existed in Dubai providing education to 36, students out of which 273,6 (9%) were enrolled in private schools. Over the next few years, the number of private schools in Dubai and Abu Dhabi are projected to grow in anticipation of significantly higher enrollment figures. UAE Ministry of Education expects 4, students in Dubai by 22, and 283,8 in Abu Dhabi by 221. Overall, UAE was ranked 42nd among 188 countries in the 217 Human Development Index (HDI). Separately, in the 217-218 Global Competitiveness Report, UAE was ranked as 12th and 16th based on the parameters of quality of higher education and training, and primary education, respectively. The quality of education is indicative of the existence of renowned schools and colleges in the country. The gradual expansion of the smart learning program, launched five years ago, has enabled the country to rank 13th in terms of providing internet access at its schools. Public schools 1% Private schools Private schools 9% UAE quality of education rankings, out of 137 countries Extent of staff training Local availability of specialized training services Internet access in schools Quality of management schools Quality of math and science education Quality of the education system 218 Rank 12 total of 36, students 13 13 Public schools 15 15 24 1 2 3 Source: KHDA, Colliers International, WEF, Emirates NBD Research 6

Overall business activity growth in Dubai s non-oil private sector increased at a slower rate in April Highlights The headline Dubai Economy Tracker Index (DET) fell to 53.9 in April from 55.3 in March and from a 218-high of 56. in January. Both output (57.1) and new work (58.) increased sharply last month but at a slower rate than in previous months. The employment index signaled a marginal increase in jobs last month, with the index at 5.3, up from 49.7 in March. The input cost index rose to 54.3, the highest reading since January, when VAT pushed the index up to 59.2. Selling prices were largely unchanged however, with the output price index only just above the neutral level despite the much higher input price inflation. Emirates NBD Dubai economy tracker 65 6 55 5 45 Employment Dubai Economy Tracker Index Prices Charged 4 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 ENBD Dubai economy tracker sector indices 65 Construction Travel & tourism Wholesale & retail trade 6 ENBD Dubai economy tracker sector indices: selling prices 6 56 Travel & tourism Construction Wholesale & retail trade 55 52 48 5 44 45 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 4 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Source : Markit, Emirates NBD Research 7

Travel & tourism remained the strongest performer (55.3), followed by construction (54.9) and wholesale & retail (53.5) Employment index signaled a marginal increase in jobs 6 58 56 54 Dubai Economy Tracker Index Employment Construction sector activity accelerated in April 62 57 52 Construction Sector Index Prices Charged Employment 52 5 48 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 47 42 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Travel and tourism sector index declined last month Wholesale & retail trade sector momentum slowed in April 65 6 Travel & tourism Index Employment Prices Charged 65 6 Wholesale & Retail Sector Index Employment Prices Charged 55 55 5 5 45 45 4 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Source: Markit, Emirates NBD Research 4 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 8

Dubai economic update 217 Dubai GDP grew 2.8% in 217 Sluggish retail trade sector weighed on growth 5. 4. 12. 1. 8. 3. 2. 1. 4.6 4.1 4.1 3.7 3.6 3.4 2.8 1.9 21 211 212 213 214 215 216 217 6. 4. 2.. 8. 7.3 4.5 4.1 3.7 3.5 2..9 Transport & storage the biggest contributor Dubai GDP by sector 217, % of total to Dubai s growth Information & communication 4.1% Hospitality 4.9% Social services 5.1% Construction 6.3% Real estate 7.1% Other 14.3% Manufacturing 9.4% Trade 26.6% Source: Dubai Statistics, Emirates NBD Research % of total Transportation & storage 11.8% Financial & insurance services 1.4% Forecasted fastest growing sectors 12. 1. 9.5 1. 1. 8. 7.5 6. 6.5 5.5 5.5 6. 4. 218f 219f 22f Hospitality Construction Transport & Logistics 6.

AED bn Dubai issues 19,877 new business licences in 217 Dubai business licences up 5.5% in 217 Dubai Economy Tracker averages 55.7 in 18 16 14 12 1 8 business licenses in thousand 18.4 116.4 128.6 139.3 149.8 145.4 153.4 211 212 213 214 215 216 217 Total Licences (LHS) % y/y (RHS) % y/y 15 5-5 -15-25 6. 5. 4. 3. 2. 1. 62. 6. 58. 56. 5.3 5.6 4.8 4.3 4. 4. 54. 3.6 3.8 3.2 2.4 2.6 3.1 3.2 3.2 2.3 2.5 52. 5. Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 214 215 216 217 218 Real GDP Growth (LHS) Dubai Economy Tracker (RHS) Dubai s non-oil trade rises to AED 1.3tr in 217 Breakdown of Dubai s budget spending 1 AED bn. 3 6 Wages & Salaries Infrastructure Administration & Grants 8 2 5 6 4 1 4 3 22.2 23.8 2 2 8. 11.9-1 21 211 212 213 214 215 216 217 Imports (LHS) Exports & Re-Exports (LHS) Imports (% y/y, RHS) Exports & Re-Exports (% y/y, RHS) 1 15.6 17. 217 218 Source: Dubai Statistics, Markit, Emirates NBD Research 1

Dubai s real estate sector Highlights Residential real estate prices accelerated their decline in 218, albeit on low volumes. The composite Phidar Advisory price index (8% freehold apartments and 2% freehold villas in selected communities) declined -7.% y/y in March. The average decline in 218 was -7.2% y/y compared with -5.4% y/y in Q4 217. Since the Q2 214 peak, prices of properties in the sampled freehold communities have declined -3%. However, apartments (-6.2% y/y in ) fared better than villas (-11.3% y/y) and lower priced units fared better than the more expensive properties. Gross residential rents declined -9.% y/y for apartments, putting some pressure on yields, while villa rents declined -1.1% y/y in 218. Given the more upbeat outlook for the GCC economies, oil prices, VAT exception for residential transactions as well as better global growth prospects, we expect the downside for residential real estate to be limited this year. Phidar Advisory expects residential real estate prices to recover modestly in 219 and rise further in 22-221. The value of real estate investments reached USD 29.1bn in 217, up by 17.3% compare with the -32.6% decline in 216, according to Dubai Land Department (DLD). Dubai s property market attracted investors from all continents with UAE nationals topping the list at USD 6.9bn or 23.6% of the total. India ranked second (USD 4.2bn), followed by Saudi Arabia (USD 1.9bn), UK (USD 1.6bn), and Pakistan (USD 1.4bn). Other top investors in Dubai s real estate include citizens from China, Jordan, Egypt, and Canada. Dubai real estate services sector growth 12. 1. 8. 6. 4. 2.. Dubai records USD 15.8bn real estate transactions in 1 8 6 4 2 6.9 USD bn 2.6 73.2 75.1 1.6 212 213 214 215 216 217 77.6 Total RE Transactions 15.8 215 216 217 218 4.5 9.8 7.3 Source: Dubai Tourism, Dubai Statistics Centre, Emirates NBD Research 11

% y/y % % y/y Residential real estate prices accelerated their decline in 218 Dubai residential property prices Volume growth down -2% (whole of Dubai) 6 Apartments Villas Composite index 3-3 -6-9 -12-15 -18 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 22 Apartments (LHS) Villas (RHS) 18 14 1 6 2 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 4 35 3 25 2 15 1 5 Rents declined at a slower rate in 218 While yields remain high 2 Apartments (LHS) Villas (RHS) -2-4 -6-8 -1-12 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Source: Phidar Advisory, Emirates NBD Research -3-5 -7-9 -11-13 9. Apts Yields Villas Yields 8. 7. 6. 5. 4. 3. Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

UAE: Card spending up 11% in Jan-Apr 218 Top 1 foreign spenders in the UAE Domestic vs foreign spending, % of total y/y increase (%) Jan-Apr 218 Jan-Apr 217 Rank Rank United States 7.1 1 1 Saudi Arabia 4.6 2 2 United Kingdom 27.4 3 3 Russia 44.8 4 4 China 4.3 5 6 Germany 3.2 6 8 Kuwait 3. 7 7 India 2.9 8 9 France 2.6 9 11 Switzerland 2.2 1 1 1 8 38.3 54.4 6 4 61.7 2 45.6 Hotels Jewellery & watches Foreign UAE 77.6 22.4 Airlines & Travel Agents 67.1 32.9 Clothing & boutiques 28.9 71.1 Duty Free 72.6 27.4 Restaurants GCC spenders in the UAE (3M moving average) Total spending, 6 4 2 % y/y Saudi Arabia Qatar Kuwait Oman Bahrain 3 25 2 Jan-Apr 218 22.7 27.8 15-2 -4-6 -8-1 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 1 5-5 9.2 Hotels -1.4 Jewellery & watches 11.2 Airlines & Travel Agents.8 Clothing & boutiques Duty Free Restaurants Source: Network International, Emirates NBD Research

% y/y The number of tourists coming to Dubai reached 4.65mn in 218 Highlights The travel and tourism sector index of Dubai s Economy Tracker (DET) declined to a four-month low of 55.3 in April 218, on the back of softer output and new work growth. Encouragingly, employment increased modestly on average after two months of decline in the sector. Firms absorbed higher input costs, as selling prices declined marginally for the second month in a row. Overall, businesses in the travel & tourism sector were slightly more optimistic about their prospects in the coming year than they were in February and March. The number of tourists coming to Dubai and staying in hotels including holiday rentals and on-board cruise ships for at least one night reached 4.65mn in 218, up by 1.8% compared with the same period last year. Western Europe was the lead tourist source for 218, accounting for 23.% of the total figure, followed by the GCC (17.%) and South Asia (17.%). In terms of country specific volumes, India remained Dubai s top source market with 617, tourists, an increase of 6.7% y/y. Saudi Arabia ranked second with 434, tourists (-1.4% y/y) followed by UK with 323, tourists (-7.7%), Russia with 259, tourists (15.6% y/y) and China with 258, tourists (12.2% y/y). Dubai key tourist markets, 218 175 115 55-5 -65 Top 1 visitors by nationality, 218 % of total 4.65mn visitors Russia China UK India -125 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Other 4.7% Pakistan 3.% Iran 3.2% USA 3.9% India 13.3% Germany 4.2% Saudi Arabia 9.3% China 5.5% Oman 4.5% UK 6.9% Russia 5.6% Source: DTCM, Dubai Statistics Centre, Emirates NBD Research 14

% USD Dubai s travel & tourism sector (cont.) Highlights DXB passenger traffic up 1.1% in Passenger traffic at the Dubai International Airport (DXB) rose to 22.7mn in 218, up 1.1% y/y. Cargo volume was down -3.2% y/y over the same period. Dubai s hotel occupancy averaged 85.9% in 218 slightly down from 86.3% the same period a year ago. Revenue per available room (RevPAR) has broadly stabilized y/y in 217, following two years of double digit decline. The supply of hotel rooms in Dubai increased by 5.% y/y in March 218 to 1,232 rooms. The Department of Tourism and Commerce Marketing (DTCM) is targeting 14, to 16, hotel rooms by the end of the decade. 26 22 18 14 1 6 2 mn people 12.3 211 14.3 212 16.5 213 18.4 19.6 2.9 214 Passenger traffic (LHS) 215 216 22.5 22.7 217 million tons 218 Freight volumes (RHS) 68 6 52 44 36 28 2 Source: Dubai Airports, Bloomberg, Emirates NBD Research Abu Dhabi International Airport (AUH) passenger traffic Dubai occupancy rates remain high in 7 6 5 4 3 2 1 mn people 2.8 3.4 3.7 4.6 5.5 6. 6.2 thousand tons 5.5 25 2 15 1 5 95 9 85 8 75 88.7 88.1 85.8 83.8 86.3 85.9 28 25 22 19 16 13 211 212 213 214 Passenger traffic (LHS) 215 216 217 Freight volumes (RHS) 218 7 213 214 215 216 217 218 Average hotel occupancy rates (LHS) Average revenue per available room RevPAR (RHS) 1 Source: STR Global, Bloomberg, Emirates NBD Research Source: STR Global, Bloomberg, Emirates NBD Research 15

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