Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
Real EstatePerformance
Market Intelligence.Simplified.VPI
ValuStrat Price Index
Key Indicators
ValuStrat Price IndexResidential
-6.7%Q2 Y-o-Y
Source: ValuStrat
ValuStrat Price IndexOffice
-9.7%Q2 Y-o-Y
Source: ValuStrat
-3.8%Jan-May YoY
Hotel ADR
5.7%Q-o-Q
ResidentialOff-Plan Sales
Ticket Size
-3%Jan-May YoY
Hotel Occupancy
18.7%Q-o-Q
ResidentialOff-Plan Sales
Volume
3.5%Q-o-Q
*Typical office size
Office SalesTicket Size
23.9%Q-o-Q
ResidentialReady SalesTicket Size
6.8%Q-o-Q
Office SalesVolume
10.2%Q-o-Q
ResidentialReady Sales
Volume
1.0%Q-o-Q
Office AskingRents
-1.4%Q-o-Q
ResidentialAsking Rents
Sources: REIDIN, DTCM, ValuStrat
1 | Dubai Real Estate Market 2nd Quarter 2018 Review
VPIValuStrat Price Index
ResidentialThe second quarter 2018 VPI – Residential, displayed an overall 6.7% annual decline in capital values, and the sharpest quarterly decline of 3.8%, a four-year record. This downward trend resulted in 20% citywide capital value loss since the peak of mid-2014. All 26 established freehold locations monitored by the VPI witnessed price drops since the last quarter, ranging from 0.2% to 6.1%. Quarterly declines of more than 5% were registered in The Springs and Meadows, Jumeirah Islands, International City, Downtown Dubai, Business Bay, Motor City, The Greens, and The Views. Villas in Palm Jumeirah, and Emirates Hills continue to resist heavy downward pressures with only marginal quarterly dips.
Source: ValuStrat
ValuStrat Price Index16 Apartment and 10 VillaLocations in Dubai[Base: Jan 2014=100]
80
100
120
2015 2016 2017 2018
Mar
Jun
Sep
Dec
Mar
Jun
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
97.5 97.597.998.097.998.1
98.5100.1
97.0 96.7 96.295.4
92.7
89.5
Dubai’s second quarter VPI – Office, which analyses and reports the change in capital values experienced by a representative fixed basket of freehold office units in Dubai, has shown that office capital values fell sharply by 9.7% annually and 4.4% quarterly. Barsha Heights witnessed the biggest annual loss of 15.7% and 3.4% QoQ, Business Bay was second in line with a 9.5% annual capital loss, 1.7% QoQ. Offices in Park Tower (DIFC) and Emaar Square (Downtown Dubai) were the only locations that saw annual capital gains averaging 4.2%.
OfficeValuStrat Price Index5 Office Locations in Dubai[Base: Jan 2015=100]
Source: ValuStrat
80
100
120
2015 2016 2017 2018
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Mar
Jun
Sep
Dec
88.7 90.091.491.8
97.097.797.9100.0
92.0 91.5 91.389.3
86.5
82.7
For more details, please visit www.valustrat.com/vpi
www.valustrat.com | 2
MacroEconomicSnapshot
• For the second time this year, the US Federal Reserve increased interest rates by a quarter point. With the UAE Central Bank (CBUAE) following suit, borrowing cost to increase accordingly
• As of May, Dubai’s annual inflation rate was 2% with no change recorded in the monthly rate
• Housing and Utilities Expenses retreated 2.3% YoY and 0.4% MoM
20122,105,000
20132,210,300
20142,320,800
20152,450,000
20162,695,000
20172,978,000
2018-Q23,080,165
• International Monetary Fund (IMF) forecasts Dubai’s GDP this year to grow 3.5%• Latest annual 2017 results for Dubai’s non-oil foreign trade displayed a 2% YoY increase amounting to AED 1.3 trillion• Dubai’s main trading partner during the same period was China, which took 13.6% share of the total trade value worth AED 176 billion• A series of pro-investor initiatives led by the federal government included a specialised ten-year visa for certain investors and professionals and 100% foreign ownership outside free zones. These were supplemented by a number of economic stimuli by local government covering various sectors including finance, real estate, and tourism
• Dubai International Airport (DXB) recorded a 1.09% increase in passenger traffic, reaching more than 22 million during Q1 2018
• Dubai’s population stood at 3.08 million with a five-year average growth rate of 7%
Consumer Price Index vs. Housing IndexJanuary 2015 – YTD
General Index (2014=100)
Housing, Water, Electricity, Gas and Other Fuels
Source: Dubai Statistics Centre
2015 2016 2017 2018
989694
Jan
Feb
Mar
114
112110108106104102100
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan
Feb
Mar
Apr
May
3 | Dubai Real Estate Market 2nd Quarter 2018 Review
• 8,718 apartments and villas, 23% of the total expected supply for 2018, have been completed YTD• About 64% of these completions, amounting to 5,547 units, were located mainly in three areas: Dubailand, Jumeirah Village Circle (JVC) and Dubai Silicon Oasis• The upcoming supply mix is composed of 86.4% apartments (25,102 units) and 13.5% villas (3,942 units), which are expected to finish construction before year end• Two Emaar projects, Burj Vista (268 units) and BLVD Crescent (300 units), together with three other residential developments are anticipated to add 1,513 units in Downtown by end of 2018• There were eleven new off plan projects launched during Q2, these included Tilal Al Ghaf in Dubailand, SevenCity in Jumeirah Lake Towers, Lawnz in International City 2, The Neighbourhood in Al Barari, and Grande in Downtown Dubai
• Steep declines in capital values this quarter may have boosted sales, as transaction volumes increased across the board, with off-plan sales up 10.9% YoY and 18.7% QoQ, while properties in the secondary market rallied upwards, 1.5% YoY and 10.2% QoQ• Established areas that witnessed substantial off-plan sale transactions during the last three months included Business Bay at 86% of sales being off-plan, Downtown Dubai at 70% and Jumeirah Village 65%• Average ticket prices have also risen, off-plan saw a 5.6% QoQ increase to AED 1.4 million, whilst ready property ticket sizes jumped 23.9% QoQ to reach AED 1.9 million, suggesting higher interest in prime properties• The median transacted price for ready apartments stood at AED 10,882 per sq m (AED 1,011 per sq ft), down 7.3% YoY with minute increase of 0.3% QoQ • For ready villas, the median transacted price was AED 10,656 per sq m (990 per sq ft), down 11% YoY and up 1.1% QoQ
Dubai Residential Supply2015-2019(‘000 UNITS)
Source: Dubai Statistics Centre, REIDIN, MEED Projects, ValuStrat *May be subject to significant downward adjustment
ExistingNew Apartments*New Villas*
467
ResidentialSupply
ResidentialSales
2019
E
400
450
500
2018E
2017
2016
2015
550
600
650
400
450
500
550
600
650
485
497
519
51932
5.7
55743
12.6
Source: REIDIN, ValuStrat
Ready Sales Volumes
10.2%Last Quarter
1.5%Last Year
Off-plan Sales Volumes
18.7%Last Quarter
10.9%Last Year
www.valustrat.com | 4
• Overall residential asking rents fell 8.4% YoY
• However, on a quarterly basis asking rents declined moderately by 1.7%
• Compared to the same period last year, listed rents were down 8.6% for apartments and 7.5% for villas
• As part of DUBAI10X initiative, Dubai Land Department announced the Real Estate Self Transaction (REST), a comprehensive digital platform that will allow landlords to rent and manage properties and be able to pay utilities remotely without the need for property management firms and service agents
ResidentialRents
Source: REIDIN, ValuStrat
Residential Asking Rents
-15.4%Last 2 Years
-8.4%Last Year
-2.7%Last 6 Months
• HSBC HQ Tower in Downtown Dubai was the only major office building project completed this quarter, adding a total 29,729 sq m (320,000 sq ft) GLA to supply stock
• Under construction office space is estimated at 920,300 sq m (9.9 million sq ft) for delivery by 2019
• Most upcoming office space will be concentrated in Business Bay (36%), Jumeirah Lake Towers (32%), and Dubai Silicon Oasis (20%). Which will all add an estimated 241,548 sq m (2.6 million sq ft) office GLA
Dubai Office Supply2015-2019(Million sq m GLA)
Source: REIDIN, MEED Projects, ValuStrat
Existing Stock Expected Supply
OfficeSupply
2015 2016 2017 2018E 2019E
8.39
8.47
8.70
0.43
8.70
0.49
9.13
-1.7%Last Quarter
5 | Dubai Real Estate Market 2nd Quarter 2018 Review
• Office transaction volumes this quarter were 6.8% higher than the previous quarter. Recently announced government initiatives related to 100% ownership outside free zones may further improve volume in the medium term
• Overall transacted office prices were 21.3% lower than last year and 13.2% lower QoQ
• The median transacted price stood at AED 8,277 per sq m (AED 769 per sq ft)
• Business Bay was the most popular choice for office sales with a share of 45%, followed by Jumeirah Lake Towers (JLT) with 36% of overall transactions
• The median size of offices sold in Business Bay was 98 sq m (1,058 sq ft) and 116 sq m (1,245 sq ft) in JLT
• 41,762 sq m (449,520 sq ft) of total GLA was sold during Q2, amounting to a total investment value of more than AED 522 million, up 79.2% QoQ
Source: REIDIN, ValuStrat
Office Median Transacted Prices
OfficeSales
-21.3%Last Year
-23.2%Last 2 Years
-13.2%Last Quarter
-20.3%Last 6 Months
• Median office asking rents declined 9% YoY, with a 1% increase QoQ
• Asking rents this quarter were 9.5% lower than two years ago
• The citywide median asking rent for typical office space stood at AED 1,022 per sq m (AED 95 per sq ft)
• Median asking rents commanded by Dubai International Financial Centre (DIFC) were at AED 2,110 per sq m (AED 196 per sq ft), for typically sized units between 93 – 186 sq m (1,000 – 2,000 sq ft)
• In Business Bay, median asking rents stood at AED 893 per sq m (AED 83 per sq ft) for a typical office area of 93 sq m (1,000 sq ft)
OfficeRents
Source: REIDIN, ValuStrat
Office Median Asking Rents
-9.0%Last Year
-9.5%Last 2 Years
1.0%Last Quarter
-3.9%Last 6 Months
www.valustrat.com | 6
• Emaar Malls opened The Springs Souk boasting 23,000 sq m (247,570 sq ft) GLA, it currently offers 100 shops and restaurants with a six-screen cinema and gym opening at later stage
• Nakheel Malls announced a partnership with Al Nasr Cultural & Sports Club to develop an AED 300 million retail destination with 30,658 sq m (330,000 sq ft) GLA in Al Khawaneej area, slated for completion in November 2020
• Construction contract for the 46,452 sq m (500,000 sq ft) GLA Nad Al Sheba Mall has been awarded by Nakheel, expected to finish construction in 2021
• Union Coop announced a tender to build two commercial projects, one in Al Warqa’a and another in Jumeirah First with combined retail space of 24,155 sq m (260,000 sq ft)
Retail Malls & Shopping Centres(‘000 sq m GLA)
RetailSupply
Source: REIDIN, ValuStrat
Convenience< 3k sq m
Neighbourhood3k-10k sq m
Community10k-30k sq m
Super Regional> 90k sq m
Regional30k-90k sq m
1,933
852
187
46
439
• Dubai Chamber of Commerce and Industry (DCCI) estimated Dubai’s retail market to grow at an average 5.6% between 2018-2021, with retail sales expected to exceed AED 160 billion
• DCCI plans to introduce a retail rent index to help improve market transparency
• Latest edition of Dubai Shopping Festival recorded 6.75% YoY increase in credit card spending as per Network International
• With the Middle East’s e-commerce robust growth potential, Noon.com disclosed a strategic partnership with eBay to help solidify its market position and level the ground against Amazon-backed Souq.com
Number of Malls and Shopping Centresin Dubai
Source: REIDIN, ValuStrat
RetailPerformance
Super Regional> 90k sq m
12
Convenience< 3k sq m
23
Neighbourhood3k-10k sq m
32
Regional30k-90k sq m
15
Community10k-30k sq m
24
7 | Dubai Real Estate Market 2nd Quarter 2018 Review
• As of May 2018, Dubai had a total of 85,792 hotel rooms and 24,834 hotel apartments• An estimated total of 3,048 rooms were added during Q2 from the opening of 11 hotels• Notable openings during the quarter were Rove Hotel Dubai Marina (384 rooms), Aloft City Centre Deira (304 keys), Holiday Inn Festival City (508 rooms), Zabeel House & Zabeel House MINI (350 keys). The Address Downtown (220 rooms) re-opened• Another eleven new hotel projects were announced during the last quarter to to add approximately 2,520 rooms to the city’s hotel room stock by 2020• Caesars Palace (178 keys), Caesars Bluewaters (301 rooms), Staybridge Suites Festival City (160 keys), Vienna House Deira Islands (600 rooms), ECOS Hotel Al Furjan (320 keys) and Rove La Mer (366 rooms) were some of the announcements made during the quarter
HotelSupply
• Total international guests as of May 2018 fell by 1.4% YoY to 7.16 million
• Citywide occupancy rate was 82%, down 3% YoY, likely due to Ramadan season which began mid-May
• Revenue per Available Room (RevPAR) and Average Daily Rate (ADR) saw annual declines of 7.1% and 3.9%, respectively
• Top source markets for Dubai visitors came from three regions, Western Europe (22%), South Asia (17%) and the GCC (16%)
• Russian tourists count continued to rally upwards with highest growth rate of 77% YoY
HotelPerformance
Source: DTCM
GCC
Western Europe
South Asia
MENA
North Asia & South East Asia
Americas
Russia, CIS & Eastern Europe
Africa
Australia
Source of Dubai Visitors by RegionJan-May 2018
2%
16%
22%
17%10%
11%
11%
6%5%
Hotel Room Supply2015-2019(‘000 KEYS)
Source: DTCM, MEED Projects, ValuStrat
Hotel & Service Apt Rooms New Supply
2015
98107
2017
103
2016
2017E
107
13.5
2018E
121
17.3
2019E
www.valustrat.com | 8
322
538
Al Quoz
484
300
Al Qusais
355
538
Dubai InvestmentPark
300
538
Jebel Ali FreeZone
300
484
Jebel Ali IndustrialArea
322
484
Dubai South
• Jebel Ali Free Zone (JAFZA) announced 2017 year-end results with 4% YoY increase, with trade values reaching AED 305.2 billion• 513 new companies registered with JAFZA, up 9% YoY• Majid Al Futtaim (MAF) launched the largest state-of-the-art FMCG logistics centre in National Industries Park for its Carrefour business, measuring approximately 60,000 sq m (645,834 sq ft) BUA and representing an investment of AED 300 million• Gulf Agency Company (GAC) opened an estimated 26,890 sq m (289,441 sq ft) BUA facility in Logistics District Dubai South• Access World Logistics, in partnership with RHS Group, inaugurated a 40,000 sq m (430,556 sq ft) BUA warehouse and storage property in JAFZA
Industrial Rental Rates(AED/sq m)
Source: ValuStratRent - Upper Range Rent - Lower Range
IndustrialInvestment/Supply
IndustrialPerformance• Despite increased competition and more activity in industrial areas in nearby emirates, we have seen continued construction of new industrial logistics and production properties being developed in Dubai Industrial Park and National Industries Park• Rents continue to be subdued as observed in older established locations such as Ras Al Khor & Al Qusais, with rentals ranging between AED 300 to AED 484 per sq m (AED 28 to AED 45 per sq ft). Similar rents are also seen in other locations such as Jebel Ali Industrial and Umm Ramool
• Industrial property prices continued to remain relatively stable during Q2 2018. Prices were generally in the range between AED 2,045 per sq m to AED 4,306 per sq m (AED 190 per sq ft to AED 400 per sq ft) with high specification/ quality built and modern cold storage warehouses leaning towards the upper end• Asking prices for large and older warehouse properties being offered at slightly under AED 2,045 per sq m (AED 190 per sq ft).• Extended competition came from other nearby emirates such as Sharjah (industrial parks along or near Emirates Road), and offerings in Al Jurf Industrial areas in Ajman, New Emirates Modern Industrial area in Umm Al Quwain and industrial free zones in Ras Al Khaimah
DubaiInvestmentPark
Jebel AliFree Zone
Al Quoz
1,000
2,000
3,000
4,000
5,0004,306
2,690
4,306
2,153
3,900
2,045
9 | Dubai Real Estate Market 2nd Quarter 2018 Review
20.11.17
ValuStrat Price Index: Focus on prime Downtown Dubai
One of the nine locations monitored by the prime index is Downtown Dubai, which saw capital values gaining 2.3%
since Q1 2017, making it one of the best performing prime locations monitored by the Prime VPI. Last year, Burj
Khalifa saw marginal gains but was offset by capital value declines of 0.8% when compared to the last quarter of
2017.
05.06.18
Dubai’s upscale freehold clusters get a breather
"Villas in Palm Jumeirah fared much better and appreciated more than 2 per cent mid-2017 and are now flat while apartments are now 19.6 per cent below their
peak but did see tiny gains middle of last year and remained relatively stable during Q1 2018”, says
ValuStrat's Declan King MRICS, Managing Director & Group Head of Real Estate.
18.04.18
19.04.18
“During Q1 2018 key locations with high proportions of off plan activity included Business Bay at 88% of all transactions, Jumeirah Village at 80% and Al Furjan at 65%”, said Haider Tuaima, Head of Real Estate Research at ValuStrat.
The first quarter saw 60% of all residential home transactions being off-plan
Housing conundrum: health or savings?
"No doubt, renting in Sharjah is more affordable for a certain income bracket of Dubai workers. But even when a cheaper or similar priced larger apartment is available in the northern emirates, the commute to and from Dubai can become a major issue", reckons Haider Tuaima, Head of Real Estate Research at ValuStrat.
14.06.18
15.05.18
Know when to sellDeclan King MRICS, Managing Director & Group Head for
Real Estate at ValuStrat suggests using the criteria of “location, off-plan vs ready and payment plan vs
mortgage deal” to make the best choices. He points out that these factors could positively and negatively affect the real estate market until 2021, including population
growth and the introduction of the value-added tax.
18.05.18How much does it cost to rent a co-working space in Dubai?
ValuStrat research indicates that cost savings, as compared to a more traditional office set-up, are generally in the region of up to 30%. However, a simple comparison in Jumeirah Lake Towers revealed that shared space could be sourced for up to 50% less than a traditional office.
www.valustrat.com | 10
ValuStrat is a leading consulting firmheadquartered in Dubai providing Advisory, Valuations, Research, Due Diligence andDivestment services across a diverse rangeof industry sectors since 1977. Offices in the UAE, UK, Saudi Arabia, Pakistan and Qatar serve over 800 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.
Research MethodologyEvery effort has been made to ensure the accuracy of this document. New supply data covers 38 defined areas in Dubai including non-freehold areas. Only completed and under construction projects are included. The new supply data does not include announced projects, and projects in design phase. The new supply database does not take into account most private building projects. Prices are calculated from actual transactions that have been carefully cleansed to exclude duplicates, bulk sales and outdated transactions. Rental data is derived from a carefully cleansed database of listings that don’t include duplicates, potential errors and outliers.
The ValuStrat Price Index for Dubai’s freehold office sector is constructed to represent the quarterly price change experienced by typical office space within Dubai. The ValuStrat Price Index for Dubai’s freehold residential sector is constructed to represent the monthly price change experienced by typical residential units within Dubai. The VPI uses a comprehensive weighted sample representing more than 90% of all property types across the city and is built by our expert RICS Registered Valuers.
Copyright © ValuStrat Consulting FZCo. 2018This document is the property of ValuStrat Consulting FZCo and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat Consulting FZCo. We welcome your constructive feedback and any corrections that may need to be made to this document. ValuStrat Consulting FZCo does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.
ValuStrat is a firm regulated by RICS
VPI Online www.valustrat.com/vpi
VPIValuStrat Price Index
Director - Commercial Valuations