Confidential
DUBAI REAL ESTATEMARKET OVERVIEW – 2017
Cityscape 2017
Confidential
2
Market Overview Q2 2017
Political & Economic
Dubai’s population stood at 2.8 million at the end of the secondquarter of 2017 according to DSC.
Dubai International Airport’s passengers reached 36.9 million up untilMay, a 6.7% increase Y-o-Y.
Dubai Customs reported that non-oil foreign trade grew by 2.7% andreached AED 327 billion in the first quarter of 2017.
The Dubai Chamber of Commerce and Industry have had 8,900 newmembers joining them within the first six months of 2017, a 10.9% yearon year increase.
The IMF has lowered its 2017 and 2018 growth forecasts for the UAEciting the impact of low oil prices.
Dubai’s non-oil private sector grew faster in the first half of the year ascompared to the same period last year, according to reports byEmirates NBD. The Dubai economy tracker index registered at 56.5 inJune, up from May’s seven-month low of 55.
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3
Real Estate Market
Mortgage Market
Apartment sales prices are up by 0.1% when compared to the previousquarter. While, apartment prices rose by 0.1%, villa prices rose by 1%when compared to the first quarter of 2017 indicating a bottoming outphase.
Average rent prices across various districts in Dubai have been fallingdown as massive residential supply have been added to the market. Adecline in the oil prices and job openings have added further pressureon the rentals.
Rental drops have led to a reduction in the rental incomes which inreturn is pulling the yield rates down.
More than 7,000 residential units have been added in the secondquarter of 2017.
EIBOR will likely to perform in an uptick direction albeit on a lowerlevel to US rates as FED is projected to three rate increases this yearwhich would be followed by another three increases in both 2018 and2019.
Due to the lower oil prices, local market liquidity had been affected,leading to a rise in EIBOR over the past year.
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Transaction Analysis for Ready Properties
4
Dubai Real Estate Market Overview 2017
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5
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 13% down 1% down
Mortgage Transactions 1% up 15% up
Value of Transactions
Sales Transactions 5% down 7% up
Mortgage Transactions 7% up 3% up
3,073
3,562
2,807
3,7514,043
3,532
1,926 1,858 1,7092,067 2,116 2,128
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Residential & Commercial Transactions [Ready]
Sales Transactions Mortgage Transactions
5.4
6.1
4.8
6.56.8
6.5
3.8 4.13.5 3.7 3.9
4.2
0
1
2
3
4
5
6
7
8
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Residential & Commercial Transactions [Ready]
Sales Transactions Mortgage Transactions
Residential and Commercial Unit Transaction Analysis (Ready)
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6
Apartment Transaction Analysis (Ready)
2,353
2,732
2,148
2,8293,011
2,413
1,3141,096 1,072
1,313 1,319 1,348
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Apartment Transactions [Ready]
Sales Transactions Mortgage Transactions
3.0
3.5
2.7
3.5
4.1
3.4
1.7 1.61.4
1.7 1.7 1.8
0
1
1
2
2
3
3
4
4
5
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Apartment Transactions [Ready]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 20% down 12% down
Mortgage Transactions 2% up 23% up
Value of Transactions
Sales Transactions 17% down 4% down
Mortgage Transactions 4% up 16% up
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7
369
465
378
519 539597
437
548
476
594 577618
0
100
200
300
400
500
600
700
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Villa Transactions [Ready]
Sales Transactions Mortgage Transactions
1.92.0
1.6
2.12.0
2.5
1.8
2.1
1.8 1.8 1.8
2.1
0
1
1
2
2
3
3
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Villa Transactions [Ready]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 11% up 28% up
Mortgage Transactions 7% up 13% up
Value of Transactions
Sales Transactions 23% up 23% up
Mortgage Transactions 16% up 0%
Villa Transaction Analysis (Ready)
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1.25
1.29 1.28
1.23
1.35
1.40
1.28
1.42
1.30
1.29
1.311.34
1.1
1.2
1.2
1.3
1.3
1.4
1.4
1.5
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Mill
ion
s
Average Ticket Price of Apartment Transactions [Ready]
Average Sales Ticket Price Average Mortgage Ticket Price
5.06
4.35 4.23 4.123.74
4.17
4.163.91 3.86
2.993.20
3.47
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Mill
ion
s
Average Ticket Price of Villa Transactions [Ready]
Average Sales Ticket Price Average Mortgage Ticket Price
Apartments Ticket Size Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 4% up 8% up
Mortgage Transactions 2% up 6% down
Villas Ticket Size
Sales Transactions 11% up 4% down
Mortgage Transactions 8% up 11% down
Average Sales & Mortgage Transaction Ticket Price (Ready)
Confidential9
351 365
281
388 379
418
175
214
161 160
216
141
3
53
103
153
203
253
303
353
403
453
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Commercial Transactions [Ready]
Sales Transactions Mortgage Transactions
560530
423
850
544477
323366
252 241
323
202
0
100
200
300
400
500
600
700
800
900
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Mill
ion
s
Value of Commercial Transactions [Ready]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 10% up 15% up
Mortgage Transactions 35% down 34% down
Value of Transactions
Sales Transactions 12% down 10% down
Mortgage Transactions 37% down 45% down
Commercial Transaction Analysis (Ready)
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0
100
200
300
400
500
Area-wise Transactions - Sales vs Mortgage Number
Sales Mortgage
0.00.20.40.60.81.01.21.4
BIL
LIO
NS
Areawise Transactions - Sales vs Mortgage Value
Sales Mortgage
➢ According to the property registrations,
Dubai Marina, International City and
Jumeirah Lake Towers accounted for
the highest number of completed
sales.
➢ During Q1 2017, Villa communities had
shown a better mortgage penetration
when compared to apartment
communities, due to nature of
investment. A similar trend can be seen
in Q2 2017 as well.
➢ While Mortgage usage is subdued in
the affordable location, areas such
as Dubai Marina, JLT and Palm
Jumeirah have had a high number of
mortgage usage.
Area-wise Transaction Analysis (Ready)
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Transaction Analysis for Off-Plan Properties
11
Dubai Real Estate Market Overview 2017
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2,956
4,5554,978
3,1112,678
4,300 4,055 4,146
7,082
4,714
28 105 78 71 54 141 227 290 218 197
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Residential & Commercial Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
5.5
7.77.3
4.53.8
6.0
7.3
6.0
10.7
5.9
0.1 0.2 0.2 0.1 0.1 0.3 0.5 0.5 0.4 0.3
0
2
4
6
8
10
12
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Residential & Commercial Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 33% down 10% up
Mortgage Transactions 10% down 40% up
Value of Transactions
Sales Transactions 45% down 2% down
Mortgage Transactions 38% down 5% down
Residential and Commercial Unit Transaction Analysis (Off-Plan)
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2,750
4,181 4,111
2,8282,493
3,9033,688 3,726
5,545
4,195
26 55 62 47 28 104 181 269 191 143
0
1,000
2,000
3,000
4,000
5,000
6,000
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Unit Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
5.0
7.0
6.0
3.83.3
5.1
6.1
5.0
7.9
4.8
0.1 0.1 0.1 0.1 0.0 0.1 0.3 0.5 0.4 0.2
0
1
2
3
4
5
6
7
8
9
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Unit Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 24% down 7% up
Mortgage Transactions 25% down 38% up
Value of Transactions
Sales Transactions 39% down 6% down
Mortgage Transactions 47% down 76% up
Unit (Apt. &Service Apt. & Office) Transaction Analysis (Off-Plan)
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206
374
867
283185
397 367 420
1,537
519
2 50 16 24 26 37 46 21 27 54
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
No of Villa Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
0.4
0.7
1.2
0.70.4
0.9
1.2
0.9
2.8
1.1
0.0 0.1 0.0 0.0 0.00.2 0.3
0.0 0.1 0.1
0
1
1
2
2
3
3
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Bill
ion
s
Value of Villa Transactions [Off-Plan]
Sales Transactions Mortgage Transactions
No of Transactions Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 66% down 31% up
Mortgage Transactions 100% up 46% up
Value of Transactions
Sales Transactions 62% down 21% up
Mortgage Transactions 30% up 61% down
Villa Transaction Analysis (Off-Plan)
Confidential15
1.831.68
1.471.34 1.34 1.32
1.64
1.35 1.421.15
3.33
2.28 2.27
1.67
1.21 1.131.41
1.832.02
1.45
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Mill
ion
s
Average Ticket Price of Unit Transactions [Off-Plan]
Average Sales Ticket Price Average Mortgage Ticket Price
2.04 1.891.43
2.44 2.40 2.27
3.35
2.261.85
2.100.77
1.30
0.73
1.241.56
4.64
5.51
1.531.92
1.25
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Mill
ion
s
Average Ticket Price of Villa Transactions [Off-Plan]
Average Sales Ticket Price Average Mortgage Ticket Price
Units Ticket Size Q-o-Q (% Change) Y-o-Y (% Change)
Sales Transactions 19% down 12% down
Mortgage Transactions 29% down 28% up
Villas Ticket Size
Sales Transactions 14% up 8% down
Mortgage Transactions 35% down 73% down
Average Sales & Mortgage Ticket Price (Off-Plan)
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0100200300400500600700
Area-wise Transactions - Sales vs Mortgage Number
Sales Mortgage
0.0100.0200.0300.0400.0500.0600.0700.0
MIL
LIO
NS
Areawise Transactions - Sales vs Mortgage Value
Sales Mortgage
➢ About 34% of the total sales transactions,
totaling to 1,612 transactions, were
concentrated in three areas: JVC, Al
Furjan and Business Bay.
➢ A boost in the supply in the mid-income
housing communities have caused an
upwards movement in the transactions
activities in the affordable housing
communities. Developers are getting
aggressive with their off plan units pricing
to sell their off-plan inventory.
Area-wise Transaction Analysis (Off-Plan)
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Investor Profile
17
Dubai Real Estate Market Overview 2017
Confidential18
26
.04
9.5
7
2.8
0
3.5
7
1.0
0
1.2
8
16
.90
20
.81
8.5
0
10
.88
34
.49
22
.00
8.0
0
2.0
0
2.0
0
0.5
0
0.5
0
12
.00
12
.00
4.4
0 5.8
0
22
.00
U A E S A U D I A R A B I A
Q A T A R K U W A I T B A H R A I N O M A N A R A B I N V E S T O R S
I N D I A P A K I S T A N I B R I T I S H O T H E R F O R E I G N E R S
In A
ED B
illio
ns
Value of Real Estate Investments by Nationality
2015 2016
Investor Profile Analysis
Confidential19
65
59
32
59
79
9 11
17
29
4
41
3
83
25
87
56
61
06
48
89
15
41
1
70
00
32
94
10
06
77
0
20
4
30
1
64
16
62
63
33
72
33
72
98
27
U A E S A U D I A R A B I A
Q A T A R K U W A I T B A H R A I N O M A N A R A B I N V E S T O R S
I N D I A P A K I S T A N I B R I T I S H O T H E R F O R E I G N E R S
No of Real Estate Investments by Nationality
2015 2016
Investor Profile Analysis
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Price Movements
20
Dubai Real Estate Market Overview 2017
Confidential21
60
70
80
90
100
110
120
130
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
REN
T P
RIC
E (A
ED/S
QF/
AN
NU
M)
SALE
S P
RIC
E (A
ED/S
QF)
Price Movements: Dubai Apartments
Sales Price (AED/Sqf) Rent Price (AED/Sqf/Annum)
60
70
80
90
100
110
120
130
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
REN
T P
RIC
E (A
ED/S
QF/
AN
NU
M)
SALE
S P
RIC
E (A
ED/S
QF)
Price Movements: Dubai Villas
Sales Price (AED/Sqf) Rent Price (AED/Sqf/Annum)
Residential Price Movements Over Last 2 Years
Confidential22
-2%
1%
5%
-2%
0%
-4%
0%
0%
-2%
1%
-1% -1% -1%-2%
-1%
-4%-3%
-1% -2%-3%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Business Bay DowntownDubai
DiscoveryGardens
Dubai Marina Dubai SportsCity
The Greens InternationalCity
JumeirahLake Towers
JumeirahVillage Circle
PalmJumeirah
Areawise Apartment Price Changes (Q-o-Q)
Sales Price Change Rent Price Change
-4%
2% 2%0% 0%
-1% -1% -1% 0%
3%
-2%
0%
-5%
1%
-3%-4%
-1%
-5% -4%
-1%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Al Furjan ArabianRanches
VictoryHeights
JumeirahIslands
JumeirahPark
The Lakes The Springsand The
Meadows
JumeirahGolf Estates
JumeirahVillageCircle
PalmJumeirah
Areawise Villa Price Changes (Q-o-Q)
Sales Price Change Rent Price Change
Residential Price Changes by Area – Q2 2017
Confidential23
6.6
%
6.0
%
9.1
%
6.9
% 8.3
%
7.7
% 9.1
%
7.8
%
8.4
%
5.7
%
Gross Rental Yields: Apartments
5.2
%
5.8
%
5.3
%
4.2
% 5.3
%
5.4
%
5.9
%
5.0
% 6.4
%
3.6
%
Gross Rental Yields: Vi l las
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Gross Rental Yields (%)
Yields - Apartments Yields - Villa
Residential Gross Rental Yields
Confidential24
5%3% 3%
-6%-7% -7%
-3%
-10%
-5%
0%
5%
10%
15%
20%
0
50
100
150
200
250
DIFC DowntownDubai
DubaiInternet City
Trade Center(SZR)
Business Bay JumeirahLake Towers
BarshaHeights
Ren
t P
rice
(A
ED/S
qf/
An
nu
m)
Areawise Office Rentals
Average Price (AED/SQF/YEAR) Price Change (Y-o-Y)
100
105
110
115
120
125
130
135
140
145
150
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017
REN
T P
RIC
E (A
ED/S
QF/
AN
NU
M)
SALE
S P
RIC
E (A
ED/S
QF)
Price Movements: Dubai Offices
Sales Price Rent Price
Office Price Analysis
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Dubai residential & Office Market Supply Anaysis
25
Dubai Real Estate Market Overview 2017
Confidential26
4,2
34
17
,05
6
4,8
25
17
,48
5
1,9
05
7,6
75
3,5
00
7,8
68
2,9
70
7,1
88
Q 1 2 0 1 7 Q 2 2 0 1 7 Q 3 2 0 1 7 Q 4 2 0 1 7
Projected Residential Supply in 2017
Announced Supply by Developers Projection Actual Supply
0200400600800
100012001400160018002000
Realized Units by Area (Ytd 2017)
Actual Residential Supply – 2017
Confidential27
82%
18%
Units Launched in 2017 - By Property Type
Apartment Villa
3754
2409 21511629
1153 875 743 563 300 216 144 134 97 96 95 80 40 36
12
23
4 4
21 1
21 1 1 1 1 1 1 1 1
012345678910111213
0
500
1000
1500
2000
2500
3000
3500
4000
Nu
mb
er o
f P
roje
cts
Nu
mb
er o
f U
nit
s
Projects & Units Launched in 2017 - By Developer
5,116
2,168
1,457 1,333824 645 620 505 479 419 418 360
95 760
1,000
2,000
3,000
4,000
5,000
6,000No of Units Launched in 2017 - By Upcoming
Supply
New Residential Project Launches – 2017
Confidential28
232 247 258 271 281 293
12
37
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017 2018
Tho
usa
nd
sAnnounced Residential Supply
Completed Units Announced Supply by the Developers*Only freehold
➢ 22,000 units are in the pipeline as per announcements made by developers.
➢ Around 12,000 units are expected to enter to the market in the remainder of 2017 with a 55%
materialization rate.
➢ As the global economic condition remains unstable, it is causing greater market uncertainty which will
effect the current stable market and prevent projected market bottoming out, further price falls
may follow soon.
Projected Residential Supply – 2017 & 2018
Confidential29
8.8 9.19.7 10.2 10.4 10.6 10.7
0.20.3
-
2
4
6
8
10
12
2012 2013 2014 2015 2016 2017 F 2018 F
Sqm
in M
illio
ns
Dubai Office Supply
Existing GLA (Sqm) Upcoming Office GLA (Sqm)
➢ Tamani Arts Tower in Business Bay and Duja Tower on Sheikh Zayed Road have added around
48k sqm of GLA to the market during the second quarter of 2017.
➢ The pipeline for the remainder of the year is around 165k sqm of office space.
Projected Office Supply – 2017 & 2018
Confidential
Conclusion
30
Dubai Real Estate Market Overview Q2 2017
Confidential31
➢ Domestic Trade was the main driver of Dubai’s GDP growth in 2016. However, tourism, real
estate and manufacturing are predicted to lead economic activity in the future. According to
Dubai Economy (formerly DED) the real estate sector within the emirates is projected to grow
by 4.3% and 3.8% in 2017 and 2018.
➢ Legislations in the UAE, such as Abu Dhabi Law No. 3 of 2015 and Dubai Law No. 8 of 2008
requires Developers to maintain an Escrow Account. This is encouraging Institutions to fund
new developments and is providing protection to mortgagees of off-plan purchases. The
legislations are also increasing the confidence level of investors.
➢ A reduction in the government spending due to slow-moving oil prices have reduced demand
for housing within the country and has slowdown the real estate revenues.
➢ A downwards pressure on the apartments rental rates is expected to continue as various new
projects have been completed and delivered into the market. As for the sales market,
developers have increased the range and number of incentives to attract buyers which might
stabilize the sales prices in Dubai.
➢ The US Federal Reserves, have plans to raise interest rates once more this year, with
expectations for that to happen in either September or December. UAE has hiked interest
rates twice this year (in March and in June), in line with the Federal Reserve’s rate hikes
which will lead to higher mortgage rates.
Conclusion
Confidential32
REIDIN – DUBAI OFFICEConcord Tower. No: 2304.
Dubai Media City. PO Box 333929Dubai. United Arab Emirates
Tel: +971 4 277 68 35Fax: +971 4 360 47 88
www.reidin.com [email protected]