3. 2 | ValuStrat - Real Estate Research Report - Quarter 3, 2016
• This quarter observed fairly mixed results,
on one hand we had marginally declining
prices in half of the locations monitored,
while on the other hand we found that most
of the other half has began a soft recovery.
In balance, the VPI is now more or less
equal to the same period last year
• Dubai’s apartment VPI has shown a
quarterly decline of just 0.5% while the villa
VPI remained stable QoQ
• The median apartment value in
September was AED 13,982 per sq m
(AED 1,299 per sq ft) and for villas was
AED 14,779 per sq m (AED 1,373 per sq ft)
• Compared to the previous quarter, ten
locations saw appreciation in values,
International City having the highest
quarterly improvement of 4%, while Motor
City increased by 3.4%, Dubai Production
City (IMPZ) saw an increase of 3%, and
Downtown Dubai was up by 2.3%
• Apart from Dubai Sports City that saw a
quarterly price fall 5.6%, other declining
locations saw dips of less than 2%
• Victory Heights villa prices were up by 0.8%
on a quarterly basis, which was the highest
increase for freehold villas monitored by
the VPI
ValuStrat Price Index -
Residential
The latest in-depth residential ValuStrat Price Index (VPI) report has been released to subscribers,
analysing 26 freehold locations in Dubai on a monthly basis, it has shown that mostly mid-affordable
locations initiated the price recovery process, with quarterly increases ranging from 2.3% to 4%. The
exception being high-end Downtown Dubai, which also witnessed a clear trend of positive correction
over the last six months. The third quarter 2016 VPI displayed an overall 0.6% annual decline in
values. However, the monthly growth rate of residential values has been broadly stable for the past 15
months, but declined slightly this quarter, which was expected during the softer summer months. The
July residential VPI registered 97.7 index points, while August and September both dipped by 0.1% to
97.6 and 97.5 points respectively.
VALUSTRAT PRICE INDEX
16 APARTMENT AND 10 VILLA LOCATIONS IN DUBAI
[BASE: JAN 2014=100]
Source: ValuStrat
Jan
100
103
107
109
111 111
110
108
106
103
104
103
101
100 100 99 98 98 98 98 9898 9898 9898 9898 9898 9898
JanFeb FebMar MarApr AprMay MayJun JunJul JulAug AugSep Sep JanOctO ct FebNov Nov MarDec Dec
2014 2015 2016
113
Apr May Jun Jul Aug SeptO
4. www.valustrat.com | 3
• The Dubai Consumer Price Index has
been updated to reflect the new base year
of 2014, main expenditure group weights
have also been readjusted to reflect the
change. Housing and utility expenses now
carry a slightly less weight of 43.62, down
from 43.7 previously, whilst the education
group has more than doubled in weight
from 4.09 to 8.48
• As of August, Dubai’s YoY inflation rate
was 2.5%, and the monthly rate was 0.38%
• Housing and utility expenses index
increased by 4.7% annually
Source: Dubai Statistics Centre
DUBAI POPULATION
2011
2,003,000
2012
2,105,000
2013
2,210,300
2015 2,450,000 2016 - Q3
2,564,000
2014
2,320,800
MACRO-ECONOMIC SNAPSHOT
• Dubai Customs released trade figures for H1 2016 indicating a 17% increase in volume of traded
goods, 41 million tonnes were dealt in the first half of last year, compared to 49 million tonnes
the same period this year
• Dubai International Airports’ passenger numbers increased by 6.1% to reach more than 7.7
million in August
• Dubai Metro celebrated its seventh anniversary, reporting more than 830 million passengers
so far
• Dubai’s population as of September 2016 is estimated at 2.56 million
• Annual population growth rate was 5.6% in 2015, with an average household size of 4.2
individuals
CONSUMER PRICE INDEX VS HOUSING INDEX
114
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
2015 2016
112
110
116
108
106
104
102
100
98
118
General Index (2014=100)
Housing, Water, Electricity, Gas and other fuels
Source: Dubai Statistics Centre
JANUARY 2015 - AUGUST 2016
5. 4 | ValuStrat - Real Estate Research Report - Quarter 3, 2016
Residential
RESIDENTIAL SUPPLY
• For 2016, the latest estimated total supply
of residential apartments and villas to be
completed is estimated at 15,000 units.
Around 1,100 units were delayed from
this quarter to next year
• An estimated 5,500 residential units were
completed YTD
• Ten off-plan residential projects were
launched in Q3, to add more than 2,000
units to the residential pipeline by 2020
• This year’s Cityscape exhibition saw
major projects announced. Such as
Emaar South, with 15,000 homes located
in Dubai South, Dubai Holding’s Jumeirah
Central, and Palm 360 by Nakheel
• Off plan projects offering affordable
properties were also on show, Sunbeam
by Sun & Sand Developers offered 1
bedroom apartments for AED 385,000,
and The Pulse by Dubai South announced
Studios for AED 280,000
RESIDENTIAL PRICES
• The median residential transaction price
increased by 6.6% YoY
• When compared to the previous quarter, the
median residential transacted price was up
by 5.2%
• There was a noticeable quarterly increase in
sales of apartments priced between 2 and 3
million Dirhams, and villas priced between 5
and 6 million Dirhams
• Median transacted apartment price stands
at AED 11,645 per sq m (AED 1,082 per sq ft),
up by 7.3% YoY 6.5% QoQ
• The median transacted villa price stands at
AED 11,765 per sq m (AED 1,093 per sq ft).
Increasing by 2% YoY but down by 2.3% QoQ
• Citywide residential sales transaction
volumes witnessed an estimated quarterly
decline of 25% for apartments and 14% for
villas. This drop may be attributed to the
traditionally quieter summer months
* May be subject to significant downward adjustment
Source: Dubai Statistics Centre, REIDIN, MEED Projects, ValuStrat
DUBAI RESIDENTIAL SUPPLY 2013-2017
(‘000 UNITS)
Existing New Apartments* New Villas*
2014
2016E
2017E
485
500
11
30
3.85
3.20
485
467
4502013
Source: REIDIN, ValuStrat
RESIDENTIAL MEDIAN TRANSACTED PRICES
Last 2 Years
-9.8%
Last Year
6.6%
Last 6 Months
5.2%
Last Quarter
-5.6%
5.3%
2015
6. Office
OFFICE SUPPLY
• 2016 began with an estimated 8.39 million
sq m (90.3 million sq ft) of office Gross
Leasable Area (GLA)
• 230,000 sq m (2.48 million sq ft) GLA is
expected to be delivered in 2016, and 542,000
sq m (5.8 million sq ft) during 2017
• Available data on office supply leading up to
2019 points to an estimated additional pipeline
GLA of 855,000 sq m (9.2 million sq ft)
• 29 mixed-use or dedicated office buildings are
at planning stage or under construction and
expected to complete during the next three
years, 12 of which are located in Business Bay
www.valustrat.com | 5
RESIDENTIAL RENTS
• Overall residential asking rents declined by
8% YoY
• Median asking rents this quarter were 4.5%
lower than Q1 and 7.1% lower than Q2
• Median apartment asking rents declined by
8% YoY and 6.9% QoQ
• Median villa asking rents dropped 11% YoY,
and 8.7% QoQ
• Exceptiontoabovetrendwasseeninaverage
asking prices for studio apartments, which
rose 6.9% YoY and 1.6% QoQ
Source: REIDIN, ValuStrat
RESIDENTIAL MEDIAN ASKING RENTS
Last 2 Years Last Year
-8.o%-14.8%
Last 6 Months
-4.5%
Last Quarter
-7.1%
Source: REIDIN, MEED Projects, ValuStrat
DUBAI OFFICE SUPPLY 2013-2017
(MILLION SQ M GLA)
Existing Stock Expected Supply
2014
2016E
2017E
8.39
8.62 0.54
8.39
7.88
7.532013
2015
0.23
7. OFFICE PRICES
• Overall transacted office prices fell by 8.3% YoY
• Office prices were broadly flat since the
beginning of the year
• Median transacted prices for office space this
quarter stood at AED 10,796 per sq m (AED
1,003 per sq ft)
• Business Bay saw 46% of total office sales,
followed by Jumeirah Lake Towers with 34%.
While only a handful of transactions were
documented for Downtown Dubai, Barsha
Heights and other locations
• Office sizes ranging between 93 sq m and 139
sq m (1,000 sq ft – 1,500 sq ft) represented 44%
of all sales. For Business Bay and Jumeirah
Lake Towers, the share rises to 47%
OFFICE RENTS
• Median asking rents for office space fell
9.3% YoY and 4.9% QoQ
• Overall asking office rents this quarter
were 1.6% lower than the same period two
years ago
• The median asking rent for office space
was AED 1,076 per sq m (AED 100 per sq ft)
• DIFC saw one of the highest asking rents of
AED 3,875 per sq m (AED 401 per sq ft) for
an office area of 60 sq m (646 sq ft)
6 | ValuStrat - Real Estate Research Report - Quarter 3, 2016
Source: REIDIN, ValuStrat
OFFICE MEDIAN TRANSACTED PRICES
Last 2 Years
6.2%
Last Year
-8.3%-13.5%
Last 6 Months Last Quarter
Source: REIDIN, ValuStrat
OFFICE MEDIAN ASKING RENT
Last 2 Years Last Year
-9.3%-1.6% -9.5% -4.9%
Last 6 Months Last Quarter
- 0.8% 0.3%
8. RETAIL SUPPLY
• Located in Jebel Ali, adjacent to Dubai Parks
and Resorts, phase one of Outlet Village mall
opened its doors this quarter
• Developed by Meraas, the 139,355 sq m (1.5
million sq ft) Italian themed outlet retail space
currently features three department stores,
food and beverage outlets and 125 brands
• Majid Al Futtaim opened its 20th mall, a
new My City Centre Al Barsha. Located in
Dubai Science Park and catering to nearby
residential communities such as Villa Lantana
and an anticipated 40,000 residents that will
populate the area by 2017
• Nakheel awarded a contract to build 34,839
sq m (375,000 sq ft) showroom complex in
Dragon City, the 18 showroom 10,963 sq m
(118,000 sq ft) leasing space had already been
booked
• Nakheel announced plans to build a 111,483
sq m (1.2 million sq ft) mall in Nad Al Sheba,
adding 200 shops, F&B outlets, cinema, and
health services
RETAIL PERFORMANCE
• Prime mall retail rents remained flat
since the beginning of the year, line
shops continue to command an average
rental of AED 6,000 per sq m (AED 557
per sq ft)
• According to one of the UAE’s largest
retail groups, high-end fashion retail
stores have reported single digit lower
sales figures for some of the older brands
but growing sales for newer concepts
• Apart from lower spending by Russian,
Chinese and UK tourists, Dubai’s resident
consumers faced reduced purchasing
power due to rising inflation
• Some online retail outlets, who have
improved their logistics and shortened
delivery times, have reported double
digit increases in sales this year
www.valustrat.com | 7
38
1,878
852
416
174
Convenience
(<3k sq m)
Community
(<10k-30k sq m)
Regional
(<30k-90k sq m)
Super Regional
(>90k sq m)
Neighbourhood
(<3k-10k sq m)
Retail
Source: REIDIN, ValuStrat
Source: REIDIN, ValuStrat
RETAIL MALLS & SHOPPING CENTRES
(‘000 SQ M GLA)
NUMBER OF RETAIL MALLS & SHOPPING CENTRES
IN DUBAI
23
30
20
15
12
Convenience
(<3k sq m)
Community
(<10k-30k sq m)
Regional
(<30k-90k sq m)
Super Regional
(>90k sq m)
Neighbourhood
(<3k-10k sq m)
9. HOTEL PERFORMANCE
• July’s hotel occupancy rates increased by 17.6% YoY mainly due to the falling date of the Eid al-Fitr
holiday as demand was up 24.6% YoY
• Average occupancy during period January to August was 76%, compared to 77% the same time
last year
• With hotel room stock up 5% since last year, Average Daily Rate (ADR) for the same period
dropped by 10.8% YoY and Hotel Revenue Per Available Room (RevPAR) fell 11.3% YoY
• The first eight months of 2016 saw annual visitor increases of 18% from Oman, 18% from
Philippines, 14% from Pakistan, 10% from India and 13% more visitors from China. Less visitors
from Jordan -20%, Australia -12%, Egypt -7% and Iran -5%
HOTEL SUPPLY
• The total number of hotel rooms and hotel
apartments as of August 2016 in Dubai crossed
the 100,000 mark, with 100,211 units within 676
establishments
• One hotel had a soft opening this quarter, the
1,004 room Westin Habtoor City, near Business
Bay
• Four new hotels were announced to add 1,303
keys to the pipeline over the next three years
• Notable hotel announcements included Aloft
Deira City Centre, DoubleTree by Hilton in
Jumeirah Village Triangle which will connect to
Al Khail Avenue mall, and Rosemont Hotel and
Residences Dubai which will be located near to
Dubai Internet City and is the world’s first hotel
to feature a tropical rain forest
8 | ValuStrat - Real Estate Research Report - Quarter 3, 2016
Hospitality
SOURCE OF DUBAI VISITORS BY REGION
GCC
South Asia
North Asia & South East Asia
Russia, CIS & Eastern Europe
Australasia
Western Europe
MENA
Americas
Africa
Source: REIDIN, ValuStrat
HOTEL ROOM SUPPLY 2013 - 2017
(‘000 KEYS)
Hotel and Serviced Apt Rooms New Supply
2014
2016E
2017E
98
109
10.7
14.4
98
92
832013
2015
Source: DTCM, ValuStrat
25%
21%
16%
11%
9%
6%
5%
5% 2%
10. www.valustrat.com | 9
Jebel Ali
Industrial Area
INDUSTRIAL INVESTMENT/SUPPLY
• The Dubai industrial sector is looking
to increase share of the manufacturing
sector in the country’s GDP to nearly 20 per
cent by 2021
• 18billionDirhamsistheforecastedincrease
in Dubai’s GDP for the industrial sector, out
of which revenues from machinery and
equipment division constitutes one fourth
of the overall industrial sector
• A connecting transport & logistics passage
between JAFZA & Dubai South (DWC) will
provide the facility for international firms to
transfer goods arriving at Jebel Ali Port to
DWC airport within just a few hours
• The industrial segment is now showing
some signs of slowing growth, post
adapting to lowering oil prices ranging
around USD 40-50 per barrelINDUSTRIAL PERFORMANCE
• Industrial built property (warehouses/
industrial sheds) sales prices have
seen slight declines in asking prices
depending on factors such as location,
plot size, condition and quality. Overall
prices ranged between AED 2,625 per sq
m to AED 4,400 per sq m (AED 242 per
sq ft to AED 410 per sq ft)
• Average annual rental rates have
remained unchanged in locations such
as DIP/JAFZA and Jebel Ali, rents
ranged between AED 322 to AED 591 per
sq m (AED 30 to AED 55 per sq ft) for
industrial / warehouse units. Slight price
reductions were noted in locations such
as Ras Al Khor & Al Quasis, with rentals
ranging between AED 300 to AED 540
per sq m (AED 28 to AED 50 per sq ft)
Industrial
Al Quoz
Al Qusais
Jebel Ali Free Zone
Dubai South
Dubai Investment
Park
INDUSTRIAL RENTAL RATES
(AED / SQ M)
Source: ValuStrat
Source: ValuStrat
(AED / SQ M)
INDUSTRIAL PRICES
Price High Price Low
Rent High Rent Low
Dubai
Investment
Park
Jebel Ali
Free Zone
Al Quoz
4,515
3,430
4,275
2,890
4,050
2,700
580
425
480
372
600
430
590
425
575
420
550
400
11. Yields firm up nicely for mid-tier
locations: ValuStrat
The consultancy ValuStrat suggests gross yields
of 5.5 per cent for villas and 7.5 per cent for
apartments, while the net would be 4.4 per cent
for villas and 5.3 per cent on apartments. Based
on the latest ValuStrat data, gains of 0.8 per cent
to 2.8 per cent were recorded by “mid-range, high-
yielding properties” during August.
ValuStrat in the Media
7 September 2016
ValuStrat to bolster its Qatar operations
Business advisory firm ValuStrat has formally
made its Doha office a fully owned subsidiary and
appointed key executives to drive its business in
Qatar to new heights.
Since the establishment of ValuStrat’s franchise
office in Doha under the Qatar Financial Centre
(QFC) in 2013, ValuStrat’s business has gone from
strength to strength – with a growth in revenues,
growing client list, new service lines and increased
staff numbers.
11 August 2016
Dubai businessman Al Habtoor says
property prices will rise in ‘coming
months’
ValuStrat said its data indicated an early
recovery was materialising in some areas, with a
possible bottoming-out of property values during
the course of the year. More broadly the firm
said prices had been relatively stable over the
last 12 months and sentiment was “cautiously
optimistic” towards a recovery commencing in
the second half of 2016.
09 August 2016
ValuStrat CEO Shahid Kazi Interview
“The real growth for ValuStrat has come over the
last decade or so, during which the firm moved
from a small UAE company offering just a few
services to becoming a multi-service, multi-
sector regional firm”
01 August 2016
How have externalities affected Dubai
real estate?
A Q2 2016 review by local consulting firm
ValuStrat revealed that after 12 relatively stable
months, its residential price index displayed
further indications of an early recovery in some of
the areas it measures, signalling possible signs
of a bottoming-out in property values across its
coverage locations during the course of 2016
21 August 2016
Dubai realty sales through in stability
mode
Withaclear12-monthtrendofrelativelystablesales
prices, the general sentiment has been cautiously
optimistic towards a recovery commencing in the
second-half of this year,” states a new report from
ValuStrat
13 July 2016
