futurebrand's annual gulf real estate study

Futurebrand’s annualGulF real estate study

This year’s Gulf Real Estate Study (GRES) is a reaction to the challenging landscape of the

real estate market we face today, and a shift in the way we both question and celebrate the

events spurred by the industry in the past twelve months.

Having focused and built many of the leading brands in this region and category for over ten

years, we are continually looking to assess achievements and failures as well as to measure

the performance of the brands that remain and those that we hope will capitalize. As our

name suggests, we seek insights and trends that will inform the brands’ future.

Where hyperbole once ruled, today the focus is on moderation. Developers are turning their

attention to previously neglected segments of the market with a broader variety of develop-

ments that cater not only to the luxury customer but also to the more affordable end of the

market. Countries in the Gulf Cooperation Council (GCC) are starting to create strong national

brands and forge themselves into cultural and leisure destinations that are not defined by

iconic real estate offerings but are complemented by them.

Given these changes, developer brands are going to have to proactively connect with and

listen to their end customers — both prospective clients and current residents. Those

who will best manage their reputations and build real trust in this period of difficulty will

ultimately succeed and endure.

We hope you enjoy reading this report. We’d love to have your thoughts and comments on our

findings and insights!

Cover image courtesy of Katarina Premfors

katarinapremfors.com

GULF REAL ESTATE STUDY 1

http://www.katarinapremfors.com

Examining DUBaiDubai Marina

Villas

Apartment Transactions

Dubai vs. NYC

EmERging TREnDSFact or Fiction - The Credibility Crisis

From Concept to Completion

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COntents ShaRE yoUR commEnTS:futurebrand.com/gres or Twitter: #gRES

2009 FacTS anD FinDingSImpact of the Downturn

Developer Recognition

Developer Reputation

Developer Preference

Developer Outlook

Developer Image

Preferred Locations

Preference Drivers

Breakdown by Transaction Type

Breakdown by Nationality

yEaR in REviEwThe Highs & The Lows

News & Noteworthy

2009 Notables

2009 Trends

REgion aT a gLancESaudi Arabia

Qatar

Bahrain

UAE

ThE FUTUREThe Rise of Abu Dhabi

Portfolio Rationalization

Financial Innovation

Breaking the Silence

A New Dialogue

Delivering the Promise


http://www.futurebrand.com/gres

http://twitter.com/#search?q=%23gres

2009: year In reVIeWThis past year has witnessed the greatest highs and lows of the past decade in the Gulf real estate market. In the same year that the tallest tower in the world was completed, the global financial crisis eclipsed many of the extraordinary achievements in the region. Developer brands went through flux and, in many cases, reputation crises; investors suffered heavy losses; and expatriates left the region. The last twelve months also had cause for celebration, with the inauguration of The Palm monorail and the Dubai Metro, new pieces in the infrastructure of Dubai that will serve as a blueprint for the future of the region’s infrastructure. These valuable investments in the region will create better, more comfortable and sustainable cities in the long term, so while the real estate sector is down, it is not out for the count.


tHe HIGHsIn 2009 we celebrated some milestone events that placed the region in the global spotlight.

The Dubai Mall opened to great fanfare, the first F1 Etihad Airways Abu Dhabi Grand Prix was

successfully staged at Yas Marina Circuit and The Pearl Qatar opened. The inaugural Dubai

World Championship at Jumeirah Golf Estates created a new blockbuster sporting event for

the region, which will contribute to the rise of the region as a center for sporting excellence.

Dubai’s airport announced a year-on-year growth of 9.2% in passenger numbers during 2009

with a record 40.9 million passengers, the fastest growth in passenger numbers among the

world’s busiest airports.1

The inaugurations of The Palm monorail and the Dubai Metro were significant landmarks of

infrastructure investment in Dubai, setting an example for the rest of the region. Developers

in other GCC countries are following Dubai’s lead in creating sustainable transportation links

and connecting new developments such as Masdar City in Abu Dhabi to the wider public

transport network, thus creating more comfortable, better connected and more pleasant cities

for the future. Qatar and other countries in the region are investing heavily in their tourism

infrastructure and cultural centers — the Museum of Islamic Art in Doha, which opened in

December 2008, and the bold projects planned for Saadiyat Island are prime examples —

thus improving the quality of the countries both as destinations to visit and places to live.

tHe lOWsInstitutional and foreign investors left the region during the last twelve months, precipitating

a slump in demand, that was followed by sharp drop in speculation. Unlucky investors

who had bought properties at the peak of the real estate market were left with depreciated

values and without prospective buyers. Investor confidence reached an all-time low, and

leaders of developer brands refused to give a clear account of events, creating a detrimental

information famine.

Houses, shops, offices, hotels and restaurants that had been built on aggressive and optimistic

demand projections faced the sobering reality of oversupply and the transition from a seller’s

to a buyer’s market. With developers slow to react to the change in the market conditions,

many completed buildings were left empty with for lease/sale signs on their facades.

Developers could not access the necessary capital to pay contractors and manage their

staggering debts, while investors and buyers suffered the disappearance of financing products

and increasingly complex requirements for those that remained. Market demand evaporated,

further contributing to the overall economic stagnation.

With the fundamentals of business in disarray, companies looked to cut operational costs

with rounds of redundancies; triggering an exodus of expatriates and sensationalized news

of abandoned cars and unpaid personal credit card bills. This was followed by a number of

project cancellations, delays, indefinite postponements and reevaluations. Many organizations

either collapsed or were forced to merge to consolidate their portfolios and international

footprints. The Dubai World debt default announcement in November sent shock waves

through the global financial markets and triggered fears of a second global financial crisis —

one with its source in the region. The resulting damage to the real estate sector’s credibility

has left legions of disgruntled — and vocal — investors and workers in its wake.


State of the Market

State of the Market

Despite growing demand in the housing sector, sale prices

in the Saudi real estate sector are typically 58% below the

MENA average.2

By the end of 2008, Dubai’s hospitality sector was reporting

an average occupancy level of 79%, the lowest in five

years.3

State of the Market

A survey in March 2009 found that investors in the GCC see Abu Dhabi as the region’s

strongest-performing real estate market in the Middle East North Africa (MENA) region during

2009–2010. Abu Dhabi (at 26%) is closely followed by Saudi Arabia (25%) and Qatar

(19%).4

It is estimated that more than 15,000 apartments in Qatar are vacant.5

In Dubai’s central business district (between the World Trade Center and Interchange 1),

office rents in September 2009 averaged between AED 225–275/square foot, as compared to

AED 375–400/square foot in November 2008. In Abu Dhabi, office rents averaged AED 230/

square foot in September 2009, a fall from AED 280/square foot in November 2009.6

Developers claim that Bahrain will need 80,000 housing units targeting the middle and

lower-income market segments to meet demand by 2020. The Bahraini government has

announced plans to build 50,000 low-cost housing units by 2014.7

Analysts forecast that the Kingdom of Saudi Arabia will have to build 1.5 million new homes

by 2015 to meet its housing demand. Projections estimate that at current levels of supply,

the KSA market will see a shortage of 150,000–800,000 housing units by 2012.8

Projects in Bahrain currently hold a cumulative worth of over $36 billion. Since the start of

the economic crisis, 54 projects have been cancelled or put on hold, while construction and

planning continue on 148 projects.9

neWs & nOteWOrtHy


neWs & nOteWOrtHy State of the Market

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai and Vice-President

of the UAE, was quoted as saying that the worst of the crisis had passed and the emirate was

well poised to recover, as real estate does not constitute the mainstay of Dubai’s economy.11

Dubai World, which owns the property unit Nakheel, has asked creditors to allow the firm to

delay debt payment until May 2010 at the earliest. The Dubai government announced that

it had borrowed $5 billion — half of the $10 billion it initially planned to raise by the end of

2009 — from Abu Dhabi’s government-controlled banks.12

The Dubai government announced that it would not guarantee Dubai World’s debt of $59

billion and that lenders must bear part of the responsibility.13

As part of an initiative to protect property investors, the Dubai Land Department is working

on drafting a new law that would further regulate the relationship between developers

and investors.14

Due to a new supply of hotel rooms, the average occupancy rate has dropped below 70% from

peaks of over 87% experienced between January and June 2008.15

State of the Market

One in four homes and a quarter of all office space in Dubai

is currently unoccupied. Oversupply has created a glut

in the market, and an additional supply coming onto the

market is expected to further depress prices.10


Market CorreCtion

Property prices for undeveloped land in Kuwait have fallen by 40%–50%, and built properties

have seen devaluations of up to 30%.18

By the end of 2008, Dubai’s commercial sector reported a 16% vacancy rate, up 7% from six

months earlier.19

A 400-square-meter villa in Qatar was for sale at $549,390 in September 2009, down from

$824,085 in September 2008.20

Qatar’s current projects have a cumulative worth of over $42 billion. Since the start of the

economic crisis, seven projects have been cancelled or put on hold, while construction and

planning continues on 124 projects.21

Delays

$220 billion worth of projects have been put on hold or cancelled in the GCC since the start

of the global economic slowdown, with 91% of the cancellations announced in Dubai. Besides

the announced postponements and cancellations, 54% of all announced projects in the GCC,

totalling $1.05 trillion in projected costs, are under threat of being put on hold or cancelled.22

neWs & nOteWOrtHy

Market CorreCtion

By the end of 2009, the

number of developers had

been reduced to 473.17

In January 2009, 500 developers were officially registered

with RERA, down from 800 in November 2008.16

MARKET CORRECTION


SALES & MARKETING

Saudi Arabia has banned off-plan sales and promotions without prior approval from a

commission that has yet to be established.26

MERGERS & CoNSoLIdATIoNS

The government of Qatar ordered Barwa Real Estate and Qatar Real Estate (Alaqaria) to

merge operations in early 2009. The two companies are in the final stages of merging their

non-competing portfolios, which will result in a real estate giant with a market capital-

ization estimated at $3 billion.27

Amlak and Tamweel declared in November 2008 that they would initiate a merger between

themselves and two other government-owned banks, which was to have been completed by

Q1 2009. The global real estate crisis and deepening recession have negatively affected both

lending institutions, and the nationwide steering committee responsible for seeing through

the merger is still reviewing the plans.28

In March 2009, Qatar’s Ezdan Real Estate Company — the country’s largest property firm, with

market capital of $2.6 billion — revealed that it was looking into the possibility of merging

with the Group of International Housing Co. to help both companies weather the economic

slowdown.29

After months of talks about combining Deyaar and Union Properties into a single company,

the merger was scrapped because the new entity would not be able to secure financing in the

tough real estate climate.30

INFRASTRUCTURE

Qatar will spend $17 billion over the next five years to boost

its tourism infrastructure.23

INFRASTRUCTURE

INFRASTRUCTURE

Infrastructure projects worth $28.5 billion are currently

under construction in the UAE, with another $76.9 billion

worth of projects planned for the coming decades.24

Though $62 billion worth of public works projects were put

on hold or cancelled between October 2008 and April 2009

in Saudi Arabia, the government awarded $137 billion in

new public-sector contracts over the same period.25

neWs & nOteWOrtHy


CommerCial

In the Jeddah office market, rents continue to decrease and vacancy levels continue to rise

with the arrival on the market of new, better-equipped office spaces.32

Average Dubai office prices were down 58% and office rents fell 44% in Q3 2009 as

compared with the same period in 2008.33

Office rents in Dubai’s free zones have fallen by as much as 63%. While Dubai International

Finance Centre (DIFC) continues to command the highest rates in Dubai (AED 280–325/

square foot), Jumeirah Lale Towers (JLT) has seen a significant drop in asking prices, down

from AED 240–280/square foot in Q3 2008 to AED 70–120/square foot in Q3 2009.34

reTail

Retail rents in Dubai have fallen by 18% in the past year due to an oversupply of stock and

lack of demand.35

commERciaL

Abu Dhabi’s prime office sector saw

a year-on-year drop of 40% in office rents.

In Q3 2008, prime rental rates stood at AED 5,000/square meter.

Since then prices

have dropped to

AED 2,900/square

meter.31

neWs & nOteWOrtHy


Mortgages and Financing

In recent months, banks in the region have introduced stringent rules for lending. It is

estimated that 70% of banks in MENA have restricted mortgage loans to individuals

earning more than $5,450 per month. Of those surveyed, 77% of lenders are still financing

residential properties; and 40% of these limit financing to one property per applicant.37

UAE Central Bank figures show that mortgages provided by the nation’s 52 national and

foreign banks rose by AED12 billion from January to June in 2009, as compared to AED44

billion for the same period in 2008.38

LayoFFs

In December 2008, Nakheel made 500 staff members, or 15% of its work force, redundant,

while its sister company Istithmar World cut almost 10% of its work force. Facing continuing

cancellations and project delays, Nakheel cut another 400 staff members in July 2009.39

Deyaar laid off 20% of its work force in October 2009, days after posting a 74% drop in Q3

profits as compared to the same period in 2008.40

neWs & nOteWOrtHy

Layoffs

In December 2008 Dubai Properties laid off an

estimated 600 staff members, while Damac let 200

workers go at around the same time.36


2009 nOtables

TRanSpoRTaTion nETwoRkS

Dubai Metro began operations in 2009. The project will serve as a litmus test for other GCC

governments interested in developing domestic and regional transportation infrastructure.

Despite the economic downturn, Nakheel launched its Palm Jumeirah Monorail this year, and

others in the region (such as Masdar) appear committed to providing internal transportation

networks that link to the greater public transportation grid.

REgULaToRy aUThoRiTiES

Following the launch of RERA (Real Estate Regulatory Authority) in 2008, ARERE (Ajman

Real Estate Regulatory Establishment) was launched in January 2009. Various regional

governments, including Saudi Arabia, have announced plans for establishing similar entities

to provide greater transparency and stability.

pRojEcT cancELLaTionS anD DELayS

The increase in the number of project delays and cancellations has further dented investor

confidence. Conflicts between investors and developers, master developers and third-party

developers, and tenants and landlords are becoming increasingly common as a result.

changES To ThE UaE FREEhoLD pRopERTy ownERShip LawS

The UAE government issued a federal law to clarify the issuance of visas to foreign nationals

owning freehold property in the UAE. The multiple-entry, six-month visa for those whose

properties are worth over AED 1 million and who have a monthly income of no less than AED

10,000 has had a lukewarm reception. It continues the trend of new regulations affecting

investors’ assessment of the market.


2009 trends

aFFoRDaBLE hoUSing

Perhaps in reaction to the oversaturation of luxury products, developers are starting to cater

to the middle to lower-income brackets. Governments (Bahrain, Saudi Arabia) as well as

developers and financial institutions (Aldar, Saudi Binladin, Kinan, Islamic Development

Bank) have all announced products to serve a previously neglected market segment.

FLExiBLE LEaSing agREEmEnTS anD BUying opTionS

Indicative of the shift in the dynamics of supply and demand, landlords are now offering

and accepting multiple cheques for annual leasing agreements, in contrast to the previous

practice of taking single cheques. Additionally, alternative payment options such as “rent

to own” programs have become more commonplace as developers try to spur the market.

TRaDing Up

Falling prices have empowered various segments of the rental market to move into bigger or

better properties at the same or lower cost as their previous tenancy. This has led to some

noticeable shifts in the demographics and concentration of different neighborhoods. This

trend is also affecting the commercial real estate market, albeit at a slower pace.

FaiLURE oF aUcTionS

Once an attractive way to achieve record-high prices, two property auctions held in Dubai

during 2009 have been largely considered failures, with many of the available plots failing to

meet the reserve prices.


reGIOn at a GlanCe


Saudi arabia With a current project portfolio worth over $387 billion, Saudi Arabia remains a compelling market. This is the sole market where overall housing demand fundamentals such as the growing youth population and lack of inventory appear to point to a bright future. However, the lack of clarity on ownership laws and the delays in the approval of financing dampen the market’s potential.


saudI arabIa UpDATES & MiLESTonES

Dar Al Arkan launched the mixed-use Shams Al-Arous project, a $2 billion project which will

create 10,000 residential units as well as commercial outlets and public amenities including

parks, schools and mosques.41

In the largest-ever redevelopment program undertaken in the Kingdom, the government has

unveiled plans to reinvigorate the underdeveloped residential districts of Mecca and Medina

and the holy sites of Mina, Arafat and Muzdalfa.42

Located in Medina, the recently launched $1 billion Knowledge Economic City aims to attract

knowledge-based industries in the medical sciences and biotechnology sectors by offering

research centers and scientific development companies and organizations. The project will

also develop housing for 150,000 residents and create 20,000 jobs.43

The Riyadh office market has been buoyed by news that the GCC Monetary Union Central

Bank will be located in the King Abdullah Financial District, which is currently undergoing

site preparation.44

Kingdom Holdings deferred the Kingdom Tower project — projected to become one of the

world’s tallest towers — for an undetermined period.45

Many projects announced in Jeddah during 2007-08 are showing little or no progress as

companies scale back the momentum of construction. Sama Dubai, Damac and Diamond

Tower along the Corniche are prime examples.46

Saudi Arabia has revealed plans to develop “airport cities” in Jeddah, Riyadh and Dammam.

The three new airports will anchor distinct cities that will offer commercial offices, hotels and

residential units, as well as schools and shopping complexes.47

Facing a growing population and rising demand for accommodation in the Kingdom, the Saudi

government is set to build 8,143 new housing units across 16 cities and governorates.48


Qatar The government of Qatar is firmly committed to investing in the country’s tourism and infrastructure and has made bids to host international sporting competitions in the future. Projects such as The Pearl Qatar have added a new dimension to the real estate sector. The market has witnessed a drop in prices across all real estate segments, but the government is exerting further controls in a bid to stabilize it.


Qatar UpDATES & MiLESTonES

The first phase of development for Lusail City is currently under way and set for completion

in 2011. Once complete, Qatar’s largest new development will house 455,000 people in 17

mixed-use districts connected by a light rail network.49

Work has begun on the $5.5 billion Dohaland project. Slated for completion in 2016, the

project aims to reinvigorate the center of Doha and reinstate it as the social and commercial

heart of the city while creating housing for 27,000 people.50

New retail complexes such as Lagoona Plaza and Salam Bounian’s The Gate will soon be

complete. In a traditionally undersupplied market, retail market rents are set to dampen as

the cumulative shopping mall supply increases by an expected 100% between Q1 2009

and Q4 2010.51

Qatar launched Qatar Railway with an initial capital of $100 million to spearhead government

plans to connect regions to each other and to link Qatar to neighboring countries. The first

phase of the countrywide railway project will begin in 2012 with a monorail linking the towers

in the West Bay area of Doha.52

A new law in Qatar has addressed tenant uncertainty by decreeing that a landlord must give

six months notice to a tenant in order to recover the rented property. Furthermore, a tenant

can be removed from a property only if the housing unit will be used by the landlord or his/

her legal dependents.53

House prices fell by 20% in Q1-3 in 2009 and are expected to fall a further 15% in 2010

due to more housing units coming onto the market.54


Bahrain The Ministry of Information noted that nationals accounted for 90% of real estate transactions in the country. Despite the apparent drop in influence on the market by speculators, the country’s real estate market has nevertheless slowed due to the economic crisis. Considering its small population, the Bahraini authorities appear to have adopted a reactive stance, waiting for overall market conditions to improve before making any decisive policy changes.


Manara Developments unveiled Nurana, a $1 billion waterfront reclamation mega project

with 60% of the project site allocated for residential units. In addition, it has announced

the development of Kenaz Homes, a plan for 75 semi-detached houses that will be sold

exclusively to GCC and Bahraini nationals.55,56

Marsa Al Reef, a waterfront project spanning 2.6 million square meters that will offer

residential, retail and leisure elements, was announced in April 2009.57

Eskan Bank’s planned Seef Garden project has been postponed indefinitely. The project was

to bring 670 apartments and 42 villas to the market.58

First Bahrain postponed its 21,000-square-meter development in Seef district, which was to

have featured commercial and residential towers, a five-star hotel, and serviced apartments.59

The $2.65 billion Uptown Bahrain project, which was due to start construction in Q1 2009

and was to become the new commercial and residential hub of Bahrain’s Seef area, has been

put on hold indefinitely.60

baHraIn UpDATES & MiLESTonES


UaE The contrast between the two largest markets in the UAE, Dubai and Abu Dhabi, is becoming increasingly distinct. Once the flagship of the region’s real estate potential, the Dubai market suffered the brunt of the economic crisis with falling prices, cancelled projects and mergers dominating the headlines. Although not without its own challenges, Abu Dhabi reported increases in prices and progress on its major developments.


In an event that closed a tough year for the UAE real estate market, Emaar Properties

launched the world’s tallest structure at 828 meters. In a surprise move, the tower was also

renamed and will henceforth be known as Burj Khalifa. It is named after the current UAE

President and Ruler of Abu Dhabi.61

In Q2 2009, Hydra Properties declared that it is considering delaying, canceling or selling

many of its scheduled developments. With sales of less than 10% in some developments,

Hydra has begun an internal assessment of its project portfolio to evaluate which develop-

ments are worth completing. Developments in Abu Dhabi, Dubai, Kuwait, Libya, Pakistan and

Mexico could be affected.62

The $5.4 billion Awali City project could be scaled back to half its original size. Most

investors have defaulted on their monthly payments for the past eight months, and the

developer is re-evaluating plans to continue with the entire project.63

In Ras Al Khaimah, Rakeen bought the La Hoya Bay project from a private developer to

maintain confidence in the RAK market during the economic crisis.64

All major projects in Abu Dhabi, such as Saadiyat Island, Al Sowwah, Reem Island, Yas

Island and Masdar, are in progress, with a demonstrated commitment by the government to

see them through to completion in their initially envisioned form.65

Residents of Discovery Gardens, a Nakheel property, have asked the Ruler’s Court in Dubai to

freeze their service fees to the developer in light of substandard building maintenance and a

general failure to develop common areas. The residents insist that the newly increased annual

service charges ($5,948 for every 1,000 square feet) are unjustified because the services

they are being charged for are either poorly maintained or do not exist.66

Manarat Al Saadiyat, a 15,400-square-meter visitor center that will host a gallery and special

events, is scheduled to be opened at the end of the year on Abu Dhabi’s Saadiyat Island. The

redevelopment of the natural island, which has been undertaken by the Tourism Development

and Investment Company (TDIC), is set for completion in 2018 and will promote Abu Dhabi

as a world-class cultural destination.67

uae UpDATES & MiLESTonES


Emaar Properties’ US development arm, John Laing Homes — a company it bought for $1.05

billion in 2006 and into which it poured another $614 million during subsequent financial

troubles — was written down as a loss. John Laing Homes initiated bankruptcy proceedings

in 2009.68

The UAE Minister of Economy has reported that the government will soon be amending the

laws governing foreign ownership of businesses located outside designated free zones. In

the hope of attracting a wider range of foreign investors to the country, the government may

choose to allow 100% foreign ownership of businesses across the UAE; currently foreign

investors may own a 100% stake in a company only if it is located within a free zone.69

As part of the Abu Dhabi 2030 plan, the Abu Dhabi government has launched a media production

free zone, twofour54, which aims to become a regional hub for Arabic-language content production.70

Abu Dhabi’s TDIC has launched the first phase of the Desert Islands project by inaugurating

Sir Bani Yas Island. As part of a larger plan to develop the Al Gharbia region of Abu Dhabi,

the government plans to develop the Desert Islands project as a showcase for sustainable,

eco-friendly developments. Work continues on two other islands as part of the Desert Islands

project: Dalma Island and Discovery Islands.71

In Q3 2009, commercial rates in prime office locations around Abu Dhabi fell by around

40% as compared to the same period in 2008.72

In Q3 2008, the average lease rate for residential properties in Dubai was AED 110–120,000

per year; a year later rates had dropped to AED 55–65,000 per year.73

Office lease rates in Dubai have fallen below 2006 levels. Since Q3 2008, rates in Dubai’s

CBD have seen a decrease of 55% year-on-year, while other business districts as well as

newly developed commercial areas have seen an average fall of 67%.74

Though Dubai house prices are currently 47% lower than in Q3 2008, transaction volumes in

Q3 2009 rose 64% in comparison to the previous quarter.75

A tenfold increase over Q2 and Q3 2009 was noted in active and potential demand for

commercial office space in Dubai.76

Dubai is set to see an influx of 50,000 housing units in 2010, of which 20% are expected to

be villas and only half of which are expected to be available for rent.77

uae UpDATES & MiLESTonES


The UAE jumped from 31st to 18th rank in a global property opportunity index designed to

inform the expansion plans of property developers.81

Masdar’s eponymous $22 billion green city has decided to focus on the first phase of its

project, due for completion by 2013, while relaxing its 2016 deadline to complete the

whole project.82

With a third of the 29 stations planned on Dubai Metro’s Red Line operational and the

remainder set to open by April 2010, the Dubai Roads and Transport Authority now faces

a contractual dispute over overdue back payments with the consortium building the rail

network. The consortium has declared that it is stopping all work on the network and is

focusing on securing back payments. The RTA has dismissed the reports.83

Abu Dhabi saw the fifth-fastest fall in office rents as compared to other cities in the world.

With a 39% decrease in commercial rents in Q3 2009 as compared with 2008, Abu Dhabi’s

office real estate also faces a 6% vacancy rate.78

Office space in Dubai is facing a 40% vacancy rate, with over 10 million square feet unused

as demand has dried up. Analysts predict that 150,000 white collar jobs would need to be

created in Dubai to fill the office space that is currently available.79

Dubai tops the list of the world’s cities that have experienced housing price declines in 2009.

Dubai was the worst performer on a list that surveyed 42 cities, with the emirate suffering a

47% year-on-year decrease.80

uae 2009 UpDATES & MiLESTonES


FaCts and FIndInGsTo better understand homebuyer attitudes and perceptions, FutureBrand worked with an independent market research firm to conduct a quantitative study of approximately 200 recent and prospective home purchasers in Saudi Arabia, Qatar and the UAE, the same markets as the 2008 study. Identical homebuyer specifications for 2008 and 2009 allow direct comparisons of data between the years, enabling us to see what a difference a year has made. This year it was also important for the research to measure the impact on homebuyer perceptions and to ascertain attitudes toward the Gulf real estate market moving forward. Consistent with 2008 findings, this year’s study provides insights into what motivates buyers; what factors drive their purchase decisions; their familiarity with and perceptions of leading developers and location preferences.


0% 15.000% 30.000% 45.000% 60.000%

52.9%

49.9%

38.6%

28.1%

45.7%

24.6%

38.0%

22.6%

56.4%I am more aware of risk now

I am less likely to buy or invest in the region again

I see great value and opportunities to buy a home here right now

I am disappointed with the way the region responded to the downturn

I now have more fear/concern of losing money

I feel less urgency in finding a home to buy here

I now have less trust in the developers to deliver what they promise

I am more aware of loopholes and corruption

I believe prices will decline further

Changes in Consumer Attitudes toward the Gulf Real Estate Industry Belief that Property Prices in the Region Today Offer Good Value for the Money

Future Likelihood of Investing in the Region

69%

16%15%

Believe

Unsure Don’t Believe

Likely

Unsure Unlikely

63%

15%22%

ImpaCt OF tHe dOWnturnBased on the research, the principal impact of the economic downturn can be seen in the

lack of trust homebuyers have for developers. Heightened awareness of risk, the potential for

monetary loss, loopholes and corruption all speak to a weakening of homebuyer confidence.

Perhaps most interesting is that this new wariness does not seem to affect homebuyer

attitudes towards purchase.

People are almost 70% more likely to see value in investing right now than they are to feel

less likely to buy or invest in the region ever again. A significant majority—approximately

two-thirds of homebuyers—see value in the Gulf real estate market and intend to purchase in

the future.


Emaar

Aldar

Dar Al Arkan

Barwa

Dubai Properties

UDC

Nakheel

Sorouh

Damac

0% 38% 75% 113% 150%

0.86

0.82

0.8

0.74

0.69

0.68

0.63

0.59

0.44

14%

18%

20%

26%

31%

32%

37%

41%

56%

Excellent Overall Rating (Top Box)*

+28%

-12%

+33%

+25%

+29%

+19%

-5%

N/A

-14%

*Top Box is the percentage of who rated the developer Excellent.

∆ Vs. 2008Top 2 Box* Familiarity Across the UAE, Saudi Arabia and Qatar

Emaar

Nakheel

Barwa

Aldar

UDC

Damac

Dubai Properties

Dar Al Arkan

Sorouh

0% 25% 50% 75% 100%

0.95

0.9

0.87

0.87

0.85

0.83

0.82

0.59

0.31

5%

10%

13%

13%

15%

17%

18%

41%

69%

+9%

N/A

+8%

+3%

+7%

-19%

No Change

+1%

-8%

∆ Vs. 2008

*Top 2 Box identifies the percentage of respondents who rated the developer as the one with whom they are most or second-most familiar.

Top 2 Box* Familiarity Across the UAE, Saudi Arabia and Qatar

Emaar

Nakheel

Barwa

Aldar

UDC

Damac

Dubai Properties

Dar Al Arkan

Sorouh

0% 25% 50% 75% 100%

0.95

0.9

0.87

0.87

0.85

0.83

0.82

0.59

0.31

5%

10%

13%

13%

15%

17%

18%

41%

69%

+9%

N/A

+8%

+3%

+7%

-19%

No Change

+1%

-8%

∆ Vs. 2008

*Top 2 Box identifies the percentage of respondents who rated the developer as the one with whom they are most or second-most familiar.

Emaar

Aldar

Dar Al Arkan

Barwa

Dubai Properties

UDC

Nakheel

Sorouh

Damac

0% 38% 75% 113% 150%

0.86

0.82

0.8

0.74

0.69

0.68

0.63

0.59

0.44

14%

18%

20%

26%

31%

32%

37%

41%

56%

Excellent Overall Rating (Top Box)*

+28%

-12%

+33%

+25%

+29%

+19%

-5%

N/A

-14%

*Top Box is the percentage of who rated the developer Excellent.

∆ Vs. 2008

deVelOper reCOGnItIOnEmaar remains the most recognized developer brand, although its lead over Nakheel has

decreased. Beyond the jumps made by Barwa, Aldar and United Development Company

(UDC), the big story is the decline of Damac. In 2008, Damac had risen to share the

#2 position in recognizability with Nakheel. Today, Damac is almost 70% less familiar

than Nakheel.

deVelOper reputatIOnEmaar, again, remains the most highly esteemed developer brand, but the dramatic rise of

Aldar, Dar Al Arkan, Barwa, Dubai Properties and UDC has closed the gap significantly.

* Top 2 Box identifies the percentage of respondents who rated the developer as the one with whom they are most or second-most familiar. * Top Box is the percentage who rated the developer Excellent.


Emaar

Aldar

Dar Al Arkan

Barwa

Dubai Properties

UDC

Nakheel

Sorouh

Damac

0% 38% 75% 113% 150%

0.89

0.84

0.81

0.76

0.72

0.7

0.66

0.6

0.48

11%

16%

19%

24%

28%

30%

34%

40%

52%

Most Want to Buy A Home From (Top Box)*

+27%

-8%

+29%

+27%

+21%

+17%

+1%

N/A

-3%

∆ Vs. 2008

Emaar

Aldar

Dar Al Arkan

Barwa

Dubai Properties

UDC

Nakheel

Sorouh

Damac

0% 38% 75% 113% 150%

0.89

0.84

0.81

0.76

0.72

0.7

0.66

0.6

0.48

11%

16%

19%

24%

28%

30%

34%

40%

52%

Most Want to Buy A Home From (Top Box)*

+27%

-8%

+29%

+27%

+21%

+17%

+1%

N/A

-3%

∆ Vs. 2008

0%

13%

25%

38%

50%

Em

aar

Ald

ar

Nak

heel

Bar

wa

Dub

ai P

rope

rtie

s

Dar

Al A

rkan

Dam

ac

UD

C

Sor

ouh

Non

e of

The

se

In the Current Economic Situation, Which Developer Will...

Fare The Best

Fare The Worst

4%4%5%6%6%7%10%

50%

1%

Em

aar

Ald

ar

Nak

heel

Bar

wa

Dub

ai

Pro

pert

ies

Dar

Al A

rkan

Dam

ac

UD

C

Sor

ouh

Non

e of

Th

ese

0%

13%

25%

38%

50%

1%4%4%

14%

4%3%12%10%

3%

44%

7%

deVelOper preFerenCeSimilar to reputation, Emaar’s once unassailable lead in the GCC has greatly diminished.

Aldar, Dar Al Arkan and Barwa are now preferred at levels that are beginning to rival Emaar.

deVelOper OutlOOkIn terms of how developers are expected to do in the current economic climate, Emaar is still

the dominant developer brand in the region.

0%

13%

25%

38%

50%

Em

aar

Ald

ar

Nak

heel

Bar

wa

Dub

ai P

rope

rtie

s

Dar

Al A

rkan

Dam

ac

UD

C

Sor

ouh

Non

e of

The

se

In the Current Economic Situation, Which Developer Will...

Fare The Best

Fare The Worst

4%4%5%6%6%7%10%

50%

1%

Em

aar

Ald

ar

Nak

heel

Bar

wa

Dub

ai

Pro

pert

ies

Dar

Al A

rkan

Dam

ac

UD

C

Sor

ouh

Non

e of

Th

ese

0%

13%

25%

38%

50%

1%4%4%

14%

4%3%12%10%

3%

44%

7%

* Top Box is the percentage of respondents who agree completely with the statement, “This is the developer I would most want to buy a home from.”


High-Quality Construction

Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.8 3.95 4.1 4.25 4.4

3.9

4.0

4.2

4.2

4.4

Average Grade: B-

deVelOper ImaGeIf “room to improve” and “parity at the top” were the two key takeaways in the 2008

examination of developer brand image, in 2009 the themes would touch on “weakening”

and “decentralization.” Perhaps not surprisingly, given the downturn-fueled events of 2009,

ratings of developers across measures have declined, typically by between 5% and 10%.

This is compared with the 2008 performance figures that had room to improve. Overall, the

average grade fell from a B to a C+/B-. The other big story of 2009 is the continued decline

of the Nakheel brand, the dramatic fall of Damac and the rise of non-Dubai-based developer

brands including Abu Dhabi’s Aldar, Saudi Arabia’s Dar Al Arkan and Qatar’s Barwa.

Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior),

among home buyers familiar with the developer.

High-Quality Construction

Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.8 3.95 4.1 4.25 4.4

3.9

4.0

4.2

4.2

4.4

Average Grade: B-

Innovative

Emaar

Aldar

Nakheel

Damac

Dar Al Arkan

3.6 3.8 4 4.2 4.4

3.8

3.9

4.1

4.1

4.4

Average Grade: B-

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

4.0

4.0

4.1

4.3

Average Grade: B-Builds Great Places to Live

Innovative

Emaar

Aldar

Nakheel

Damac

Dar Al Arkan

3.6 3.8 4 4.2 4.4

3.8

3.9

4.1

4.1

4.4

Average Grade: B-

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

4.0

4.0

4.1

4.3

Average Grade: B-Builds Great Places to Live


Emaar

Aldar

Dubai Properties

Nakheel

Damac

3.8 3.95 4.1 4.25 4.4

3.9

3.9

3.9

4.2

4.4

Experienced in Real Estate DevelopmentAverage Grade: B-

Emaar

Aldar

Dar Al Arkan

Dubai Properties

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

3.9

3.9

4.2

4.3

Easy to Work WithAverage Grade: B-

Emaar

Aldar

Dubai Properties

Nakheel

Damac

3.8 3.95 4.1 4.25 4.4

3.9

3.9

3.9

4.2

4.4


Emaar

Aldar

Dar Al Arkan

Dubai Properties

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

3.9

3.9

4.2

4.3


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.725 3.85 3.975 4.1

3.8

3.8

4.0

4.0

4.1

Good Value for the MoneyAverage Grade: C+

Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.0

4.2

Provides Homes that Are a Good InvestmentAverage Grade: C+

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.725 3.85 3.975 4.1

3.8

3.8

4.0

4.0

4.1


Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.0

4.2


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.725 3.85 3.975 4.1

3.8

3.8

4.0

4.0

4.1


Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.0

4.2


Emaar

Aldar

Dubai Properties

Nakheel

Damac

3.8 3.95 4.1 4.25 4.4

3.9

3.9

3.9

4.2

4.4


Emaar

Aldar

Dar Al Arkan

Dubai Properties

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

3.9

3.9

4.2

4.3





Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3

Financially SoundAverage Grade: B-

Emaar

Dubai Properties

Dar Al Arkan

Barwa

Nakheel

3.6 3.7 3.8 3.9 4

3.7

3.7

3.7

3.8

4.0

Reasonably PricedAverage Grade: C

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

4.1

4.1

4.1

4.3

Luxurious HomesAverage Grade: B-

Emaar

Aldar

Dar Al Arkan

Dubai Properties

Barwa

3.6 3.775 3.95 4.125 4.3

3.7

3.9

4.0

4.2

4.3

Environmentally OrientedAverage Grade: B-

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

4.1

4.1

4.1

4.3


Emaar

Aldar

Dar Al Arkan

Dubai Properties

Barwa

3.6 3.775 3.95 4.125 4.3

3.7

3.9

4.0

4.2

4.3


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

4.1

4.1

4.1

4.3


Emaar

Aldar

Dar Al Arkan

Dubai Properties

Barwa

3.6 3.775 3.95 4.125 4.3

3.7

3.9

4.0

4.2

4.3


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3


Emaar

Dubai Properties

Dar Al Arkan

Barwa

Nakheel

3.6 3.7 3.8 3.9 4

3.7

3.7

3.7

3.8

4.0


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3


Emaar

Dubai Properties

Dar Al Arkan

Barwa

Nakheel

3.6 3.7 3.8 3.9 4

3.7

3.7

3.7

3.8

4.0





Aldar

Emaar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.7

3.8

3.8

4.2

4.2

Responsive Customer ServiceAverage Grade: C+

Emaar

Dubai Properties

Aldar

Barwa

Nakheel

3.6 3.75 3.9 4.05 4.2

3.7

3.7

3.7

3.8

4.2

Government AffiliatedAverage Grade: C

Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.775 3.95 4.125 4.3

3.8

4.0

4.0

4.1

4.3

Premium AmenitiesAverage Grade: B-

Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

4.0

4.2

4.2

4.3

Well-Planned UnitsAverage Grade: B-

Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.775 3.95 4.125 4.3

3.8

4.0

4.0

4.1

4.3


Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

4.0

4.2

4.2

4.3


Emaar

Aldar

Dar Al Arkan

Nakheel

Dubai Properties

3.6 3.775 3.95 4.125 4.3

3.8

4.0

4.0

4.1

4.3


Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.8 3.925 4.05 4.175 4.3

3.9

4.0

4.2

4.2

4.3


Aldar

Emaar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.7

3.8

3.8

4.2

4.2


Emaar

Dubai Properties

Aldar

Barwa

Nakheel

3.6 3.75 3.9 4.05 4.2

3.7

3.7

3.7

3.8

4.2


Aldar

Emaar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.7

3.8

3.8

4.2

4.2


Emaar

Dubai Properties

Aldar

Barwa

Nakheel

3.6 3.75 3.9 4.05 4.2

3.7

3.7

3.7

3.8

4.2





Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.6 3.8 4 4.2 4.4

3.8

3.9

4.1

4.1

4.4

Delivers on TimeAverage Grade: B-

Emaar

Aldar

Nakheel

Damac

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.7

3.9

3.9

4.2

4.2

Communicates ProgressAverage Grade: C+

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.1

4.2

TrustworthyAverage Grade: C+

Emaar

Aldar

Nakheel

Dar Al Arkan

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3

Desirable LocationsAverage Grade: B-

Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.1

4.2


Emaar

Aldar

Nakheel

Dar Al Arkan

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3


Emaar

Aldar

Dar Al Arkan

Nakheel

Damac

3.6 3.75 3.9 4.05 4.2

3.8

3.9

3.9

4.1

4.2


Emaar

Aldar

Nakheel

Dar Al Arkan

Damac

3.8 3.925 4.05 4.175 4.3

3.9

3.9

4.0

4.1

4.3


Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.6 3.8 4 4.2 4.4

3.8

3.9

4.1

4.1

4.4


Emaar

Aldar

Nakheel

Damac

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.7

3.9

3.9

4.2

4.2


Emaar

Dar Al Arkan

Aldar

Damac

Nakheel

3.6 3.8 4 4.2 4.4

3.8

3.9

4.1

4.1

4.4


Emaar

Aldar

Nakheel

Damac

Dubai Properties

3.6 3.75 3.9 4.05 4.2

3.7

3.9

3.9

4.2

4.2





0%

12.5000%

25.0000%

37.5000%

50.0000%

Dubai Abu Dhabi Doha Jeddah Muscat Riyadh Manama Kuwait City RAK Sharjah Fujairah

4.7%

9.9%

6.8%

2.1%2.1%

7.3%

3.1%

6.8%

9.4%11.5%

36.1%

0%0.4%0.8%0.8%1.6%

4.5%5.9%

9.2%11.1%

23.0%

43.5%

The Most Desired Locations2009 2008

0%

12.5000%

25.0000%

37.5000%

50.0000%


4.7%

9.9%

6.8%

2.1%2.1%

7.3%

3.1%

6.8%

9.4%11.5%

36.1%

0%0.4%0.8%0.8%1.6%

4.5%5.9%

9.2%11.1%

23.0%

43.5%


0%

12.5000%

25.0000%

37.5000%

50.0000%


4.7%

9.9%

6.8%

2.1%2.1%

7.3%

3.1%

6.8%

9.4%11.5%

36.1%

0%0.4%0.8%0.8%1.6%

4.5%5.9%

9.2%11.1%

23.0%

43.5%


preFerred lOCatIOnsThis chart illustrates the performance of cities in the region in driving preference.


Hig

h Q

ualit

y C

onst

ruct

ion

0

0.2

4.6%5.2%5.3%5.7%

6.3%6.7%6.8%

15.6%

18.8%

Inno

vati

ve

Bui

lds

Gre

atP

lace

s to

Liv

e

Eas

y to

W

ork

Wit

h

Exp

erie

nced

in

Rea

l Est

ate

Dev

elop

men

t

Pro

vide

s H

omes

Th

at A

re a

Goo

d In

vest

men

t

Goo

d Va

lue

for

the

Mon

ey

Luxu

riou

s H

omes

Env

iron

men

tally

O

rien

ted

Preference Drivers

preFerenCe drIVersThis graph depicts the relative importance of key attributes in terms of their ability to predict

a homebuyer’s predisposition toward a developer.

0

0.2

0.2%

2.0%2.0%2.3%2.5%2.6%3.2%

3.8%4.2%

Rea

sona

bly

Pri

ced

Fina

ncia

llyS

ound

Pre

miu

m

Am

enit

ies

Wel

l-P

lann

ed

Uni

ts

Res

pons

ive

Cus

tom

er S

ervi

ce

Gov

ernm

ent

Aff

iliat

ed

Des

irab

le

Loca

tion

s

Del

iver

s on

Ti

me

Trus

twor

thy

Preference Drivers (Continued)


69% 63%

0

75,000

150,000

225,000

300,000

Mor

tgag

e

Sal

es

Valu

atio

n

Gra

nted

Leas

ing

Oth

er

Inhe

rita

nce

Ren

t

Inve

stm

ent

Com

pens

atio

n

2,5751458,615

213,560

9,134

27,576

7,153

69,367

34,432

Num

ber

of T

rans

acti

ons

Breakdown by number of transactions

Mor

tgag

e

Sal

es

Valu

atio

n

Gra

nted

Leas

ing

Oth

er

Inhe

rita

nce

Ren

t

Inve

stm

ent

Com

pens

atio

n

69% 63%

0

100,000

200,000

300,000

400,000M

ortg

age

Sal

es

Valu

atio

n

Gra

nted

Leas

ing

Oth

er

Inhe

rita

nce

Ren

t

Inve

stm

ent

Com

pens

atio

n

24561772,21612,22517,929

28,320

223,528

285,331

372,823

Valu

e (A

ED

)

Breakdown by value of transaction type (AED Millions)

breakdOWn by transaCtIOn type

*data as of January 31st, 2010 This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department



69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%

Breakdown by value (AED) Breakdown by area (sq. ft.) Breakdown by price per square foot (AED/sq. ft.)

69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%


69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%


breakdOWn by natIOnalIty

69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%


69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%


69% 63%

USA4%

Canada4%

Oman4%

Kuwait5%

Russia7%

KSA9%

Iran10%

Pakistan12%

UK21%

India24%

USA2%

Canada2%

Oman3%

Kuwait37%Russia

3%

KSA10%

Iran6%

Pakistan8%

UK12%

India17%

USA12%

Canada12%

Oman9%

Kuwait1%Russia

17%

KSA6%

Iran11%

Pakistan10%

UK12%

India10%





examInInG dubaIDubai has been put under a magnifying glass across the globe. When news spread of the Dubai World default, people feared a second global economic crisis, with its epicenter in the Dubai real estate market.


dubaI marInaThe graph below shows the fluctuation of the average value of a 1 bedroom apartment in the

Marina from January 2003 to November 2009.Average price per square foot for a 1 bedroom apartment in Dubai Marina

0

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Brand Dubai has been closely associated with its real estate offerings and series of iconic buildings — from sail- to palm-tree-shaped residential developments to the world’s tallest supertower. The real estate crash, here more than anywhere, has inspired equally sensational newspaper headlines around the world. The following analysis attempts to reveal the state of the real estate market in hard facts and statistics. The case study takes a wide-angle view that considers foreign investment, the rise and fall in prices of residential property, and the number of transactions year by year to give a more measured view of the situation.

This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department


VIllasEven at the higher end of the spectrum with four bedroom villas in Emirates Hills, there is

a similar rise and fall of the average price back to 2006 levels.

0

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003

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008

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9

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r 20

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Aver

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e (A

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Average price per square foot for a 4 bedroom villa in Emirates Hills

Average price per square foot for all types of villas in Emirates Hills

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embe

r 20

09

Aver

age

Pric

e (A

ED/s

q. ft

.)

Average price per square foot for a 4 bedroom villa in Emirates Hills

Average price per square foot for all types of villas in Emirates Hills

0

250

500

750

1,000

1,250

1,500

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ary

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This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land DepartmentThis data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department


apartment transaCtIOnsThe graph below shows all apartment transactions between January 2003 and

November 2009.

Avg. price per sq. ft. for NY 10010 and2 bedroom apartment in Dubai Marina

0

625

1,250

1,875

2,500

3,125

3,750

4,375

5,000

Janu

ary

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Dubai MarinaNYC 10010

dubaI Vs. nyCThis graph shows the comparative value between two bedroom apartments in Dubai Marina

and the 10010 zip code in New York City.

Number of apartment transactions broken down by unit type

0

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1 B

edro

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2,992

8,113

21,10921,038

Ave

rage

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AE

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qft)


New York City Data from Zillow.com – http://www.zillow.com/local-info/NY-10010-home-value/r_61624/ #metric=mt%3D11%26dt%3D1%26tp%3D6%26rt%3D7%26r%3D61624



emerGInG trends


“ We remain committed to our projects and optimistic about the long-term outlook for

the real estate sector. Most of our developments are long-term, large-scale projects,

constructed over eight years on average, so we can adjust the pace of development

taking into account market conditions, which will inevitably fluctuate in that time.”

Limitless on Arabian Canal86

“ Shifting away from the fast-track development of its Jumeirah Gardens project and in

light of rapid change in the real estate market and global economic conditions, Meraas

Development is now focusing on adapting its master plan, designs and product mix to

suit market conditions.”

Meraas statement87

“ The tower [Nakheel Harbor & Tower] will be delayed until the market changes. You can’t

build something like that in this kind of market. Whatever is under construction will

be continued. Whatever is planned will be shelved, delayed. Anything committed to we

shall finish; everything that cannot currently be financed will be delayed.”

Sultan Ahmed bin Sulayem, Chairman of Dubai World88

“ I am hoping we can restart work on the project within the next two years, but it all

depends on the market situation. At the end of the day, the ball is in Nakheel’s court.

You’ve got to see what the market demands, and restarting a project of that nature in

this region at this stage doesn’t make much sense.”

Donald Trump Jr., on the status of Trump Tower89

“Our projects in Dubailand are ongoing as planned. Nothing has changed.”

Mohammed al Habbai, Senior VP of Dubailand84

“ This year we will be revisiting our operations. Revisiting depends on many parameters

and the world financial problem also dictates that ... we have to look into phasing of the

project and timing of the project.”

Salem Al Moosa, Chairman and CEO of Falcon City of Wonders85

EmERging TREnDS

FaCt Or FICtIOn - tHe CredIbIlIty CrIsIsMuch of the angst voiced and documented over the past year has centered not only on the

falling prices of investments but also on the continued ambiguity of project progress and

completion dates. The shifting completion target dates coupled with the reluctance of developers

to commit to a definite time scale has resulted in the diminishing of their brands’ credibility.

Real estate brands are now faced with the same issues of trust as the credibility crisis suffered

by financial institutions in the aftermath of the global economic crisis. This sentiment has

affected the entire sector regardless of individual performances and past records.

Emaar remains a highly regarded brand in the region. Despite the global downturn and some

international downsizing, it still delivered significant retail and hospitality offerings in 2009.

However, the rescheduling and renaming of the world’s tallest tower from September 9, 2009 to

December 2, 2009, and eventually to January 4, 2010, raised eyebrows in a market looking for

any signs of trouble and eager to assume the worst.

Regaining credibility and trust will be the major issue in the upcoming year as brands look to

correct their course and adjust to the new realities.

conT

inUE

amBi

gUoU

S

amBi

gUoU

Sca

ncE

LLaT

ion

?


By the end of 2009, you could watch the reflection of the rising sun on the world’s tallest

tower. You could live, dine and relax on a man-made island in the shape of a palm tree. From

the backyard of your luxurious villa, you could watch the world’s top 60 golf players compete

in a season-ending tournament. From the deck of your yacht, you could toast the Abu Dhabi

F1 Grand Prix Champion under a night sky bright with the colorful illumination of a newly

built hotel. Families could enjoy a walk along the new boardwalks that fringe the coastline

and seek shelter from the summer heat in megamalls. Nowhere else in the world could all

these destinations and events be built from scratch in such a time frame.

EmERging TREnDS

FrOm COnCept tO COmpletIOn

In a region where the change from new to old is measured in months rather than years, it is

easy to lose sight of these monumental feats. With each completed project and each home

handed over, the successes of the region’s real estate market provide a counter argument to the

critics and skeptics.

As new communities start to live, work and play in what once was merely a vision, the role of

the destination brand must evolve from promotion to engagement. The criteria for long-term

success will now be the building of strong community brands - not just iconic structures.

Brands that promote their neighborhood identity while forming strong connections to their

immediate surroundings will instill a sense of pride and ownership for the residents who will

become ambassadors for these new communities.


tHe Future

ThE FUTURE

tHe rIse OF abu dHabIMajor real estate developments and country branding initiatives in emerging markets

are inextricably linked. An awe-inspiring mega project can generate tourism, and a city’s

successful tourism promotion program can generate demand for property. Dubai’s meteoric

real estate success and rise as an international tourism destination is a prime example of the

impact that one can have on the other. With The Palm, Burj Khalifa, Dubai Shopping Festival

and a spectrum of other projects and government initiatives, it was no surprise that Dubai

dominated and led the emergence of the region’s real estate sector.

Since the global financial crisis, however, no other city has suffered a more dramatic fall

from grace than Dubai. Emerging to take its lead is its neighboring city, the Emirate of Abu

Dhabi. As the future home of the Guggenheim and the Louvre, host of the F1 Grand Prix at

an immaculate new racecourse, and the rising prominence of Masdar in the global discussion

of alternative energy; Abu Dhabi is putting on an impressive — albeit more reserved — and

diversified bid to claim the title of the new capital of the Middle East. With its financial

strength and its rise as a destination of note, Abu Dhabi is best-placed to lead the region’s

real estate recovery. It is also poised to be the first place in the region to attract foreign

investment and partnership opportunities in the future, should the Emirate seek these.


ThE FUTURE

pOrtFOlIO ratIOnalIzatIOnThe steady flow of news of various cancellations, delays and re-evaluations have left investors,

the media and industry analysts confused as to the true scale and scope of both tier 1 and

tier 2 developers. Many developers remain silent about the true situation of many of their

projects, with many continuing to market though their websites developments that have been

suspended, cancelled or delayed.

Whether through financial constraints or imposed mergers, consolidations or downsizing,

developers are faced with difficult business and brand decisions regarding the optimization

of their portfolios in reaction to the new economic reality. While it might initially appear to

harm the brand’s status to reduce the size of the active portfolio, being more transparent with

information on project timings and each project’s primacy to the developer’s value proposition

will yield greater dividends and optimize the outlook for the future.


ThE FUTURE

FInanCIal InnOVatIOnDemand is at an all-time low as an increasing amount of property is flooding the market.

Surprisingly, the region has been slow in enacting some of the financial measures put in place

in Europe and the US to stabilize and boost the real estate sectors. Mortgage rates (from

those institutions that still offer mortgages) remain high, with no signs of relief for those

burdened with properties decreased in value. In an unfortunate state of affairs, the banks and

lending institutions are often treating existing and potential customers as potential liabilities

and defaulters rather than as prized clients.

Through closer partnership with financial institutions or state-backed offerings, new and

innovative financial products will be critical to generating any real boost in demand.


ThE FUTURE

breakInG tHe sIlenCeThe ways of communicating to end users have never been more varied. The emergence and

ease of use of social media and other Web 2.0 applications have provided a very effective

megaphone to the masses. Reflective of the overall market sentiment, it is often the most

disgruntled (from irate groups of foreign investors to the outraged tenants of a particular

community) who use these outlets to vocalize their frustrations and mobilize like-minded

people. A region still dogged by a lack of transparency and a silent media, both of which

foster unabated and uncontested attacks on a brand’s reputation, is ripe for this trend.

Instead of ignoring these voices or the new media available, it is imperative for brands to

embrace them. If nothing else, it can serve as a valuable way to better gauge the brand’s

performance and take the pulse of market sentiment. Brands should look to develop strategies

to engage their audiences in a positive dialogue.


ThE FUTURE

a neW dIalOGueAcross the region many units are being completed and handed over to residents (whether

rental tenants or owners), and people who live in the developments are finally emerging as an

important audience. To date, this large audience has been neglected or siloed as a concern

for the facilities management company. During times when long queues at sales launches

were commonplace, the focus was on converting potential buyers into actual customers.

Once the sales agreement was executed, customers were no longer of primary importance

unless they remained potential buyers of future properties. Worse still, rental tenants were

completely disregarded, as they were not considered direct clients of the developers.

Tenants and residents represent the largest group of potential brand detractors or brand

ambassadors, and they will wield significant weight in shaping the public perception of the

brand. How effectively and innovatively developer brands can connect with the residents,

tenants and the wider community will be a critical element in building brands of the future.


ThE FUTURE

delIVerInG tHe prOmIseAs every brand’s action or inaction is scrutinized more than ever before, there will be an

increased emphasis on companies on the delivery of measurable results. The market will

insist on seeing tangible and real supporting evidence for each promise, projection or

claim. The days when business needs set marketing deadlines with no correlation to the

development timeline have past. This spells doom for those brands that maintain hype-driven,

empty promises.

In this environment of rigorous analysis, companies that operate in an integrated and

holistic fashion (aligning business, marketing and development timelines) will be better

positioned to survive.

Crisis management teams that involve the full spectrum of the organization need to be

seriously considered as a vital part of the organizational structure of the future. Even though

most players in the region are private entities, adapting the PR practices of publicly listed

companies in managing crises will help them better weather the storms that might lie ahead.


Chapter break photography courtesy of Mike Sheehan

Disclaimer: All material presented herein is intended for informational purposes and has been compiled from sources deemed reliable including developers, sales staff, published data and secondary sources. Though content is believed to be correct, material presented is subject to errors, omissions, changes or withdrawal without notice.

©2009-2010 FutureBrand 2 / 02.02.2010

conTacTS

William Shintani

FutureBrand Dubai

P.O. Box 502162, Dubai, UAE

971.4.367.8285

[email protected]

www.futurebrand.com

mEDia paRTnER

Arabian Business website and magazine is

the comprehensive guide to Middle East

business and industry news.

SoURcES

For a complete list of all sources contained in this document, visit

http://www.futurebrand.com/gres/sources

Jae Hwang

FutureBrand Dubai

P.O. Box 502162, Dubai, UAE

971.4.367.1624

conTEnT paRTnER

REIDIN.com is a Real Estate Information

Company focusing on Emerging Markets.

GULF REAL ESTATE STUDY

www.futurebrand.com/gres