dubai real estate market overview q2 2017 - mpm … q2_adib_mpm real... · 2018. 1. 25. · q2 2017...

DUBAI REAL ESTATE MARKET OVERVIEW

Q2 2017

REAL ESTATE SERVICES

2 3

CONTENTSDemand Drivers 4

Macro Trends 6

Residential Sector 8

Project Focus 14

Office Sector 16

Retail Sector 20

Hospitality Sector 22

Definitions & Methodology 24

Contact Information 25

Supply - Photo Gallery 26

Development Location Map 28

Residential

�� During Q2 2017, c.5,000 new residential units were added, taking the new residential supply count to 10,900 units during the first half of the year. In total 7,800 apartments (71%) and 3,100 villas/townhouses (29%) were added in H1 2017, taking the total residential stock of Dubai to 507,000 units.

�� Residential sales rates during the quarter recorded a marginal decline of 1.3% while year-on-year the decline was 5%. In terms of performance by location, Palm Jumeirah apartments recorded the highest drop of 9% year-on-year.

�� Residential rents continue to soften as supply continues to supersede demand. Average rents dropped marginally by 1% quarter-on-quarter and 5% year-on-year. The rate of decline across villa properties was marginally higher than the apartments with average rents dropping by 6% year-on-year and 1% quarter-on-quarter.

�� With rising vacancy levels, large landlords that own towers are becoming more open to offering incentives in the form of rent-free periods ranging from one to three months.

Office

�� During the quarter over 750,000 sq.ft. of office space was added, taking the total office stock to 94.8 million sq.ft. New office space that emerged includes Tamani Art Office tower in Business Bay and low-rise towers from Umm Al Sheif area. Looking at the ongoing construction activity, we expect c.2.4 million sq.ft. of office space to enter during the second half of 2017.

�� Average office sale rates across freehold locations declined by 3% year-on-year, while the rates remained

unchanged quarter-on-quarter. The Downtown Dubai recorded the highest yearly drop of 8% followed by Barsha Heights with 5%.

�� Office rents remained unchanged from the previous quarter while year-on-year the rates dropped by 5%. Across the freehold areas, Barsha Heights recorded the highest decline of 8% year-on-year followed by Jumeirah Lakes Towers with 6% drop year-on-year.

Retail

�� During this quarter, the rents remained flat across all major malls while secondary mall operators are looking at rental negotiation to retain existing tenants and maintain their occupancy levels.

�� All the major shopping centresr witnessed a boost in sales and footfalls, driven by the three day super sale event and extended mall hours during the Eid. The three day sales event not only attracted UAE residents but also tourists from neighbouring GCC countries.

Hotel

�� During Q2 2017, over 1,700 rooms were added taking the total supply to over 106,000 rooms and apartments. Few of the new additions include Premium Rixos in Jumeirah Beach Residence, Double Tree in Business Bay and Rove Trade Centre.

�� Year-on-year the ADR’s remained flat while occupancy rates have risen by 2% year-on-year, as Eid holidays aided in recording strong occupancy rates. Looking at the exhibitions and events scheduled and promotions offered by the hotels, occupancy rates are expected to remain strong for the remainder of the year.

FOREWORD ADIB Real Estate Services comprises a comprehensive real estate banking and advisory platform providing the full range of professional services from a single provider. Our services include:-

�� Real estate financing�� Strategic development advisory�� Investment advisory�� Asset management�� Project management

�� Valuation�� Agency�� Market research�� Property management�� Facilities management

MPM PROPERTIES FACTS AND FIGURES

TOTAL UAE STAFF PROPERTY MANAGEMENT STAFF ADVISORY STAFF

UNITS UNDER MANAGEMENT

LEASING & SALES STAFF LANDLORD CLIENTS

COMBINED MARKET VALUE OF PROPERTIES VALUED SINCE JANUARY 2012

MORTGAGE VALUATIONS SINCE JANUARY 2012

DEDICATED VALUATION PROFESSIONALS

OCCUPANCY RATE

LARGEST ABU DHABI MAINLAND PORTFOLIO

160+

7,600+

No.1

98.5%20+

30+

90bn

35+

23,500+

95+

1,700

REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEWQ2 2017

4

REAL ESTATE SERVICES | DUBAI REAL ESTATE MARKET OVERVIEW Q2 2017

5

DEMAND DRIVERS

REAL ESTATE AND CONSTRUCTION�� Wasl Asset Management Group announced

construction of Warsan project covering 160,000 sq.ft. of land with a built up area of 2.6 million sq.ft. The project comprises of 26 resort-style residential buildings to accommodate hospitality staff. The project is expected to offer 3,866 residential units comprising of 3,380 shared rooms, 360 studios, and 126 one bedroom units. It is further complimented by health club, swimming pools, sports facilities and green lawns and is expected to complete by October 2020.

�� AED1.5 billion construction award for the Palm Gateway project on Palm Jumeirah was awarded to Shapoorji Pallonji Mideast. The project, developed and owned by Nakheel Properties, includes construction of three residential towers, retail space and a beach club. The development includes 1,265 luxury apartments spread across three towers with units ranging from one to three bedrooms and parking over 14 levels. The residential units from the Gateway project will be offered on annual lease and the entire project is expected to be completed in 30 months.

TOURISM INITIATIVES �� Figures from the Department of Tourism and

Commerce Marketing (Dubai Tourism) indicate a 10.5% rise in visitors to Dubai during June 2017YTD versus the same period last year. During the period YTD June 2017, Dubai had 8.06 million overnight visitors with 21% of the visitors originated from Western European countries, 19% from GCC countries and 18% from South Asia. In terms of top source market, India led with 1.05 million visitors followed by Saudi Arabia with 0.74 million visitors and the United Kingdom remained third with 0.63 million.

�� His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai launched Marsa Al Arab tourism project, which is valued at AED6.3 billion, developed by Dubai Holding and managed by Jumeirah Group. The project comprises of two islands located on either side of Burj Al Arab.One island will be dedicated to entertainment and family tourism while the other will include luxury resort. The development will also offer 300 waterfront residential apartments and 140 luxury villas along with commercial office and retail space.

TRANSPORTATION �� His Highness Sheikh Mohammed bin Rashid Al

Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai approved road works to improve Latifa Bint Hamdan Street and the junction of Umm Al Sheef and Latifa Bint Hamdan streets. The first phase of the project includes linking Jumeirah district with Al Khail road and the parallel roads to the First Al Khail and Al Asayel roads which is expected to be completed in H1 2018. The second phase of the project includes improving the link

between Sheikh Zayed road and Jumeirah to the West and Dubailand to the east, with expected completion date being Q1 2019.

�� Dubai International Airport handled 6.08 million passengers in June 2017, up by 3.9% compared to 5.85 million passengers in June 2016. During the first half of the year, passenger traffic increased by 6.3% to 43.05 million passengers, up from 40.51 million passengers during the same period last year.

FREEZONES �� China National Petroleum Corporation

(CNPC) has signed an agreement with Jebel Ali Free Zone (JAFZA) to establish its head quarter in JAFZA. The new headquarter covers 55,000 sq.m. and includes 10,000 sq.m. of office space along with warehouse facility for storage, maintenance and repair of oil and gas equipment. The new facility will also help in consolidation of 16 listed companies of CNPC to operate under one roof.

�� Dubai International Financial Centre (DIFC) signed a memorandum of understanding with Dubai Economy to allow companies operating within DIFC to obtain licenses to operate in mainland Dubai. Under the MoU, a central data repository will be established, allowing data exchange between the parties, improving visibility and transparency of commercial activity within the DIFC. In addition, joint inspections will also ensure better compliance, prevent fraud and increase consumer protection.

GOVERNMENT INITIATIVES�� Sheikh Hamdan bin Mohammed bin Rashid Al

Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, launched Smart Dubai 2021 initiative. The Dubai Pulse, a new platform, will compile all available data to both public and private sectors and provide access to live data about the city for free of cost to public. Analysed data would be available at a fee for economic, academic, professional and commercial purpose.

�� Dubai Electricity and Water Authority (DEWA) has awarded the contract worth AED248 million, to supply, extend and commission 40 kilometer of water pipelines along Al Qudra Street and the Dubai to Al Ain highway, to increase water-flow capacity and provide water for future development projects in these areas. The project includes remote control and monitoring systems, to allow continuous control of the main water transport network through remote-controlled valves in the control centre.


6


7

INVESTOR ANALYSISMACRO TRENDS

DUBAI POPULATION (GROWTH & HOUSEHOLD SIZE)

Population Growth Rate

2009 2010 2011 2012 2013 2014 2016 Q2 20172015

3.0

2.5

2.0

1.5

1.0

0.5

0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0PO

PU

LA

TIO

N (

MIL

LIO

NS

)

GR

OW

TH

RA

TE

(%

PA

)

AN

D H

OU

SE

HO

LD

SIZ

E

Household Size

Source: Dubai Statistics Center

1.771

1.9

05

2.0

03

2.1

06

2.2

14

2.3

27

2.4

47

2.5

93

2.7

10

DUBAI CONSTRUCTIONACTIVITY %YoY

GDP Construction

%Y

oY

DUBAI CPI VS RENTALCONTRIBUTION TO CPI Q2 2017

CPIHousingContributionto CPISource: Dubai Statistics Center

Source: Dubai Statistics Center

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17e

120.00

100.00

80.00

JA

N 1

5

JU

N 1

5

JA

N 1

6

JU

N 1

6

JA

N 1

7

JU

N 1

7

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

2,000

4,000

6,000

8,000

10,000

12,000

Valu

e (

in M

illio

ns)

Sales Transactions

Tra

nsa

cti

on

s

DUBAI LAND TRANSACTIONSVOLUME vs VALUE

Sales Value

0

5,000

10,000

15,000

20,000

25,000

30,000

DUBAI LAND TRANSACTIONSQoQ% CHANGE

Sales Transactions

43201221 43

201321 43

201421 43

201521 43

201621

201721 43

201221 43

201321 43

201421 43

201521 43

201621

201721

-30-20-10

01020304050607080

Source: DLD and MPM Properties Research

* Established Real estate

Source: Dubai Statistics Center and MPM Properties Research Source: DLD and MPM Properties Research

DUBAI GDP SHARE BREAKDOWN BY ECONOMIC SECTORS - 2017 YTD

TOP NATIONALITIES INVESTING IN DUBAI PROPERTY IN 2016

Tra

nsa

cti

on

Valu

eA

ED

mill

ion

TOP LOCATIONS - RESIDENTIAL TRANSACTION VALUE

Q1 2017 Q2 2017

Source: DLD

Bu

sin

ess

Bay

Ju

meir

ah

Vill

ag

e

Du

bai

Sp

ort

s C

ity

Ju

meir

ah

Lakes

To

wers

Ara

bia

nR

an

ch

es

Palm

Ju

meir

ah

Ju

meir

ah

Beach

Resi

den

ce

Du

bai

Mari

na

Do

wn

tow

nD

ub

ai

Em

irate

sL

ivin

g0

200

400

600

800

1,000

KuwaitEgypt QatarPakistanUnitedKingdom

SaudiArabia

IndiaUAE0

5

10

15

20

25

Source: DLD

5%

27%

13%

16%

9%

11%

19%

Wholesale & Retail Trade

Real Estate & Construction

Transportation & Communication

Manufacturing

Financial Sector

Government & others

Hotels & Restaurants


8


9

RESIDENTIAL SECTOR

RESIDENTIAL SUPPLY �� During Q2 2017, c.5,000 new residential units

were added, taking the new residential supply count to 10,900 units during the first half of the year. In total 7,800 apartments (71%) and 3,100 villas/townhouses (29%) were added in H1 2017, taking the total residential stock of Dubai to 507,000 units.

�� Majority of the new supply during Q2 2017 was completed within the freehold developments of Jumeirah Village Circle, Dubailand, Dubai Silicon Oasis, Dubai Marina and Production City while in the leasehold developments, most active location was Al Warqa.

�� Looking at the ongoing construction activity, we anticipate further 9,000 new units entering the market during the second half of the year.

�� The off-plan residential market remained active during Q2 2017 despite the holiday period. Over 4,000 residential units were launched during this quarter with 25% of these units being villas and townhouses and the remaining apartments. Some of the projects launched include Maple III, Vida Residence Dubai Mall and Downtown View tower 3 by Emaar Properties, Casa Viva by Dubai Properties, Bloom Towers in Jumeirah Village Circle by Bloom Properties, Bayz by Danube and Azizi Aura by Azizi Investments in Downtown Jebel Ali area.

0

100

200

300

400

500

600

2014 2015 2016 H2 2017H1 2017 2018 2019

Source: MPM Properties Research

Supply Apartments

RESIDENTIAL SUPPLY BY UNITS 2012-2019

Existing Supply Villas +% Change

2.0% 3.1% 2.7% 3.1% 2.2% 1.8% 5.0% YoY 1.9%

2012 2013

435 444 452 469 481 496 507 516 542

8.5 8.514 11 11 8 73 1.2 4.2 3.1 1.9

3.8%

215.2

173.8

SAMPLE OF RESIDENTIAL UPCOMING PROJECTS

SAMPLE OF ANNOUNCED PROJECTS IN Q2 2017

NAME OF PROJECT TYPE DEVELOPER LOCATION

The Pulse - Phase 3 Apartments Dubai South Dubai South

Kenda Stone Villa Villas Damac Akoya Oxygen

Bloom Towers Apartments Bloom Jumeirah Village Circle

Noor Townhouse Villas Nshama Town Square

Downtown Views Tower 3 Apartments Emaar Downtown

Azizi Aura Apartments Azizi Downtown Jebel Ali

Bayz Apartments Danube Business Bay

Aknan Villas Damac Akoya Oxygen

Vida Residence Dubai Mall Serviced Emaar Downtown

Maple III Villas Emaar Dubai Hills Estate

Aurum Villa Villas Damac Akoya Oxygen

Casa Viva Townhouse Dubai Properties Serena

Eaton Place Apartments Ellington Jumeirah Village Circle

LOCATION PROPERTY NAME

Culture Village Riah Towers

Dubai Marina Continental Tower

Dubai Studio City Glitz 1

Arjan Syann Park

Dubai Silicon Oasis Emirates Airlines Towers

Dubai Motor City OIA Residence

Business Bay The Pad


10


11

RESIDENTIAL SECTOR

Th

eG

reen

s

Ju

meir

ah

Beach

Resi

den

ce

Bu

sin

ess

Bay

Du

bai

Mari

na

Th

eV

iew

s

Palm

Ju

meir

ah

DIF

C

Old

To

wn

Do

wn

tow

nD

ub

ai

APARTMENT AVERAGE SALES PRICES (Q2 2017)

AND PERCENTAGE CHANGE

AE

D/s

q.ft.


-1.2% -1.4% -1.4% -1.6% -0.0% -1.6% -1.9% -1.2%-1.6% QoQ

YoY -6% -8% -3% -6% -2% -4% -4% -1%-9%

0

500

1,000

1,5002,000

2,500

2,0

25

1,8

00

1,75

0

1,5

00

1,5

00

1,3

75

1,23

0

1.3

25

1,210

AVERAGE APARTMENT ANNUAL RENTS Q2 2017


SALE PRICES �� Residential sales rates during the quarter

recorded a marginal decline of 1.3% while year-on-year the decline was 5%. In terms of performance by location, Palm Jumeirah apartments recorded the highest drop of 9% year-on-year while in the villa segment Springs, Jumeirah Village and Arabian Ranches recorded the highest drop of 7% each year-on-year.

�� Transactions of completed properties recorded a decline year-on-year both in value and volume terms. During Q2 2017 a total of 2,734 transactions were recorded at a total value of AED4.99 billion compared to AED5.4 billion in Q1 2017. The transaction value dropped by 7.3% quarter-on-quarter.

�� During the quarter, apartments accounted for 68% of the total transaction value, while villas and townhouses accounted for 32%.

We are noticing an increase in transactions in both value and volume terms for villa properties over the past two years. Since 2015, the market has witnessed the launch of several competitively priced villas and townhouses which is leading to increase in volume for villa transactions.

�� The off-plan market remained buoyant with over 4,000 properties launched during Q2 2017 with large concentration being in the Dubailand and Dubai South areas. However, as per the data from Dubailand Department, the value of transactions declined year-on-year from AED6.7 billion in Q2 2016 to AED4.8 billion in Q2 2017. Historically, the market remains sluggish during the festive season which has resulted in drop in absorption rates despite lucrative offers from the developers.

RENTS �� Residential rents continue to soften as supply continues

to supersede demand. Average rents dropped marginally by 1% quarter-on-quarter and 5% year-on-year. As the developments that towards transforming existing tenants into owner residents complete, we are witnessing a shift in market dynamics with % of owner occupied residents increasing vs. % of tenant occupied units in Dubai. This in turn is leading to softening of rents across all locations. With c.9,000 units expected to complete during the course of the year, the rents are forecasted to soften further, with increased landlord incentives anticipated.

�� The main leasehold areas of Bur Dubai, Al Barsha, Oud Metha and Al Nahda recorded over 7% decline year-on-year. Bur Dubai area recorded the highest decline with rates dropping by 9.3% year-on-year. One bedroom apartments which were achieving rents in the range of AED70,000-85,000 per unit per annum in Q2 2016 dropped to AED65,000-75,000 per unit per annum in Q2

2017. Similarly Al Barsha area recorded a decline of 7.9% year-on-year with the highest drop been across studio and two bedroom units.

�� The rate of decline across villa properties was marginally higher than the apartments with average rents dropping by 6% year-on-year and 1% quarter-on-quarter. The four bedroom units recorded the highest drop of 7.25% year-on-year with the average rate dropping from AED240,000 per unit per annum in Q2 2016 AED223,000 per unit per annum. With the expected handover of Arabian Ranches and Town Square developments, we anticipate the rates to deflate further during the course of the year.

�� With rising vacancy levels, large landlords that own towers are becoming more open to offering incentives in the form of rent-free periods ranging from one to three months, no chiller charges and relaxed payment terms of 4 to 12 cheques in order to reduce voids.

LOCATION STUDIO 1BR 2BR 3BR Q-ON-Q Y-ON-Y

Business Bay 60 78 118 158 -2.42% -4.91%

DIFC 78 108 138 205 -1.76% -6.57%

Discovery Gardens 45 67 90 - -1.10% -5.05%

Downtown Dubai 68 100 153 213 -0.89% -6.83%

Dubai Marina 60 88 130 185 -2.58% -7.37%

Greens 65 83 125 150 -1.83% -5.69%

International City 32 46 66 88 -1.41% -7.20%

Jumeirah Beach Residence 75 100 130 173 0.00% -3.17%

Jumeirah Lakes Towers 58 85 115 148 -1.65% -4.60%

Palm Jumeirah 80 115 145 182 -1.17% -8.89%

Barsha Heights 58 78 100 135 -1.52% -4.78%


12


13

RESIDENTIAL SECTOR

PROJECT 2 BEDROOM 3 BEDROOM 4 BEDROOM 5 BEDROOM Q.O.Q Y.O.Y

Al Furjan - 158 - 215 -0.00% -3.08%

Arabian Ranches 138 175 230 285 -2.29% -6.99%

Dubai Sports City - 173 188 265 -1.56% -6.35%

Jumeirah Park - - 220 275 -1.11% -8.62%

Jumeirah Village 138 145 158 185 -0.83% -6.77%

Meadows - 210 235 270 -1.69% -6.52%

Palm Jumeirah - 305 420 460 -0.71% -7.48%

Springs 120 165 - - -1.77% -6.70%

Jumeirah Islands - - 275 355 -0.89% -7.67%

Jumeirah Golf Estates - 245 293 365 -2.12% -7.39%

0

500

1,000

1,500

2,000

2,500

Al F

urj

an

Ju

meir

ah

Vill

ag

e

Sp

rin

gs

& M

ead

ow

s

Ju

meir

ah

Park

Ara

bia

nR

an

ch

es

Du

bai

Sp

ort

s C

ity

Th

eL

akes

Palm

Ju

meir

ah

AVERAGE VILLA SALE PRICE AED/ sq.ft. Q2 2017

AE

D/s

q.ft


0.0%

-7.0%

-3.0%

-7.0%

-3.0%

-4.0%

0.0%

-2.0%

-3.0%

-3.0%

0.0%

-6.0%

-2.0%

-7.0%

0.0%

-4.0%

QoQ

YoY

2,4

00

1,275

1,10

0

1,0

75

1,0

75

1,0

25

95

0

975

AVERAGE VILLA ANNUAL RENTS Q2 2017


0

200

400

600

800

1,000

350

500

425

320

500410

600

950

775

250350

300

NON-INVESTMENT LAND VALUES Q2 2017

AE

D /

Sq

.ft.


Mirdif Al Barsha Umm Suqeim Al Warqa

HighLow Average

0

50

100

150

200

250

300

NON-INVESTMENT VILLA RENTS Q2 2017

AE

D (

Mill

ion

)


4 Bed3 Bed 5 Bed

Al WarqaUmm SuqeimAl BarshaMirdif

150175

210200230

265

175

205

263

130150

160

3.8

7.85.8

7.0

15.0

11.09.5

24.0

16.8

4.5

7.56.0

NON-INVESTMENT VILLA VALUES Q2 2017

25

20

15

10

5

0

AE

D (

Mill

ion

)


Mirdif Al Barsha Umm Suqeim Al Warqa

HighLow Average


1514

Q2 2015

AMENITIES AND FACILITIES

PAYMENT PLAN

Bayz Tower is located in Business Bay masterplan development in-close proximity to Downtown Dubai and Dubai Mall. The ground plus 29 floors project is being developed by Danube Properties and offers a total of 456 apartments comprising of studios, one, two and three bedroom units along with retail space on the ground floor. All the apartments are provided with white goods and furniture.

The tower offers various sizes of apartments catering to a broad spectrum of investors from single occupants to families.

Located in the heart of the city with easy access to major landmarks of Burj Khalifa, Dubai Mall, Meydan Race Course and the upcoming world’s tallest deck

�� Located in a development with well-developed infrastructure and community facilities;

�� Modular kitchen;

�� White goods and furniture;

�� State-of-the-art Health Club with steam room and sauna;

�� Swimming Pool with Jacuzzi;

�� Zen zone for meditation and rejuvenation;

�� Cabana;

�� Barbeque area;

�� Party Hall cum Air conditioned kid’s play area

�� 10% on booking plus DLD Registration & Oqood fees;

�� 10% 60 days from booking date;

�� 7% 120 days from booking date;

�� 1% every month. (December 2017 to December 2023).

UNIT TYPE AREA (SQ.FT.) STARTING PRICE (AED)

Studio 412 - 472 700,000

One bedroom 551 - 881 925,000

Two bedroom 1,141 - 1,148 1,500,000

Three bedroom 1,365 1,800,000

BAYZ TOWER


16


17

OFFICE SUMMARY �� During the quarter over 750,000 sq.ft. of office

space was added, taking the total office stock to 94.8 million sq.ft. New office space that emerged includes Tamani Art Office tower in Business Bay and low-rise towers from Umm Al Sheif area.

�� Looking at the ongoing construction activity, we expect c.2.4 million sq.ft. of office space to enter during the second half of 2017.

�� Average office rents dropped by 5% year-on-year while quarter-on-quarter the rates remained stable. The office rents across all

the locations have bottom out and we do not expect a major shift in rental rates during the course of the year.

�� Based on the projects announced/ launched/under construction, it is estimated c.8.4 million sq.ft. of new office space to enter the market during the period 2018-2020. However, we are noticing a shift in office supply from strata to single owned office towers. The majority of the future supply is single owned grade A space while the strata space expected from office projects launched during the peak of the market are nearing completion now.

OFFICE SALES �� Average office sale rates across freehold locations

declined by 3% year-on-year, while the rates remained unchanged quarter-on-quarter. The Downtown Dubai recorded the highest yearly drop of 8% followed by Barsha Heights with 5%. The office sale rates have bottomed out across all the freehold locations and have stabilized at these levels in the second quarter. The average sale rates in Downtown area are currently AED2,100 per sq.ft. as compared to over AED4,500 per sq.ft. during the peak of the market.

�� The majority of the enquiries during the quarter were for smaller office sizes of less than 2,000 sq.ft. which is also evident from the Dubai Land Department transaction data. In total c.335,000 sq.ft. of office space was transacted in Q2 2017 at

a total value of AED432.2 million as compared to AED536.3 million in Q1 2017, recording a quarterly decline of 19% and 11.9% year-on-year. The majority of the transactions during the quarter were for office sizes measuring less than 1,500 sq.ft. accounting for 51% of the total transactions in value terms followed by office sizes in the range of 1,500-2,500 sq.ft. at 24%.

�� In terms of transaction by location, Business Bay and Jumeirah Lakes Towers accounted for 78% of the total value of transaction with Business Bay accounting for AED217 million worth of transactions followed by Jumeirah Lakes Towers at AED119 million. Other areas which witnessed increase in transaction activity include Trade Centre AED43 million and Barsha Heights AED35 million.

OFFICE SECTOR

0

20

40

60

80

100

120

DUBAI OFFICE STOCK (2008 - 2019)

Mill

ion

sq

.ft.

20092008 2010 2011 2012 2013 2014 2015 2016 H12017

Stock Expected


2018 2019

2.52.40.03.56.82.50.26.0

6.010.0

8.06.0 97

3.8

100959491848181756959

5145

H22017

OFFICE RENTS �� The office market remained subdued during

the quarter. Most leasing enquiries were largely from companies looking to consolidate and for smaller sized offices, with space less than 2,500 sq.ft.

�� Office rents remained unchanged from the previous quarter while year-on-year the rates dropped by 5%. The CBD area which includes office towers along Sheikh Zayed road and Downtown Dubai recorded a year-on-year decline of 6% which was primarily due to migration of tenants from ageing buildings.

Average rents in the area range from AED90-240 per sq.ft. per annum (all inclusive) dependent on the age and quality of the building.

�� Across the freehold areas, Barsha Heights recorded the highest decline of 8% year-on-year followed by Jumeirah Lakes Towers with 6% drop year-on-year. The rates across all the office locations have bottomed out and we do not expect any significant changes in the rental rates in these areas during H2 2017.


18


19

Sheikh Mohamed Bin Zayed Rd.



Al Khail Road

Al Khail Road

daoR mi equS

mm

U

Sheikh Zayed Rd.

Sheikh Zayed Rd.

Sheikh Zayed Rd.

Arabian RanchesDubai

Land

DubaiLand

DubaiLand

DubaiLand

DubaiLand

Nad AlSheba 2

Nad Al Sheba

DubaiSilicon Oasis

InternationalCity

DragonMark

MushrifNational Park

Murdif

FestivalCity

TOSHARJAH

TOHATTA & OMAN

TOAL AIN

TOABU DHABI

TheLagoons

Business Bay Za’abeel

Garhoud

Al Qusais

Port Saeed

Rigga

Ras Al Khor

Al Marqadh

LegendsAl Barari

City of ArabiaGlobal Village

MotorCity

DubaiSport City

DubaiInvestment

Park 1

Jumeirah GolfEstates

Jumeirah GolfEstates

IMPZ

DubaiInvestment

Park 2

JumeirahVillage

JumeirahVillage South

The Meadows

Emirates Hills

The Springs

TheGardens

Jebel Ali Village

Jebel Ali Port

Jebel Ali Freezone

Jebel AliIndustrial Area

Dubai World Central Airport

DiscoveryGardens

JumeirahPark

JumeirahIslands

BarshaHeightsThe

Lakes

TheGreens

Naif

Al Raffa

SatwaJumeirah

Al WaslAl Safa

Umm Suqeim

The PalmJumeirah

Al SufouhMedia / Internet

CityJumeirah Lake

Towers

Dubai Marina

Burj Al Arab

The World

The Palm Deira

Al QuozIndustrial Area

Al Barsha

Al Quoz

Emirates Towers

DIFCBurj Khalifa

Karama

OudMetha

Al Mamzar

Port Rashid

DubaiInternational

Airport

OFFICE SECTOR

0

50

100

150

200

250

300

350

DIC

& D

MC

Bars

ha

Heig

hts

Ju

meir

ah

Lake T

ow

ers

Bu

sin

ess

Bay

Sh

eik

hZ

ayed

Rd

Do

wn

tow

nD

ub

ai

DIF

C

OFFICE RENTS AED/sq.ft. Q2 2017

AE

D/s

q.ft.

High Low


125

130

34

0

24

0

85

180

65 14

0 190

55

70 11

0

120 17

5

SHEIKH ZAYED RD.RENT = AED 85 - AED 180 /sq.ft.

DIC & DMCRENT = AED 120 - AED 175 /sq.ft.

BARSHA HEIGHTSRENT = AED 70 - AED 110 /sq.ft.AVG. SALE = AED 900 /sq.ft.

JUMEIRAH LAKES TOWERSRENT = AED 55 - AED 190 /sq.ft.AVG. SALE = AED 975 /sq.ft.

DOWNTOWN DUBAIRENT = AED 130 - AED 240 /sq.ft.AVG. SALE = AED 2,075 /sq.ft.

DIFCRENT = AED 125 - AED 340 /sq.ft.AVG. SALE = AED 1,750 /sq.ft.

BUSINESS BAYRENT = AED 65 - AED 140 /sq.ft.AVG. SALE = AED 1,050 /sq.ft.

0

500

1,000

1,500

2,000

2,500

BarshaHeights

JumeirahLake Towers

BusinessBay

DubaiMarina

DIFCDowntownDubai

OFFICE AVERAGE SALE PRICES Q2 2017

AE

D /

sq

.ft.

-1.0%

-8.0%

0.0%

-3.0%

0.0%

0.0%

0.0%

-2.0%

0.0%

-3.0%

-1.0%

-5.0%

QoQ YoY

2,0751,750

1,4751,050 975 900


20


21

RETAIL SECTOR

PRIME SHOPPING MALL AVERAGE RENTS – Q2 2017

An

ch

ors

Cin

em

a

Hyp

erm

ark

et

Min

i M

ajo

rs

Fla

gsh

ips

Rest

au

ran

ts

Fo

od

Co

urt

Lin

e S

ho

ps

1,2001,1001000900800700600500400300200100

0

AE

D/s

q.ft.



�� This quarter witnessed a boost in sales and footfalls across all major shopping centers, driven by the three day super sale event and extended mall hours during the Eid. The three day sales event not only attracted UAE residents but also tourists from neighbouring GCC countries. All the major malls reported long queues across the participating outlets for the three day sales event, while the secondary malls continue to struggle in attracting similar footfall levels.

�� In terms of new retail suppy, only 37,500 sq.ft. of retail space entered the market, taking the total retail stock of Dubai to 34.5 million sq.ft. of Gross Leasable Area (GLA). With over 10 million sq.ft. of GLA under construction, Dubai’s retail space is heading for a massive

increase during the course of next three years which could have an effect on occupancy and footfall figures.

�� During this quarter, the rents remained flat across all major malls while secondary mall operators are looking at rental negotiation to retain existing tenants and maintain their occupancy levels. Some of the secondary mall operators have starting revamping their retail mix, to ensure they are aligned to the market demand and prepared for the upcoming new malls and growing space in existing malls. In addition, there is increased pressure from the rapidly expanding online shopping platform, which is growing its market share of the overall retail spend in UAE.

0

10

20

30

40

50

24.5 27.1 27.9 28.4 28.7 30.0 32.6 34.5

0.04

34.5 37.5

3.03.3

40.8

4.5

DUBAI RETAIL MALL STOCK - 2010 - 2019

GL

A s

q.ft.

(Mill

ion

s)

Stock Expected - *Includes all retail malls with a GLA greater than 25,000 sq.ft.


2010 2011 2012 2013 2014 2015 2016 H1 2017 H2 2017 2018 2019

2.62.6 0.7 0.5 0.3 1.3

1.8

RETAIL SUMMARY

DUBAI RETAIL MALLS GLA BY AREA Q2 2017

12%

17%

14%

23%

34%

Neighborhood - 33%

Community - 22%

Regional - 20%

Super Regional - 25%

DUBAI RETAIL MALLS BY SIZE Q2 2017

DUBAI RETAIL SUPPLY (PRE-2010)

NEW SUPPLY DELIVERED 2010-Q2 2017

Neighborhood - 22%

Community - 15%

Regional - 16%

Sub-Regional - 16%


33%

22%20%

25%22%

15%

16%16%

31%

20%

11%

14%

7%

11%

4%5%

5%

3%

6%

3%

8%

3%

Deira - 20%

Business Bay - 14%

Barsha - 11%

Mirdif - 11%

Al Warsan - 8%

Bur Dubai - 7%

Al Quoz - 6%

Dubai Marina - 5%

Jebel Ali - 5%

Dubailand - 4%

Jumeirah - 3%

Al Wasl - 3%

Other Areas - 3%

Neighborhood - 17%

Community - 12%

Regional - 14%

Sub-Regional - 23%



22


23

HOSPITALITY SECTOR

0

200

400

600

800

1,000

1,200

DUBAI HOTELS PERFORMANCE - 2017 YTD

ADR RevPAR


Occupancy

100.0%90.0%80.0%70.0%60.0%50.0%40.0%30.0%20.0%10.0%0%

AE

D

Occu

pan

cy

Jan

-14

Feb

Mar

Ap

rM

ay

Ju

nJu

lA

ug

Sep

Oct

No

vD

ec

Jan

-15

Feb

Mar

Ap

rM

ay

Ju

nJu

lA

ug

Sep

Oct

No

vD

ec

Jan

-16

Feb

Mar

Ap

rM

ay

Ju

nJu

lA

ug

Sep

Oct

No

vD

ec

Jan

-17

Feb

Mar

Ap

rJu

n

HOTEL SUMMARY �� During Q2 2017, over 1,700 rooms were

added taking the total supply to over 106,000 rooms and apartments. Few of the new additions include Premium Rixos in Jumeirah Beach Residence, Double Tree in Business Bay and Rove Trade Centre.

�� Tourist numbers continue to record a robust growth despite challenging economic environment and currency fluctuation. During H1 2017 Dubai hotels welcomed 8.06 million guests as against 7.29 million guests during the same period last year, a growth of 10.6% year-on-year.

�� The largest source market during H1 2017 was India with 1.05 million guests followed

by 740,000 guests from Saudi Arabia. Visa on arrival for Indian nationals holding US visa had a positive impact on the guest numbers. With foreseeable improvements with visa on arrival to Indians holding UK and EU residency visa will further boost guest numbers from India.

�� Year-on-year the ADR’s remained flat while occupancy rates have risen by 2% year-on-year, as Eid holidays aided in recording strong occupancy rates. Looking at the exhibitions and events scheduled and promotions offered by the hotels, occupancy rates are expected to remain strong for the remainder of the year.

HOTEL NAME LOCATION STAR DATE NUMBER OF KEYS

Rove Trade Centre Al Jaffliya 4 star Q2 2017 270

Premium RixosJumeirah Beach

Residence5 star Q2 2017 443

Double Tree Business Bay 5 star Q2 2017 238

TRYP by Wyndham Barsha Heights 5 star Q2 2017 674

Goldstate Hotel Al Jadaf 3 star Q2 2017 101

HOTEL NAME LOCATION STAR DATE NUMBER OF KEYS

Renaissance Downtown Dubai

Business Bay 5 star 2017 298

Waldorf AstoriaDubai International

Financial Centre5 star 2017 247

Creek Rotana & Arjaan Deira 4 star 2017 280

Bulgari Resort & Residences

Jumeirah Bay Island 5 star 2017 121

HOTELS - NEW SUPPLY Q2 2017

SAMPLE OF UPCOMING SUPPLY

0

30

60

90

120

150

DUBAI HOTEL ROOMS SUPPLY (2012 - 2019)

No

. o

f R

oo

ms

('0

00

s)

Existing Supply New Supply


418 4.7

6.8 1.66.4

H1 2017 H2 2017 2018 2019201620152012 2013 2014

79 80 84 92 97 104 105

8.0

112

7.5

120


24


25

DEFINITIONS & METHODOLOGY

RESEARCH STUDY AREA

The geographic extent of the study area covers the key districts in Dubai.

RESIDENTIAL

New residential developments are classified as delivered and thus entered into the new supply category when they are made available for occupation. This is verified via a combination of site inspections and discussion with the developer and hence our supply numbers do take into consideration the phased release of large projects.

Rental and sales trend analysis is based on transactional data derived from the MPM Properties Agency team and data sourced from developers and owners.

OFFICES

New office developments are classified as delivered and thus entered into the new supply category when they are available for tenant fit-outs.

Given the general lack of transparency in the local market rents quoted are headline rents, thus exclude any rent free period of other financial

incentives that may have been negotiated between the parties. The rents quoted are also exclusive of service charges.

RETAIL

New retail developments are classified as delivered and thus entered into the new supply category when the first units are open and trading.

Our classification of malls is based on our own assessment having regard to size and the catchment area which the mall typically penetrates.

HOSPITALITY

New hotels are classified as delivered and thus entered into the new supply category when they are opened and trading. All trading performance data is provided by DTCM.

FUTURE SUPPLY PROJECTIONS

Our future supply projections across all sectors are based on a combination of regular site inspections and discussions with developers.

BESPOKE CLIENT RESEARCH ADDING VALUE TO YOUR PROPERTY INTERESTSThe ADIB Real Estate Services team covers all sectors of the real estate market. We provide bespoke market research to our valued clients to meet their specific requirements.

We provide reports, information and presentations derived from primary market data that directly assist our clients to save or make money from real estate and shape strategies to enhance value.

DISCLAIMER:

The information contained in this report has been obtained from and is based upon sources that MPM Properties believes to be reliable, however, no warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. MPM Properties will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute MPM Properties, as of the date of this report and are subject

to change without notice. Figures contained in this report are derived from a basket of locations highlighted in this report and therefore represent a snapshot of the Dubai market. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, involve risk and uncertainty because they relate to future events and circumstances which are beyond MPM Properties’ control. For a full in-depth study of the market, please contact MPM Properties team.

A collaborative team providing our integrated services

BALAJI NAGARAJ MSC MRICS Head of Residential Valuation Dubai & Northern Emirates T: +971 (0)4 371 9463 M: +971 (0)55 196 2396 [email protected]

CHARLES ANDREW CHAMBERS CEO T: +971 (0)2 610 0545 M: +971 (0)56 6773521 [email protected]

ABDULLAH SAID AL KUWEITI Business Development Director T: +971 (0)2 610 1554 M: +971 (0)50 623 5854 [email protected]

MOHAMMED FAHEEM Manager Strategic Advisory & Research T: +971 (0)4 371 9471 M: +971 (0)50 384 5220 [email protected]

WAHIDA KARAMA Head of Property Operations T: +971 (02) 610 0435 M: +971 (0)50 765 7679 [email protected]

FRANK O’DWYER MBA (Hons); BEng.COO T: +971 (0)2 610 0402 M: +971 (0)50 812 1070 [email protected]

DOMINIC BARLOW Head of Retail, Hospitality & Leisure T: +971 (0)2 510 0655 M: +971 (0)56 288 1458 [email protected]

JUBRAN AL HASHMI Head of Property Services T: +971 (0)2 610 0232 M: +971 (0)50 122 0041 [email protected]

VINEET KUMAR Director of Agency – Dubai T: +971 (0)4 371 9462 M: +971 (0)50 651 6491 [email protected]

VAIBHAV SHARMA MCOM; MDBA Chief Strategy Officer T: +971 (0)2 412 8914 M: +971 (0)50 660 9295 [email protected]

ALI ABDULLAH ABDUL RAHMAN Acting Regional Head – Northern Emirates T: 971 (0)6 597 2514 M: +971 (0)50 656 2486 [email protected]

MOHAMED AL ZOUBI Head of Development Advisory BSc Civil Engineering T: +971 (0)2 610 0564 M: +971 (0)50 310 3570 [email protected]

YOUSEF AL ZAROONI Regional Head – Al Ain T: +971 (0)3 708 8636 M: +971 (0)50 600 1002 [email protected]

PAUL MAISFIELD BSC (HONS) MRICS Head of UK Real Estate T: +44 (0) 20 7590 2234 M: +44 (0)7802 404868 [email protected]


26


27

SAMPLE OF UPCOMING PROJECTS – Q2 2017RESIDENTIAL

RETAIL

HOTEL

3 AZIZ FREESIA 4 AZIZ DAISY1 RIAH TOWERS CULTURE VILLAGE

2 MAYDAN RESIDENCES 1 MAYDAN

OFFICE

1 THE POINTE PALM JUMEIRAH

2 THE FIRST AVENUE MOTOR CITY

3 NAKHEEL MALL PALM JUMEIRAH

4 PAVILION BADRAH RESIDENCE

1 BULGARI JUMEIRAH BAY ISLAND

2 PARK INN MOTOR CITY

3 RENAISSANCE DOWNTOWN DUBAI

4 WALDORF ASTORIA DIFC

1 NBAD OFFICE BLDG. AL JADDAF

2 OFFICE BUILDING, UM AL SHEIF

4 THE OPUS, BUSINESS BAY

3 OFFICE TOWER, UM AL SHEIF

1 TAMANI ART, BUSINESS BAY

2 OFFICE BUILDING, UM AL SHEIF



SUPPLY - PHOTO GALLERY

NEW SUPPLY – Q2 2017RESIDENTIAL

HOTEL

3 MARINA ARCADE 4 MANZEL AL KHOR CULTURE VILLAGE

2 NILOFAR TOWER CULTURE VILLAGE

1 SUFOUH VILLAS SUFOUH

OFFICE

1 TRYP BY WYNDHAM BARSHA HEIGHTS

2 RIXOS PREMIUM JBR

4 DOUBLE TREE BUSINESS BAY

3 GOLDSTATE AL JADAF

RETAIL

1 PAVILLION, JUMEIRAH ISLANDS


28


29

TOABU DHABI

Jebel Ali Port

Jebel Ali FreezoneBarshaHeights

Al Mamzar

Al Qusais

1

2

32

34

1

13

3

4

3

4

1

2

3

3

1

4

2

2

1

1

4

4

2

4

1

2

Residential

Offices

Retail

Hotels

Q4 2016 NEW SUPPLY

Residential

Offices

Retail

Hotels

UNDER CONSTRUCTION

Q2 2017

INTEGRATED SERVICES COVERING THE FULL PROPERTY LIFECYCLE

Property Management

Investment Advisory

Project Management and ESCROW

Research & Strategic AdvisoryAgency (Sales & Leasing)

Valuation

VAIBHAV SHARMA MCOM; MDBA Chief Strategy Officer T: +971 (0)2 412 8914 M: +971 (0)50 660 9295 [email protected]

ABU DHABI HEAD OFFICE 6th Floor, Al Wahda Tower P.O Box 114686 Abu Dhabi

Tel. +971 2 610 0252Fax. +971 2 610 0514 www.mpmproperties.ae

DUBAI OFFICE Office 2301,2303,2305 - Level 123 Arenco Tower, Dubai Internet City Dubai

Tel. +971 (0)4 371 9462

AL AIN OFFICE 201-204 ADIB Ladies Branch Building Oud Touba Street Al Ain

Tel. +971 (0)3 703 9521

SHARJAH OFFICE Sarh Al Emarat Tower Buheira CornicheSharjah

Tel. +971 (0)6 597 2555

Enhancing value for individual & institutional property owners:

�� Prompt leasing & debt collection

�� Effectively market & lease vacant units

�� Physical & technical maintenance of asset

�� Maintain tenant satisfaction

�� Timely lease renewals

�� Manage risk, insurance & litigation

�� Protect your interests and enhance value

Complete Project Management services at planning & construction stage:

�� Engineering Review & Scheduling

�� Cost Estimate & Procurement

�� Project Monitoring

�� Cost Control & Accounting

�� Assist with Permits & Licensing

�� Ensure appropriate fund movement for Escrow based on Project Assessment

Aiding developers and investors to maximize value:

�� Investment Advisory & Due Diligence

�� Investment Management

�� Disposal Strategy

�� Portfolio Review & Optimization

�� Deal Structuring & Capital Sourcing

�� Investment Sale

We work with developers, commercial tenants, retailers and individuals, offering:

�� Launch Strategy

�� Project Launch Handling

�� Project Marketing Events

�� Acquisitions

�� Leasing

�� Sales

We cover all sectors, including residential, commercial, industrial, retail, and land.

Bankable studies for your real estate and business needs:

�� Highest & Best Use

�� Market & Financial Feasibility

�� Development Strategy

�� Market Research

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�� Master-plan and design review

Valuation reports for:

�� Mortgage & Loan Security

�� Securing Project Funding

�� Internal Accounting

�� Mergers & Acquisitions

�� Investment appraisal

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�� Inheritance

We cover all asset classes. Our reports are in compliance with the International Valuation Standards (IVS) and the RICS Professional Valuation Standards.

CHARLES ANDREW CHAMBERS CEO T: +971 (0)2 610 0545 M: +971 (0)56 6773521 [email protected]

dubai real estate market overview q2 2017 - mpm … q2_adib_mpm real... · 2018. 1. 25. · q2 2017...

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