cavendish maxwell residential market report apr 2015

Residential Market ReportDubai - United Arab EmiratesQ1 2015

2Residential Market Report | © Cavendish Maxwell 2015

1.0 FOREWORD 4

2.0 CAVENDISH MAXWELL INTRODUCTION 4

3.0 PROPERTY MONITOR INTRODUCTION 4

4.1 DUBAI RESIDENTIAL MARKET TRENDS – THE STORY SO FAR 5

4.2 MARKET WIDE TRENDS 6

4.3 SALE PRICE & PERFORMANCE 7

4.4 CURRENT RENTAL PRICE & PERFORMANCE 7

4.5 OFF PLAN PROJECT PERFORMANCE 8

4.6 INVESTMENT PERFORMANCE 8

5.0 SUPPLY 10

6.0 REGULATION 12

7.0 ECONOMIC FACTORS 13

8.1 DEVELOPMENT FINANCE 13

8.2 MORTGAGE FINANCE 14

9.0 SENTIMENT 15

Residential Market Report | © Cavendish Maxwell 2015 3

Residential Market Report | © Cavendish Maxwell 20154

2.0 Cavendish Maxwell introduction: a full spectrum property service firm

1.0 Foreword

3.0 Property Monitor: the property data partner for your business

We are a firm of chartered surveyors and property consultants focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell has expanded into one of the region’s largest and highest profile property consultancies.

Adam Wisher, MRICSHead of Development Advisory & Real Estate Research

As a fully qualified member firm of the Royal Institution of Chartered Surveyors (RICS), and with extensive knowledge of the region’s property and asset markets, we have the necessary experience and expertise to deal with property and business assets of all types.

‘The lower transaction volumes during the second half of 2014 created a downward pressure on prices that led to reductions in Q1 2015 as sellers began to lower their expectations to get deals through. The average price at the end of Q1 stood at AED 1,344 per sq ft, representing a 5.1% market wide decline in the preceding 9 months from what looks to be the peak in Q2 2014.

The extent of this trend is not a one-size-fits-all generalisation with established locations - Business Bay, Dubai Marina & parts of Downtown - showing the most resilience. Secondary apartment locations such as International City and end user villa communities have been hit the hardest with year-on-year drops of up to 11%.

Despite these declines, there is still appetite in the off-plan market with several successful launches of product in secondary locations such as Dubai Sports City, Dubai Silicon Oasis and Dubailand. Developers in these locations have, however, had to offer very flexible payment plans alongside developer track record and marketing exposure to drive absorption.

This appetite will be tested in the coming years with 23,000+ units being delivered in 2015. A total pipeline of 54,495 units are expected to be delivered during 2015-2017, 45.7% of this coming from Dubailand and Sports City master developments. In terms of sentiment, the majority of the market expects further price declines up to 5% in the run up to Q3.

The data included within this report draws from the Property Monitor, a live data service driven by bespoke research conducted by Cavendish Maxwell and a number of Approved Partners.

The Property Monitor draws on real-time data as and when MOUs are signed and therefore represents the most current source of actual transactions. More detail than is presented in this report is available from Cavendish Maxwell on

Given our growing prominence in the market more banks, private clients, landlords, tenants and developers are turning to Cavendish Maxwell due to our excellent reputation as property consultants and advisors. We offer a comprehensive range of property services across six departments, each of which is headed by fully qualified chartered surveyors.

request, alongside a range of valuation, agency, advisory, research and other property services.

The Property Monitor is also available to market operatives who are looking to access transactional evidence to inform investment development and transactional activity. All data is verified by an RICS surveyor and covers both Dubai and Abu Dhabi.

INTRODUCTION


4.1 Dubai residential market - the story so far…The property market in Dubai saw unprecedented levels of growth during 2007 and early 2008 following the establishment of the freehold areas, and the subsequent law governing them in 2006. Prices peaked in 2008 following high levels of speculation and then dropped just as drastically in the wake of the global economic crisis.

The emerging market of Dubai has seen relatively short cycles with prices bottoming out in Q1 of 2011 before seeing growth to what looks to be another peak, albeit below that of 2008, in Q2 of 2014.

Key points

• Year on Year (Y-o-Y) drops of 28% and 20.4% following 2008 peak.

• 2009 - period of market consolidation as major government based developers re-grouped, re-structured debt and planned for a more sustainable business model.

These clear cycles between 2008 and 2014 are discussed in this report focusing on the fundamentals behind the factors affecting the market to inform how it will progress up to 2020.

DUBAI MARKET TRENDS: CURRENT ACTIVITY

• Market confidence grew from 2012 and 2013 (Y-o-Y price increases of 37.2% & 12.7% respectively) with changes in the business models of developers alongside new regulations and the EXPO 2020 announcement.

“Factors driving the

market include supply,

sentiment, regulation and

finance - a combination of

which have led to varying

trends post the peaks of

2008 and most recently in

Q2 2014.”

1600

1400

1200

1000

800

600

400

200

Dubai real estate market economic Timelinesource: cavendish maxwell

Q1 2007

1090

1400

1500

1350

1010

1100

13201356

1380

average 878

Q1 2008 Q4 2008 Q1 2009 Q4 2009 Q2 2012 Q4 2013 Q1 2014 Q3 & Q4 2014

US housing bubble began

to burst

UAE Real Estate Boom

Oil price peak at $ 145/ barrel

Oil price collapse at $ 32/ barrel

Oil price collapse

at $ 47/ barrel

Russian currency crisis

Lehman Brothers collapse

Early signs of trouble for

Government-related entities

!

$ 10 billion-worth bond issuance by the Dubai Central Bank

$10BILION

Nakheel and DWC announcing

plans for debt restructuring

Abu Dhabi’s $10 billion loan to

Dubai

Rebound growth for the general

markets - oil prices above $ 100

Expo 2020 announcement

Post-Expo 2020

Q1 2010 to Q1 2012Prolonged period of slow growth,

prices around AED 878/ sq.ft.

figure 1


4.2 Market wide trends - established area profile, sales

“Prime areas recovered

first and have remained

most resilient following

recent price compressions

- prime stays prime.”

“It is important to view

quarterly trends and also

those since the peak but

the year-to-date will

reflect the strong

performance of some

areas in Q1 of 2014.”

Key points

• Whilst declines were marginal across Q3 & Q4 2014 with sellers holding firm alongside reduced volumes, the last quarter has seen a drop across the market. In Q1 2015 villa properties declined by 3%, compared to apartments which dropped by 2%.

• The market looks to have peaked at Q2 2014 at an average price of AED 1,416 per sq. ft. (In the 9 months succeeding we have witnessed a drop of 5.1%, comparing to a drop of 21% in the corresponding period following the peak of 2008.)

2,800

2,600

2,400

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

Dubai Apartment Averages Dubai Villa Averages Downtown Burj Khalifa DIFC Arabian Ranches Springs

Sales value trends, by area Source: Property Monitor Indices*

* the Property Monitor indices draws from data collated under exclusive agreements with reputable local agents and the Cavendish Maxwell’s

valuation business. This includes off-plan and secondary transactions as well as mortgage and non-mortgage deals. Importantly the data

comes in real-time as and when MOUs are signed and all transactions verified by an RICS surveyor.

figure 2



“Apartments dominate

the top ten performing

locations and peripheral

areas have been hit hard

in the villa market.”

“The villa market has

dipped between 2.28%

(Jumeirah Golf Estates) to

10.75% (Jmeirah Village

Triangle) since the

market peak and an

average of 5.65%. The

apartment market has

seen a boarder range of

decline from 1.76% in

Dubai Marina down to

12% in International City

with an average of 4.64%.

End user villa commu-

nities such as Arabian

Ranches and the Springs

declined 4.8% and 8.%

respectively but still show

a strong occupancies and

amongst the highest rates

per sq ft in the rental

market.”

4.3 Sale price & performance - year to date (YTD)

figure 3

figure 4

figure 5

TIME PERIOD

Area

TIME PERIOD

Area

Q1 2014AED

per sq. ft.

Q1 2014AED

per sq. ft.

YTD ranking

YTD Market wide ranking

Q2 2014AED

per sq. ft.

Q2 2014AED

per sq. ft.

Q3 2014AED

per sq. ft.

Q3 2014AED

per sq. ft.

Q4 2014AED

per sq. ft.

Q4 2014AED

per sq. ft.

Q1 2015AED

per sq. ft.

Q1 2015AED

per sq. ft.

Decline from Q2 ‘14 Peak

% change

Decline from Q2 ‘14 Peak

% change

YTD

% change

YTD

% change

Jumeirah Golf Estates (1*)

Jumeirah Islands (2*)

The Lakes (3*)

Jumeirah Park (4*)

Victory Heights (5*)

The Meadows (6*)

Arabian Ranches (7*)

The Springs (8*)

Jumeirah Village Triangle (9*)

Al Furjan Villas (10*)

Dubai Marina (1*)

Emirates Living (Greens/Views) (1*)

Business Bay (3*)

Jumeirah Beach Residences (4*)

Downtown Burj Khalifa (5*)

Palm Jumeirah (Shoreline Apt) (6*)

Dubai Sports City (7*)

Uptown Motor City (8*)

Discovery Gardens (9*)

International City (10*)

1,525

1,656

1,509

1,200

1,347

1,632

1,411

1,321

1,124

1,077

1,688

1,552

1,452

1,798

2,485

1,614

879

964

954

807

4

7

8

10

13

14

15

17

18

20

1

1

3

5

6

9

11

12

16

19

1,592 (4.39%)

1,727 (4.29%)

1,562 (3.48%)

1,237 (3.08%)

1,369 (1.63%)

1,674 (2.57%)

1,433 (1.59%)

1,357 (2.73%)

1,163 (3.41%)

1,049 (-2.66%)

1763 (4.43%)

1647 (6.12%)

1501 (3.37%)

1876 (4.37%)

2565 (3.22%)

1654 (2.48%)

922 (4.89%)

1,022 (6.02%)

982 (2.92%)

815 (0.99%)

1,591 (-0.06%)

1,700 (-1.56%)

1,585 (1.45%)

1,237 (0.00%)

1,370 (0.07%)

1,675 (0.06%)

1,419 (-0.98%)

1,345 (-0.90%)

1,131 (-2.75%)

983 (-6.29%)

1767 (0.22%)

1627 (-1.21%)

1497 (-0.24%)

1854 (-1.18%)

2532 (-1.27%)

1648 (-0.36%)

915 (-0.76%)

1,021 (-0.10%)

936 (-4.59%)

770 (-5.52%)

1,566 (-1.57%)

1,680 (-1.18%)

1,543 (-2.63%)

1,209 (-2.26%)

1,347 (-1.68%)

1,659 (-0.99%)

1,399 (-1.38%)

1,323 (-1.66%)

1,094 (-3.21%)

977 (-0.54%)

+/- Average

1762 (-0.26%)

1609 (-1.11%)

1490 (-0.47%)

1847 (-0.40%)

2518 (-0.56%)

1630 (-1.09%)

889 (-2.84%)

1,000 (-2.06%)

933 (-0.39%)

744 (-3.38%)

+/- Average

1,551 (-0.96%)

1,660 (-1.19%)

1,503 (-2.62%)

1,189 (-1.65%)

1,314 (-2.43%)

1,577 (-4.92%)

1,363 (-2.58%)

1,248 (-5.65%)

1,038 (-5.19%)

956 (-2.18%)

-2.94%

1732 (-1.74%)

1592 (-1.06%)

1484 (-0.40%)

1828 (-0.99%)

2509 (-0.37%)

1608 (-1.35%)

870 (-2.14%)

9,43 (-5.70%)

911 (-2.33%)

717 (-3.63%)

-1,97

-2.58%

-3.88%

-3.78%

-3.88%

-4.02%

-5.79%

-4.88%

-8.03%

-10.75%

-8.87%

-5,65

-1.76%

-3.34%

-1.13%

-2.56%

-2.18%

-2.78%

-5.64%

-7.73%

-7.23%

-12.02%

-4,64

1.70%

0.24%

-0.40%

-0.92%

-2.45%

-3.37%

-3.40%

-5.53%

-7.65%

-11.23%

-3,30

2.60%

2.60%

2.20%

1.70%

1.00%

-0.40%

-1.00%

-2.18%

-4.50%

-11.20%

-0,92

Residential sale prices. Dubai, villas

Residential sale prices. Dubai, apartments

source: Property Monitor

source: Property Monitor


4.4 Current rental points & performance - quarterly

Villa community(Assumes 4 bed villa)

Apartments(Assumes 2 bed apartment)

AED Rent per unit (p.a.) (‘000)March ‘15

AED Rent per unit (p.a.) (‘000)March ‘15

AED Rent per sq. ft. (p.a.)

March ‘15

AED Rent per sq. ft. (p.a.)

March ‘15

Victory Heights

The Springs

Arabian Ranches

Jumeirah Village Triangle

Jumeirah Islands

The Meadows

Jumeirah Park

The Lakes

Jumeirah Golf Estates

International City

Motor City

Dubai Sports City

Emirates Living

Jumeirah Beach Residences

Dubai Marina

Business Bay

Downtown Burj Khalifa (Upscale)

Downtown Burj Khalifa (Luxury)

195 - 225

190 - 220

180 - 230

205 - 230

285 - 320

245 - 260

260 - 290

280 - 310

340 - 370

67 - 75

110 - 120

90 - 110

130 - 150

130 - 160

130 - 150

130 - 160

135 - 165

260 - 280

81

72

70

53

60

68

65

71

74

60

76

70

108

105

114

96

120

155

Rental price trends, by unit type source: Property Monitor


4.6 Investment performance - capital appreciation vs. investment yield*

4.5 Off-plan project performanceInvestor appetite remains for off-plan and under construction projects. Outside of tier one developer led schemes, we have seen strong performance for recent launches outside of prime locations. A sample of recently launched schemes include:

• Akoya Project, Dubailand. 2,182 units launched by Damac Properties. Launch Date: Various dates. • Villa Lantana, Al Barsha South. 438 villas launched by Tecom Investments. Launch Date: January 2014.• Mira Oasis, Phase 1, Dubailand. 411 units launched by Emaar. Launch Date: Feb 2014.• Mira Oasis, Phase 2, Dubailand. 480 units launched by Emaar. Launch Date: April 2014.• Polo Residence, Mohammad Bin Rashid (MBR) City. 29 Apartment buildings launched by Invest Group Overseas (IGO). Launch Date: May 2014.• The Vertex Towers, Phase 1, Motor City. 45 & 30 storey apartment towers launched by Union Properties. Launch Date: Sep 2014.

• Grand Horizon, Dubai Sports City. 200 units launched by developer / agent GGICO. Launch Date: Feb 2015. • Acacia at Park Heights, Phase 3, Mohammad Bin Rashid (MBR) City. 479 Apartments Launched By Emaar. Launch Date: Feb 2015.• Town Square Phase, 1 (Zahra), Dubailand. 306 apartments launched by Nshama. Launch Date: Feb - Mar 2015.• Downtown Views, Downtown Burj Khalifa. 418 units launched by Emaar. Launch Date: April 2015

Track record and marketing exposure is said to have driven strong absorption at the above schemes. Developers have, however, had to encourage demand with very flexible payment plans which, in some cases, exceed the project delivery date.

* representation of gross investment yield ** Ranking basis on a 50/50 weighting of rental yield/capital appreciation


“ Strong investor

performance in the

Downtown, Emirates

Living & Dubai Marina

locations.”

“Peripheral areas showing

strong investment returns

for those entering the

market now - International

City, Discovery Gardens,

Sports City & Motor

City with above 8%

returns - but lower overall

performance taking into

consideration the price

compression in these

areas.”

“Apartment locations

dominate top 5

performing areas for

investors.”

“Future investment

potential in emerging

areas with strategic

locations such as DWC

and DIP.”

figure 6

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%

-12%

1. E

mira

tes

Livi

ng

(Gre

ens

and

View

s)2.

Dub

ai M

arin

a3.

Bus

ines

s Ba

y

4. J

umei

rah

Beac

h Re

siden

ces

5. J

umei

rach

Gol

f Est

ate

6. D

ownt

own

Burj

Khal

ifa7.

Jum

eira

h Is

land

s

8. T

he L

akes

9. J

umei

rah

Park

10. D

ubai

Spo

rts C

ity11

. Ipt

own

Mot

or C

ity

12.

Vic

tory

Hei

ghts

13

. The

Mea

dow

s 1

4. A

abia

n Ra

nche

s 1

5. D

iscov

ery

Gar

dens

16

. The

Spr

ings

17.

Jum

eira

h Vi

llage

Tria

ngle

1

8. In

tern

atio

nal C

ity

19.

Al F

urja

n Vi

llas

Investment performance - Capital appreciation vs. investment yield*source: Property Monitor Indices

CAPITAL APPRECIATION GROSS RENTAL YIELD


5.0 Supply

30,000

25,000

20,000

15,000

10,000

5,000

560,000

540,000

520,000

500,000

480,000

460,000

440,000

420,000

2013

Uni

ts: Y

early

Incr

ease

18,990

12,950

23,304

1,464

17,512

12,214

4,260

2014 2015 2016 2017 2018

Commulative Supply Yearly Supply Q1 2015Pipeline supply, Dubai Source: Property Monitor

Figure 7

DUBAI MARKET TRENDS: FACTORS AFFECTING THE MARKET

1

1016

2

26

15

12

21

28

30

24

23

6

729

11

22

17

14

2025

5

8

27

9

3

4

1313

13

1318

19

13

21

13

9

8

7

6

5

4

3

2

1

1 AL FURJAN2 ARABIAN RANCHES3 BUSINESS BAY4 DIFC5 DISCOVERY GARDENS

6 DOWNTOWN BURJ KHALIFA7 DUBAI FESTIVAL CITY8 DUBAI INVESTMENTS PARK9 DUBAI LAND1 0DUBAI MARINA

11 DUBAI SILICON OASIS12 DUBAI SPORTS CITY13 EMIRATES LIVING14 IMPZ15 INTERNATIONAL CITY

16 JUMEIRAH BEACH RESIDENCES17 JUMEIRAH GOLF ESTATES18 JUMEIRAH ISLANDS19 JUMEIRAH LAKES TOWERS20 JUMEIRAH PARK

21 JUMEIRAH VILLAGE CIRCLE22 JUMEIRAH VILLAGE TRIANGLE23 3MOTOR CITY24 PALM JUMEIRAH25 TECOM

26 CULTURE VILLAGE27 DUBIOTECH28 UMM SUQEIM29 AL BARSHA30 MIRDIF

< - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 15,000

15,001 - 20,000

20,001 - 25,000

25,001 - 30,000

30,001 - 35,000

35,001 - <

NUMBER OFDWELLINGS

MHI 8: EXISTING SUPPLY

Key points

• 23,000+ additional units to enter market in 2015, 4.5% net addition.

• 7,885 additional luxury units over the coming three years - 11% of the total 71,848 pipeline in 2015-2017.

• Significant additions in secondary areas in 2015 - 2018. Including: JVC (6.2% of pipeline), Sports City (11.5% of pipeline), DIP (2.9% of pipeline) and Dubailand (43%% of pipeline).

Existing supply, Dubai

figure 8

“Supply will continue to

have an impact on price

with opportunities for

residents to upgrade

in emerging locations

in the sale and rental

markets.”



Market heat indices - pipeline supply

Pipeline supply massing, Dubai

8 Dubai Investments Park

9 Dubai Land

10 Dubai Marina

12 Sports City

13 Emirates Living

14 IMPZ

17 Jumeirah Golf Estates

19 Jumeirah Lakes Towers

21 Jumeirah Village Circle

24 Palm Jumeirah

26 Jumeirah Golf Estates

figure 9

Palm Jumeirah

Dubai Marina

JLT

Dubailand

Emirates Living

IMPZ

JVC

JVT

Sports City

Dubai Investment Park

Arabian Ranches

MBR City

Jumeirah Golf Estates

1570

3631

2644

6895

656

2317

4476

279

7971

2098

1651

4107

486

Area Pipeline sample 2015-2018


6.0 Regulation

REGULATION (REGULATOR, DATE)

REGULATION CURRENT IMPACT & FUTURE OPTIONS

Mortgage law

(Central Bank,

circular No: 31/2013)

Limit of exposure to real

estate (Central Bank)

Transfer fees

(DLD, Executive Council

resolution No. (30) of 2013)

Disclosure of personal debt

(Central Bank)

Restrictions on investors of

off-plan projects

(Developers)

UAE National:

Property valued at AED 5 Million or less: LTV = 80 %

Property valued at more than AED 5 Million: LTV = 70%

Non UAE National:

Property valued at AED 5 Million or less: LTV = 75%

Property valued at more than AED 5 Million: LTV = 65%

Limits developers exposure to real estate within lending

portfolios.

Doubling the transfer fee subjected on each sale to 4% of

the property’s value.

Requires banks to share information on request regarding

personal debts during loan applications.

Emaar led initiative requiring 40% payment on off-plan

projects prior to re-sale. Majid Al Futtaim implemented

similar terms on their developments.

Current impact:

Reduction in demand in end user led locations

such as Emirates Living.

Future options:

Central Bank could change LTVs to simulate the

market in run up to the EXPO.

Current impact:

Led to a more selective approach to project

financing.

Future options:

Not likely to see a change in the short to medi-

um term.

Current impact:

Introduced at a time of high price hikes and

helped to cool demand and price escalation.

Future options:

A return to pre 2013 rates of 2% unlikely.

Current impact:

Improved transparency of personal debt and

lending placed restrictions on those over lever-

aged.

Future options:

Here to stay.

Current impact:

Contributed to stablising prices in the off-plan

market and reduced the activity of ‘flippers’.

Future options:

Other developers following suit.

Real estate regulations & practices Dubai source: cavendish maxwell

The following details a series of regulations that have impacted the residential market dynamics in Dubai.


figure 10


Agriculture, Live Stock and FishingMining and QuarryingManufacturing

Electricity, Gas & WaterConstructionWholesale, Retail Trade and Repairing Servises

7.0 Economic factors

8.1 Development finance

Dubai inflation

Rate 2014: 3.37%

Q1 2015: 4.42%

Dubai Population (as of April 11, 2015)2,355,287

Grant of New Visa570,917 new residency visas issued in the first half of 2014 (30% higher than then first half of 2013)

• Major banks’ finance appetite for real estate still limited outside of one-off client relationships and top tier developers*.• This would exclude industry projects (schools, hospitals etc.) and built- to-suit opportunities with pre-lets and secure income. • Encouraging signs that some major banks entering the market with more favourable real estate project finance products.

11%

1%

7%

24%

5%13%

12%

3%

11%

5%

7%0,1%

0,1

GDP distribution: Dubai H1 2014

3

2

2

1

1

0

8%

7%

6%

5%

4%

3%

2%

1%

0%2007 2008 2009 2010

CAGR (2007-2016): 5.3%

2011 2012 2013 2014 2015 2016

Mill

ions

Perc

enta

ge

Gro

wth

7%

8% 8% 8%

5% 5% 5% 5% 5% 5%

Nationals ExpatsPopulation, DubaiSource: Dubai Statistics Center & Cavendish Maxwell Projections


• *Tier 1. Government subsidiaries, track record in large scale projects and large land banks.• Tier 2. Established developers with track record & expertise.• Tier 3. Private parties with land plots, limited experience in development.

Project finance rate: 5-6% constriction period / 4-5% investment period**dependant upon borrower

Debt Equity Ratios: 60*/40* inclusive of land, exclusive of soft costs

“Regulatory measures

have acted to cool

the market and curb

speculation. Increasing

LTVs remains an option to

stimulate the market

in the run up to

EXPO 2020.”

figure 11

figure 12

Source: Dubai Statistics Center & Cavendish Maxwell Projections


8.2 Mortgage financeThe following details a series of regulations that have impacted the residential market dynamics in Dubai.

* the indices details activity of major UAE banks for whom Cavendish Maxwell have consistently conducted mortgage valuations during this time.

Key points

• Volume of mortgage deals at the end of Q1 2015 are back down to levels recorded in March 2013, having peaked in between around Q1 2014.

• Around the peak we witnessed a spike in the level of refinanced mortgages following a drive from local banks with new products targeting this segment.


610

510

410

310

210

110

10

-90

Primary Axis: # of valuations Secondary Axis: Average price/sq.ft. (AED)

Feb

201

3 =

100

1500

1400

1300

1200

1100

1000

900

800

700

600

Mar

- 1

3

May

- 1

3

Jul -

13

Sep

- 1

3

No

v -

13

Jan

- 14

Mar

- 1

4

May

- 1

4

Jul -

14

Sep

- 1

4

No

v -

14

Jan

- 15

Mar

- 1

5

Real estate regulations & practices Dubai Source: Cavendish maxwell*

Dubai marketwide average price/sq.ft Refinance Salesfigure 13


9.0 SentimentCavendish Maxwell’s first Residential Market Sentiment Survey, taking the temperature of the market to inform future movements.

• Vast majority of agents (68%) feel that sales values will decline in Q2. Most agents (48%) indicated that this decrease in value would occur alongside an increase in sales activity.

• With regards to the rate of decline, the majority of the agents (45%) expect a drop of 1% to 5% in the Q2 2015.

Q1: Sale listings (Supply) vs. buyer enquires (demand) - Last 3 months

• Majority of agents (58%) observed an increase in new seller instructions - increase in supply availability & willing sellers…

• Majority of agents (44%) have seen a drop in new buyer enquiries - lower buyer demand…

Above supportive of further reduction in prices.

Q2: Buyer & seller expectations

• Sellers: 51% have expectations that are above the achievable market price.

• Buyers: 56% have expectations that are below the achievable market price.

Gap to narrow which should increase transactional activity.

80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%Decrease Increase Remain

the same

Sales Price & volumes in next 3 Months source: Property Monitor

Sales price sales volume


figure 14

“The market has changed

significantly- buyers are

more sophisticated and

speculators no longer

have much opportunity

for an easy profit.”

Agent Comment

“ The market has been

on a roller-coaster ride

from an incomparable

boom to a free-fall after

the Lehman Brother crisis.

It’s in everybody’s interest

– investors, landlords,

the government and real

estate professionals, to

make sure that we witness

a steady sustainable

growth and prevent

an overheating of the

prices.” Agent Comment


9.0 Sentiment (cont.)

• Vast majority of agents (46%) feel that rental values will decline in Q2 2015. Most agents (58%) indicated that this decrease in value would occur alongside an increase in rental activity.

Q5: The EXPO Impact - Residential sale prices

• 1 year impact (2015 - 2016): 81% of the agents see no impact • 3 year impact (2015 - 2018): 74% of the agents expect a positive impact• 5 year impact (2015 - 2020): 93% of the agents expect a positive impact

Q6: Trends post 2008 vs. trends post 2014

• 76% think that it is different this time around.

80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%Decrease Increase Remain

the same

Rental price & volumes in next 3 months source: Property Monitor

rental price rental volume


“The market is more

mature and different

fundamentals have

kicked in compared to

the boom and bust years.

Better investor protection

will help to reinforce

confidence in ‘under

construction’ projects.”

Agent Comment

“I very much believe

end users are still in the

market, however they

are extremely educated

and are shopping around

before making any

choices. It is definitely a

buyer’s market and there

are some great deals to

be had.” Agent Comment

The market sentiment survey was participated by well reputed and established real estate agencies in the market including: - Ascot and Co - Real Estate - Bavarian Real Estate Brokers LLC - Better Homes Properties - Dacha Real Estate - Dart Link Real Estate Brokers LLC - Escola Real Estate - Exclusive Links Real Estate - Fine & Country UAE - Fortune 5 Real Estate - GGICO Properties - GIM Real Estate Broker - Gulf Platinum Properties - House Hunters Real Estate LLC - Kensington Real Estate - Ocean View Real Estate Dubai - Prime Places Real Estate - Q Properties - We Buy Your -Property.

figure 15


Key facts: Q1 2015Sales

• Market average sales price: AED 1,344 per sq. ft.

• Highest performing apartment area, sale price (YTD): Dubai Marina, Emirates Living, 2.60 %

• Highest performing villa area, sale price (YTD): Jumeirah Golf Estates, 1.70%

• Lowest performing apartment area, sale price (YTD): International City, -11.20%

• Lowest performing villa area, sale price (YTD): Al Furjan, -11.23%.

Rental performance

• Highest performing apartment area, gross rental yield (Q1 2015): International City, 9.26%

• Highest performing villa area, gross rental yield: (Q1 2015): Victory Heights, Dubai Sports City, 5.42%

• Lowest performing apartment area, gross rental yield (Q1 2015): Downtown Burj Khalifa, 5.57%

• Lowest performing villa area, gross rental yield (Q1, 2015): Palm Jumeirah (Fronds) 3.67%

Supply

• Largest supply pipeline, 2015: Dubai Sports City, 2,299 units.

Sentiment

• 68% of agents feel that sales values will decline in the next 3 months

• 48% of agents indicated that this decrease would occur alongside an increase in transactional activity.

• 45% of agents expect a drop of 1% to 5% in the next 3 months.

Andrew Love MA (Hons) MRICS PartnerHead of Investment & Commercial Agency M: +971 50 859 2734 E: [email protected]

Miles Phillips BSc (Hons) MRICS ACIArbPartnerHead of Operations - UAE

M: +971 56 604 2750 E: [email protected]

Jay Grant MSc IRRV (Hons) Managing Partner


Mike Kenyon MRICS AAPI CPV (P&M)PartnerHead of Machinery & Business Assets M: +971 56 934 0078 E: [email protected]

Paul Barker BSc (Hons) MRICSPartnerHead of Commercial Valuation M: +971 56 690 3186 E: [email protected]

Craig Ross BSc (Hons) MRICSPartnerHead of Project & Building Consultancy M: +971 56 139 4311 E: [email protected]

Giuliano Gasparini MSc FRICSHead of Hotels, Hospitality & Leisure


James Cresswell BA (Hons) MSc MRICSPartnerHead of Commercial Valuation M: +971 56 690 1186 E: [email protected]

Adam Wisher BSc (Hons) MRICSPartnerHead of Development Advisory & Real Estate ResearchM: +971 56 139 4315E: [email protected]

Sofia Underabi BPropEc AAPI PartnerHead of Residential Valuation M: +971 50 435 6527 E: [email protected]

Adam Wellfair BSc (Hons) MRICSManaging Partner


T: +971 (0) 4 453 9525 E: [email protected] Marina Plaza, Dubai Marina, P.O. Box 118624, Dubai, United Arab Emirates

CavendishMaxwell.com

cavendish maxwell residential market report apr 2015

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