Q3 2017 Abu Dhabi Residential Market Report

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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

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

© Property Monitor 2017 | propertymonitor.me

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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

Š Cavendish Maxwell 2017 | cavendishmaxwell.com


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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© Cavendish Maxwell 2017 | cavendishmaxwell.com


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

© Property Monitor 2017 | propertymonitor.me

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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.

© Property Monitor 2017 | propertymonitor.me

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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

Nigel Armstrong FMAAT Chief Executive Oficer M: +971 54 355 0772 E: nigel.armstrong@cavendishmaxwell.com

Miles Phillips BSc (Hons) MRICS Senior Partner M: +971 56 604 2750 E: miles.phillips@cavendishmaxwell.com

Sohail Raja BSc (Hon) MRICS Head of Abu Dhabi M: +971 50 443 5997 E: sohail.raja@cavendishmaxwell.com

Sofia Underabi MRICS AAPI Partner, Head of Residential Valuation M: +971 50 435 6527 E: sofia.underabi@cavendishmaxwell.com

Sathya Srinivasan Msc MRICS Head of Strategic Consulting and Research M: +971 54 442 0384 E: sathya.srinivasan@cavendishmaxwell.com

Manika Dhama BA (Hons), MBA Senior Consultant, Strategic Consulting and Research M: +971 50 482 7938 E: manika.dhama@cavendishmaxwell.com

Lynnette Abad BBA (Hons) Partner, Head of Property Monitor M: +971 50 894 7880 E: lynnette.abad@propertymonitor.ae

Dubai 2205 Marina Plaza Dubai Marina P.O. Box 118624 Dubai United Arab Emirates T: +971 4 453 9525 E: info@cavendishmaxwell.com

Abu Dhabi 605 West Tower, Abu Dhabi Mall Tourist Club Area P.O. Box 126609 Abu Dhabi United Arab Emirates T: +971 2 448 4677 E: info@cavendishmaxwell.com

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