Chestertons Market Talk

31 May 2016

Agenda

• Opening Remarks - Robin Teh• Dubai trends - Ian Hollingdale; Director of Sales and Leasing Dubai • Abu Dhabi trends - Drica Rodrigues; Head of Abu Dhabi Agency • The impact of construction trends on the real estate sector - Daniel Xu Senior Legal

Consultant, DLA Piper Middle East LLP• UK trends - Amit Seth; Head of International Residential Developments• International trends - James Hodgetts; International Sales Consultant • Closing - Robin Teh

65+ Offices Worldwide – 15 Countries –5 Continents

9 MENA Offices - 4 Countries – 100 Employees

MENA Head OfficeDubai – Boulevard Plaza

International SalesSales & Leasing

DUBAIAl Barsha

Sales & LeasingValuation

Plant & MachineryResearch

Property Management

DUBAIAl Barsha 2

Sales & LeasingMarketing

ABU DHABI

Sales & LeasingValuations

AJMAN

Sales & LeasingValuation

Plant & MachineryResearch

Property Management

SAUDI ARABIA

RiyadhInternational Sales

Valuations

QATAR

Sales & LeasingValuation

Plant & MachineryResearch

Property Management

Al Khobar

International SalesValuations

Jeddah

International SalesValuations

‘Our success isn’t simply a result of our presence. Our Chairman and shareholders emanate from the region; our Directors have extensive experience in the area and have therefore built one of the strongest brands. We are part of the culture and speak their language.’

Dubai

Market stabilizes in Q1 2016 as price drop slows and investment appetite improves

• Emirates Living, Dubai Marina and Palm Jumeirah were top transacted areas. But highest yields were provided by International City ,Discovery Gardens and Dubai Silicon Oasis .

• Mortgage transactions jumped 50% in Q1 2016, increasing total transactions to a high of AED 27 Billion. Office segment witnessed a decline of 7%. Indeed banks report mortgage business booked well into Q3

• Industrial segment remained stable for the quarter, labour camps continue to attract investor interest

• Pockets of long-term opportunity emerge in distressed assets in prized locations.

Chesterton’s market observation

Mix concerns of oversupply and economic uncertainty out weighs demand and induces market caution.

Increase in oil prices have led to an overall improvement in investor appetite

Property price trend*

*Chart does not reflect actual prices, displayed only for reference

Market Trend

Dubai Property Market Update May 2016

Sales prices

Rental prices

Discovery Gardens9%-10%

International City

9%-10%

Dubailand7%-8%

JVC7%-8%

Residential yields 8.4%

7.7%6.6% 6.8%

5.6%4.7%

3.9%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

Studio 1BR 2BR 3BR 3 BR (Villas)

4 BR (Villas)

5 BR (Villas)

Source: Chstertons AnalysisMay 2016

Dubai Property Market Update

Investment Hotspots

• Overall market yields have been slightly increased as residential prices dropped this quarter.

• Apartments provide higher average yield than villas.

• International City and Discovery Gardens are the highest yield providers in apartments. at an average of 8%

• Villa segment overall provided an average yield of 4.7%

• The springs provided the highest yield to investors at approximately 6.4%

1

Residential

Sales: Q2 was expected to be quiet in

terms of transactions activity. However there

has been a marked increase in

transactions. Sales prices may see further

pressure. 2Rentals: Rentals to see further

correction between 5% to 7% as concerns over disposable

income of residents continue to affect the market

3New projects: New projects launched

by DAMAC, Emaar received well by investors

Commercial4

5Rental: Office rentals continue to witness correction on weak occupier demand and profitability.

6Grade A offices near established commute areas to see good occupancy and healthy demand.

Market Outlook

2015 2020

Office: Office demand to be weak with price correction to continue in prime and secondary locations.Industrial: Industrial segment lower take up levels in general, however demand for good quality warehouses remains strong.

Dubai Property Market Update May 2016

Abu Dhabi

Abu Dhabi’s market in all sectors sees moderate correction as market reshuffles

• Apartments segment witnesses moderate price correction, villa prices remain stable due to steady supply

• Residential apartment rents begin to witness a reduction due to an over supply

• Lower demand for large offices and entire floors as government cuts spending and expansion plans. Leading to a trend for smaller office suites and serviced offices

• Expatriate tenants in Abu Dhabi will have to pay 3 per cent extra on their rent distributed annually thro utility bills as a municipality contract fee.

• New regulations relating to escrow accounts, land and property registration, strata law, reduce oversupply risk and increase transparency and investors / buyer confidence .

Chesterton’s market observation

Rents and prices to be seen declining in the summer months in high end areas due to continued uncertainty in oil prices whereas affordable segment expected to outperform.

Property price trend*

*Chart does not reflect actual prices, displayed only for reference

Market Trend

Capital values driven down by economic uncertainty, government policy on employment . The current over supply constrains the demand for long term leases leading to a trend of short term lettings

Sales prices

Rental prices

Total Leads from Jan till April: 2919 LeadResidential: 2308 | Commercial : 596

Abu Dhabi Property Market Update May 2016

Investment Hotspots

AL Reef8%-9%

Al Muneera8%-9%

Gross yields in Abu Dhabi

AL Ghadeer7%-8%

7.7%6.9% 7.1%

5.9%5.4%

4.7%

1BR 2BR 3BR 3 BR (Villas) 4 BR (Villas) 5 BR (Villas)

Source: Chesterton Analysis

• The market continues to offer attractive yields to investors, as rental rates for villas remain stable witnessed a slight increase last quarter

• Al reef downtown once again outperforms by providing highest yields in the apartments and villas segment.

• Yields for apartments is higher than that of villas

• Yas off plan offers ROI up to 8%, facilitated by a well structured payment plan

Yas off plan

7%-8%

1

Residential

Sales prices expected to remain subdues in

2016. High-end segment of the market

to see a higher correction due to a

buyer’s market

2Rentals: Luxury units couldsee some pressure on rentalsas demand from high-endexpatriate segment is expectedto be weak. Due to a cut backon government and companiesallowances

.3

Recent over supply has destabilized the market. the

price corrections to be seen in 2016 will restore balance and

stability

Commercial4

5Rent slips hit secondary and tertiary office locations more than Grade A office locations.

Low commercial demand to persist as government spending cuts curtail expansion

6Major office project announced including Al Wafra Office, Al Soho Square, Maryah Plaza, Al Reem mall

Market Outlook

2015 2020

United Kingdom

Manchester & Birmingham

• Northern Powerhouse Government Investment Initiative• Yields in London average 3-4% Gross & 6-7% In Birmingham & Manchester• Strong Capital Appreciation Due to Strong Growth• Chestertons Partnership With Top Tier Developers• More Affordable Price Point Prices Start From GBP150,000 or GBP350/SQFT• UK’s Less Volatile Property Market• ADIA Investment Into Etihad Stadium• 20% Of Buy To Let Sales in UK From UAE• $2 Billion Investment in Last Quarter of 2014• Majority Of Manchester City Is Between The Age Of 21-39 (Young Professionals)• Corporations Moving to & Operating Head Offices In Birmingham Central• HS2 Rail Link Connecting London & Birmingham in 48mins and Manchester in 68mins• Both Cities Are Well Connected Internationally With Direct Flights to Major US

Cities/China/Middle East

International

Berlin

Buying international real estate is a big decision and many investors want to see an established trend before committing.

Berlin continues to be one of the most attractive investment locations for real estate offering high returns in a stable environment.

Why demand continues to increase:• Growing population• Rising household figures• Economic growth• Low interest rates• Low cost of living relative to other capital cities• Quality of life, security and value for money

Pricing

Rent Per Month Avg. RangeApartment (1 bedroom) in City Centre 664.32 550.00-800.00Apartment (1 bedroom) Outside of Centre 465.01 400.00-600.00Apartment (3 bedrooms) in City Centre 1,289.29 1,000.00-1,500.00Apartment (3 bedrooms) Outside of Centre 919.42 800.00-1,100.00

Buy Apartment PriceCity Centre 4,074.14 3,500.00-5,000.00Outside of Centre 2,671.58 2,100.00-3,000.00

Purchase and rental in Euros per sqm

Source: Numbeo, May 2016

Berlin

We have seen capital appreciation of ca. 10pc with a ca. 5pc, nett, return on investment. Prime city centre locations giving a slightly lower return as is to be expected.

Potential for new developments in all parts of the city.

The continuing influx of new residents will further increase the overhang in demand. For this reason, Chestertons are expecting a slight price increase for the entire Berlin residential market. It is especially in the mid-market and secondary locations which we expect to benefit from the lack of supply.

Prime ex-pat property destination.

Chestertons have several exciting developments in Berlin for international investors including refurbishment and new build options.

What we have seen and the outlook going forwards

Lisbon

• Location: few hours flight time to many main European cities• Resilient real estate market: stability of house prices• Value for money: prime London real estate can reach around €33,000/sqm

whereas Lisbon can be acquired for €6,000 - €8,000sqm• Return on investment (ca. 5pc nett)• Flexible investment immigration policies: potential for Golden Visa eligibility &

Non Habitual Tax Residency• Well placed Lisbon real estate is positioned to be one of the best performing

asset classes over the next 10 years.

What makes it such an attractive investment ?

Pricing

Rent Per Month Avg. RangeApartment (1 bedroom) in City Centre 567.21 450.00-700.00Apartment (1 bedroom) Outside of Centre 363.84 300.00-450.00Apartment (3 bedrooms) in City Centre 1,081.19 800.00-1,500.00Apartment (3 bedrooms) Outside of Centre 656.15 500.00-800.00

Buy Apartment PriceCity Centre 2,872.67 2,400.00-3,500.00Outside of Centre 1,553.57 1,200.00-2,000.00

Purchase and rental in Euros per sqm

Source: Numbeo, May 2016

Golden Visa Scheme

What is it:• Temporary permit to reside in Portugal• Same rights as a Portuguese citizen with regards employment, education and health• Potential grant of Portuguese citizenship after 6 years

Who is it for?• Non-EU nationals who undertake an investment activity in Portugal for at least 5 years

Qualifying investment?• In real estate the criteria is a minimum investment of €500,000.

Other countries offer residency/citizenship by investment schemes: Spain, Turkey, Cyprus, etc.

Residency/citizenship by investment

Questions?

Dubai• Ian Hollingdale; Director of Sales and Leasing Dubai• 0505051464 • ian.hollingdale@chestertons.com

Abu Dhabi• Drica Rodrigues; Head of Abu Dhabi Agency• 0505148792• drica.rodrigues@chestertons.com

United Kingdom • Amit Seth; Head of International Residential Developments• 0508850961• amit.seth@chestertons.com

International • James Hodgetts; International Sales Consultant• 056 3217600• james.hodgetts@chestertons.com

Contact details