Q1 2017 Residential Market Report - Abu Dhabi
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Š Property Monitor 2017 | propertymonitor.me
Q1 2017 Residential Market Report - Abu Dhabi
Foreword Property Monitor is the UAE’s only data platform offered by RICS accredited property professionals. It gives us great pleasure to be working alongside Cityscape as their official data partner for the 11th edition of Cityscape Abu Dhabi. Our data and intelligence service is aimed at increasing transparency in the UAE marketplace. Agencies, developers, consultancies and banks can access real-time data and expert intelligence in order to make more informed decisions, based on actual transactions, values and trends. Property Monitor offers users the ability to search residential sales, leasing transactions, off-plan sales, valuation data as well as our professional opinion on achievable prices, across all major areas of Dubai and Abu Dhabi. Our data dates back to January 2014, and is sourced from our association with Cavendish Maxwell as well as with various reputable agencies, developers and banks.
Contents • Macro-economic factors • Price performance • Rent performance • Supply overview
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Q1 2017 Residential Market Report - Abu Dhabi
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Š Property Monitor 2017 | propertymonitor.me
Q1 2017 Residential Market Report - Abu Dhabi
Consumer prices expected to be pushed higher in 2017 Abu Dhabi - % change in Consumer Price Index
Macro-economic factors
Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 CPI
Economic recovery in Abu Dhabi linked to oil price stability and increased government spending
Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016
The emirate’s economy is expected to achieve a growth rate between 3.5% to 3.7% in 2017, according to the Department of Economic Development. Infrastructure spending will lead the growth charge with projects worth $64 million being approved by the Executive Committee as part of the Abu Dhabi plan in March 2017.
YoY % Change
4.0
2.0
MoM % Change
Source: Abu Dhabi Statistics Centre
Growth of 3.5% to 3.7% expected in 2017 Real GDP growth, Abu Dhabi 10.0%
9.3
8.0%
Positive signs at the start of the year have also come from oil prices stabilizing close to the $50 a barrel mark after OPEC announced output cuts in November. This should have a positive impact on the UAE federal budget as hydrocarbon revenues are still the main contributor to the national economy
4.8
6.0%
4.9
4.5
2.8
4.0% 1.4 2.0%
However, concerns still remain over the demand outlook and return on investment for sectors such as real estate, transport, tourism and retail. The effects of lower oil prices and cuts in government spending during the 2015 and 2016 periods continue to put pressure on the non-oil business sectors in the Emirate.
0.0% 2011
2012
2014
2013
2015
Barriers to investment inflow from traditional markets Currency movement 1.4%
70 69
1.2%
68
1.0%
67 66
USD/GBP, EUR
0.8%
65
0.6%
64 63
0.4%
62
0.2%
61 60
0.0% Jan-16 Mar-16 May-16 Jul-16
USD/EUR
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2016
Source: Abu Dhabi Statistics Centre
Rent declines and a strong dollar could balance rising consumer prices, which are expected to be pushed higher this year as a result of rising utility, energy costs and school fees. The rise in rate of inflation is expected to continue throughout this year with a spike in 2018 with the VAT introduction. Mortgage rates in the country are expected to rise in tandem with the U.S. Federal rate increases. The first of such increases was effected by the UAE Central Bank in March 2017. Current consensus predicts two more U.S. Federal rate hikes of 0.25% each in 2017. First-time buyers taking out a mortgage will have to realign their budgets accordingly and banks in the UAE have been offering incentives to cater to a wider base of buyers.
0
-0.2
Feb-2017
accredited property professionals
USD/INR
In terms of investments in the emirate, the Abu Dhabi Securities Exchange (ADX) reported that AED3.13 billion and AED2.30 billion of investment were pumped in by international investors in January and February 2017 respectively. The real estate sector accounted for the lion’s share of total trades on the exchange, at 42.94% and 44.61% respectively in the first two months of the year.
Jan-2017
USD/GBP
Sep-16 Nov-16 Jan-17 Mar-17
USD/INR
Source: Cavendish Maxwell research
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Q1 2017 Residential Market Report - Abu Dhabi
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Š Property Monitor 2017 | propertymonitor.me
Q1 2017 Residential Market Report - Abu Dhabi
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Q1 2017 Residential Market Report - Abu Dhabi
Price performance Price declines continue in investment zones, averaging a 1% year on year drop in prices for apartments and villas in Q1 2017. Prices for apartments and villas in investment zones in Abu Dhabi have continued to decline through 2016 into Q1 2017. Apartments in Al Ghadeer, Al Reef Downtown and villas in Al Raha Gardens and Al Reef all experienced annual declines of more than 1.0% on an average in Q1 2017. Continued downward pressure on housing demand is expected due to job uncertainty resulting from high-profile mergers of governmentbacked entities. These could also result in a readjustment of employee benefit packages such as housing allowances thus softening demand and resulting in further price declines. Apartment price performance
-0.8
-0.1
Al Raha Beach
-0.8
-0.1
-0.9
Al Reem Island
0.0
-1.1
Al Ghadeer
0.0
-1.2
Al Reef Downtown
Average price AED / sq ft
% change
0
-0.2%
-0.4%
-0.6%
-0.8%
-1.0%
-1.2%
-1.4% Saadiyat Beach Residences
-0.1
0
QoQ% change Q4 2016 - Q1 2017
12 month change Q1 2016 - Q1 2017
200
400
600
800
Q1 2017 Price
1000 1200 1400 1600 1800
Source: propertymonitor.me
Villa price performance
Average price AED / sq ft
% change
-0.1
Al Reef Villas -1.5
Saadiyat Beach Villas
0
-1.0
-0.2%
-0.4%
-0.6%
-0.8%
-1.0%
-1.2%
-1.4%
-1.6% Al Raha Gardens
-0.1
-0.7
-0.1 0
QoQ% change Q4 2016 - Q1 2017
8
12 month change Q1 2016 - Q1 2017
200
Q1 2017 Price
400
600
800
1000 1200 1400 1600 1800
Source: propertymonitor.me
Š Property Monitor 2017 | propertymonitor.me
Q1 2017 Residential Market Report - Abu Dhabi
Rent performance QoQ % change in rents averages -0.5% for apartments and -0.6% for villas in Abu Dhabi investment zones Apartment and villa rents in Abu Dhabi investment zones continued to decline in Q1 2017 and declines were more pronounced among 2 bedrooms in Al Raha Beach and 4 bedroom villas in Al Raha Gardens. These categories of units exhibited QoQ% declines of 2.2% and 3.3% respectively. Larger units are facing occupancy pressure from weakened demand as job insecurity continues in the Emirate, especially for senior level executives. The Abu Dhabi municipal fee of 3% of rent came into effect from January 2017 and is a measure for increasing and diversifying government revenues. It mirrors the 5% charge in Dubai and the 2.5% charge in Sharjah collected at the time of annual rental contract issuance. While it could further pressurise squeezed housing budgets of residents, the overall impact on the property market is expected to be minimal, with the bigger challenge for Abu Dhabi tenants being backdated lump sum payment of this municipal fee for the period February to December 2016. Apartment rent performance - Q1 2017 0.0%
200000 180000
-0.2%
160000
AED per annum
140000
-0.4
-0.3
-0.4
-0.4%
120000 -0.6
100000
-0.6%
80000 -0.8%
60000 40000
-1.0% -1.1
20000 0
Al Ghadeer
Studio Rent
Al Raha Beach
1 BR Rent
2 BR Rent
Al Reef Downtown
Al Reem Island
-1.2% Saadiyat Beach Residences
Average QoQ% change
Source: propertymonitor.me
Villa rent performance - Q1 2017 0.0
500,000
0.0%
450,000 -0.2%
AED per annum
400,000 350,000
-0.4%
300,000 250,000
-0.6%
-0.6
200,000 -0.8%
150,000 100,000
-1.0% -1.1
50,000
-1.2%
0 Al Raha Garden 3 BR Rent
4 BR Rent
5 BR Rent
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Al Reef Average QoQ% change
accredited property professionals
Saadiyat Beach Villas
Source: propertymonitor.me
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Q1 2017 Residential Market Report - Abu Dhabi
Residential supply Approximately 1,200 residential units have been completed during Q1 2017 in investment zones Nearly 83% of the total number of units completed in Q1 were apartments, with the majority of them located in Saraya, Corniche area. New project announcements during this quarter included Aldar’s mid-market housing at Reem Island and Yas Island communities as well as Manazel’s 2,500 affordable villa project in Ghantoot, which are part of the next phase of Al Reef development.
Upcoming supply in investment zones (Q2 – Q4 2017)
There are an additional 7,800 units scheduled for delivery during the remainder of 2017, concentrated primarily in Abu Dhabi City and Al Reem Island.
VILLAS & TOWNHOUSES
APARTMENTS
1,600
6,200
Summary of upcoming supply in key areas (2017-2020)
Approximately 35,000 residential units are scheduled for delivery in investment zones through 2017-2020 Note: Above supply excludes hotel apartments and mixed use developments.
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Source: Cavendish Maxwell research
© Property Monitor 2017 | propertymonitor.me
Q1 2017 Residential Market Report - Abu Dhabi
Methodology Sale Prices and rents are derived from Property Monitor (www.propertymonitor.ae), a comprehensive real estate platform established in 2014 to provide real-time, market-wide access to transactions and trends. Working with agencies, banks, developers and corporate investors, it provides a deeper insight into real estate advisory, investment, and lending activities. The average sales price per sq. ft. is based on the Property Monitor Index that incorporates signed contracts, registered transactions, valuations & listings verified by Cavendish Maxwell valuation department. Supply projections for residential projects are based on regular tracking of construction status, new launches, delays, etc. This is carried out through site inspections as well as discussion with developers, contractors, in-house building consultancy team and related government entities.
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Strategic Consulting and Research Cavendish Maxwell’s strategic consulting and research team uses its indepth knowledge of the real estate sector and extensive networks to support our clients through the development process, providing advice to guide and support investment decisions from concept to delivery. We have advised on schemes with a gross development value of over AED 3 billion in the last year. Our reports are used internally for business planning purposes and to satisfy the criteria of external financiers and auditors. Our name is trusted by all major banks across the UAE, supported by our presence on over 35 bank panels across the region.
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Asset Management
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Buyer Profiling
Feasibility Studies
Joint Venture Structuring
Highest & Best Use Studies
Advisory Services
Site Analysis
Disclaimer Š Cavendish Maxwell and Property Monitor 2017. The information and analysis contained in this report has been obtained from or is based on information from a variety of sources generally regarded to be reliable and assumptions which are considered reasonable, and which was current at the time of undertaking market research. However, no representation is made, or responsibility accepted by Cavendish Maxwell or Property Monitor in respect of the accuracy or currency of this information. Cavendish Maxwell and Property Monitor do not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.
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Property Consultants Middle East and Africa Lynnette Abad BBA (Hons) Partner, Head of Property Monitor M: +971 50 894 7880 E: lynnette.abad@propertymonitor.ae
Paul Mccambridge Head of Sales M: +971 50 287 3811 E: paul.mccambridge@propertymonitor.ae
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