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UA E R E S E A R C H 2 0 2 0 REPORT Savills Research The Property Report
The Property Report
UA E R E S E A R C H 2 0 2 0
The Property Report
3
The Property Report The Property Report
UAE Property Market
The UAE has been steadily progressing policy reforms to have a long-lasting positive
towards setting ambitious goals and achieving impact on existing and future businesses and in
individual targets at an emirate level and attracting talent to the region. As employment
also collectively as a nation. The emphasis in the country grows, the requirement for
continues on diversifying the non-oil economy, investment quality real estate will increase
expanding the tourism offering, enabling trade in tandem. There is no doubt an imbalance
& commerce and positioning the UAE as a between the current supply and existing
preferred choice to live and work. In 2019, we demand levels across most real estate asset
witnessed various policy reforms to enable classes, however, this is a short-to-medium
this transition such as relaxing Foreign Direct term scenario which is likely to be addressed Strong addition to the labour force
Investment (FDI) norms, allowing long-term though supply side interventions and the The total private sector employment in the issued work permits in the UAE increased
residency and creating strategic partnerships positive impacts of the below mentioned UAE at the end of Q3 of 2019 was 5.08 million. by 110,912 in the first nine months of 2019
with key global economies. We anticipate these demand side factors among others. According to data from the Ministry of Human compared to the same period of the previous
Resources and Emiratization, total net newly year.
Continued shift towards knowledge economy
The Abu Dhabi Investment Office (ADIO) such as the implementation of electronic rent
has signed a strategic partnership agreement contract attestation, and the launch of smart
with China-based Artificial Intelligence (AI) ‘Real Estate Developers Gate’ by Sharjah Real WORK PERMIT AND NET EMPLOYMENT GROWTH
company SenseTime to establish the firm’s Estate Registration Directorate (SRERD).
EMEA research and development centre in These developments along with the various
Abu Dhabi while Sorbonne Centre for Artificial other Smart Dubai initiatives indicate a clear 1200 160
Intelligence has been inaugurated at Sorbonne drive towards creating a mature knowledge
University in Abu Dhabi. In Sharjah, significant economy in the region. 140
digital transformations were witnessed in 2019 1000
120
NET EMPLOYEES ADDED ('000)
WORK PERMITS ISSUED ('000)
New drivers for residential demand 800
100
Anecdotal evidences - based on the interest cities or are planning to relocate in the near
received by Savills - suggest that the share of future. The recent Global Labour Resilience
80
first-time property renters in the UAE has gone Index has also ranked UAE first in the Arab 600
up in the last twelve months. Close to 30% -35% world and 21st globally as the most stable
of total enquiries received for vacant units in labour market. This fares well for the long-term 60
Dubai and around 15% in Abu Dhabi were from growth of the real estate market in the country. 400
individuals who have recently moved to these
40
200
Further boost to transactions 20
Early settlement fee on mortgages has been re-mortgage or sell without the high exit fees 0 0
capped to a maximum of 1% of the outstanding and buyers can feel more confident knowing ABU DHABI DUBAI N O R T H E R N E M I R AT E S UAE
balance or AED 10,000 – whichever is less. that in the future they will have the freedom
Previously borrowers had to pay a 3% early to sell or explore better deals without the high NEW CANCELLED NET
settlement fee. This new directive will benefit penalties.
both buyers and sellers as sellers can
Source Savills, Ministry of Human Resources and Emiratization
4 5
TheDhabi
Abu Property Report
Residential TheDhabi
Abu Property Report
Residential
Abu Dhabi
Though demand side factors have remained stable, the
onset of substantial new supply has had a negative impact
on asset pricing across the Emirate.
MICRO-MARKET C O N F I G U R AT I O N AV E R AG E A N N U A L R E N T ( A E D) Y- O -Y C H A N G E ( % )
VILLAS / TOWNHOUSES
RESIDENTIAL
Al Reef 4 Bedroom 120,000 -8
The residential real estate market in the capital Developers have utilised this policy level an average 85% sale (except for Reserve which
witnessed various positive developments push and have further incentivised buyers has sold only 30%) indicating strong investor Hydra Village 3 Bedroom 80,000 - 11
throughout 2019. The most significant among with attractive payment plans, discounts and demand in the market. Capital Views (642
these was the opening up of the market innovate schemes such as rent-to-own. This units) and Intercontinental Grand Marina Golf Gardens 3 Bedroom 170,000 - 13
to foreign investors, allowing them to buy led to stable transaction levels and demand Residences (130 units) by National Corporation
Al Raha Garden 3 Bedroom 140,000 -7
property and land within 15 designated especially across prime freehold locations such for Tourism & Hotels and Al Jurf Gardens
zones. This was further complemented by as Saadiyat Island, Yas Island, Al Reef and Al (293 units) by Imkan were among the other Saadiyat Island 4 Bedroom 300,000 -9
the long-term UAE residency visa which Reem Island. prominent projects launched during the year.
was introduced in a bid to improve investor APARTMENTS
Project completions have also remained Though demand side factors have remained
confidence and increase investments in the
stable. Close to 4,700 units were handed stable, the onset of substantial new supply has Al Reef 2 Bedroom 65,000 -7
region. Even though the widespread impact
over throughout the year. Notable project had a negative impact on asset pricing across
of these measures is yet to be seen, positive
completions include, Mamsha (461 units), the emirate. Both capital and rental values Al Raha Beach 2 Bedroom 105,000 -13
offshoots and improved sentiments were
Jawaher (83 units) by Aldar Properties and Soho witnessed an average drop of 10 – 12% y-o-y
visible across the market. The first bi-annual Saadiyat Island 2 Bedroom 120,000 - 14
Square (302 units) and Park View (424 units) across most residential micro-markets for
report by Abu Dhabi’s Department of Urban
by Bloom Properties on Saadiyat Island. New both apartment and villa developments in the
Planning and Municipalities reflects this trend Al Reem Island 2 Bedroom 110,000 0
supply addition on the other hand increased emirate.
as AED 31 bn worth of real estate transactions
and was led by Aldar Properties with the launch
were recorded during the first half of 2019 and
of projects such as Al Reeman (1,012 units) and
a similar or slightly better transaction level
Al Reeman II (557 units) at Al Shamka, Lea (238 A B U D H A B I R E S I D E N T I A L C A P I TA L VA L U E T R E N D
expected for the second half of the year. The
units) at Yas Island and Reserve (223 units)
region’s largest developer, Aldar Properties, also
on Saadiyat Island. All these projects which
reported a 128% y-o-y jump (AED 3.0 bn) in its HIGH -END VILL AS / TOWNHOUSE HIGH - END APARTMENTS MID - END VILL AS / TOWNHOUSE MID - END APARTMENTS
were launched in 2019, have already achieved
development sales till Q3 2019.
1,800
1,600
1,400
1,200
AED / SQ. FT.
1,000
800
600
400
200
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2017 2018 2019
Source Savills Research
6 7
The
AbuProperty Report
Dhabi Office The Property
Abu Report
Dhabi Industrial
Abu Dhabi
Manufacturing companies preferred long-
term land lease to construct their built-to-suit
developments.
OFFICE INDUSTRIAL
Abu Dhabi office market is undergoing a impact on the office real estate activity. Among the notable transactions, BNY Mellon Demand for industrial and warehousing space Companies from the hydrocarbon and infrastructure projects, while approximately
transformation from being predominantly opened a representative office while Swiss remained stable in Abu Dhabi during 2019. infrastructure sectors were among the active 10,700 sq. ft. was leased by a 3PL firm at
Demand from the traditional occupiers of Consolidation and relocation exercises were the occupiers of warehousing space. Manufacturing Business Hub
driven by oil & gas and government related private bank, Bank Lombard Odier & Co Ltd
office space in Abu Dhabi such as oil & gas primary drivers of demand across the emirate companies on the other hand preferred long-
entities to one which is witnessing an increasing started operating from the ADGM. ADNOC also
companies and government related firms has Supply addition on the other hand was limited
demand and space take-up by technology (tech) signed a new long-term lease for approximately as we witnessed a movement in tenant activity term land lease to construct their built-to-suit
also remained stable. The setting up of new during the year. Only one notable project
firms. In the last twelve months, the market 88,200 sq. ft. in Sarab Tower. This latest move to the Industrial City of Abu Dhabi (ICAD) and developments. Demand from Food & Beverage
government entities in the last twelve months offering 312,000 sq. ft. was completed in
has seen a spike in investment and space take- by ADNOC follows the establishment of its also Musaffah from Al Mina area on account of (F&B), e-Commerce and 3PL companies also
as part of the reorganisation of government Masdar City. This led to a relative stability in
up activity by local tech start-ups catering to a new trading arms, ADNOC Global Trading the ongoing redevelopment. Demand across the remained stable during the year.
departments has led to fresh demand for Grade rents across micro-markets such as Musaffah
variety of industries such as logistics, financial and ADNOC Trading, both of which are Khalifa Industrial Zone Abu Dhabi (KIZAD) was
A buildings across locations such as Khalifa Transaction activity was largely observed for and ICAD 1 and 2, KIZAD and Al Markaz when
services, artificial intelligence and e-commerce. incorporated in ADGM. strong from companies keen on cold storages
Park, Abu Dhabi National Exhibitions Company small to medium sized space ranging from compared to 2018.
This spurt in activity is supported by the and temperature-controlled warehouses. The
(ADNEC) and Al Raha. Stable demand from Supply addition continued to remain strong 10,000 sq. ft. to 50,000 sq. ft. Among the
AED 535 mn Ghadan Ventures Fund launched recent announcement to waive charges for over
ancillary industries to the oil and gas sectors across the emirate. Notable project completions notable transactions, approx. 19,375 sq. ft.
by Abu Dhabi Investment Office (ADIO) to 75% of its services whilst lowering fees for
was also observed which in turn has improved during the year include Sadeem (75,000 sq. of warehouse space was taken up in ICAD 1
support venture capital and promote the many of the other services has also helped in
the overall office space take-up in the city. ft.) on Al Raha Beach, C55 in Al Muntazah and by a construction company associated with
start-up ecosystem. Most of these activities attracting new tenants to KIZAD.
Al Noon (35,000 sq. ft.) on Saadiyat Island.
are concentrated across Hub71, located in the Demand from oil & gas related companies and
The existing vacancy levels and addition of
Abu Dhabi Global Market (ADGM), which ancillary industries was witnessed across the
new supply had a negative impact on asset
now supports 35 start-ups with up to 100 corniche in the CBD and also on Abu Dhabi
pricing across the emirate. Rental values across
percent free housing, office space and health Island due to the strong presence of Abu Dhabi
Grade A buildings in the CBD and outer CBD A B U D H A B I I N D U S T R I A L R E N TA L VA L U E T R E N D
insurance for two years for seed companies and National Oil Company (ADNOC) and other
witnessed a correction of approximately 7% and
50 percent subsidies for emergent companies, oil & gas related firms. Across ADGM, leasing
6% y-o-y respectively. While office projects on
for three years. This strong focus by the activity was observed due to the growing
Off-Island North witnessed a rental correction MUSSAFAH ICAD 1 ICAD 2 KIZAD AL MARK AZ
Government to promote Abu Dhabi as the start- demand from start-ups and companies from
of approx. 3% y-o-y.
up capital of the Middle East, has had a positive the financial services and consulting sector.
45
40
A B U D H A B I O F F I C E R E N TA L VA L U E T R E N D
35
CBD OFF ISL AND NORTH OUTER CBD
30
AED / SQ. FT. / ANNUM
180
25
AED / SQ. FT. / ANNUM
160
20
140 15
120 10
100 5
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2018 2019
2018 2019
Source Savills Research
Source Savills Research
8 9
The Property
Dubai Report
Residential The Property
Dubai Report
Residential
Dubai MICRO-MARKET
Al Furjan Villas
Springs - Townhouses
C O N F I G U R AT I O N
4 Bedroom
3 Bedroom
AV E R AG E A N N U A L R E N T ( A E D)
VILLAS / TOWNHOUSES
135,000
115,000
Y- O -Y C H A N G E ( % )
- 6.9
- 8.0
RESIDENTIAL Mira – Townhouses 3 Bedroom 102,500 - 6.8
2019 was an interesting year for the residential Emirates Road, which has become the hotbed effort on part of the developers to balance out Arabian Ranches 1 – Alvorada Villas 4 Bedroom 210,000 - 4.5
real estate market in Dubai. The first half of the of new project launches in the last few quarters. the current oversupply situation in the market.
APARTMENTS
year witnessed the absorption of 17,100 units, Demand for secondary sales was estimated MBR City again was at the forefront of new
compared to 16,400 units during the first half at 15,200 units during 2019, with established supply, as 3,500 units were launched across Downtown Dubai 1 Bedroom 75,000 - 6.3
of 2018, with transactions increasing by almost locations such as Dubai Marina (1,520 units), the micro-market. This was followed by Dubai
50% in H2 2019 when compared to the same International City (1,080 units), Jumeirah Creek Harbour (1,900 units) and new phases Business Bay 2 Bedroom 84,000 - 6.7
review period last year. Close to 21,800 units Village Circle (1,010 units) and Al Furjan (1,010 of Arabian Ranches (1,400 units) as the key
were absorbed in H2 2019 which led to overall units) emerging as the most preferred micro- projects to witness new supply addition. Around Jumeirah Lake Towers 2 Bedroom 102,000 - 7.3
transactions increasing by 25% y-o-y in 2019. markets for secondary sale transactions. 70% of the new units launched were apartments
followed by villas / townhouses. Dubai Marina 2 Bedroom 126,000 - 6.7
Demand for off plan units stand out, with a total The increase in transaction levels however, have
of 23,700 units sold, constituting close to 60% not had any positive impact on asset pricing The current supply / demand dynamics The Greens 3 Bedroom 115,000 - 4.2
of the total transactions witnessed during the across the Emirate. Even though transactions continues to negatively impact capital and
year. This was facilitated by lucrative payment increased by 25% y-o-y, project completions / rental values across the city. Capital value of
plans along with other incentives such as partial handovers increased by 39% y-o-y during 2019, apartments in micro-markets such as Remraam,
or full waiver of Dubai Land Department (DLD) resulting in an increase to the existing vacancy Jumeirah Beach Residence, IMPZ, Dubai
fees and also service charges along with other levels across the Emirate. Close to 36,700 Investment Park, Jumeirah Village Triangle D U B A I R E S I D E N T I A L C A P I TA L VA L U E T R E N D
innovative schemes such as offering business new residential units were completed across and Jumeirah Lake Towers witnessed a price
licences with the purchase of apartments. Off- projects located in MBR City (5,000 units), correction of circa 10% y-o-y as compared to
plan transactions were concentrated across Jumeirah Village Circle (JVC) (3,800 units), 2018. Across villa and townhouse communities, HIGH -END VILL AS / TOWNHOUSE HIGH - END APARTMENTS MID - END VILL AS / TOWNHOUSE MID - END APARTMENTS
projects such as Villanova, Liwan, Town Square, Business Bay (3,100 units), Dubai Silicon Oasis capital values on an average were down by
Damac Hills, Akoya Oxygen, Mohammed Bin (3,000 units) among others. Along with these 11% y-o-y. Similarly, rental values for villa
Rashid City (MBR City) and Dubai Creek newly handed over units, an additional 15,100 / townhouse developments were down by
Harbour among others. With the exception units were also launched in 2019. The number an average 5 – 8% y-o-y while rents across
of new units launched has, however, declined apartment units were down by circa 4 – 8% 2,500
of MBR City and Dubai Creek Harbour, most
of these projects are concentred along the by almost 35% y-o-y indicating a conscious y-o-y across most sub-markets.
2,000
1,500
AED / SQ. FT. 1000
500
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2017 2018 2019
Source Savills Research
10 11
The Dubai
Property Report
Office The Property
Dubai Report
Industrial
D U B A I O F F I C E R E N TA L VA L U E T R E N D
Dubai
NEW DUBAI CENTR AL DUBAI DIFC OLD DUBAI DUBAI FRINGE
300
OFFICE
The office real estate sentiment remained As the economy matures and new business the prominent office districts in Dubai, rental 250
largely unchanged from 2018. Lease regears, sectors are added to the already diversified corrections were observed across JLT (5%
achieving rental savings on renewal, Dubai economy, there will be steady growth in y-o-y), DIFC (4% y-o-y), Dubai Internet City
AED / SQ. FT. / ANNUM
consolidating and right-sizing, were the key demand for investment grade office projects. / Media City / Knowledge Village (3% y-o-y),
theme for the year. Majority of enquiries and In the longer term, much of the existing vacant while they have remained largely stable across 200
transactions were for small and medium sized stock and upcoming supply does not necessarily other micro-markets. Importantly however, the
office space. Demand for new large sized office meet the quality requirements of global quoted rental values have witnessed marginal
space remained limited, except in the case of corporates. This has driven several corporates correction on an annual basis, the limited
consolidation. Landlords continued to offer in the region, especially from the banking demand for office space amidst increasing 150
flexible commercial terms including generous sector, to consider BTS developments or pre- competition has prompted developers to offer
rent-free periods, additional car parking, lease committing space in some of the upcoming favourable leasing terms, thereby providing
flexibility through increased break clause Grade A developments. During 2019, the global substantial rental savings to tenants.
opportunities with minimal penalties and even financial services company VISA committed 100
Going forward, we expect that demand across
upgraded space (in few limited cases) from to open its built-to-suit (BTS) regional
prime buildings will remain consistent which
shell and core to Category A fit-out (CAT A). headquarters (HQ) at Dubai Internet City while
may ultimately stabilise quoted rental rates
Ernst & Young has pre-committed office space
Though the market conditions favoured in the better-quality developments. However,
at ICD Brookfield Place to consolidate most 50
tenants, many occupiers adopted a wait-and-see supply will continue to outpace demand
of its office portfolio in the city. Regional bank Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
approach and committed to shorter lease terms which will prompt developers to continue
Mashreq and the London based HSBC have
at renewals. However, the positive impacts of with generous incentives. These incentives 2018 2019
recently opened their BTS office HQ in Dubai.
recently introduced policies aimed at improving also extend to renewals where we have seen
Source Savills Research
the ease of doing business in the country are Supply addition during 2019 increased as landlords not only significantly reduce rents
starting to be noticed across the city. One such projects such as Silicon Park in Dubai Silicon upon renewal but also in some cases offer rent
implemented policy was the dual licencing Oasis, One Central (Phase 4 and 5) in the Trade free periods and other incentives to persuade
option, which permits companies to have Centre area, Hills Business Park in Dubai Hills tenants to renew again on a longer-term basis.
D U B A I I N D U S T R I A L R E N TA L VA L U E T R E N D
onshore and offshore operations within their Estate among others were completed. The
designated space. This means that companies current supply demand dynamics has resulted
will have a larger variety of options to choose in a stable or marginal decline in quoted rental JAFZA DIP DUBAI INDUSTRIAL PARK DUBAI SOUTH AL QUOZ JEBEL ALI INDUSTRIAL NATIONAL INDUSTRIES PARK R AS AL KHOR
from as they are not restricted to specific areas. values across most micro-markets. Among
INDUSTRIAL 60
Demand for industrial and warehousing space in the engineering and manufacturing sector, This fares well with the prevalent occupier
remained low at the start of the year and was and expansion activity by 3PL (Third Party profile as e-commerce companies are among
50
largely muted throughout H1 2019. Oversupply Logistics) and e-Commerce companies were the major drivers of warehousing demand in the
AED / SQ. FT. / ANNUM
in select locations and a limited number of new the other factors that led to a strong increase city.
market entrants to drive fresh demand, were in demand during H2 2019. Most of these
Institutional interest for properties with
among the key factors for the sluggish market transactions were under discussion for the 40
international tenants and long lease terms
activity. Transaction closures were observed last few quarters and were concluded during
also spiked during the year and a handful of
for small-to-medium sized space ranging H2 2019 on account of the various proactive
transaction closures were observed. In terms
from 10,000 sq. ft. to 30,000 sq. ft., however measures implemented by the Government.
of end-user demand, occupier interest for 30
limited transactional activity was recorded
The current market dynamics have prompted automated built-to-suit, temperature-controlled
in the 50,000 sq. ft. and above segment.
developers / landlords to reposition their centers with new technologies was strong.
Renewal activity on the other hand increased
projects to meet current and future demands. 20
as landlords became increasingly flexible on However, similar to the residential and office
Dubai South for example, is positioning itself
rental expectations and lease terms in a bid market in Dubai, rental values continued their
as the hub for e-commerce players. As part of
to compete with the newly completed supply. downward trend across most micro-markets.
this objective, it recently launched the EZDubai
However, after a prolonged period of subdued Rents across Grade B stocks declined the most 10
district which enables occupiers to consolidate
demand levels, which was carried through from compared to good quality investment grade
their onshore and offshore activities into one Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2018, market activity improved during H2 2019 projects.
facility; thereby benefitting from dual licensing
on the back of a spike in renewal, relocation 2018 2019
issued by Dubai Economic Department (DED-
and consolidation exercises. The entry of a
LLC) and Dubai World Central (DWC-FZE). Source Savills Research
number of international companies, especially
12 13
The Property
Sharjah Report
Residential The Office
Sharjah Property
andReport
Industrial
Sharjah
We witnessed a gradual shift in housing demand
from locations in the erstwhile city centre to
emerging residential hubs.
RESIDENTIAL OFFICE
The past twelve months have been watershed example, the availability of gated communities, across Al Majaz for studios dropped by 12% Demand for office space was limited in are offering attractive incentives to
for the residential real estate sector in Sharjah. less traffic congestion and recent development y-o-y from an average AED 18,000 in 2018 to Sharjah throughout 2019. A slowdown in commercial tenants, with extended rent-
While the city continued to remain a preferred timeline. an average AED 16,000. Similar to Al Majaz, tenant demand coupled with additional free periods and capital contributions
residential destination in the country, we rents for studios in Al Qasimia dropped by supply entering the market, has placed to fit outs becoming more common
Supply addition has remained strong in 2019,
witnessed a gradual shift in housing demand 7% y-o-y to AED 15,000 and by 8% y-o-y at Bu downward pressure on office rents. practice.
with multiple projects being launched including
from locations in the erstwhile city centre to Tina, Al Naba’ah to AED 13,000. Rental values Recent lease transactions for office units
Sharjah Sustainable City (Shurooq & Diamond Going forward, it is anticipated that
emerging residential hubs. According to the for 1 Bed apartments declined by an average within prime locations in Sharjah have
Developer), The Boulevard and Nest Complex demand across these newly completed
Sharjah Real Estate Registration Department, 10% y-o-y across markets while 2 Beds and 3 ranged between AED 50 to AED 65 / sq.
(Arada), and Muwailah Community (Thuraiah projects in Emerging Sharjah is likely
close to AED 16.7 bn worth of residential Beds apartment properties are on an average ft. / annum, while secondary locations
Group). Notable project completions on the to improve as office occupiers follow
transactions - accounting for 69.4% of total real 9% and 8% more affordable compared to 2018. have seen rental levels of AED 45 / sq. ft. /
other hand include the first and second phases residential tenants in their move towards
estate transactions in the city – were concluded The impact of the declining market has also annum on average.
of Nasma residences (291 units). newly built communities. A positive
in 2019. Records show that sales transactions resulted in rising vacancy levels, specifically
Emerging Sharjah, which has witnessed growth in developments such Sharjah D E M A N D AC ROS S TH E S E
of 3,328 properties, 46.3 mn sq. ft. in area, were Rental values, however, continued to remain in older properties and those that offer lower
bulk of the residential supply and Research, Technology and Innovation N E W LY CO M P LE TE D P ROJ EC T S
registered in the Emirate of Sharjah. This strong under pressure throughout the year. Asset quality accommodation. As per the Savills
demand in 2019 has very limited office park, inauguration of Sharjah Media I N E M E RG I N G S H A R JA H
demand for residential was on account of the pricing across established locations declined on Sharjah Occupancy Index, occupancy levels
supply at the moment. As the market City, and the construction of Sharjah
availability of ample investment opportunities account of the introduction of new supply in across residential projects across Sharjah City I S LI K E LY TO I M P ROV E A S
is still at a very nascent stage, the rents Healthcare City, as well as other mixed
across projects in emerging areas, as well as emerging locations at a lower price range. Also, has dropped from 90% in December 2018 to O FFI C E O CC U P I E R S FO LLOW
across these office buildings are almost used projects which include commercial
Sharjah City, such as Muwailah and Al Khan. the decline in rental and capital values across 88.7% in December 2019. This has led landlords
20% lower than comparable properties elements are expected to improve the R E S I D E NTIA L TE N A NT S I N
Apart from affordability, growing interest in properties in Dubai had a negative impact on to actively offer discounted rentals and other
in Sharjah City and range from AED overall investment sentiments of the TH E I R M OV E TOWA R DS N E W LY
properties across these emerging locations can the rental values across the residential sector incentives in order to retain and attract tenants.
26 to AED 36 / sq. ft. /annum. With office sector in Sharjah. B U I LT CO M M U N ITI E S .
be attributed to a diverse range of factors. For in Sharjah. On an annual basis, rental values
occupancy levels remaining low for
most commercial properties, landlords
MICRO-MARKET C O N F I G U R AT I O N AV E R AG E A N N U A L R E N T ( A E D) Y- O -Y C H A N G E ( % )
INDUSTRIAL
APARTMENTS
Sharjah’s industrial market continues Industrial Areas 2-15 continue to be
Al Muwailah 2 Bedroom 36,000 -6 to be a crucial part of the Emirate’s real considered the most prime / desirable
estate market, with the industrial sector locations due to their proximity to the
Al Majaz 3 Bedroom 50,000 -4
accounting for a third of GDP. Industrial centre of Sharjah as well as accessibility
Al Khan 2 Bedroom 41,000 -2 properties accounted for 11.8% of to neighbouring Dubai. However, 2019
transactions in 2019, totalling saw a rise in the number of businesses
Abu Shaghara 2 Bedroom 27,000 - 14 AED 2.8 bn. relocating to projects in Al Saja’a as well
as Industrial Area 18, seeking better
Al Qasimia 2 Bedroom 35,333 -8 Despite some improvements in
quality projects, low congestion and
economy, industrial rents, most notably I N D U S TR IA L A R E A S 2-1 5
Butina, Al Nabaah 2 Bedroom 25,333 - 11 lower rents.
warehousing, continued to decline CO NTI N U E TO B E CO N S I D E R E D
throughout 2019. Average warehouse On the other hand, Kalba City, is
TH E M OS T P R I M E / D E S I R A B LE
rents decreased by an average 12% undergoing an expansion of its industrial
y-o-y, with areas such as Al Saja’a being offering with the construction of 33Kv LO C ATI O N S .
impacted the most. Average rents for substation to serve the new industrial
Industrial Areas 2 – 18 currently range zone, which will accommodate more
from AED 24 – 30 / sq. ft. / annum, whilst than 1,500 properties.
A S S E T P R I CI N G AC ROS S E S TA B LI S H E D LO C ATI O N S D EC LI N E D O N in Al Saja’a they range from AED 18 – 22 /
ACCO U NT O F TH E I NTRO D U C TI O N O F N E W S U P P LY I N E M E RG I N G sq. ft. / annum.
LO C ATI O N S AT A LOW E R P R I C E R A N G E .
14 15
The Property
OutlookReport The Property
OutlookReport
Outlook
THE FUTURE IS ....
. . . S U S TA I N A B L E . . . S U P P LY ... A TENANT’S ... REFORM ... FOCUSED ON NEW
LADEN MARKET DRIVEN BUSINESS SEC TORS
The last decade and last year in particular
has seen an increase in companies Various proactive measures have been Approximately 75,000 residential units The Government’s commitment towards creating a competitive Vertical farming, cloud kitchen, fintech, start-ups, co-working
evaluating their environmental adopted throughout 2019 to limit the are projected to complete in Dubai and sustainable economy will lead to more policy reforms and and co-living are some of the buzzwords that will influence the
footprints and introducing measures to introduction of new supply across all asset and close to 14,000 units are likely to implementation of few of the recent announcements. As more real estate landscape in the country. In 2019, we have already
make their business more sustainable. classes throughout the country. However, be handed over in Abu Dubai over the clarity and concrete measures are introduced in the next few witnessed medium-to-large sized warehousing spaces taken up
Companies in the UAE are at the this is likely to have limited impact on next twelve to eighteen months. With months, the overall market sentiment is likely to improve leading by vertical farm operators and cloud kitchen service providers
forefront of this change, which is led by the anticipated supply – especially in the the onset of these new projects into the to an increase in enquiry and transaction levels. The opening up across Dubai Industrial City and Al Quoz respectively. While
the government – the Mohammed bin residential segment - in the short-to- existing supply, the market will continue of the market to foreign investors in Abu Dhabi and the launch of global co-working operators are evaluating options and strategies
Rashid Al Maktoum Solar Park, is a prime medium term. Numerous projects which to remain favourable towards tenants. freehold residential projects in Sharjah along with the introduction to expand their presence in the country. One of the world’s
example. Throughout 2019, various real were launched over the past few years are Tenants may continue to benefit from of long-term UAE residency visa has contributed to significant largest co-working operator, Wework opened its first co-working
estate developers (including built-to- in various stages of construction and are a few of the current incentives such as transaction across these two Emirates in the last twelve months. space at the ADGM in Abu Dhabi at a time when the capital is
suit developments) have incorporated likely to be added to the market over the rent-free periods, furnished apartments, Going forward few of the key topics to watch-out for include: actively promoting the start-up ecosystem in the region. While
some element of sustainability into their next twelve to eighteen months. multiple cheque payments among others co-living projects are currently being experimented by leading
projects. Going forward, this focus on The real estate committee
in an already subdued rental environment. developers such as Emaar in Dubai and student housing is
sustainability across construction and Anecdotal evidences suggest that the spike in property
The office and warehousing segment becoming increasingly popular in Sharjah. This trend is only
real estate developments is likely to take transactions in Dubai during the last quarter of 2019 was partially
are likely to follow a similar trend, with likely to increase throughout 2020 and beyond.
centre stage as the long-term impact of driven by an improvement in investor / end-user confidence post
existing incentives being offered by
built environments are critically evaluated the announcement of the setting up of the real estate committee.
landlords extended over the next twelve
especially in the light of the upcoming The steps taken by this committee will be crucial for the market
months. A strong competition between
EXPO 2020 which has a strong focus on going forwards as developers evaluate their strategies post EXPO
key landlords / developers to retain /
sustainability. The recent launch of a 2020 and beyond.
attract existing and new tenants to their
sustainable real estate investment trust buildings is the primary reason for this The roll-out of Real Estate Self Transaction “REST”
(REIT) – the first ‘green’ REIT to be trend. The oncoming office supply of close platform in Dubai
introduced in the UAE – by Masdar is to 670,000 sq. ft. in Abu Dhabi and close Dubai REST is the smart real estate platform for real estate
among the various other positive steps to 3.2 mn sq. ft. in Dubai is likely to ensure services, it enables both property owners and tenants to manage
taken in this direction. a tenant favoured market in the short-to- leases (registration, renewal, and cancellation of the lease), submit
medium term. rental dispute cases, and follow up on them.
16 17
The Property
OutlookReport The Property
OutlookReport
Outlook
THE FUTURE ....
... IS ONLINE . . . WILL BE INFLU ENCED BY INCRE ASED . . . I S TOWA R D S T H E N E X T 5 0 ... IS EXPO 2020
E-commerce as a sector is still at a very nascent stage with less T R A D E C O O P E R AT I O N W I T H A S I A N Declared “2020: Towards the next 50,” next year will witness The much-awaited EXPO 2020 is just around the corner and
than 5% share of the total retail sales, compared to 12 – 15% in COUNTRIES the biggest national strategy to prepare for the coming 50 the Savills team was fortunate to have a detailed site visit
counties such as the United Kingdom and the United States. As the Dubai Silk Road strategy continues to take shape, we years on the federal and local level as the country approaches during the last quarter of 2019. The scale and depth of the
However, since the internet penetration (at 91%) in the UAE anticipate a spike in demand for warehousing and industrial its Golden Jubilee in 2021. project is unprecedented, and it will have a lasting impact on
is the highest in the region coupled with a high share of young space in the city. The new Dubai Silk Road strategy comprises the regional economy in the near future. In the next section,
and educated population, the e-commerce sector is poised for 9 initiatives and 33 projects that will see the collaboration of we have looked at the EXPO 2020 in details with a focus on its
growth. This will support the long-term growth of institutional Emirates airlines, Dubai Airports, Dubai South, Dubai Free Zones, real estate element.
grade modern warehousing stock. Warehousing in Dubai is likely DFZ, Council, Dubai Maritime City Authority, Dubai Roads and
to benefit from this trend, as the current infrastructure in the Transport Authority, DP World, Dubai Municipality, Jebel Ali
city and a significant share of the upcoming warehouse supply Free Zone. In the capital, The Abu Dhabi Investment Office
is targeted at this sector. In Sharjah, 2020 is predicted to be a (ADIO) has signed a strategic partnership agreement with China-
year of digital transformation. Within the real estate sector, based AI company SenseTime to establish the firm’s Europe
2019 saw significant digital implementation such as electronic Middle East and Africa (EMEA) research and development centre
rent contract attestation, and Sharjah Real Estate Registration in Abu Dhabi.
Directorate’s (SRERD) launch of its smart “Real Estate
Developers Gate”. Going forward, a high digital acceleration is
expected to continue in 2020.
18 19The Property Report
Expo 2020 The Property Report
Expo 2020
Expo 2o2o
T O TA L G FA B U I LT A S S E T S
OV E R
55 800 4,800 108 3,000 NEW
2.68 COMMERCIAL
BUILDINGS
MODERN
RESIDENTIAL
PA R K I N G
S PAC E S
SERVICED LAND
PLOTS FOR
HOTEL KE Y'S
ZONED FOR
DUBAI
EXHIBITION
MILLION SQM UNITS RESIDENTIAL CENTRE
G FA B R E A K D O W N
38% O F F I C E
6% R E S I D E N T I A L H O T E L
4% E D U C AT I O N EXPO 2020 TRANSITION DISTRICT 2020
OC TOB ER 2020 TO APRIL 2021 TO OC TOB ER 2021
4% R E TA I L APRIL 2021 OC TOB ER 2021 A N D B E YO N D
3% C O M M U N I T Y FA C I L I T I E S
Source District 2020
20 21The Property
Savills Report The Property
Middle East
Report
Savills
MIDDLE EAST
Our mission is to represent our clients
diligently, and through that commitment,
to achieve superior results.
7
OFFICES
ACROSS M ENA
43+
YEARS IN
THE MIDDLE EAST
300+
S ERVI C E S TO FU LFI L
YO U R N E E DS
39,000+
E M P LOY E E S
G L O B A L LY
600+
O F F I C E S A N D A S S O C I AT E S
WORLDWIDE
Savills is one of the world’s largest real estate firms.
Established in 1855, we now have over 39,000 employees in
over 600 offices and associates throughout the Americas,
Europe, Asia Pacific, Africa and the Middle East. Through USA CARIBBEAN UK, IRELAND EUROPE AFRICA MIDDLE ASIA-PACIFIC
our advice, property management capabilities and New York and The success of & CHANNEL European cities are Cape Town is EAST China’s residential
Miami continue the Caribbean is ISLANDS on the rise. Paris known as the ‘digital Middle East enjoys market has risen to
transactional services, we help our clients fulfil their real
estate needs - whatever and wherever they are. to be the most closely tied to the London continues residential recorded gateway to Africa’. a strategic position become the most
internationally North American and to retain its status its best performance The Western Cape bridging East and valuable in the world.
Formerly known as Cluttons Middle East, Savills has been invested US cities, European markets as a global financial since 2011, Madrid is home to four top West, attracting Shanghai, Beijing
but it’s America’s that feed it. centre, and the is recovering fast, universities, and businesses and and Shenzhen have
the regional leader and real estate advisor of choice in the
tech hubs – San prime markets of and Berlin is seeing some 59% of South property buyers, all emerged as global
Middle East for over 43 years. With on-ground presence in
Francisco, Boston the UK continue to double-digit annual Africa’s start-ups from around the players.
seven cities across five Middle East countries, Savills has the
and Austin – that attract a wide range price growth. are born here. globe.
largest reach of any real estate consultancy in the region. We look to be the star of buyers from both
provide a complete range of property solutions throughout performers. within the UK and
the life-cycle of any real estate asset regionwide. overseas.
Savills global reach and network gives us the local
knowledge and expertise to provide accurate and robust
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22 23The Our
Property
Services
Report The
Middle
Property
East Offices
Report
B U I L D I N G A N D P R O J E C T C O N S U LTA N C Y
SAUDI ARABIA
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C A P I TA L M A R K E T S
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ksa@savills.sa
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DUBAI
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24 25The Property Report
Savills Middle East
Working alongside investors, developers, operators and owners, we inject market insight and provide
evidence-based advice at every stage of an asset’s lifecycle. We have unrivalled reach across the Middle
East with extensive market experience in UAE, Bahrain, Oman, Egypt and KSA.
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mixed-use projects. We add value by providing our clients with research-backed advice and consultancy through our market-leading
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Research
Swapnil Pillai Feras Ibrahim Richard Paul
Associate, Research Market Analyst Head of Professional Services &
+971 4 365 7700 +971 6 572 3794 Consultancy
swapnil.pillai@savills.me feras.ibrahim@savills.me +971 4 365 7700
richard.paul@savills.me
Office
Edward Carnegy Murray Strang Suzanne Eveleigh
Head of Abu Dhabi Head of Dubai Head of Sharjah
+971 2 441 1225 +971 4 365 7700 +971 6 572 3794
edward.carnegy@savills.me murray.strang@savills.me suzanne.eveleigh@savills.me
Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle
East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a
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26Savills Dubai Savills Abu Dhabi Savills Sharjah 22nd Floor, Arenco Tower Office 201, Old EMC Building, 2702C Al Marzouqi Towers, PO Box 3087 Dubai PO Box 95246 Abu Dhabi PO Box 3615 Sharjah +971 4 365 7700 +971 2 441 1225 +971 6 572 3794
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