Q3 2017 Residential Market Report - Abu Dhabi
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Š Cavendish Maxwell 2017 | cavendishmaxwell.com
Q3 2017 Residential Market Report - Abu Dhabi
Foreword Cavendish Maxwell is a highly respected, independent irm of chartered surveyors and property consultants, focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell is now one of the region’s most inluential property consultancies. We provide comprehensive and detailed reports prepared to internationally accepted standards that meet a diverse range of client requirements. As a fully qualiied member irm of the Royal Institution of Chartered Surveyors (RICS), with extensive knowledge of the region, we have the necessary experience, expertise and insight to deliver property advice of the highest standard. Our experience covers property, land and business asset valuations; investment; disposals and acquisitions; rent reviews; lease renewals; development appraisals; advisory services; market research; feasibility studies; education advisory and valuation; project management; building consultancy and data analytics. Our Quarterly Residential Market Report for Abu Dhabi provides an analysis and summary of the apartment and villa/townhouse properties, as well as the factors affecting housing demand. Price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties is provided through Property Monitor, a real estate data analytics and intelligence platform, powered by Cavendish Maxwell.
Contents • Housing Demand • Price Performance • Rent Performance • Supply Overview
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Q3 2017 Residential Market Report - Abu Dhabi
Housing Demand Housing demand in Abu Dhabi is primarily a factor of job growth and resultant population growth, particularly of the white-collar labour force. According to the latest available data from the Statistics Centre Abu Dhabi, the total population for the emirate stood at 2.9 million in 2016, rising by nearly 9% since 2014, which was the last residential market peak. In comparison, the white-collar population has declined by 2% over the same period to reach 1.4 million in 2016 and the percentage contribution of the white-collar workforce in the total population has declined from 53% in 2014 to 48% in 2016. The oil and gas sector still remains a primary source of revenues for the economy and hence housing demand in Abu Dhabi is closely linked to job creation in this sector. Analysis of price performance among key freehold communities within the emirate against oil price movement bears out this correlation. Housing budget readjustments as well as job losses in this and other key sectors, such as banking and aviation, have impacted rents and occupancy levels across Abu Dhabi.
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Š Cavendish Maxwell 2017 | cavendishmaxwell.com
Q3 2017 Residential Market Report - Abu Dhabi
Abu Dhabi Population 3,500,000
60%
3,000,000
2,500,000
Population
40% 2,000,000 30% 1,500,000
20% 1,000,000
White-collar workers as a % of total poplulation
50%
10%
500,000
0 2014 Total population
2015
0%
2016
Source: Statistics Centre – Abu Dhabi
White-collar workers as a % of total poplulation
Note: Total white-collar population is only one of the key factors in demand assessment, which is a more detailed exercise that should account for household sharing ratios, migration trends, among other metrics. Abu Dhabi Residential Prices vs Crude Oil Prices 2,000
160
1,800
140
1,600 120 1,400
80
800
60
600 40 400 20
200 0
Abu Dhabi average residential sales rate (AED per sq ft)
Š Property Monitor 2017 | propertymonitor.me
OPEC basket crude oil price (USD/barrel)
Q3 2017
Q1 2017
Q3 2016
Q1 2016
Q3 2015
Q1 2015
Q3 2014
Q1 2014
Q3 2013
Q1 2013
Q3 2012
Q1 2012
Q3 2011
Q1 2011
Q3 2010
Q1 2010
Q3 2009
Q1 2009
Q3 2008
0 Q1 2008
AED per sq ft
1,000
USD/barrel
100
1,200
Source: Cavendish Maxwell research
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Q3 2017 Residential Market Report - Abu Dhabi
Price Performance Marginal price declines continue, averaging 1.5% for apartments and 1.9% for villas/townhouses over the last 12 months. Prices for apartments and villas/townhouses in Abu Dhabi have continued to decline during the last twelve months into the third quarter of 2017. According to the Property Monitor Index, Saadiyat Beach Residences and villas in Al Raha Gardens have experienced 12 month declines of more than 2% an average in Q3 2017. There is limited transaction activity in the secondary market in freehold locations throughout Abu Dhabi as expatriate appear to be biding their time, waiting to purchase a property at its lowest price. Meanwhile deals between UAE Nationals have continued, predominantly for private villas/townhouses throughout Abu Dhabi and buildings on the islands. Also, developers are driving off-plan sales activity through payment plans, especially catering to buyers who would otherwise be priced out of the market. Apartment Price Performance
-1.4
-0.2
Al Reem Island
-1.2
Al Ghadeer
-1.2
-0.3
-0.2
-1.4
Al Reef Downtown
Average price AED / sq ft
-0.7
Al Raha Beach % change
0
-0.2%
-0.4%
-0.6%
-0.8%
-1.0%
-1.2%
-1.4%
-1.6%
-1.8%
-2.0%
-2.2% Saadiyat Beach Residences -2.1
-0.2
0
QoQ% change Q2 2017 - Q3 2017
12 month change Q3 2016 - Q3 2017
200
400
600
800
Q3 2017 Price
1,000 1,200 1,400 1,600 1,800
Source: propertymonitor.me
Villa/Townhouse Price Performance
Average price AED / sq ft
% change
0
-0.5%
-2.2
-0.1%
-1.5%
Saadiyat Beach Villas
-2.0%
Al Reef Villas
-2.5%
-3.0% Al Raha Gardens
-0.8
-1.9
-0.3
-1.5
-0.6 0
QoQ% change Q2 2017 - Q3 2017
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12 month change Q3 2016 - Q3 2017
Q3 2017 Price
200
400
600
800
1,000 1,200 1,400 1,600 1,800
Source: propertymonitor.me
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Q3 2017 Residential Market Report - Abu Dhabi
Rent Performance Rent averages have declined by 3.1% for apartments and 4.3% for villas/townhouses over the past 12 months in Abu Dhabi investment zones. Declines were more pronounced in Al Raha Gardens and Al Reef villas. In these locations units exhibited 12 month declines of 4% or more. Rental declines have continued as summer draws to an end and the last group of expatriates leave the UAE with fewer new families arriving. The many vacant apartments and villas/townhouses in freehold areas such as Reem Island have left landlords facing long vacancy periods on their assets. This downward trend is expected to continue over the next quarter.
Apartment Rent Performance 200,000
0.0%
180,000
-0.5%
160,000
-1.0% -1.5%
AED per annum
140,000 -2.2
120,000 -2.7
100,000
-2.5% -3.1
-3.0%
80,000 -3.8
60,000
-2.0%
-3.5%
-3.8
40,000
-4.0%
20,000
-4.5%
0
Al Ghadeer
Studio Rent
1 BR Rent
Al Raha Beach 2 BR Rent
Al Reef Downtown
Al Reem Island
-5.0% Saadiyat Beach Residences
12 month % change
Source: propertymonitor.me
AED per annum
Villa/Townhouse Rent Performance 500,000
-0.0%
450,000
-0.5%
400,000
-1.0%
350,000
-1.5%
300,000
-2.0%
250,000
-2.5%
200,000
-3.0%
150,000
-3.5%
-3.9 -4.1
100,000 50,000
-4.0% -4.5%
-5.0
-5.0%
0 Al Raha Gardens 3 BR Rent
4 BR Rent
5 BR Rent
Al Reef 12 month % change
Š Property Monitor 2017 | propertymonitor.me
Saadiyat Beach Villas Source: propertymonitor.me
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Q3 2017 Residential Market Report - Abu Dhabi
Residential Supply Approximately 1,700 residential units have been handed over across Abu Dhabi investment zones this year. As of September, approximately 6,274 units are scheduled for handover for the remainder of the year, though actual completions may vary signiicantly. The key locations for upcoming supply this year are Reem Island and Yas Island, which have more than 1,500 units each scheduled for completion this year. Among the new launches this quarter was Aldar’s Water’s Edge project on Yas Island, expected to have 2,255 residential units, with the majority (42%) being one bedroom. In terms of pricing, the new launch is targeting the mid-income buyer with starting prices at AED 480,000 for a studio. Meanwhile, at the luxury end of the market was the launch of 44 -storey Reem Tower by National Bonds Corporation (NBC). The luxury tower is to be designed by Japanese architectural irm Nikken Sekkei and is expected to have 335 apartments.
Property Monitor Supply Tracker Supply scheduled to be completed by the end of 2017 2,000+
2,000 - 1,500
1,000 - 600
600 - 400
400 - 200 Saadiyat Island
Al Reem Island
Corniche Road
Al Ba te en
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Q3 2017 Residential Market Report - Abu Dhabi
Upcoming Supply (Q4 2017)
4,576
APARTMENTS
1,698
VILLAS/TOWNHOUSES
Al Raha Beach
Yas Island
Masdar City
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Q3 2017 Residential Market Report - Abu Dhabi
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Š Cavendish Maxwell 2017 | cavendishmaxwell.com
Q3 2017 Residential Market Report - Abu Dhabi
Methodology Sale prices and rents are derived from Property Monitor (www. propertymonitor.me), a comprehensive real estate data analytics platform established by Cavendish Maxwell in 2014. Property Monitor provides real-time, market-wide transactional data and trends. Working with agencies, banks, developers and corporate investors, it provides deeper insight into real estate advisory, investment, and lending activities. The average sales price per sq ft is based on the Property Monitor Index which incorporates signed contracts, registered transactions, valuations and listings veriied by Cavendish Maxwell’s market leading valuation department. Supply projections for residential projects are based on the regular tracking of construction projects, new launches and delays etc. This is achieved through site inspections as well as regular feedback from developers, contractors, Cavendish Maxwell’s building consultancy team and related government entities.
Strategic Consulting and Research Cavendish Maxwell’s strategic consulting and research team uses its in-depth knowledge of the real estate sector and extensive network to support our clients through the development process, providing strategic consultancy and 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 inanciers 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.
Our documents and advice meet banking and audit criteria, proven by our presence on over 35 bank panels across the UAE.
Key Services
Market Research
Due Diligence for Land Acquisition
Asset Management
Property Data
Buyer Proiling
Feasibility Studies
Joint Venture Structuring
Highest & Best Use Studies
Advisory Services
Site Analysis
Education Advisory and Valuation
Disclaimer © 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 Jay Grant MSc IRRV (Hons) Founder and Chairman M: +971 50 192 1658 E: jay.grant@cavendishmaxwell.com
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