1. real estate
2. apartments

Property Review
Special Edition:
Dubai
Historic Review 2008-2014
and 2015 Outlook
Despite the small correction in
values in the second half of 2014,
the level of interest in Dubai’s real
estate market remains strong.
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Sales
Dubai 2014
Highlights
RESIDENTIAL
KEY TRENDS
•
•
TRANSACTION
ACTIVITY
•
•
•
• Following two years of strong growth for Dubai’s residential sales, 2014 was a year of stabilisation with moderate growth during the first
two quarters; this was followed by a decline in
prices during the second half of the year.
• As a result of strong price growth, transactional
activity slowed down significantly during the
second half of 2014 as new supply was delivered to the market and low global oil prices impacted key source markets such as the CIS and
GCC countries.
POPULAR
DEVELOPMENTS
/ AREAS
•
•
OFFICES
•
•
• Strong rental rate growth of 18% and 13%
year-on-year was witnessed since Q4 2011 for
apartments and villas respectively.
•
Leasing
Prices peaked in Q2 2014 from the low point •
in Q4 2011, recording an overall increase of
75% and 60% for apartments and villas respectively.
The second half of 2014, however witnessed a
moderate reduction in sales prices as sellers
were more willing to match buyer’s expectations.
Rental rates were 7% higher than in Q4 2013,
and as such many tenants were faced with an
increase or no change in rates rather than a
reduction when leases were renewed.
The slowdown in transactional activity was sig- •
nificant, with 25% less transactions for villas
and apartments, combined, for the year compared with 2013, according to Reidin.
The slowdown was mostly felt in the second
half of the year as Q4 transactions levels were
down by 40% compared with the same period
last year.
Off-plan sales slowed as buyers had a wider
choice of completed products to choose from. •
2014 witnessed a slowdown in leasing activity as rental rates stabilised and many tenants
remained in their existing accommodation
rather than relocate.
Dubai Marina and JBR, International City,
Downtown Dubai, and Jumeirah Lake Towers
were the areas that had the most sales transactions for apartments in 2014.
•
The most popular villa developments were
Meadows, Springs and Arabian Ranches accounting for 50% of all villa sales.
Demand for offices was minimal, by compar- •
ison, as office transactions represented less
than 10% of all property transactions in Du•
bai, according to Reidin.
Buyers are typically smaller-sized businesses
looking for their own space in strata-owned
buildings.
Business Bay was the most transacted office
area followed by Jumeirah Lake Towers.
•
-25% RESIDENTIAL
TRANSACTIONS
Annual Growth in 2014
Rents:
+7%
Apartments
Sales:
Number of Residential
transactions in
2014 down by 25%
compared to 2013
Supply Delivered In 2014: Apartments: 7,000 Units
Office leasing in 2014 improved gradually over
the year with the last quarter being the most
active in terms of completed transactions.
The type of tenants were small-sized companies setting up a small office for trade license
purposes as well as large local and international companies expanding or consolidating
their business with requirements of +/- 10,000
to 15,000 square feet.
Similar to recent years, fitted office space
was the most in demand, with buildings well
connected to the transportation network performing best.
+4%
Villas
+4%
Apartments
In addition to the popular freehold areas,
apartments for rent in areas such as Bur Dubai and Deira were in demand due to the affordability of properties and the general convenience of these locations.
Villas in the Umm Suqeim and Jumeirah areas
were in demand. However, most of the supply
consisted of older or very large villas, and as
such the offering targeting expatriate families
for smaller new villas was insufficient.
Offices
+1%
Villas
Villas: 650 Units
+12%
+9%
Offices
Offices: 300,000 m2 of GLA
Source: Reidin
2
2
© Asteco Property Management, 2015
© Asteco Property Management, 2015
3
UAE ANNUAL REPORT 2014
Dubai 2015
Outlook
UAE ANNUAL REPORT 2014
Dubai
APARTMENTS
Leasing
•
•
•
• Sales values are largely underwritten by cash
buyers and despite the small correction in values in the second half of 2014, the level of interest in the Dubai market remains strong.
• In fact, there are two completely different markets; the leasing market which reacts relatively
quickly to changes in supply and could therefore soften in 2015/2016 as new supply enters the market and the sales market driven by
cash buyers and general market sentiment.
Sales
•
VILLAS
•
•
Why buy off-plan?
⎷ Ability to purchase property at a discount compared to
OFFICES
•
completed developments. This is especially beneficial
in well established areas.
⎷ Developers providing attractive financing for off-plan
properties and banks lending up to 50% reduces the
buyer’s financial burden.
⎷ Rules and regulations for off-plan projects are in place
⎷ Property should be viewed as a medium to long term
APARTMENTS
VILLAS
investment. The potential for capital appreciation is
generally maximised at completion and ideally a couple of years down the line.
⎷ Ensure the contractor is already mobilised on site and
all RERA approvals are in place.
⎷ Conduct proper due diligence such as checking the developer’s track record from the Lands Department.
⎷ Research the area to find out what and when additional
supply will come up in the same vicinity.
4
4
© Asteco Property Management, 2015
With a substantial number of off-plan
schemes launched in 2014, 2015 is likely
to see a reduction in sales prices for offplan villas and see more attractive payment plans being offered by developers.
Prices for completed villas are anticipated
to remain stable throughout the year, and
communities with minimal facilities and
amenities could witness a drop in value.
•
With current sales rates stabilising and
office rental rates witnessing potential increases in the medium term, office yields
are expected to improve and as such,
purchasing office space may become an
increasingly attractive option in 2015.
•
Total Supply Delivery Anticipated in 2015
in Dubai to protect the buyer’s investment.
Tips on buying off-plan
We expect transaction activity to reduce
across the market as buyers become
more cautious, especially when purchasing property for lease, as pressure on
rents and yields may increase in light of
upcoming supply.
A continuation of low oil prices as well as
sanctions imposed on various countries
may have an effect on demand for highend luxury properties, which could lead
to a potential reduction in transactional
activity as well as a moderate reduction in
sales prices.
The overall sales prices of units in sought
after communities are likely to see relative
stability in sales prices, whilst secondary
communities, with limited facilities and
amenities are likely to be faced with declining values.
OFFICES
•
•
If all the supply is delivered to the market as per current projections, Asteco
anticipates a reduction in rental rates
over the year, potentially leading to tenant movement in the market and therefore increased transactional activity as
new developments are released.
Villa rental rates are anticipated to remain stable in the most desirable areas,
whilst marginal declines in less desirable areas can be expected.
A more significant drop in rental rates
could be witnessed in 2016 and beyond
as the large number of projects announced in 2013/2014 are completed.
Rental rates appeared to have reached
an equilibrium in 2014. If landlords remain reasonable in their asking rates,
we expect transactional activity to improve during 2015.
Certain buildings, especially single
owned, good quality properties could
potentially see some rental increases in
2015.
12,000 Units
2,000 Units
350,000 m2 of GLA
Major Project Launches in 2015
Marina Arcade – Dubai Marina
Reef Residence – Jumeirah Village
© Asteco Property Management, 2015
5
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Dubai
Rental Rates
2008 to 2014
Apartments
TYPICAL 2BR APARTMENT RENT EVOLUTION
2008 TO 2014
2BR
0%
The table below provides average rental rates for the fourth quarter of every year from 2008 to 2014
for a selection of apartment areas.
•
Apartment rental rates increased by 65% since 2011 but are still 25% lower than 2008. Rental rates
are 6% higher, on average, compared with last year.
•
Asteco believes that the rapid growth witnessed from 2011 onwards, and especially during 2013, led
to rental rates peaking. Going forward, any further increases will make many areas unaffordable to
their target market leading to decreased demand and tenant outflow.
•
Furthermore, any new projects that are due for delivery in the next 12 to 18 months will result in a
softening of rental rates throughout 2015.
•
On average, a 2-bedroom apartment for all Dubai areas combined, leased for AED 122,000 per annum in Q4 2014, whereas the average in 2011 was AED 72,000 and AED 158,000 in 2008 as shown in
the adjacent bar chart.
Average Apartment Rental Rates
as at Q4 (AED 000’s pa)
2009
Business Bay
-17%
87
2011
2012
2013
2014
55
45
60
90
93
17%
36%
2009
2010
2BR Apartment Rental Rate
2008
2009
122
2012
2011
2013
2014
% Annual Change
3BR
2010
2011
2012
2013
2014
85
70
85
130
135
2008
2009
83
% Change
2010
2011
2012
2013
2014
20132014
20082014
115
100
125
178
180
3
75
70
75
135
133
0
-12
-2
-36
Deira
88
48
40
37
35
68
65
103
55
55
53
53
85
90
Discovery Gardens
100
58
45
38
45
70
70
135
85
70
53
70
83
80
Downtown Dubai
133
85
70
68
80
98
118
185
120
100
100
125
160
170
275
165
150
150
180
228
245
10
-10
Dubai Marina
130
78
63
63
75
105
113
180
110
90
80
100
140
158
245
160
125
115
135
178
210
14
-14
Greens
120
65
58
55
65
85
83
160
88
78
75
100
135
148
180
130
115
105
130
155
173
7
-13
International City
70
44
27
23
24
43
46
93
63
39
38
38
65
63
1
-33
Jumeirah Beach Residence
115
85
73
70
80
108
118
168
118
95
90
100
135
163
203
148
115
110
140
175
200
15
-1
Jumeirah Lakes Towers
110
65
50
45
55
83
90
160
85
65
65
75
110
133
210
118
85
85
100
148
168
15
-19
35
45
70
65
53
70
95
103
80
90
120
130
4
Palm Jumeirah
200
113
90
90
95
135
150
228
145
120
120
140
175
208
300
200
170
170
190
223
243
13
-18
Sheikh Zayed Road
160
83
70
68
83
98
113
203
130
105
100
110
148
148
290
175
120
120
135
195
200
5
-30
© Asteco Property Management, 2015
138
7%
84
72
2BR
2010
Jumeirah Village
6
99
2008
1BR
2008
-12%
114
AED 000’s pa
•
-37%
158
© Asteco Property Management, 2015
7
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Dubai
Rental Rates
2008 to 2014
Villas
TYPICAL 4BR VILLA RENT EVOLUTION
2008 TO 2014
4BR
0%
Average Villa Rental Rates
as at Q4 (AED 000’s pa)
As shown below, the rental market for villas and apartments
reached a low in 2011, with rates starting to increase from 2012
onwards.
•
Villa rates increased by approximately 55% since their lowest in
2011, with Q4 2014 rates still 20% lower than in Q4 2008 but up
4% since last year.
•
On average, a typical 4BR villa for all Dubai areas combined, leased
for AED 274,000 in Q4 2014 compared with AED 191,000 at the
lowest point of the market in Q4 2011, as shown in the adjacent
bar chart.
211
2008
0%
19%
14%
5%
274
229
192
2009
191
2012
2011
2010
4BR Villa Rental Rate
3BR
2013
2014
% Annual Change
4BR
5BR
% Change
2008
2009
2010
2011
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
20132014
20082014
Arabian Ranches
275
140
125
125
155
213
215
335
180
160
160
220
285
300
425
265
250
250
285
365
343
-1
-17
Green Community
310
190
160
170
200
230
220
385
210
190
190
220
235
238
393
240
210
210
240
260
253
-2
-35
195
220
250
290
295
340
15
Jumeirah Park
Jumeirah Village
8
-9%
260
AED 000’s pa
•
-38%
338
90
125
155
163
110
150
165
178
145
165
180
210
10
Meadows
325
180
180
180
210
230
238
350
240
200
200
225
250
275
425
265
225
225
265
285
310
8
-25
Mirdif
240
100
80
80
90
138
133
260
120
110
105
115
165
155
275
165
125
125
140
175
175
-3
-40
Palm Jumeirah
375
270
275
275
325
350
355
550
340
315
315
400
495
485
800
450
450
450
500
723
725
0
-9
Springs
250
125
105
105
140
163
195
20
-22
© Asteco Property Management, 2015
© Asteco Property Management, 2015
9
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Dubai Office Market
Sales Prices & Rental Rates
2008 to 2014
Leasing
•
•
•
•
•
The office market lagged behind the residential market by a year, with lowest rental
rates witnessed in 2012, and slow growth witnessed thereafter.
The fourth quarter of 2014 outperformed the rest of the year with a substantial number
of transactions completing for small, medium and large office space.
Demand stemmed from all types of tenants, including new companies setting up and
requiring an office for trade license purposes as well as local and international tenants
seeking to expand or consolidate.
2014 rental rates appeared to have reached an equilibrium, encouraging transactional
activity and as a result, 2015 is likely to continue on this positive trend.
There appeared to be a lack of single-owned, quality fitted offices in the market due for
completion – with the exception of The One JLT by DMCC and C1 Tower at Dubai World
Trade Centre, which are anticipated for handover by the end of 2015.
% Change
Average Office Rental Rates
as at Q4 (AED / ft2 pa)
2008
2009
2010
2011
2012
2013
2014
20132014
20082014
Bur Dubai
360
150
110
90
80
95
105
11
-71
Business Bay
n/a
n/a
n/a
75
70
100
103
2
DIFC
525
370
230
220
225
220
235
7
-55
Dubai Investment Park
205
95
50
40
40
55
65
18
-68
Jumeirah Lake Towers
235
100
60
50
50
90
95
6
-60
Sheikh Zayed Road
425
215
160
140
140
175
180
3
-58
Tecom C
350
105
75
60
55
85
100
18
-71
Sales
AVERAGE OFFICE SALES PRICES
Q4 2008 TO Q4 2014
•
•
10
Office sales witnessed a strong decline of 65% from 2008 to their lowest point in 2012,
with subsequent growth of 35%, on average, from 2012 to 2014 as sales prices increased
by 13% over the last year only.
In contrast to the residential sector, transaction levels in the office sector increased by
16% compared with 2013 with close to 1,500 deals recorded by the Dubai Land Department in 2014, according to Reidin.
AED per ft2
•
In terms of size, most transactions in 2014 were for mid-sized offices measuring from
1,000 to 2,000 square feet, representing approximately 50% of all transactions, whereas
small units of less than 1,000 square feet represented 30%.
•
Although transaction levels improved, sales price growth remained relatively slow, with
a yearly increase of only 9% since Q4 2013, and still 50% lower, on average, than at their
peak in 2008.
© Asteco Property Management, 2015
4%
5%
16%
18%
-44%
-56%
-54%
-46%
-61%
4250
2500
2200
1900 1900 1800
1250
900
The most transacted areas were Business Bay, Jumeirah Lake Towers and Tecom C,
representing close to 80% of all office transactions in 2014 (90% in 2013) according to
Reidin.
•
26%
750 700
975
2009
2000
1800 1875
1225
1200
650 650 550 550 525 550
Business Bay
2008
1700
DIFC
2010
2011
Dubai Investment Park
2012
2013
2014
900
925
650 550 550
Jumeirah Lake Towers
% Change 2013-2014
1075
1100
850 750 750 825 975
Tecom C
% Change Q4 2008 - Q4 2014
© Asteco Property Management, 2015
11
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Dubai Sales Prices
2008 to 2014
• Following a year of rapid growth in 2013, 2014 was marked by a slowdown in transaction
activity for all property types. Prices were higher and a string of new regulations by the UAE
Central Bank and fees (Dubai Land Department transfer fees) made the process of purchasing property in Dubai more expensive.
•
Q4 2014 villa prices were stable in comparison with Q4 2013, however, prices were 30% lower than in Q4 2008. Indeed, at that time, the strong levels of demand together with the lack
of completed villa communities, led to extremely high prices, with Arabian Ranches trading at
AED 2,200 per square foot, in comparison with AED1,150 per square foot now, on average.
• On average, apartment sale prices in Q4 2014 were 22% lower than in Q4 2008, but still 6%
higher than Q4 2013, despite having declined in the second half of 2014.
•
Palm Jumeirah is the only development that has experienced an increase from its Q4 2008
prices, with rates up by 4%. This increase is due to the firm establishment of the Palm as a
unique and exclusive villa community, appealing to both local and international buyers.
AVERAGE APARTMENT SALES PRICES
AVERAGE VILLA SALES PRICES
Q4 2008 TO Q4 2014
Q4 2008 TO Q4 2014
-6%
0%
7%
6%
-3%
-2%
-37%
-31%
-29%
-14%
-8%
-19%
2700
2700
2200
2325
2050
1225
1000
750
700
1300
1600
1500
1350
1300
1900 1750
1800
1400
1300
1250
825
900
1400 1375
1300
1100
885
1700
1100
1000
1050
925
1050
950
825 775
AED per ft2
AED per ft2
1875 1875
0%
15%
-17%
-22%
-11%
850 750 750 950
450 450
DIFC
11%
-48%
2200
550 500
Business Bay
-6%
Discovery Gardens
Dubai Marina
Downtown Dubai
Greens
1500
1225 1150
850 750 750 900
Arabian Ranches
1125
7%
4%
6%
0%
-32%
-19%
-11%
-16%
-29%
1175 1175
725
Dubai Sports City
1100
800
650 550
850
975
600 500 475 550
Jumeirah Village
Jumeirah Park
13%
5%
1500
1250
10%
-11%
2800
2000
2000 2000
1625
1400
1050
675
500
425
710
1100
1000
925 925
12
12
1200 1250
1100
850
700
650
750
600
325 350
2009
© Asteco Property Management, 2015
875 925
1400
1175
1100
500 475 500
4%
0%
-5%
0%
-2%
3000
2850
2750
2200
1000
850 850
1000
1800
1300 1350
1550 1500
1800
1800
900 1100 1075
850
650 650
International City
2008
1500
AED per ft2
1525
4%
JBR
2010
2011
Jumeirah
Village
JLT
2012
2013
2014
% Change Q4 2008 - Q4 2014
Palm Jumeirah
% Change 2013-2014
Meadows
2008
2009
Springs
Palm Jumeirah
2010
2011
2012
2013
2014
% Change 2013-2014
% Change Q4 2008 - Q4 2014
13 Property Management, 2015
© Asteco
13
UAE ANNUAL REPORT 2014
UAE ANNUAL REPORT 2014
Dubai
Dubai Area & Rent
Affordability Map
The following map highlights some of Dubai’s most popular residential areas, in terms of their affordability for rent or sale.
Most Expensive
Expensive
Mid Priced
Affordable
1 Al Barari
2 Al Furjan
3 Al Nahda
4 Al Qusais
5 Al Warqaa
6 Arabian Ranches
7 Barsha
8 Bur Dubai
9 Business Bay
10 Culture Village
11Deira
12DIFC
13 Discovery Gardens
14 Downtown Dubai
15 Downtown Jebel Ali
16 Dubai Creek
17 Dubai Hills
18 Dubai Investment Park
19 Dubai Marina
20 Dubai Silicon Oasis
21 Dubai Sports City
22Dubailand
23 Emirates Hills
24 Green Community
25IMPZ
26 International City
27JBR
28Jumeirah
29 Jumeirah Golf Estates
30 Jumeirah Islands
31 Jumeirah Park
32 Jumeirah Village
33 Jumierah Lakes Towers
34 Living Legends
35 Maritime City
36Meydan
37Mirdif
38MotorCity
39Muhaisnah
40 Palm Jumeirah
41Remraam
42 Residential City
43 Rigga Al Buteen
44 Sheikh Zayed Road
45 Springs / Meadows
46 Studio City
47 Tecom C
48 The Greens
49 The Lakes
50 The Villa
51 Umm Suqeim
52 Uptown Mirdiff
53 Victory Heights
14
© Asteco Property Management, 2015
Arabian Gulf
35
40
28
27
19
33
11
15
43
12
47
11
7
49
31
11
44
48
13
8
51
11
14
3
9
30
23
44
11
45
2
10
39
32
311
17
25
24
44
311
4
36
44
16
29
53
To Abu Dhabi
To Sharjah
21
38
34
311
46
6
52
1
37
311
41
42
5
22
611
26
20
50
611
611
611
© Asteco Property Management, 2015
15
UAE ANNUAL REPORT 2014
UAE Property Review
Special Edition:
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.
Historic Review
2008-2014
and 2015 Outlook
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 and Advisory Services
• Market Research
• Valuation Services
SALES
Asteco 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.
LEASING
Asteco 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.
John Stevens, BSc MRICS
Managing Director/Director, Asset Services
+971 600 54 7773
[email protected]
John Allen, BSc MRICS
Director, Valuation & Advisory
+971 600 54 7773
[email protected]
Sean McCauley, MBA BCom
Director - Agency Services
+971 600 54 7773
[email protected]
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 use communities throughout the GCC Region.
Julia Knibbs, MSc
Research & Consultancy Manager, UAE
+971 600 54 7773
[email protected]
SALES MANAGEMENT
Our Sales Management services are comprehensive and encompass everything required for the successful completion and
handover of units to individual unit owners.
James Joughin, BSc (Hons) MRICS
Head of Valuations, Abu Dhabi
+971 2 626 2660
[email protected]
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 Dubai market. 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
Licence No. 218551. Paid-up Capital AED4,000,000.
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© Asteco Property Management, 2015
© Asteco Property Management, 2015
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© Asteco Property Management, 2015