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 2020. 01 For the month of April 20, the overall Consumer Price Index (CPI) has reached 119.85, 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 +0.74 and Transportation by + 0.35. 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.
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
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 78 80 81 82 83 85 86 84 84 85 85.3 85.1 84.8-0.3 6 1,378 Burj Khalifa Tower 48 49 50 53 56 56 56 53 53 53 52.8 53.4 53.3-0.2 10 3,788 Downtown 87 89 90 92 96 97 100 102 103 104 104.4 104.4 104.6 0.3 18 2,851 Business Bay 51 54 58 59 62 65 67 70 72 73 73.6 74.3 74.9 0.8 39 1,385 DIFC 43 44 44 46 48 48 48 51 51 54 54.9 55.2 55.2 0.0 26 1,850 Dubai Land 63 66 67 69 70 72 73 74 75 76 76.8 76.6 77.4 1.0 18 989 Dubai Marina 62 67 70 72 75 76 77 79 82 82 83.5 83.4 83.4 0.0 25 1,752 Greens 61 61 62 64 66 69 71 70 71 72 73.4 73.4 74.0 0.9 21 1,406 International City 52 54 54 59 60 61 64 67 70 73 75.0 75.7 75.7 0.0 40 681 Beach Residences Lake Towers 67 67 68 71 73 74 75 77 77 78 79.1 79.4 79.1-0.4 18 1,563 49 51 51 53 55 56 56 57 58 59 61.2 61.9 61.9 0.0 22 1,038 Islands 83 88 91 93 95 97 98 97 98 98 98.5 98.5 98.6 0.2 12 1,825 Park 67 70 71 78 82 85 85 82 82 82 82.0 81.2 80.7-0.6 15 1,281 Village 77 83 87 91 97 98 101 112 111 1 1.1 1.8 1.1 0.3 38 908 Old Town 66 67 68 69 71 72 76 74 75 75 76.8 76.8 76.8 0.0 2,188 Palm 102 105 108 1 116 119 120 119 120 121 125.7 126.3 126.3 0.0 20 2,810 Springs/Meadows 73 74 76 76 79 80 82 81 83 84 84.8 84.5 84.0-0.6 1,469 *Index of Median prices, Base = 100 (October 2008) Per Sq. Ft (AED)
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 78 80 81 82 83 85 86 84 84 85 85.3 85.1 84.8-0.3 6 1,378 83 88 91 93 95 97 98 97 98 98 98.5 98.5 98.6 0.2 12 1,825 67 70 71 78 82 85 85 82 82 82 82.0 81.2 80.7-0.6 15 1,281 77 83 87 91 97 98 101 112 111 1 1.1 1.8 1.1 0.3 38 908 73 74 76 76 79 80 82 81 83 84 84.8 84.5 84.0-0.6 1,469 04
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 48 49 50 53 56 56 56 53 53 53 52.8 53.4 53.3-0.2 10 3,788 87 89 90 92 96 97 100 102 103 104 104.4 104.4 104.6 0.3 18 2,851 Dubai Marina 62 67 70 72 75 76 77 79 82 82 83.5 83.4 83.4 0.0 25 1,752 Beach Residences Lake Towers 67 67 68 71 73 74 75 77 77 78 79.1 79.4 79.1-0.4 18 1,563 49 51 51 53 55 56 56 57 58 59 61.2 61.9 61.9 0.0 22 1,038 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