The document discusses the top real estate trends for the UAE in 2014 as identified by Jones Lang LaSalle. The key trends include avoiding another property bubble in Dubai through more measured development, the return of major mega-projects, future areas of growth, limited impact of Expo 2020 in 2014, varied approaches to real estate financing, a two-speed investment market, increased corporate activity driving workplace transformation, more hotel investment sales, sustainability moving from talk to action, and improved valuation and measurement standards. The trends are expected to have differing impacts across major UAE real estate markets like Dubai and Abu Dhabi.

1. T
Top trends for UAE
O P Real Estate in 2014
T R E
N D S
1

2. Presentation Outline
1
2
3
4
Review
Of
2013
Trends
Mega Trends
Influencing
UAE
Real Estate
in 2014
Implications
for Major
Markets
Q&A
2

3. Mega trends
Influencing UAE
Real Estate in 2014
6

4. Jones Lang LaSalle’s – Top Trends for 2013
01
Return of confidence impacts the Dubai market
02
Funding constraints will apply a natural brake to development activity
03
Increased involvement from Chinese and the Global South
04
Significant supply levels could offset improved sentiment
05
Greater attention to operating costs and property management
06
Sustainability – more talk than action
07
Government Initiatives will influence market conditions
Correct
Partially correct
Incorrect
7

5. Improving Macro Economic Climate
UAE outperforms global economy in 2013
Brighter prospects for 2014
Global
Middle East
2.5
3
2.5
4
•
Global Economic
Situation has improved
UAE
•
3.9
4.3
Regional geopolitical
situation remains mixed
Real GDP Growth (%)
8

6. Jones Lang LaSalle’s – Top Trends for 2014
1
Avoiding another bubble
6
Two speed investment market
2
More measured mega developments
7
Workplace transformation as corporate
activity increases
3
Future directions of growth
8
More hotel investment sales
4
Expo 2020. Limited impact in 2014
9
Sustainability – From talk to action
5
Varied approaches to finance real estate
10
Improved valuation and
measurement standards
9

7. 1: Avoiding another bubble in Dubai – Smarter the 2nd time around
Worrying signs of over heating
 Unsustainable price growth in
residential market
 Increasing cost pressures / resource
constraints
 Return of speculative activity
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
Sale Price Index
% change Y-o-Y
10
% change Y-o-Y
400
350
300
250
200
150
100
50
0
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
 Expo 2020 causing
irrational exuberance
Index, Jan 2003=100
 Land sales on generous
financial terms
Dubai Residential Sale Price Index

8. 1: Avoiding another bubble in Dubai – Smarter the 2nd time around
Differences this time around
 Significant levels of new
supply
 Larger projects are being
phased in line with demand
 More caution from investors
 Less reliance on pre-sales
and sub developers
 Better regulations – aimed at
calming the market
11

9. 2: Return of mega projects - Dubai
 Dubai Canal – Meraas / RTA
 Mohammad Bin Rashid City –
Emaar / DPG
 Dubai Waterfront – Nakheel





Bluewaters (Meraas)
Habtoor City
Dubai World Central (DWC)
Dubai Trade Centre District (DTCD)
Dubai Design District (d3)
15

10. 2: Return of mega projects – Abu Dhabi
 Zayed City (Capital District)
UPC
 Masdar (Mubadala)
 Al Maryah Island (Mubadala)
 Saadiyat Island / TDIC
 Yas Island / Aldar
16

11. 2: More measured mega projects – Key Messages
 Resumption of previously stalled projects
 More awareness of need to phase projects in line with demand
 More co-operation between master developers
 Reduced role for sub developers
 Improved regulations on pace of development
17

12. 3: Future Growth : Dubai
9
E311 Sheikh Zayed Road
8
6
5
3
10
2
11
E311 Sheikh Mohamed Bin
Zayed Road
4
7
1
15
12
E311 Emirates Road
Free Zone
13
14
1 Dubai Industrial City
3 JAFZA
5 JLT
7 Dubiotech
9 Dubai Maritime City
11 DAFZA
13 Academic City
2 TechnoPark
4 IMPZ
6 TECOM
8 DIFC
10 DHCC
12 Dubai Silicon Oasis
14 Dubai Outsource Zone
15 Dubai World Central
18

13. 3: Future Growth : Dubai
E311 Sheikh Zayed Road
3
5
1
4
6
2
E311 Sheikh Mohamed Bin
Zayed Road
E311 Emirates Road
Commercial District
1
CBD
3
TECOM A & B
5
JLT
2
Business Bay
4
TECOM C
6
Jebel Ali
19

14. 3: Future Growth : Dubai
E311 Sheikh Zayed Road
1
E311 Sheikh Mohamed Bin
Zayed Road
2
3
4
5
E311 Emirates Road
High Priority
Low Priority
1
Business Bay
3
Mohamed Bin Rashed City
2
Lagoons
4
Dubai World Central
5
Dubai Land
20

15. 3: Future Growth : Dubai
E311 Sheikh Zayed Road
E311 Sheikh Mohamed Bin
Zayed Road
South – towards
Abu Dhabi
Infill – filling in
the gaps
E311 Emirates Road
21

16. 3: Future Growth : Abu Dhabi
Mina Zaved
Hydra Village
Saadiyat
Al Maryah
Shams
Lulu
Yas Island
Saraya
Reem Island
Naimat
Al Reef
Bateen
Peninsulas
Raha Beach
Danet
Airport City
Rawdhat
Masdar
Hudayriat
Capital
Centre
ICT
Arzanah
BMC
Capital District
1
Horizontal + Vertical Development
2
Master Planning and / or infrastructure stage
22
Source: Jones Lang LaSalle

17. 4. Expo 2020 : Limited impact in 2014
 Positive long term impact on UAE
 Limited direct impact in 2014
 Greatest benefit will be to the
hospitality, logistics and retail
sectors
 Two potential problems will require
careful management in the short
term:
- Excessive price expectations
- Excessive potential new supply
23

18. 5: Varied approaches to finance real estate
Focus on equity rather than debt
 Pre-sales remain important in residential market
 Sale and leasebacks
 Pre leases / build to suit
 Limited use of IPO’s and bonds
 Last mile financing
 REIT’s
 Banks remain cautious
24

19. 6: Two Speed Investment Market
Limited Interest from Western
institutions
 Constrained by lack of investment
grade product
 More ME institutions looking in
Dubai Strategic relationships
 Chinese investment in the Pearl
is Government backed means of
selling expertise
 Increased interest from
debt investors
26
25

20. 6: Two Speed Investment Market
Strong interest from private
investors
 DLD report transactions of AED162
billion in 2013
 Sales to more than 120 nationalities
 Most sales either land or individual
homes / units
26

21. 7: Workplace Transformation as Corporate Activity Increases
Increasing Demand from Corporate
Occupiers
 Overall market is improving – more
corporates now growing again
 Mixed implications for the real estate
market
 Continued two tier market
 2014 will remain primarily a tenants
market, with no decline in excessive
overall vacancy
26
27

22. 7: Workplace Transformation as Corporate Activity Increases
Key Drivers and business objectives
driving work place transformation: Reducing property costs
 Improving business performance
 Attracting and retaining staff
 Merging of organizations
 Consolidations
27
28

23. 8: More investment sales in hotel sector across UAE
 A larger number of operating hotels
 Loan maturities
 Current diversity of players
 Specialization on core activities
(real estate developers vs hoteliers)
• Hotels perceived as ‘income
generating’ assets
• More professional asset
management places greater
emphasis on financial performance
28
29

24. 9: Sustainability – From talk to action
Case study of U Bora Tower
• Energy savings of 15%
• Water reduction
• Waste reduction
 Small scale / low capital cost
 Payback of less than 3 years
 Reduces service charges
 Increases tenant appeal
29
30

25. 9: Sustainability – From talk to action
 Increased awareness of
importance of sustainability
 Abu Dhabi continues to lead the
way
 Dubai introduces new regulations
 Emergence of a ‘sustainability
premium’
 More focus on small scale
initiatives that can be retrofitted
29
31

26. 10: Improved valuation & measurement standards
Measurement standards

Plans to introduce global measurement
standards

Could impact measured areas and
therefore values by 25%

Variety of standards currently used in
UAE causes confusion and inhibits
transparency

Quote all projects in sq m rather than sq ft

Standard approach to convert BUA (supply
data) into GLA (demand).
30
32

27. 10: Improved valuation & measurement standards
Valuation standards
 Better Quality - All Valuations will have to adhere to International Valuation
Standards
 Better Transparency - Levels of openness and transparency laid down in IVS
 Better Local Knowledge and skills - Valuers required to have expertise in both
the relevant asset class and geography.
31
33

28. Mega trends
Implications
for Major Markets
34

29. Market Directions - Dubai - Prime Rental Clock
Q4 2012
Rental Growth
Slowing
Rental Growth
Accelerating
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Rents
Falling
Rents
Bottoming Out
* Hotel
Residential
Retail
Office
35

30. Market Directions - Dubai - Prime Rental Clock
Q4 2013
Rental Growth
Slowing
Residential
Rents
Falling
Rental Growth
Accelerating
Rents
Bottoming Out
* Hotel
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Retail
Office
36

31. Market Directions - Dubai - Prime Rental Clock
Q4 2014
Residential
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Rents
Falling
Rental Growth
Accelerating
* Hotel
Rental Growth
Slowing
Rents
Bottoming Out
Retail
Office
37

32. Market Directions - Abu Dhabi - Prime Rental Clock
Q4 2012
Rental Growth
Slowing
Rental Growth
Accelerating
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Rents
Falling
Rents
Bottoming Out
* Hotel
Retail
Office
Residential
38

33. Market Directions - Abu Dhabi - Prime Rental Clock
Q4 2013
Rental Growth
Slowing
Rental Growth
Accelerating
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Rents
Falling
Rents
Bottoming Out
Residential
Retail
* Hotel
Office
39

34. Market Directions - Abu Dhabi - Prime Rental Clock
Q4 2014
Rental Growth
Slowing
Residential
*Hotel clock reflects the
movement of RevPAR.
Note: The property clock
illustrates where Jones Lang
LaSalle estimates each prime
market is within its individual
rental cycle as at end of the
relevant quarter.
Source: Jones Lang LaSalle
Rents
Falling
Rental Growth
Accelerating
Rents
Bottoming Out
* Hotel
Office
Retail
40

35. Jones Lang LaSalle’s – Top Trends for 2014
1
Avoiding another bubble
6
Two speed investment market
2
More measured mega developments
7
Workplace transformation as corporate
activity increases
3
Future directions of growth
8
More hotel investment sales
4
Expo 2020. Limited impact in 2014
9
Sustainability – From talk to action
5
Varied approaches to finance real estate
10
Improved valuation and
measurement standards
46

36. Question and Answers
47

37. Alan Robertson
CEO, MENA
alan.robertson@jll.com
David Dudley
Director of MENA
Operations
david.dudley@jll.com
Andrew Williamson
Head of Retail
andrew.williamson@jll.com
Chiheb Ben Mahmoud
Head of Hotels & Hospitality
Andrew Rotteveel
Head of Project and
Development Services
andrew.rotteveel@jll.com
Deepak Jain
Head of Strategic
Consulting
deepak.jain@jll.com
Gaurav Shivpuri
Head of Capital Markets
Gaurav.shivpuri@jll.com
Fadi Moussalli
Regional Director – ICG
fadi.moussalli@jll.com
Craig Plumb
Head of Research
craig.plumb@jll.com
Simon Brand
Head of Valuation Advisory
simon.brand@jll.com
chiheb.ben-mahmoud@jll.com
Dana Williamson
Head of Agency
dana.williamson@jll.com
Graham Howat
Head of Asset & Property
Management
graham.howat@jll.com
48

38. Thank you
twitter.com/
JLLMENA
youtube.com/
joneslanglasalle
linkedin.com/company/
jones-lang-lasalle
joneslanglasalleblog.com/
EMEAResearch
49