property review dubai real estate report · 2020. 7. 19. · dubai real estate report - dubai...

Property Review

Dubai Real Estate ReportQ2 2020

Elaine JonesFRICS

Executive Chairman and Founder

Asteco’s research reflects the latest market trends. Our data is obtained from an extensive range of sources, including transactional evidence, valuation evidence (internal and external), discussions with major UAE lenders, brokers (internal and external) and data from managed portfolios comprising assets situated across the UAE.

To date, the UAE real estate market has shown a surprising level of resilience in the face of serious challenges created by COVID-19. However, despite a number of positive reports suggesting that the economy is moving into a recovery phase, it is widely perceived that the full economic impact has yet to be felt. Rather, there is considerable risk that the economic unwinding from the pandemic has yet to begin in earnest.

The Calm before the Storm? Whilst it might be surprising to describe recent tumultuous months as calm, the current data indicates a lag in real estate market trends to events that have already unfolded, and continue to unfold.

This would appear evident from our Q2 2020 figures, which indicate no significant drop in values and rents over the past quarter. Rather, the declines were broadly in line with Q1 2020 results. On this point, it is worth noting that these drops were already anticipated based on significant levels of supply and weak demand. As such, it would appear that the ‘new’ headwinds created by COVID-19 have yet to bare teeth.

It is widely expected that this picture will become much clearer following the resumption of international travel and the repatriation of unemployed workers.

Nevertheless, measures have been made to offset the full economic impact of Covid, both at Federal and Municipal levels, through a series of stimulus packages. These packages will mitigate some of the short term effects and provide a platform for improvement in the overall economy in the medium to long term.

These stimulus packages are supported by existing commitments to infrastructure spending / delivery, such as the Expo 2020 metro line (Dubai Red Line extension) with 7 new stations, which will officially open to the public in September this year.

The opening of UAE airports to international tourists will also undoubtedly provide welcomed relief to the hospitality and retail sectors, two of the hardest hit segments of the economy. The recovery of these sectors is ultimately critical to returning the economy to full health. However, the pace of this recovery remains uncertain and will ultimately be influenced by a range of factors, many outside of the UAE’s borders.

Nevertheless, with an increased probability of business downsizing and potential job losses, there is a high risk that demand for real estate (rental and sales) will weaken further. This potentially sharp drop in decline is set to coincide with the continued delivery of pre-pandemic committed supply. As such, significant corrections in values (rents in particular) during the second half of the year and into 2021 are likely.

SPECIAL NOTE FROM MANAGEMENT

2

Dubai Real Estate Report -

DUBAI MARKET OVERVIEW

3 Q2 2020

SUPPLY* RENTAL RATES SALES PRICES

*It is important to note that whilst a number of projects may have received completion certificates, Asteco does not consider a project delivered until the handover process has been initiated and the units are available for Lease in the open market.

New Apartment supply slowed markedly in Q2 2020 with the handover of 4,200 units, compared to over 5,750 in the first quarter of the year. Similarly, new Office supply fell short of last quarter’s output, with the delivery of 0.3 million sq.ft. of Office space compared to 0.5 million sq.ft. in Q1. Interestingly, Villa stock increased marginally, from 2,150 units in Q1 to 2,300 dwellings in Q2 2020. Despite post-completion linked payment plans that previously encouraged Developers to complete projects in a timely manner, new supply is likely to fall short of earlier estimates. Recent research revealed that approximately 20% of previously tendered or under construction projects have been put on hold, temporarily or indefinitely, and our projections have been revised accordingly. Whilst these figures represent a notable decline on previous projections, it is still a significant volume, particularly given the current situation. Although Real Estate demand is likely to slow based on current uncertainties, it is reasonable to assume that the number of new project announcements will be very limited until economic conditions and market sentiment improve. This may aid in the absorption of pent-up demand in the medium to long term.

The rate of decline for Apartment, Villa and Office Rental rates over Q2 2020 was more or less similar to previous quarters, recording quarterly drops of 4%, 3% and 5%, respectively. Annual changes were also broadly aligned with preceding trends and amounted to 13%, 10% and 13%, respectively. Asteco anticipates that this pattern is likely to prevail, or even intensify due to the expected volume of additional supply combined with a potentially sharp drop in demand in the short to medium term due to the impact of COVID on employment. There has been a marked rise in the number of small (circa. 100 - 500 sq.ft.), fully furnished / fitted / serviced offices available for Lease, especially in areas with a large amount of strata title space, such as Business Bay and Jumeirah Lakes Towers. Incentives offered are extensive and include items such as free licenses, rent-free periods (up to 12 months), zero commission, free chiller, free parking, flexible payment options, etc. Despite discounts and incentives offered by Residential and Commercial Landlords, we expect a reduced number of new Leases and renewals in the short term as Tenants adopt a wait and see approach. Whilst prolonged economic challenges and the general level of employment uncertainty have and will result in Residents downsizing and seeking value-for-money accommodation, preliminary data suggests an increase in enquiries for larger (competitively priced) units with extensive facilities. This is predominantly due to the rise in ‘work from home’ policies implemented by companies, often on a permanent basis. In addition, there may well be a trend for more flexible Residential options in terms of Lease terms and more limited upfront capital requirements due to shorter term employment opportunities and in order to address concerns over job security. In any event, monthly payments by direct debit / credit cards will become the market norm and the Property Management structure will need to be able to address these requirements going forward in terms of enhanced level of Tenant management and responsive maintenance services to retain Tenants.

Whilst there is definite traction in the market, sales prices for Apartments, Villas and Offices contracted by 4%, 4% and 2% compared to the previous quarter, and recorded annual declines of 11%, 11% and 9%, respectively. The reduction of the LTV ratio by 5% and partial release of pent-up Buyer demand resulting from the lifting of movement restrictions resulted in an immediate bounce in sales activity towards the end of the second quarter. However, there has been a significant drop in off-plan Sales launches, a trend we expect will continue for the short term. Despite extensive Government initiatives on both Federal and Municipal level, oil price volatility and the threat of a breakdown in trade relations between China and the USA will continue to weaken global economic and therefore local recovery. Whilst we initially expected the fall out of Covid-19 to manifest in Q2, we do not believe this to be the case just yet. Until greater stability returns to the market, it is difficult to predict when conditions will normalise and how transactional volumes and values will be affected. Moreover, it is difficult to anticipate whether long term changes to purchaser habits and change in work-place, work-life habits will manifest.

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESMILLION SQ.FT.

DUBAI SUPPLY


5,750 4,200

2,150

Q1 2020 Q2 2020 H2 2020

12,650

2,300 3,750

0.5 0.3 1.15

4 Q2 2020

COMPLETED IN COMPLETED IN PROJECTED

DUBAI APARTMENT RENTAL RATES

(All figures in AED 000’s p.a.)

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

HIGH TO LUXURY ENDDIFCDOWNTOWN DUBAIPALM JUMEIRAHSHEIKH ZAYED ROADMID TO HIGH ENDBUSINESS BAYDUBAI MARINAGREENSJUMEIRAH BEACH RESIDENCEJUMEIRAH LAKES TOWERSAFFORDABLEDEIRADISCOVERY GARDENSDUBAI SPORTS CITYINTERNATIONAL CITYJUMEIRAH VILLAGE


FROM TO FROM TO FROM TO FROM TO Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

0%-41%

Since Q2 2019

-13%-4%

Since Q1 2020

5 Q2 2020

Since peak Since market lowQ2 2014 Q3 2011

Y-o-YQ-o-Q

45 6535 6550 7050 60

30 47.530 6035 47.545 6030 45

401522.5 32.520 3015 25

22.5 32.5

60 10050 8060 11050 85

40 6540 7545 7055 75

37.5 65

25 5535 5030 45

22.5 32.530 45

140 7070 120

15585120 60

60 9555 11565 10570 10045 85

37.5 7060 80

654035 5045 70

95 205100 180110 190 80 150

95 12516070

85 14090 13560 120

9555-

60 -

8065 80 65 90

-3%-6%-3%-2%

-6%-5%-6%-6%-6%

-4% -4%-6%-3%-3%

-11%-14%-8%-9%

-15%-12%-12%-13%-12%

-14%-10%-16%-9%

-15%

% Change

DUBAI APARTMENT SALES PRICES

% CHANGE


(All figures in AED per sq.ft.)

HIGH TO LUXURY END

DIFC

DOWNTOWN DUBAI

PALM JUMEIRAH

MID TO HIGH END

BUSINESS BAY

DUBAI MARINA

THE GREENS AND THE VIEWS

JUMEIRAH BEACH RESIDENCE

JUMEIRAH LAKES TOWERS

AFFORDABLE

DISCOVERY GARDENS

DUBAI SPORTS CITY

INTERNATIONAL CITY

JUMEIRAH VILLAGE

0 500 1,000 1,500 2,5002,000 Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

800 1,750

650 1,275

775 1,800

600 1,500

400 775

525 1,100

650 1,100

350 700

675 1,850

625 1,150

400 800

650450

9%

Since Q1 2020

-4%

Since Q2 2019

-11% -40%

6 Q2 2020

-2% -7%

-4% -9%

-4% -8%

-3% -8%

-3% -10%

-3% -11%

-3% -8%

-3% -11%

-5% -17%

-4% -15%

-6% -20%

-4% -15%

Q-o-Q Y-o-Y Since peakQ2 2014

Since market lowQ3 2011% Change

DUBAI VILLA RENTAL RATES

(All figures in AED 000’s p.a.)

2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE

ARABIAN RANCHESDUBAI SILICON OASIS (CEDRE VILLAS)DUBAI SPORTS CITY (VICTORY HEIGHTS)JUMEIRAHJUMEIRAH PARKJUMEIRAH VILLAGEMEADOWSMIRDIFPALM JUMEIRAHSPRINGSTHE LAKESUMM SUQEIM


FROM TO FROM TO FROM TO FROM TO Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

Since Q2 2019

-10% -41% -10%

Since Q1 2020

-3%

Q-o-Q Y-o-Y Since peakQ2 2014

Since market lowQ2 2012

Q2 20207

75 115 - -- -- -- -

70 105- -

55 85- -

70 110- -- -

85 155125 137.595 125

105 185130 16580 120

140 18065 105

160 25095 135

135 170110 190

130 230130 140125 165120 210150 20080 135

160 20075 125

220 380- -

170 240130 230

160 260150 160170 245130 240200 250110 150175 25080 130

275 650- -

240 275150 280

-3% -6%-2% -12%-5% -13%-4% -7%-2% -4%-3% -11%-2% -4%-1% -10%-1% -7%-5% -9%-2% -6%-2% -6%

% Change

DUBAI VILLA SALES PRICES

% CHANGE



ARABIAN RANCHES

DUBAI SILICON OASIS (CEDRE VILLAS)

DUBAI SPORTS CITY (VICTORY HEIGHTS)

JUMEIRAH PARK

JUMEIRAH VILLAGE

MEADOWS

PALM JUMEIRAH

SPRINGS

0 1,000 2,000 3,000 4,000 Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

550 1,050

525 650

725 900

575 850

300 700

700 1,000

700 3,500

525 825

-4% -11% -44% -5%

Since Q1 2020 Since Q2 2019

8 Q2 2020

-3% -11%

-4% -12%

-3% -9%

-4% -14%

-5% -13%

-3% -8%

-3% -5%

-4% -13%

Y-o-YQ-o-Q Since peakQ2 2014

Since market lowQ3 2011% Change

(All figures in AED per sq.ft. p.a.)

AVERAGE RENTAL RATES % CHANGE

FROM TO

BARSHA HEIGHTS (FORMER TECOM)BUR DUBAIBUSINESS BAYDIFCJUMEIRAH LAKES TOWERSSHEIKH ZAYED ROAD

DUBAI OFFICE RENTAL RATES


Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

-5% -14% -31% 0%


0%

9 Q2 2020

Q-o-Q Y-o-Y Since peak Since market lowQ4 2012Q3 2015

35 7540 9035 8060 27525 8550 120

-20%-8%-13%-7%-18%-8%

-8% -15%-21%-8%

-5% -14%

% Change

DUBAI OFFICE SALES PRICES

% CHANGE



BARSHA HEIGHTS (FORMER TECOM)

BUSINESS BAY

DIFC

JUMEIRAH LAKES TOWERS

0 500 1,000 1,500 2,000 Q1 2020 - Q2 2020 Q2 2019 - Q2 2020

450 800

525 1,200

950 1,750

350 950

-2% -9% -36% -1%


-4% -12%

-3% -10%

-2% -10%

-4% -8%

Q-o-Q Y-o-Y Since peakQ1 2015 Q2 2012

Since market low

Q2 202010

% Change

DUBAI PROPERTY MAP

311

311

311

611

611

611

1111

44

44

21

2

4

3

5

27

2324

25

6 8

62

6459

57

5856

55

61

70

6665

67

6872

69

71

85

50

4748

51

49

73

4645

63

7876

77

87

86

81

84

83

7

31

29

30

22

28

26

3235

53

52

41

37 38

34

9

15 1817

1410

16

36

1113

1220

19

42

43

82

80

79

44

54

6075

74

39 40

33

1

To Sharjah

To Abu Dhabi

Arabian Gulf

1 Veneto2 Badrah3 Bluewater Island4 JBR5 Dubai Marina6 Dubai Internet City,

Dubai Media City & Knowledge Village

7 Palm Jumeirah8 Umm Suqeim9 Jumeirah10 Jumeirah Bay Island11 City Walk12 Al Satwa13 Sheikh Zayed Road14 La Mer15 Pearl Jumeirah16 Bur Dubai17 Dubai Maritime City18 Port Rashid19 Deira Island20 Deira21 Downtown Jebel Ali22 Wasl Gate23 Al Furjan24 Discovery Gardens25 Jumeirah Park26 Jumeirah Islands27 Jumeirah Lakes

Towers28 Springs / Meadows29 Emirates Hills30 The Lakes31 The Greens32 Barsha Heights

(Tecom C) 33 Al Barsha34 Business Bay35 Downtown Dubai36 DIFC37 Dubai Design District38 Dubai Healthcare

City Phase 2 39 Al Jadaf40 Jaddaf Waterfront

(Culture Village)41 Dubai Festival City42 Al Nahda43 Al Qusais44 Muhaisnah

45 Jumeirah Village Triangle

46 Jumeirah Village Circle47 Dubai Science Park48 Arjan49 Dubai Hills Estate50 Living Legends51 Al Barari52 MBR City53 Meydan54 Dubai Creek Harbour55 Commercial District 56 Golf District57 Logistic District58 Aviation District59 Expo 202060 Residential District61 Dubai Investment

Park62 Green Community63 Dubai Production

City (IMPZ)64 Jumeirah Golf Estates65 Victory Heights66 Dubai Sports City67 MotorCity68 Dubai Studio City69 Damac Hills70 Remraam71 Mudon72 Arabian Ranches73 Dubailand74 Falcon City of

Wonders75 The Villa76 Liwan77 Dubai Residence

Complex78 Dubai Silicon Oasis79 Dubai Academic

International City80 International

City Phase 2 & 381 International City82 Al Warqaa83 Mirdif84 UptownMirdiff85 Town Square86 Mira87 Akoya Oxygen

Dubai Real Estate Report -11 Q2 2020

DISCLAIMER: The information contained in this report has been obtained from and is based upon sources that Asteco Property Management 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. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute Asteco Property Management’s judgment, 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 UAE market. Averages, however, represent a wider range of areas. Particularly exclusive or unique projects have been excluded from the data to avoid distorting averages. 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 Asteco Property Management’s control. For a full in-depth study of the market, please contact Asteco Property Management’s Research team. Asteco Property Management LLC. Commercial License No. 218551. Paid-up Capital AED 4,000,000. | ORN 180

About Asteco

The Middle East’s largest full service Real Estate Services Company, Asteco was formed in Dubai in 1985. Over the years, Asteco has gained enormous respect for consistently delivering high quality, professional, value-added services in a transparent manner. It is also widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the Emirates.

Asteco has an essential combination of local knowledge and international expertise. A deeply established brand, renowned for its application of the latest technological advances, its commitment to transparency, winning strategies and human expertise. Undisputed Real Estate experts, Asteco represents a significant number of the region’s top property Owners, Developers and Investors.

VALUATION & ADVISORY Our professional advisory services are conducted by suitably qualified personnel all of whom have had extensive Real Estate experience within the Middle East and internationally.

Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with extensive local experience.

The Professional Services Asteco conducts throughout the region include:

• Consultancy & Advisory services

• Market research

• Valuation services

SALESAsteco has established a large regional property Sales division with representatives based in the UAE, Qatar and Jordan. Our Sales teams have extensive experience in the negotiation and sale of a variety of assets.

LEASINGAsteco has been instrumental in the Leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT Asteco provides comprehensive Asset Management services to all property Owners, whether a single unit (IPM) or a regional mixed-use portfolio. Our focus is on maximising value for our Clients.

OWNERS ASSOCIATION Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy services to Residential, Commercial and mixed-usecommunities throughout the GCC Region.

BUILDING CONSULTANCY The Building Consultancy Team at Asteco have a wealth of experience supporting their Clients throughout all stages of the built asset lifecycle. Each of the team’s highly trained surveyors have an in-depth knowledge of construction technology, building pathology and effective project management methods which enable us to provide our clients with a comprehensive building consultancy service.

FRANCHISEOur brand, network, system and procedures are now available in territories across the MENA region. Our Licensing services currently include Real Estate Brokerage Franchising and associated support services with many of the key elements designed specifically around the Franchisee, making it a truly unique and bespoke franchise opportunity.

Elaine JonesFRICS

Executive Chairman and Founder / Director - Transactional Services+971 4 403 [email protected]

John Stevens MSc, BSc (Hons), MRICS

Managing Director/ Director - Asset Management+971 4 403 [email protected]

John Allen BSc, MRICS

Executive Director - Valuation & Advisory+971 4 403 [email protected]

James Joughin BSc (Hons), MRICS

Senior Associate Director - Head of Valuations +971 4 403 [email protected]

Jenny Weidling BA (Hons)

Manager - Research and Advisory, Dubai+971 4 403 [email protected]

Ghada Amhaz MSc

Manager - Research and Advisory, Abu Dhabi+971 2 626 [email protected]

Tamer Ibrahim Chaaban BE

Associate Director / General Manager - Al Ain+971 3 766 [email protected]

20200609/astrep885

property review dubai real estate report · 2020. 7. 19. · dubai real estate report - dubai...

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