Real Estate Market 2nd Quarter | 2019 Review
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Real Estate Market 2nd Quarter | 2019 Review
Real VPI Residential VPI Residential VPI Office
Estate Capital Values Rental Values Capital Values
Performance -11.5%
Q2 Y-o-Y
-10.6%
Q2 Y-o-Y
-16.1%
Q2 Y-o-Y
VPI
ValuStrat Price Index
Market Intelligence.
Simplified.
Source: ValuStrat
Key Indicators
Source: REIDIN, DTCM, ValuStrat
Residential Off-Plan Residential Off-Plan Residential Ready Residential Ready Residential
Sales Ticket Size Sales Volume Sales Ticket Size Sales Volume Rents
1.48m 4,662 1.81m 2,687 91,759
AED Transactions AED Transactions AED p.a.
-7.1% 5.5% 10.2% 0.4% -3.3%
Q-o-Q Q-o-Q Q-o-Q Q-o-Q Q-o-Q
Hotel Average Hotel Office Sales Office Sales Office
Daily Rate Occupancy Ticket Size Volume Rents
469 77% 0.92m 374 945
AED Jan-May 2019 Jan-May 2019 AED Transactions AED/sq m p.a.
-10.7% -5.0% -12.6% -3.4% -2.3%
Y-o-Y Y-o-Y Q-o-Q Q-o-Q Q-o-Q
Increase Stable Decline
1 | Dubai Real Estate Market 2nd Quarter 2019 ReviewVPI
ValuStrat Price Index
Residential
The ValuStrat Price Index (VPI), which is a
valuation-based price index for Dubai’s VPI - Dubai Residential Capital Values
16 Apartment and 10 Villa Locations
residential values, displayed an overall 11.5%
[Base: Jan 2014=100]
annual fall in capital values, with quarterly
declines slowing to 2.9%. This downward 110
trend resulted in 29.3% citywide capital value 98.0 97.9 97.5 97.5 97.0
100 96.7 96.2 95.4
loss since the peaks of mid-2014. All 92.7
89.5
established freehold locations monitored by 90 87.0
84.0
the VPI witnessed price drops since the last 81.5 79.2
80
quarter, ranging from 1.2% to 4.2%. On an
annual basis, 3 out of 26 locations measured 70
saw single-digit declines, villas in Palm
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Jumeirah and Al Furjan, as well as 2016 2017 2018 2019
apartments in Dubai Sports City. Capital
values dropped more than 15% annually for Source: ValuStrat
apartments in Palm Jumeirah, Discovery
Gardens, and The Greens.
VPI - Dubai Residential Rental Values
16 Apartment and 10 Villa Locations
The Dubai VPI also analyses residential [Base: Q1 2014=100]
rentals. The rental VPI is a 100 index with a
110
base set for Q1 2014, it monitors 16 apartment
98.8 97.6 98.7
and 10 villa locations within Dubai’s freehold 100
97.4
market and compares similar units within 90.1 90.4
87.7
those locations on a quarterly basis. The Q2 90 85.6
84.0 82.7
2019 residential rental VPI in Dubai stood at 78.8 78.0
80 76.5
73.9 points, declining 26.1% since 2014, 73.9
dropping 3.4% quarterly and 10.7% annually. 70
Dubai’s net yields averaged 5.7%, with
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
apartments at 5.9% and villas at 4.7%. The 2016 2017 2018 2019
average residential occupancy rate stood at
Source: ValuStrat
84%.
Office VPI - Dubai Office Capital Values
5 Office Locations
The second quarter ValuStrat Price Index for [Base: Q1 2015=100]
Dubai’s office capital values declined to 69.3 100
points, suggesting that average capital values 91.8 91.4
88.7 90.0
92.0 91.5 91.3
89.3
are 30.7% lower than the same period during 90 86.5
82.7
80.7
the base year 2015, 16.1% lower than the same 80 77.7
74.0
period last year and 6.3% below the previous
69.3
quarter. Office space in Business Bay 70
witnessed the highest annual drop of 18.2%
60
and 7.7% QoQ, Jumeirah Lake Towers was
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
second in line with losses of 17% year on year
2016 2017 2018 2019
and 7.2% QoQ. Downtown Dubai and Dubai
International Financial Centre (DIFC) saw the Source: ValuStrat
least annual declines of 10.5% and 5.3%,
respectively. DIFC was the only location with For more details, please visit www.valustrat.com/vpi
stable capital values since last quarter.
www.valustrat.com | 2Macro-Economic Snapshot
• Dubai Investment Development Agency Dubai Population
recorded 41% YoY increase in foreign direct
investments amounting to AED 38.5 billion in
2018 3,279,000
• Dubai Economy forecasted 2019 GDP to grow 2019-Q2
2.1% with real estate, transport, logistics and 3,186,000
tourism sectors as major growth drivers 2018
• During January to April 2019, the Business
Registration and Licensing sector at the 2,976,000
Department of Economic Development (DED) 2017
Dubai issued 9,514 new licenses, up 38.3% YoY
• Non-oil foreign trade grew 7% YoY to AED 339 2,699,000
billion during the first quarter of this year, as 2016
per latest data from Dubai Customs
• Foreign trade indicators rose 30% YoY in 2,447,000
exports, 7% YoY growth in re -exports and 2015
imports up 4% YoY
• Moody’s Investor Service estimated Dubai
2,327,000
received largest share of Value Added Tax
2014
(VAT) receipts in 2018 at 42% of total UAE VAT
revenues
• Dubai International Airport (DXB) recorded
2.2% less traffic in Q1 2019 compared to the
same period last year, at 22.2 million
passengers
• Free zone trade totalled AED 146 billion, up
20% YoY. Direct trade at AED 189 billion
Source: Dubai Statistics Centre
accounted for much of the total trade but fell
0.5% YoY
• Total population stood at
3.28 million with average
five-year growth rate of 7.6%
Consumer Price Index vs. Housing Index • Sheikh Mohammed bin
January 2016 – YTD Rashid Al Maktoum unveiled
the “gold card” system, a
125 new scheme which could
120 grant permanent residency
to certain investors,
115 entrepreneurs and
110 professionals
• As of April 2019, annual
105
inflation rate dropped 2.9%
100 and witnessed less than 1%
MoM uptick
95
• Housing and Other Utilities
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
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
expenses index plunged 6.3%
YoY and dipped 0.5% MoM
2016 2017 2018 2019
General Index (2014=100)
Housing, Water, Electricity, Gas and Other Fuels
Source: Dubai Statistics Centre
3 | Dubai Real Estate Market 2nd Quarter 2019 ReviewResidential Supply
• 8,487 residential units, 25% of the total Residential Supply
estimated supply for 2019, have been 2016-2020
completed YTD (’000 UNITS)
• More than half of these completions were
concentrated in three areas: Dubailand,
Jumeirah Village Circle and Al Furjan
• For the rest of the year, projected supply mix
is composed of 80% apartments (20,897 units)
and 20% villas (5,133 units), all expected to 2020E
finish construction before year-end 15.8 67.8 631
2019E
• Approximately 10,000 apartments currently
5.6 29.0 597
under construction are in Business Bay, Dubai 597 2018
Silicon Oasis, Jumeirah Village Circle,
529 2017
Dubailand and Al Furjan. For villas, 73% of the
new build units will be in Mohammed Bin 499 2016
Rashid City and Dubailand
• Available data for new off-plan projects
announced is estimated at 3,700 units from Existing Urban Villas/Apartments
twelve projects expected to handover in a New Apartments*
matter of three years New Villas*
• Notable projects launched during the quarter *May be subject to significant downward adjustment
Source: Dubai Statistics Centre, REIDIN, MEED Projects, ValuStrat
include Arabian Ranches 3 (988 units), Creek
Edge Dubai Creek Harbour (554 units), Grand
Blue by Elie Saab Dubai Marina (631 units),
Sur La Mer (147 units) and Wilton Park MBR
City (320 units)
Residential Sales
• Off plan sales transaction volume continued Ready Sales Volumes
to rally upwards during the last nine months,
as the first quarter saw off-plan sales
increase 7.6% YoY, however, ready property -1.2% 0.4%
Last Year Last Quarter
sales fell 1.2% YoY, but stabilised since Q1
• Q2 saw the highest share (28%) of ready villa
purchases priced between AED 1M - AED 2M
since 2016, and a significant share of 9.6% of
villas priced above AED 10 million
• Ready homes ticket size grew 10.2% QoQ and
off-plan declined 7.1% QoQ
• The average transacted ticket size for off plan Off-plan Sales Volumes
was AED 1.48 million and for ready properties
AED 1.8 million 7.6% 5.5%
• The median transacted price for ready Last Year Last Quarter
apartments stood at AED 9,257 per sq m (AED
860 per sq ft), down 14.9% YoY and 1.1% QoQ
• For ready villas, the median transacted price
was AED 8,966 per sq m (833 per sq ft), down
15.8% YoY and 6.8% QoQ
Source: REIDIN, ValuStrat
www.valustrat.com | 4Residential Rents
• Overall residential asking rents fell 10.6% YoY Residential Asking Rents
• However, on a quarterly basis asking rents
dropped 3.3%
-18.2% -10.6%
Last 2 Years Last Year
• Compared to the same period last year, listed
rents were down 10.9% for apartments and
8.1% for villas
• Average annual rents for 2-bed villas stood at
AED 137,000, 3-beds at AED 161,000, and
4-bedroom villas remained at AED 212,000 -5.2% -3.3%
Last 6 Months Last Quarter
• The citywide average rents per annum for
studio apartments were AED 49,000, 1-bed at
AED 68,000, 2-bed was AED 99,000, and
3-bedroom apartments were AED 131,000
• Residential occupancy in Dubai is estimated
Source: REIDIN, ValuStrat
at 84%
Office Supply
• ICD Brookfield Place secured three Office Supply
pre-let agreements during Q2 with a 2016-2020
combined space of 5,110 sq m (55,000 (Million sq m GLA)
sq ft) GLA ahead of its official opening
• Approximately 74,467 sq m (801,555
sq ft) GLA finished construction during 0.37
the quarter which includes offices in
0.50
National Industries Park, Dubai South
and Dubai Wholesale City 9.20
8.81
8.81
8.70
• Available data on remaining office space
under construction is estimated at 8.47
497,670 sq m (5.4 million sq ft) GLA
expected for delivery in 2019
• These include Mashreq Bank HQ
Downtown with 35,000 sq m (376,737
sq ft) GLA, Dubai Islamic Bank office
tower Al Nahda 1 at 23,339 sq m
(251,213 sq ft) GLA and flydubai HQ 2016 2017 2018 2019E 2020E
Warsan 3 with 35,025 sq m (377,006
sq ft) GLA Existing Stock Expected Supply
Source: REIDIN, MEED Projects, ValuStrat
5 | Dubai Real Estate Market 2nd Quarter 2019 ReviewOffice Sales
• There were 374 office sales transactions Office Median Transacted Prices
during the second quarter, 3.4% lower than
the previous quarter
-29.8% -10.9%
Last 2 Years Last Year
• Overall transacted office prices were 10.9%
lower than last year, and down 2.1% QoQ
• The median transacted price stood at AED
7,373 per sq m (AED 685 per sq ft)
• Business Bay was the most popular choice for
office sales with a share of 52%, followed by -22.0% -2.1%
Jumeirah Lake Towers (JLT) with 27% of Last 6 Months Last Quarter
overall transactions this quarter
• The median size of offices sold in Business
Bay was 84 sq m (906 sq ft) and 104 sq m
(1,118 sq ft) in JLT. 42,359 sq m (455,952 sq ft)
of total Gross Leasable Area was sold during
Source: REIDIN, ValuStrat
Q2, amounting to a total investment value of
more than AED 344 million
Office Rents
• Median office asking rents declined by 7.5% Office Median Asking Rents
YoY and fell 2.3% QoQ
• Asking rents for this quarter were 15.9%
-15.9% -7.5%
Last 2 Years Last Year
lower than two years ago
• The citywide median asking rent for a typical
office size stood at AED 945 per sq m (AED 88
per sq ft)
• Median asking rents commanded by Dubai
International Financial Centre (DIFC) were at -3.3% -2.3%
AED 2,088 per sq m (AED 194 per sq ft) for Last 6 Months Last Quarter
typically sized units between 93 – 186 sq m
(1,000 – 2,000 sq ft)
• In Business Bay, median asking rents stood at
AED 818 per sq m (AED 76 per sq ft) for a
typical office area of less than 93 sq m (1,000
Source: REIDIN, ValuStrat
sq ft)
• Office occupancy in Dubai is estimated at 82%
www.valustrat.com | 6Retail Supply
• Carrefour hypermarket occupying a total area Malls and Shopping Centres
of 117,327 sq m (109,000 sq ft) at Cityland Mall (‘000 sq m GLA)
in Dubailand was opened 762
• A new 1,301 sq m (14,000 sq ft) GLA mall
dedicated to motorcycles, named as
Motorcycle Mall was opened along Umm
Suqeim Road 135
• Meraas and Samanea Group agreed to build a
52,955 sq m (570,000 sq ft) mall project near
International City
• Al Ghurair Centre announced the completion 22
of phase one for its 6,968 sq m (75,000 sq ft)
13
Reel Cinema megaplex
• Data available for upcoming retail projects to
be completed this year was adjusted upwards
to 1.4 million sq m (15.1 million sq ft) GLA 32 263 498 1,026 1,696
• According to a Dubai Economic Department Convenience
(< 3k sq m)
Neighbourhood
(3k-10k sq m)
Community
(10k-30k sq m)
Regional
(30k-90k sq m)
Super Regional
(> 90k sq m)
report, the first four months of 2019, 258
restaurants and 169 coffee shops were
Retail Completed
opened, growing 25% annually Retail Under Construction
Source: REIDIN, ValuStrat
Retail Performance
• Emaar Malls announced footfall in its asset Number of Malls and Shopping Centres
portfolio grew 3% YoY to 36 million visitors
during Q1 2019 2
• The Dubai Mall welcomed 22 million visitors
during the first three months of 2019
1
• Occupancy for Emaar’s collection of malls 3 4
and community centres was kept at a healthy
rate of 92%, down 3% YoY
• Souq.com have transitioned and relaunched
as Amazon.ae, marking the official take-over
by the US e-commerce giant 16 46 28 19 11
Convenience Neighbourhood Community Regional Super Regional
(< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m)
Retail Completed
Retail Under Construction
Source: REIDIN, ValuStrat
7 | Dubai Real Estate Market 2nd Quarter 2019 ReviewHotel Supply
• As of May, total hotel room and hotel Hotel Room Supply
apartment stock stood at 93,734 and 24,648 2016-2020
keys respectively (’000 KEYS)
• An estimated 2,222 rooms were added from 10.7
the opening of seven hotels
• Notable openings include Vida Hotel Emirates 17.7
Hills (160 keys), Hyatt Place Wasl District (202
rooms), The Grayton Hotel Al Mankhool (96
keys), Millennium Place Dubai Marina (453
rooms) and Rove at the Park (579 keys)
• An estimated seven new hospitality project
announcements were made during Q2 to add 134
an approximately 1,572 keys during the next 116
three years 116
103 107
• These include Diamond Central -Business
Bay (220 rooms), Island Central - Deira
Islands (267 keys), Central House - City Walk
(60 rooms) and Jaz in the City - Deira (234 2016 2017 2018 2019E 2020E
keys)
• Dubai’s total room stock is projected to Hotel & Serviced Apt Rooms New Supply
exceed 130,000 by end of this year Source: DTCM, MEED Projects, ValuStrat
Hotel Performance
• Total international guests Jan-May 2019 Source of Dubai Visitors by Region
reached 7.16 million, no change when Jan-May 2019
compared to the same period last year
• Citywide occupancy rate for the same period
stood at 77%, down 5% YoY 5%
2%
• Revenue per Available Room (RevPAR) and 6% 22%
Average Daily Rate (ADR) witnessed
double-digit declines on annual basis, 10%
plunging 15.6% and 10.7%, respectively
• The top three source markets were from
Western Europe (22%), GCC (17%), South Asia
10%
(16%)
• Russian tourist numbers declined 8% YoY 17%
• During Q1 2019, visitor count at Dubai Parks
and Resorts weakened 11% YoY to 760,000 12%
guests
• Shortly before its official opening, the 16%
17,000-seater Dubai Arena located in City
Walk, was renamed to Coca Cola Arena, after
the same company acquired naming rights Western Europe Russia, CIS & Eastern Europe
from Meraas. The new entertainment venue is GCC Americas
expected to host local, regional and South Asia Africa
international concerts and events which could North Asia & South East Asia Australia
MENA
positively impact tourism sector
Source: DTCM
www.valustrat.com | 8Industrial Investment/Supply
• China announced a plan to invest AED 12.5 Industrial Prices
billion in Dubai logistics facilities involved in (AED/sq m)
storage and production
• A Dubai-based logistics services company
opened a 60,000 sq m (645,834 sq ft)
5,000
semi-automated warehouse fulfilment centre
in Dubai Logistics City 4,000 3,584
3,289 3,224
• Dubai South welcomed the opening of a 3,200
3,000
sq m (34,445 sq ft) B2C exports facility owned 2,211
by DHL 2,000
1,399 956
• Komatsu Middle East opened a 46,298 sq m 1,000
(498,347 sq ft) modern training and
demonstration facility in Jebel Ali
Al Quoz Dubai Jebel Ali
• Completed industrial developments net Investment Free Zone
project value totalled AED 3.06 billion during Park
the first half of 2019
• Available data on upcoming warehouses and
Rent - Upper Range Rent - Lower Range
industrial facilities slated for completion until
Source: ValuStrat
next year stood at 252,569 sq m (2.7 million
sq ft) BUA
Industrial Performance
• Industrial property prices experienced • Higher rates were recorded for properties
quarterly declines, most notably with with specialised provisions including cold
older-aged properties having lower eaves storage facilities
headroom height in Jebel Ali Free Zone
• Rental rates have also dropped QoQ in the
• Asking rates quoted were generally in the city's industrial areas apart from Dubai South
range between AED 2,152 per sq m to AED which has remained relatively stable with
5,290 per sq m (AED 200 per sq ft to AED 550 annual lease rates ranging from AED 377 per
per sq ft) depending on various factors such sq m to AED 549 per sq m (AED 35 per sq ft to
as location, size, condition and age of the AED 51 per sq ft)
building
Industrial Rental Rates
(AED/sq m)
538 549
484
377 377 361 377
301 269
240 251
122
Rent High
Rent Low
Al Quoz Al Qusais Dubai Investment Jebel Ali Jebel Ali Dubai South
Park Free Zone Industrial Area
Source: ValuStrat
9 | Dubai Real Estate Market 2nd Quarter 2019 ReviewValustrat
In
Media
27th June, 2019 3rd May, 2019
Dubai and Abu Dhabi cheaper for Dubai said to mull plan to freeze rents
residents on strong dollar despite rise in for 3 years
cost of living ranking
According to a recent report by real estate consultancy
One of the main drivers of cheaper costs for existing ValuStrat, rents in Dubai in the first quarter of 2019
residents are falling property prices with the UAE have declined by 23.5 percent since 2014 and softened
market slowing in recent years on the back of a by 1.9 percent quarterly and 9 percent annually
three-year oil slump that has dampened demand and
contracted sales and rental prices. Residential rents in
Abu Dhabi in the first quarter of this year, for example,
fell 6.9 per cent year-on-year and 2.1 per cent
quarter-on-quarter, according to data from leading
real estate firm ValuStrat.
30th April, 2019
Declan King talks about ValuStrat’s
recent acquisition in the UK
13th May, 2019 ValuStrat's Declan King explained the rationale behind
investment into a London-based firm of Chartered
Dubai office rents become more Surveyors
affordable
ValuStrat had said that median office asking rents
declined by 4.4 per cent year-on-year in the first
quarter. The citywide median asking rent for a typical
office size stood at Dh90 per square foot. Commercial
office occupancy in Dubai was estimated at 84 per cent.
17th April, 2019
Property buyers are returning to Dubai
as prices continue to drop
“As capital values softened by an average of one per
cent per month for the last 16 months, a six-month
10th May, 2019 streak in buying activity has been observed for both
off-plan and ready homes,” said Haider Tuaima, Head
“Star” wars cuts hotel prices of Real Estate Research at ValuStrat.
The Head of the Real Estate Research Department at
Valustrat, Haider Tuaima, attributed the large number
of rooms to the feasibility studies conducted by the
hotel owners. He pointed out that the high occupancy
rates achieved by Dubai hotels are the highest in the
region and among the highest in the world, while the
rates of decline in prices between five to six percent per
year.
www.valustrat.com | 10About
ValuStrat is a leading consulting firm headquartered in Dubai providing
Advisory, Valuations, Research, Industrial Consulting and Due Diligence
services across a diverse range of industry sectors since 1977. Offices in
Strategic
the UAE, UK, Saudi Arabia, Pakistan and Qatar serve over 1,000 corporate Partners of
clients in the Middle East. Client base includes financial institutions, local
corporates, multinationals, governments, SMEs, family businesses and
startups. Some of the key sectors serviced by ValuStrat’s consulting team
include real estate, hospitality, healthcare, education, manufacturing, retail, Financial
Institutions
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.
VPI
ValuStrat Price Index
VPI Online www.valustrat.com/vpi
The ValuStrat Price Index for Dubai’s office capital values is a
valuation-based index constructed to represent the quarterly
price change experienced by typical office space within Dubai.
The ValuStrat Price Index for Dubai’s residential capital
values is a valuation-based index constructed to represent
the monthly price change experienced by typical residential
units within Dubai. The ValuStrat Price Index for Dubai’s
residential rental values is constructed to represent the
quarterly rental change experienced by typical residential
units within Dubai. The VPI applies weighted averages using Director - Commercial Valuations
data samples representing more than 90% of all property
types across the city’s freehold locations and is built by our
expert RICS Registered Valuers.
Research Methodology
Every 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 Associate Director & Head of Industrial Consulting
is derived from a carefully cleansed database of listings that
don’t include duplicates, potential errors and outliers.
Copyright © ValuStrat Consulting FZCo. 2019
This document is the property of ValuStrat Consulting FZCo
and must not be reproduced or transmitted in any form or by Clare Frances McCarron, MRICS
any means, without the prior written consent of ValuStrat Manager - Commercial Valuation
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.You can also read
