Abu Dhabi Residential Market Report Q3 2015

Abu Dhabi Residential
Market Report
Q32015

• Cavendish Maxwell
• Property Monitor Index
• Abu Dhabi residential market
headlines
• Macro-economic factors
• Legal framework
• Residential market overview
• Sales price performance
• Rental rates performance
• Residential supply
Content

© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 54
Abu Dhabi Residential Market Report - Q3 2015
60+ people across 8 departments
350MILLION
worth of completed
property transactions
over AED
We undertake valuations for
over 30 banks across the UAE
master planned
developments across
Dubai and Abu Dhabi
live transactional
data from over
42 of commercial land
and buildings currently
under instruction
MILLION SQ.FT
Cavendish Maxwell is a highly respected independent firm of
chartered surveyors and property consultants, focusing on property
services throughout the Middle East and Africa. Established in
2008, Cavendish Maxwell has grown into one of the region’s largest
and highest profile property companies, employing over 60 people
across 8 departments.
Our experience covers property, land and business asset valuations;
investment; asset management; fund management; disposals and
acquisitions; rent reviews; lease renewals; development appraisals;
advisory services; market research; feasibility studies; project
management and building consultancy.
As a fully qualified member firm of the Royal Institution of Chartered
Surveyors (RICS), and with extensive knowledge of the region, we
have the necessary experience, expertise and insight to deliver
property advice of the highest standard. Our reports are used for
loan security, audit, insurance reinstatement, dispute resolution, risk
management, debt recovery and performance analysis.
We provide a comprehensive range of property services across all our
departments, each of which is headed by highly skilled, experienced
and fully qualified RICS chartered surveyors. Our various teams
provide valuation, agency, advisory, research and building
consultancy services across all property types and sectors.
Cavendish Maxwell - Chartered Surveyors and Property Consultants
We have built a first class reputation on the quality of our
reporting, certainty of timing and thoughtful approach to helping
clients add value to their land and property portfolios
Cavendish Maxwell
has grown into
one of the
REGION’S LARGEST
and
HIGHEST PROFILE
property companies
Advising clients
throughout the
Middle East and Africa
Specialist sectors
Student Housing Media Corporate
Logistics
Airports
Plant &
Machinery
Hotels &
Resorts
Labour
Accommodation
Education
RICS
regulated
company
worth of projects
in the last year
Advised
on over
BILLION
7AED
527
Building
surveys of
highrise tower floors
undertaken in
the last 6 months
Industrial Leisure
Institutional
Commercial
Insurance
H
worth of commercial
property valued in
the last 12 months
BILLION
30Over
AED

• A relatively stable quarter in terms of price movements, recording an
overall market decline of 1%.
• Both apartment and villa prices dropped by an average of 1% in Q3
2015.
• Rents remain stable across both the apartment and villa markets.
• Abu Dhabi government initiatives and the recent property registration
laws to be implemented as of January 2016, should have a positive
impact the real estate market bringing more transparency which
in turn should increase confidence to both foreign and domestic
investors.
• Approximately 15,000 residential units to enter the market over the
next four years in the major investment zones of Abu Dhabi.
Abu Dhabi residential market headlines
Q2 2015 - Q3 2015
-1% -1%
Q3 2014 - Q3 2015
-4% -4%
Cavendish Maxwell’s Property Monitor Index (PMI) offers a unique
perspective on the market due to the unique and exclusive access to
real-time data, fueled by the Property Monitor data service.
The figures in our Q3 2015 residential market report represent a
consensus view of Cavendish Maxwell’s market leading team of
chartered surveyors and residential valuers.
(www.propertymonitor.ae).

In formulating the index our valuers have access to various data sources
that should provide users with confidence in the results:

• Property Monitor, Approved Partner data: includes an expanding
number of reputable agencies and developers, capturing data in real-
time
• Agent consultation: evidence sourced from reputable and active
agents to support our valuation business.
• Publically available evidence: variety of published data sources.
Property Monitor Index

• Abu Dhabi inflation rate has increased to its highest levels to 6.1%
as of August 2015. This hike was mainly driven by the increase in
transportation cost by 12% in August due to the deregulation of
gasoline prices.
• Following the hike in gasoline prices in August of this year, the Fuel
Prices Committee reduced prices by 8% in September and a further
9% with the recently released gasoline prices for the month of
October 2015.
• According to the Urban Planning Council’s Abu Dhabi 2030 Plan, the
population in the Abu Dhabi region (including the Mainland, Islands
and North Coast) is expected to grow to 3 million by the year 2030.
• Expats make up approximately 80% of the total Abu Dhabi emirate
population.
• As of 2014, the population in the Abu Dhabi Region alone (excluding
Al Ain and the Western Region) was approximately 1.5 million.
Macro-economic factors Legal framework
Figure 2
Abu Dhabi GDP by economic
activity 2014. Top seven sectors
Mining and quarrying
Construction
Financial and insurance
Public administration
and defence
Manufacturing
Real estate
Other51+10+7+6+5+5+1651.0%
9.6%
7.2%
5.8%
5.5%
4.6%
16.3%
Figure 1
Given the upcoming implementation of the new Abu Dhabi real estate
law, Cavendish Maxwell has consulted with the law firm of Berwin
Leighton Paisner to summarise the law as stated below.
After much consultation and consideration, the long awaited new Abu
Dhabi real estate law has at last become a reality with the issue of Abu
Dhabi Law No. (3) of 2015 (the “New Law”).
Whilst the New Law has yet to be published in the Gazette, we
understand that it will take effect in or around January 2016 and that
all of the supporting executive regulations envisaged by the New Law
will be published simultaneously with the substantive law itself. The
intention appears to be that, in contrast with the ‘piecemeal’ approach
taken by other Emirates, Abu Dhabi will, when the New Law comes into
force with immediate effect have a modified real estate system which is
fully integrated, articulated and functional.
As expected, the New Law resembles various Dubai laws passed since
2007 and, among other things, provides for:
1. the overall (and detailed) supervisory control of the market by the
Abu Dhabi Department of Municipal Affairs (“DMA”) (whose role
will be broadly similar to that of RERA in Dubai);
2. a regime to enable the DMA to compile records of a wide range of
relevant information relating to real estate development projects;
3. a licensing regime for all relevant market participants (i.e. -
developers, brokers, brokers’ employees, auctioneers, directors of
owners’ associations, valuers and surveyors) prohibiting them from
carrying on business unless they are duly licenced;
4. various obligations and restrictions in relation to activities carried
on by brokers;
5. rules governing the manner in which valuers undertake the
valuation of properties;
6. a regime for the registration of real estate development projects
and restricting the marketing of new projects ‘off-plan’ without
prior authorisation from the DMA;
7. rules to do with the termination of off-plan sale contracts;
8. an ‘escrow account’ regime requiring monies (including mortgage
proceeds and interim payments from buyers) to be deposited in a
restricted account, from which sums may only be released (subject
to various conditions) for the purposes of funding the relevant
works and paying for the project;
9. the creation of an entirely new registry (a ‘preliminary real estate
registry’) for the registration of new development projects and
off-plan contracts, and providing that such sale contracts will be
non-binding unless duly registered in the new register;
10. detailed arrangements concerning real estate mortgages which
include the introduction of the concept of ‘priorities’ between
mortgagees and creation of a right for contractual purchasers to
‘mortgage’ their contractual rights;
11. recognition of the concept of a mortgageable ‘long lease’ (an
entirely new concept under Abu Dhabi law);
12. for the implementation of jointly owned property arrangements,
through Owners’ Associations, in relation to estate developments
with shared common areas and in which the units are to be sold
off;
13. the imposition upon developers of a form of ‘decennial’ liability
for 10 years from the final completion certificate issued by the
Municipality in relation to the structural and common parts of a
development, as well as a liability to put right all defects affecting
the construction works which appear within one year from the
completion certificate issued by the Municipality.
As will be apparent, the law is intended to cover all material concerns
and issues which have already been addressed under Dubai law,
in a single piece of legislation. It also appears that the Abu Dhabi
authorities have taken the opportunity to learn from the Dubai
experience and to avoid some of the issues experienced in Dubai.
Although it remains to be seen what the detailed regulations will bring
once they are published and how the New Law will operate in practice,
it is encouraging to see that many important concerns have been
addressed in the law which are important to ensure the smooth and
efficient operation of the market.
The above legal information is supplied courtesy of Berwin Leighton
Paisner. (For more information go http://www.blplaw.com.)
David Nunn
Partner, Commercial Real Estate
Berwin Leighton Paisner
Abu Dhabi Emirate population: 2006-2014*
1.000,000
800,000
600,000
400,000
200,000
0
360
1,101
Population
10%
8%
6%
4%
2%
0%
GrowthRate
Nationals Expats Growth Rate
377
1,196
395
1,300
1,412
414
433
1,533
439
1,681
476
1,857
495
1,957
506
2.150
2006 20112007 20122008 20132009 20142010
5%
8%
10%
8% 8%8% 8%8%
*Figures include Abu Dhabi region (mainland,
islands and north coast), Al Ain, Al Gharbia.
Source: Statistics Centre - Abu Dhabi
“Petrol prices in the UAE have dropped by
approximately 16% in October 2015 from the hiked
prices of August.”
“The contribution of the oil industries to GDP has
decreased to 51% in 2014 from 55% in 2012 as Abu
Dhabi government initiatives focus on growing other
sectors such as construction and manufacturing.”
Source: Property Monitor Index

Figure 3
Residential market overview
• Whilst real estate is one of the top five contributing economic
activities to Dubai’s economic growth, it is still a growing sector in Abu
Dhabi’s economy.
• During the first real estate market boom of 2008, the overall market
prices in Abu Dhabi were higher than those in Dubai. Whilst Dubai
reached the peak in Q3 2008, there was approximately a quarter lag
to Abu Dhabi peak in Q4 2008.
• Following the market crash in Dubai towards the end of Q4 2008, Abu
Dhabi prices dipped drastically in Q1 2009 and continued to decline
through mid 2012.
• The market bottomed out in Abu Dhabi around Q2 2012, reflecting
approximately a nine month lag from Dubai’s market bottom in Q3
2011. During this price compression both markets declined in the
range of 60% to 70% from the peak in 2008.
• As both markets began to recover from the declines throughout
2012 and 2013, the Abu Dhabi market grew at a rate three times
slower, than the Dubai market.
• Prices in Abu Dhabi began to increase in Q3 2013 and throughout
the first half of 2014, reaching the second market peak in Q3 2014.
• Abu Dhabi is traditionally less driven by investors and more by the
decisions of end users which leads to a market less responsive to
speculative trends and more controlled.
Current Dubai
market
Current Abu
Dhabi market
Abu Dhabi
2nd market
peak
1800
1600
1400
1200
1000
800
600
400
Averagesaleprice(AEDpersq.ft.)
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Abu Dhabi market peak
3monthslag
9monthslag
3monthslag
Dubai market
peak
Dubai 2nd
market peak
Dubai market
low
Abu Dhabi
market low
Abu Dhabi vs Dubai real estate market trend
Abu Dhabi vs Dubai:
“The peak in the Abu Dhabi market typically lags Dubai by approximately
3 months in time.”
VS

Figure 4 Figure 6
Figure 5
Sale price performance Rent rates performance
• Villa prices in Q3 2015 have declined between 1% at Saadiyat Beach
villas to 1.3% at Al Raha Gardens.
• With limited supply and high demand for quality villas in the market,
prices have remained stable with minimal drops quarter on quarter
throughout this year.
• When looking at villa prices during a 12 month period (Q3 2014 to
Q3 2015), there has been a significant variance in price compression
throughout the Abu Dhabi villa market. Villa prices dropped by an
average of 4% in Al Raha Gardens to 7% in Al Reef.
• Apartment prices have relatively remained stable, dropping minimally
by 1% in Q3 2015 from Q2 2015.
• Over a 12 month period (Q3 2014 to Q3 2015) apartment prices have
dropped between 3% to 4% across the investment areas.
• The handover of stock in the first half of 2015 has placed a slight
pressure on the prices in Q3 2015. Additionally, new launches have
shifted buyer attention towards the off-plan market, especially with
investors looking for a high yield.
Apartments:
“Slight drops in apartment prices by 1% in
Q3 2015.”
Villas:
“Villa prices declined on average by 1%
during Q3 2015.”
Rents:
“Rents remain relatively stable across both the apartment and villa markets.”
“Rents remain relatively stable across both the apartment and villa markets.”
Villa sale performance Apartment sale performance
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
Averageprice(AED/sq.ft.)
Averageprice(AED/sq.ft.)
%change
%change
-1%
-4%
-7%
-3%
-1% -1%
Al Raha
Gardens
Al Reef Saadiyat
Beach Villas
-4%
-3%
-4%
-3%
-4%
-1%-1%-1%-1%-1%
Al Ghadeer Al Raha Beach Al Reef
Downtown
Al Reem
Island
Saadiyat Beach
Residences
Al Raha Gardens
Al Reef
Saadiyat Beach Villas
5 bed4 bed3 bed
67
57
93
63
-
70
60
53
62
Rental rate/sq.ft./annum
September 2015 Al Ghadeer
Al Raha Beach
Al Reef Downtown
Al Reem Island
Saadiyat Beach Residences
2 bed1 bedStudio
Rental rate/sq.ft./annum
September 2015
76
-
77
125
-
70
125
74
104
126
65
108
65
103
98
QoQ % change
Q2 - Q3 2015
12 Month % change
Q3 2014 - Q3 2015
Villas
Apartments
• An average three bed villa in Saadiyat Beach remains significantly
higher than other villa locations.
• Rents in prime locations such as Al Reem Island, Al Raha Beach and
Saadiyat Beach continue to command the highest rents.
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Average annual rent
2 bedroom apartment
AverageannualrentAED
AverageannualrentAED
Al Ghadeer Al Raha
Beach
Al Reef
Downtown
Al Reem
Island
Saadiyat Beach
Residences
Average annual rent
3 bedroom villa
Al Raha
Gardens
Al Reef Saadiyat
Beach Villas
Source: Property Monitor IndexQ2 2015 Q3 2015

• Abu Dhabi developers have ramped up the number of launched
projects to be delivered in the coming four years in the major
investment locations, supporting the city’s 2030 plan.
• Approximately 80% of the upcoming supply will be apartment units
and 20% villa units.
1. Masdar City
2. Yas Island
3. Saadiyat Island
4. Shams Abu Dhabi
5. City of Lights
6. Najmat Abu Dhabi
7. Al Maryah Island
8. Al Raha Beach
• The bulk of the pipeline supply is on Al Reem Island with over 6,000
units, followed by Saadiyat Island with over 3,500 units and Yas Island
with over 2,000 units scheduled for delivery over this time period.
Pipeline Supply:
“Approximately 15,000 residential units scheduled for delivery through the year 2018.”
Residential supply
> - 500
501 - 1,000
1,001 - 1,500
1,501 - 2,000
2,001 - 2,500
2,501 - 3,000
3,001 - 3,500
Range
Figure 7

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Also contact us for:
Miles Phillips BSc (Hons) MRICS ACIArb
Partner
Head of Operations - UAE
M: +971 56 604 2750
E: miles.phillips@cavendishmaxwell.com
Adam Wisher BSc (Hons) MRICS
Partner
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M: +971 56 139 4315
E: adam.wisher@cavendishmaxwell.com
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Jay Grant MSc IRRV (Hons)
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