1. Dubai Real Estate Market
REVIEW: FIRST QUARTER 2015
www.valustrat.com
2. 1 | ValuStrat - Real Estate Research Report - Quarter 1, 2015 www.valustrat.com | 2
ValuStrat in the Media
17 April 2015
- New Dubai Metro
extension ‘could lift house prices by
15%’
ValuStrat said the new route recognises the
mass transit demands of 240,000 residents
with new stations planned in Discovery
Gardens, Al Furjan, Jumeirah Golf Estates,
Dubai Investment Park and the Expo 2020
site.
15 April 2015
- Affordable housing
quotas in Dubai: A middle-class
dream
According to Declan King, Director and
Group Head of Real Estate at ValuStrat:
“More mature western property markets
display a precedence of affordable housing
quotas being introduced for developers —
several such models exist. Wider discussion
would be necessary to understand if any of
these concepts would be suitable for the
Dubai market.”
25 March 2015
– Dubai’s rentals
remain stuck on a high
It has become extremely challenging for
single-income families with one or two
children and in certain occupations, such
as teaching or nursing to come upon an
“affordable” two-bedroom apartment in
Dubai, according to analysis by ValuStrat.
11 February 2015
– To buy or to rent, the
million dollar question
“Anecdotal evidence is that some tenants
have already started buying because
of sales price drops compared to the
continued upward move of rents, thus
making it more attractive for tenants to
consider home purchase,” said Declan
King, Director and Group Head, Real Estate,
ValuStrat
12 January 2015
– Dubai developer targets
Dh9k-Dh15k earners
A recent report by ValuStrat, an advisory,
valuation and asset divestment services
company, said buying an apartment than
renting made sense as the monthly outgo
(mortgage) is lesser than the rent paid.
08 January 2015
– Buying Dubai property
cheaper than renting?
“Our analysis reveals that many tenants
may now be able to purchase a property
similar to the one they are renting at a
lower monthly cost. This appears to be
particularly the case for lower cost starter
type homes,” says Declan King, Director
& Group Head – Real Estate Valuations,
ValuStrat.
10 December 2014
– Real estate remains
our main focus: Kazi
In an exclusive interview with Gulf
Property, Shahid Kazi, CEO of ValuStrat
claims that the team adopts the best
practices to deliver customized solutions to
the clients and offer best possible strategic
advice at every step of the business cycle.
03 December 2014
– Prime mall
rates in Dubai rise
Declan King – Director & Group Head Real
Estate at ValuStrat points out that growing
rates in The Dubai Mall and Mall of the
Emirates illustrates high demand from
retailers and the importance they now
place on being in Dubai.
3. 3 | ValuStrat - Real Estate Research Report - Quarter 1, 2015 www.valustrat.com | 4
Q1 2015 - Real Estate
Indicators
MACRO-ECONOMIC SNAPSHOT
• Dubai’s announced 2015 budget
amounted to AED 41 Billion with no
deficit - representing a 9% increase
compared to 2014
• 36% of the budget is allocated
towards supporting the economy,
infrastructure and transportation
• Dubai’s population as of March 2015
amounted to 2.36 Million
• Between 2011 and 2015 the population
growth rate was 5% per annum with
an average house hold size of 4.4.
• The Consumer Price Index (CPI)
for Dubai increased by 4.33% when
compared to the same period last
year
• Housing and DEWA expenses
continue to rise, albeit at a slower
pace
• The CPI growth rate is showing
signs of slowing down
• January’s month on month growth
rate was 1.88%, February 0.65% and
March 0.23%
Source: Dubai Statistics Centre
Source: Dubai Statistics Centre
Source: ValuStrat
Source: DLD Real Estate
Dashboard, ValuStrat
Source: REIDIN, ValuStrat Source: REIDIN, ValuStrat Source: REIDIN, ValuStrat Source: REIDIN, ValuStrat
Source: DLD Real Estate Dashboard,
ValuStrat
Source: Hotels Now - STR Global,
ValuStrat
Source: Hotels Now - STR Global,
ValuStrat
DUBAI POPULATION
CONSUMER PRICE INDEX VS HOUSING INDEX
JANUARY 2012 – MARCH 2015
4. 5 | ValuStrat - Real Estate Research Report - Quarter 1, 2015 www.valustrat.com | 6
ValuStrat Price Index -
Residential
Residential
• Index of residential values broadly
back to where it was at start of 2014
• Dubai apartment and villa markets
saw values decline 3.1% and 4% QoQ
respectively during the first quarter
• High-end apartment locations saw
most of the value correction; namely
Palm Jumeirah, JBR, and Downtown
Dubai
• The VPI this quarter displays a
higher QoQ decline compared
to DLD data for the same period
(see pg 6). We observe that this
variance is primarily due to the more
representative basket employed in
the VPI and the possible lagging of
DLD data in a changing property
market
Since the ValuStrat Price Index began tracking in January 2014, Dubai residential prices
have witnessed a rise and fall of values. By benchmarking the index from Jan 2014 at
100 points, we found that values peaked in June 2014 at 113, then returned to 100 points
in March 2015, displaying a maturing market price correction within a span of just over
a year.
RESIDENTIAL SUPPLY
• An estimated 467,000 residential
units in stock at the beginning of Q1
• An expected supply of 29,000
apartments and 2,200 villas in 2015,
followed by 23,000 units in 2016
• Four off-plan projects were
launched in Q1 adding 22,000 units
to the residential pipeline between
2016 and 2025
RESIDENTIAL PRICES
• According to the DLD Real Estate
Dashboard, residential transaction
volumes declined by 11% when
compared to Q4 2014, with a lower
average ticket size of AED 1.5 Million
• Average residential transaction
prices witnessed negative trend year
on year, declining by 1.9%
• When compared to the previous
quarter, average residential prices
were stable
• The median apartment price per
square meter stands at AED 12,109
per sq m (AED 1,125 per sq ft)
• Villa transaction prices rebounded
with a growth rate of 6% Q-o-Q
• The median villa price stands at AED
13,896 per sq m (AED 1,291 per sq ft)
Source: REIDIN, Lookup, ValuStrat
Source: REIDIN, ValuStrat
Source: ValuStrat
VALUSTRAT PRICE INDEX – DUBAI RESIDENTIAL SECTOR [BASE: JAN 2014=100]
DUBAI AVERAGE RESIDENTIAL PRICE
PERFORMANCE
DUBAI RESIDENTIAL SUPPLY 2013-2016
(‘000 UNITS)
5. Office
OFFICE SUPPLY
• 2015 began with an estimated 7.88
Million square meters (84.8 Million sq
ft) of office gross leasable area (GLA)
• 590,000 sq m (6.3 Million sq ft) GLA is
expected to be delivered during 2015
and 500,000 sq m (5.3 Million sq ft)
during 2016
• Key completions include Central Park
in DIFC delivering 81,000 sq m (876,997
sq ft) of GLA and part of Dubai Design
District with 4,000 sq m (430,500 sq ft)
of GLA
OFFICE PRICES
• Office Prices increased 6% year on
year
• Negative growth of 4% seen during
this quarter when compared to Q4
last year
• Prices of Grade A office space in
Downtown Dubai ranged from AED
21,528 – 25,830 per sq m (AED 2,000
– 2,400 per sq ft)
• Prices for office space in JLT,
Business Bay and TECOM ranged
from AED 11,355 – 12,900 per sq m
(AED 1,055 – 1,200 per sq ft)
OFFICE RENTS
• YoY asking rents continue to see
double digit increase, currently
standing at 17%
• Quarter on quarter asking rents also
increased by 6%
• The median asking rent for office
space is AED 1,205 per sq m (AED 112
per sq ft)
Source: REIDIN, ValuStrat
Source: REIDIN, ValuStrat
Source: REIDIN, ValuStrat
7 | ValuStrat - Real Estate Research Report - Quarter 1, 2015 www.valustrat.com | 8
RESIDENTIAL RENTS
• Residential asking rents have dipped
by 1% when compared to the same
period last year
• Quarter on Quarter asking rents grew
by just 1%
• Apartment asking rents saw a 1%
decrease YoY, however showed no
change QoQ
• Villa asking rents dipped by 2% YoY
but increased 9% QoQ
DUBAI AVERAGE RESIDENTIAL ASKING
RENT PERFORMANE
Source: REIDIN, Lookup, ValuStrat
DUBAI OFFICE SUPPLY 2012-2016
(MILLION SQ M GLA)
DUBAI AVERAGE OFFICE PRICE PERFORMANCE
DUBAI AVERAGE OFFICE ASKING RENT
PERFORMANCE
6. RETAIL SUPPLY
• Dubai has a stock of 93 malls,
shopping centres and hypermarkets
• Total retail GLA of 3 Million sq m (33
Million sq ft)
• 44 units at Boxpark in Al Wasl were
completed this quarter
• Key new retail launch
announcements during Q1 included
Al Khail Avenue in JVT (350 outlets)
to be completed in Q3 2018, Wasl
Hub in Al Karama to be completed
in Q4 2016 and retail space in the
Golden Mile at Palm Jumeirah (70
outlets) to be opened Q2 this year
HOTEL SUPPLY
• The total number of hotel rooms and
hotel apartments at the beginning of
2015 stood at 93,000
• 2,351 hospitality units were added in Q1
• New hotel openings include Hyatt
Regency and Taj Dubai
• Ten new hotels were announced adding
3,828 keys to the pipeline between Q3
2015 and Q3 2018
• Notable hotel announcements included
Royal Atlantis Resort, Venu Bluewaters
Island Hotel, Park Inn by Radisson and
Anantara Dubai Creek Hotel
HOTEL PERFORMANCE
• This quarter showed a continued strong occupancy rate of 86%, dipping 1.8% when
compared to the same period last year
• With increasing new hotel room supply, the Average Daily Rate (ADR) this quarter slipped
10% YoY
• We note that there is increased competition to the hospitality sector from landlords
leasing their apartments on short-term basis
RETAIL PERFORMANCE
• The 32-day long 20th edition of the
Dubai Shopping Festival saw Visa card
spending in its first two weeks rise by
12% when compared to the same period
during the previous DSF
• Dubai Duty Free announced record
breaking 2014 sales of AED 7 Billion,
achieving an average of 74 thousand
transactions per day Source: REIDIN, ValuStrat
9 | ValuStrat - Real Estate Research Report - Quarter 1, 2015 www.valustrat.com | 10
Retail Hospitality
Source: REIDIN, ValuStrat
Source: Hotels Now - STR Global
Source: Dubai Statistics Centre, ValuStrat
NUMBER OF MALLS IN DUBAI DUBAI HOTEL ROOM SUPPLY 2012 - 2015
(‘000 KEYS)
DUBAI HOTEL PERFORMANCE
