Cavendish Maxwell_Dubai Residential Market Report_Q3 2015

Dubai Residential
Market Report
Q32015

© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 32
Dubai Residential Market Report - Q3 2015
• Dubai residential market headlines
• Macro-economic factors
• Sale price performance
• Rental rates performance
• Residential supply
• Cavendish Maxwell
Residential Market Survey Q3 2015
Content

• As the Dubai market continues to go through a correction phase,
overall market prices have continued to decline by 2% throughout
Q3 2015.
• Apartment and villa prices have both dropped by an average of 2%
in Q3 2015, consistent with the declines in the previous quarter.
• Apartment rents have remained stable in Q3 2015, whilst villa rents
decreased in most of the major villa communities.
• Approximately 6,000 residential units have been introduced into the
market in Q3 2015, in areas such as Dubai Sports City, Dubailand,
International City, Jumeirah Golf Estates and Jumeirah Village Circle.
• Cavendish Maxwell Residential Market Survey Q3 2015 results show
that buyer inquires continued to decrease whilst seller instructions
increased. The number of agreed sales, however, has remained
the same.
Dubai residential market headlines
Q2 2015 - Q3 2015
-2% -2%
Q3 2014 - Q3 2015
-6% -9%
“Inflation rate as of August 2015 stood at 4.41,
the highest level since 2008.”
“Petrol prices in the UAE have dropped by
approximately 16% in October 2015 from the
hiked prices of August.”
• Dubai Consumer Price Index (CPI) and inflation rate increased during
August to the highest levels in years. This was mainly driven by a 10%
increase in transportation cost in August, due to the deregulation of
petrol prices.
• CPI represents the prices paid by consumers for a select basket
of goods allocated into 12 categories, including food, clothing,
housing, transport, etc. The three categories with the highest weight
are housing and utilities, transportation and food and non alcoholic
beverages.
• Following the hike in petrol prices in August, the Fuel Prices
Committee reduced prices by 8% in September and a further 9% with
the recently released petrol prices for the month of October 2015.
• Over the course of 2015, food and non-alcoholic beverages prices
have increased by 5.14% from January to August 2015, followed by
an increase of 2.59% during the same period in the housing, water,
electricity, gas and other fuels category.
Macro-economic factors
128.00
126.00
124.00
122.00
120.00
118.00
116.00
114.00
112.00
110.00
108.00
5%
4%
3%
2%
0%
-1%
-2%
-3%
Inflation rateCPI
2014 June201120102009 August2012 2013
CPI
%inflation
Source: Dubai Statistics Centre
Figure 1

• As overall apartment prices continue to drop, the rate of decline in
prime locations such as Business Bay, Downtown Burj Khalifa and
Palm Jumeirah has decreased.
• In Q3, prices continued to drop at the same rate as Q2 2015 in
Dubai Marina, the Greens and Views, Jumeirah Beach Residence and
International City, whilst prices in Dubai Sports City and Motor City
declined at a more accelerated rate throughout this quarter.
• Prices in secondary locations such as International City, Motor City
and Discovery Gardens have declined the most at 10%, 10% and
9% respectively over a 12 month period from Q3 2014. In the more
central and established areas, prices have dropped between 4% and
5% during the same period.
• These slower rates of decline may suggest that prices will level out
and stabalise leading to the end of this year.
Apartments: market wide
“Apartment prices declined by 2% in Q3 2015”
Figure 2
Sale price performance
Apartments price performance
Dubai
Marina
Palm
Jumeirah
(Shoreline
Apartments)
Emirates
Living (Views
and Greens)
Dubai
Sports City
Business
Bay
Motor CityJumeirah
Beach
Residences
Discovery
Gardens
Downtown
Burj Khalifa
International
City
3,000
2,500
2,000
1,500
1,000
500
0
0%
-2%
-4%
-6%
-8%
-10%
-12%
Averageprice(AED/sq.ft.)
%change
Q2 2015 Q3 2015 QoQ % change
Q2 – Q3 2015
12 Month % change
Q3 2014 - Q3 2015
-1%
-5% -5% -5%
-4% -4%
-6%
-7%
-10%
-9%
-10%
-2%
-1% -1% -1% -1%
-2% -2% -2% -2%
• The decline in villa prices slowed in Q3 2015 in communities such as
Jumeirah Golf Estates, the Meadows, Springs and Lakes.
• Price declines accelerated significantly in Jumeirah Islands, Victory
Heights, Arabian Ranches and Al Furjan during the third quarter in
comparison to Q2 2015.
• Jumeirah Golf Estates villa prices dropped by 1% in Q3, a notable
improvement from the 3% in the previous quarter. The Meadows and
Springs prices declined at a slower rate in Q3 than in Q2 2015
• The villa market prices have dropped by approximately 4.4%
throughout the first three quarters of 2015 and 9% over a 12 month
period with further supply of these units being launched and
completed during this time period.
Villas: market wide
“Average villa prices declined at a rate of 2% in Q3 2015, consistent with the decline in Q2.”
Figure 3
Villas price performance
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
0%
-3%
-6%
-9%
-12%
-15%
-18%
-21%
-24%
-28%
Averageprice(AED/sq.ft.)
-1%
-6%
-5%
-8%
-7% -7%
-12%
-7%
-20%
-12%
-7%
-2%
-1%
-2%
-3%
-2% -2%
-5%
-2% -2%
Jumeirah
Golf Estates
The MeadowsJumeirah
Islands
Arabian
Ranches
The Lakes The SpringsJumeirah
Park
Jumeirah
Village Triangle
Victory
Heights
Al Furjan
Villas
Q2 2015 Q3 2015 QoQ % change
Q2 – Q3 2015
12 Month % change
Q3 2014 - Q3 2015
%change
Source: Property Monitor Index Source: Property Monitor Index

• Whilst rents remained stable in most locations across Dubai, rents
in Business Bay dropped by approximately 2% and by 3% in Dubai
Sports City.
• Prime locations still demand premium rents with a one bed apartment
in Downtown Burj Khalifa ranging from AED 110,000 to AED 125,000
per annum. Similarly a one bed in the Views or Greens ranges from
AED 95,000 to AED 110,000.
• Rents have declined on average by 1% in the Meadows, Springs and
Lakes. These communities continued to have strong rental activity
throughout this year.
• In locations such as Victory Heights and Jumeirah Park, rents have
dropped by up to 3% in Q3 2015 from the previous quarter.
Apartments:
“Apartment rents remained stable in most
locations in Q3 2015.”
Villas:
“Villa rents have marginally declined in most
of the major villa communities in Q3 2015.”
Figure 4 Figure 6
Rental rates performance
Dubai Marina
The Views
The Greens
Business Bay
Jumeirah Beach Residence
Downtown Burj Khalifa
Dubai Sports City
Motor City
Discovery Gardens
International City
2 bed1 bedStudio
Rental rate/sq.ft./annum
September 2015
96
149
148
99
110
180
95
84
88
71
114
122
112
95
114
138
72
67
67
62
106
110
100
89
112
118
70
71
-
59
Apartment rents by unit type Q3 Villa rents by unit type Q3
Jumeirah Golf Estates
Jumeirah Islands
The Lakes
Jumeirah Park
Victory Heights
The Meadows
Arabian Ranches
The Springs
Jumeirah Village Triangle
Al Furjan Villas
5 bed4 bed3 bed
-
-
79
65
-
62
72
72
-
50
67
56
85
63
78
64
68
75
60
-
61
64
-
60
71
66
69
-
50
44
Rental rate/sq.ft./annum
September 2015
Average annual rent - 4 bedroom villa
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Jumeirah
Golf Estates
Jumeirah
Islands
The Lakes Jumeirah
Park
Victory
Heights
The Meadows Arabian
Ranches
The Springs Jumeirah Village
Triangle
Average annual rent - 2 bedroom apartment
250,000
200,000
150,000
100,000
50,000
0
Dubai
Marina
The Views The Greens Business
Bay
Jumeirah Beach
Residences
Downtown Burj
Khalifa
Dubai
Sports City
Motor City International City
Figure 5 Figure 7
Averageannualrent(AED)
Averageannualrent(AED)
Source: Property Monitor Index

• During the first three quarters of this year, 6,000 residential units have
been introduced into the market. These figures exclude any serviced/
hotel apartments.
• The completed developments in the first three quarters of 2015 are
in locations such as Dubai Sports City, Dubailand, International City,
Jumeirah Golf Estates and Jumeirah Village Circle.
• Over 70% of the completed developments in 2015 have been
apartment units, the remaining percentage are villas and townhouses.
• Some of the most densely developed areas such as Dubai Marina,
Jumeirah Lakes Towers and Downtown Burj Khalifa have had a limited
number of newly launched residential developments during this year
as the reach their development capacity.
Completions:
“Approximately 6,000 residential units have been completed in the first three quarters of 2015.”
Figure 8
Residential supply
1
1220
3
2
19
21
29
28
7
10
13
26
21
18
24
6
11
8
16
4
5
22
25
7
6
5
4
3
2
1
15
27
9
17
23
14
6
5
4
3
2
1
21
16
2
3
9
13
19
29
12
11
1
25
7
4
15
23
14
27
16
1 Al Furjan
2 Al Jaddaf
3 Arabian Ranches
4 Business Bay
5 DIFC
6 Discovery Gardens
7 Downtown Burj Khalifa
8 Dubiotech
9 Dubai Creek Harbour
10 Dubai Festival City
11 Dubai Investment Park I and II
12 Dubai Marina
13 Dubai Silicon Oasis
14 Dubai South
15 Dubai Sports City
16 Dubailand
17 Emirates Living
18 IMPZ
19 International City
20 Jumeirah Beach Residences
21 Jumeirah Golf Estates
22 Jumeirah Islands
23 Jumeirah Lake Towers
24 Jumeirah Park
25 Jumeirah Village Circle
26 Jumeirah Village Triangle
27 Mohammed Bin Rachid City
28 Motor City
29 Palm Jumeirah
1 Al Furjan
2 Al Jaddaf
3 Arabian Ranches
4 Business Bay
7 Downtown Burj Khalifa
9 Dubai Creek Harbour
11 Dubai Investment Park I and II
12 Dubai Marina
13 Dubai Silicon Oasis
14 Dubai South
15 Dubai Sports City
16 Dubailand
19 International City
23 Jumeirah Lake Towers
25 Jumeirah Village Circle
27 Mohammed Bin Rachid City
29 Palm Jumeirah
< - 2,000
2,001 - 6,000
6,001 - 10,000
10,001 - 14,000
14,001 - 18,000
18,001 - 22,000
22,001 - <
< - 2,000
2,001 - 4,000
4,001 - 6,000
6,001 - 8,000
8,001 - 10,000
10,001 - <
Range Range
• There were approximately 18,000 residential units scheduled to
enter the market in 2015. Of those 6,000 units have been completed
so far. We have seen many developments initially scheduled to be
completed at the end of 2015, delayed to the first half of 2016 or to a
later date in 2017.
• The recently launched community The Villages in Dubai South is set to
deliver 20,000 residential units with Cluster 1 providing 6,000 units to
be completed by 2019, ahead of the Expo 2020.
• A number of residential developments have been launched in
Mohammed Bin Rashid City and Dubai Creek Harbour over the
past two quarters. We see areas such as these being a focus of
development moving forward as new communities are created.
• Additional supply entering the market could place further pressure
on prices to the end of 2015 and through 2016. Factors such as
the estimated population and job growth leading to the year 2020,
alongside the UAE’s initiatives to encourage investment, should help
support the absorption of this upcoming supply.
Pipeline Supply:
“Whilst a number of residential projects entered the market during the first three quarters of this year,
other projects have been delayed to 2016 and 2017.”
Figure 9

Q4 2015 sales outlook
Apartments
Percentage of agents who predicted apartment
prices would:
Villas
Percentage of agents who predicted villa prices
would:
Q4 2015 rents outlook
Apartments
Percentage of agents who predicted apartment
rents would:
Villas
Percentage of agents who predicted villa rents
would:
increase by more than 5% increase by up to 5% not change decrease by up to 5% decrease by more than 5%
increase by more than 5% increase by up to 5% not change decrease by up to 5% decrease by more than 5%
Figure 10
Figure 11
Source: Cavendish Maxwell Residential Market Survey
Source: Cavendish Maxwell Residential Market Survey
28% 36%
0% 0%
40%
32%
28% 28%
4% 4%
16%
24%
64%
44%
8%12%
20%
4%
4% 4%
Looking back - Q3 2015
Cavendish Maxwell Residential Market Survey
The majority of agents surveyed had predicted apartment and villa
prices to decline by up to 5%
predictions vs reality
Apartment and villa prices fell by 2% during Q3 2015.

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
Head of Development Advisory and Real Estate Research
M: +971 56 139 4315
E: adam.wisher@cavendishmaxwell.com
Sofia Underabi BPropEc AAPI
Partner
Head of Residential Valuation
M: +971 50 435 6527
E: sofia.underabi@cavendishmaxwell.com
Dima Isshak BSc
Research Manager
M: +971 50 482 7938
E: dima.isshak@cavendishmaxwell.com
PROPERTY SERVICES
MIDDLE EAST & AFRICA
Jay Grant MSc IRRV (Hons)
Managing Partner
M: +971 50 192 1658
E: jay.grant@cavendishmaxwell.com
T: +971 (0) 4 453 9525 E: info@cavendishmaxwell.com
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