observer dubai market report q2 / 2018
TRANSCRIPT
OBSERVERDubai Market ReportQ2 / 2018
Price Movements QoQ
Apartments
Apartments
Volumes
Volumes
Villas
Villas
Values
Values
Rental Movements QoQ
Ready Units Transactions
Off-Plan Units Transactions
Report HighlightsServices
Affordability is one of the key real estate trends being realised in 2018 and hence is a core theme in this report. With a large amount of supply set to enter the market, developers need to focus on catering to the largest and most active sectors, namely the mid-income segment. To keep ticket prices of residential property affordable to this audience, developers have been offering competitive payment plans, as well as reducing unit sizes. This trend is already being seen in locations such as Dubailand, Dubai South, Al Furjan and Jumeriah Village Circle.
Sales Prices The downward price corrections witnessed in Q1, continued throughout Q2. Average apartment sales prices are down 1% from the last quarter, whilst average villa sales prices have remained unchanged. Off-plan sales, particularly in the mid-market segment, continue to dominate the market due to flexible and affordable payment plans turning many renters into buyers.
Rental Prices Downward rental adjustments continue to take place in the Dubai market, due to several factors; additional stock being delivered thus providing more choices, some tenants purchasing their own properties due to the current affordability and conservative market sentiment. Average apartment rents are down 4% from the last quarter and average villa rents are down 2%.
Transactions The number of completed (ready to move in) unit transactions decreased by 3% from the previous quarter, with a 21% increase in transaction value, indicating a lower volume of sales but for a higher ticket size. For off-plan units, transactions increased by 5% from the previous quarter, with a 10% uplift in values.
Market Outlook The watchword for 2018 is ‘supply’. Whilst the UAE is still experiencing population growth, property supply, however, is growing at a higher percentage than the population. This means the real estate market will most likely continue to soften throughout the rest of 2018.
ValuationsMortgage and Secured LendingPortfolio Valuations
Advisory and ResearchFinancial FeasibilitiesHighest and Best Use StudiesMarket ResearchConceptual Advisory and Project Positioning Studies Project Redevelopment/Repositioning Advisory Investment Strategies – Acquisition and Disposal
Sales and LeasingCommercialIndustrialResidentialRetail
Property/Facilities Management CommercialMixed-UseResidential
International Properties London Off-Plan ResidentialInternational Homes and Investments International Relocations
Residential Market Q2 2018 Snapshot
-1%
-4%
-3%
+5%
0%
-2%
+21%
+10%
The Observer - Dubai Residential Q2 2018 1
ApartmentsResidential Sales Prices and Quarterly Change
Off-plan residential sales continue to dominate the market.
Residential Sales Prices and Quarterly Change
Villas
HOT TOPIC After the surge in off-plan sales last year, Dubai regulators have proposed a policy whereby property developers will need a project to reach 50 per cent completion before they can commence off-plan sales; currently the law stipulates only 20 per cent completion is required. This has been proposed due to concerns that the attractive payment plans on offer for some projects were leading to a rise in speculative buying. This proposal, if approved, is likely to slow down the pace of off-plan launches which could help stem supply in the short term.
The downward price corrections witnessed in Q1, continued throughout Q2. Average apartment sales prices are down 1% from the last quarter, whilst average villa sales prices have remained unchanged.
The continued decrease in apartment prices over the last few years has made the bigger units more affordable, hence there has been a lower number of transactions but a higher value of transactions.
Larger villas with high price points have generated limited interest from buyers, mainly due to the lower investment yields attached to this type of property and currently the main focus is on affordable units.
Business Bay residential prices picked up, owing to its good location and the fact investors are seeking alternatives to the higher priced Downtown and DIFC areas. Off-plan sales, particularly in the mid-market segment, continue to dominate the market due to flexible and affordable payment plans turning many renters into buyers.
1,17
8
792
1,68
3
757
1,32
0
807
729
957
631
1,11
0
824
1,09
5
1,38
6
1,22
6
753
1,68
0
760
1,32
0
822
730
941
589
1,07
2
871 1,
077
1,34
2
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Business Bay DiscoveryGardens
Downtown DubaiLand Dubai Marina Dubai MotorCity
Dubai SiliconOasis
Dubai SportsCity
InternationalCity
JLT JVC The Greens The Views
PERCEN
TAGE C
HA
NG
EAED
SA
LES
PRIC
ES
Figures in AED/Sq FtSource: REIDIN & Chestertons
Q1 2018 Q2 2018 QoQ Movement
942
985
2,20
5
1,20
4
988
923
960
2,29
8
1,19
5
991
-3%0
500
1000
1500
2000
2500
0
200
400
600
800
1000
1200
1400
1600
1800
-2%
-1%
0%
1%
2%
3%
4%
5%
Arabian Ranches Jumeirah Park Palm Jumeirah The Lakes The Meadows/The Springs
Figures in AED/Sq FtSource: REIDIN & Chestertons
PERCEN
TAGE C
HA
NG
EAED
SA
LES
PRIC
ES
Q1 2018 Q2 2018 QoQ Movement
1,17
8
792
1,68
3
757
1,32
0
807
729
957
631
1,11
0
824
1,09
5
1,38
6
1,22
6
753
1,68
0
760
1,32
0
822
730
941
589
1,07
2
871 1,
077
1,34
2
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Business Bay DiscoveryGardens
Downtown DubaiLand Dubai Marina Dubai MotorCity
Dubai SiliconOasis
Dubai SportsCity
InternationalCity
JLT JVC The Greens The Views
PERCEN
TAGE C
HA
NG
EAED
SA
LES
PRIC
ES
Figures in AED/Sq FtSource: REIDIN & Chestertons
Q1 2018 Q2 2018 QoQ Movement
942
985
2,20
5
1,20
4
988
923
960
2,29
8
1,19
5
991
-3%0
500
1000
1500
2000
2500
0
200
400
600
800
1000
1200
1400
1600
1800
-2%
-1%
0%
1%
2%
3%
4%
5%
Arabian Ranches Jumeirah Park Palm Jumeirah The Lakes The Meadows/The Springs
Figures in AED/Sq FtSource: REIDIN & Chestertons
PERCEN
TAGE C
HA
NG
EAED
SA
LES
PRIC
ES
Q1 2018 Q2 2018 QoQ Movement
The Observer - Dubai Residential Q2 2018 2 The Observer - Dubai Residential Q2 2018 3
ApartmentsResidential Market Rent and Quarterly Change
Supply is outpacing demand which is creating a tenant-led market.
Residential Market Rent and Quarterly Change
Villas
Downward rental adjustments continue due to several factors; additional stock being delivered providing more choices, some tenants purchasing their own properties due to the current affordability and conservative market sentiment.
Average apartment rents are down 4% from the last quarter and average villa rents are down 2%.
As opposed to previous quarters, smaller units are also affected. Studio rentals dropped by an average of 5% and 1BR units by 4%.
Prime established locations such as Jumeirah Golf Estates, DIFC and Dubai Marina exhibit more resilience when it comes to both apartment and villa rental rates.
The focus for developers and landlords going forward should be on quality as tenants will proactively seek out cheaper options or move to better quality units for the same price as their existing units.
HOT TOPIC With the burgeoning volume of off-plan investment stock entering the market that is destined to be made available for rent after handover - the ability of the rental market to absorb a high volume of new stock will be tested over the next few years. Newly completed properties that are affordable, in good locations and offer decent facilities will command attention over older more expensive properties, essentially creating a two-tier market.
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
-
50,000
100,000
150,000
200,000
250,000
Studio 1BR 2BR 3BR QoQ Change
Business Bay DIFC DiscoveryGardens
DowntownDubai
Dubai Marina DubaiSilicon Oasis
Dubai Sports City
Dubailand InternationalCity
JLT JVC The Greens The Views DubaiMotor City
PERCEN
TAGE C
HA
NG
EAED
REN
TAL
PRIC
ES
Figures in AED/Sq FtSource: Propertyfinder & Chestertons
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
ArabianRanches
TheSprings
TheMeadows
The Lakes VictoryHeights
Al Furjan JVT JumeirahIslands
JumeirahGolf Estates
PalmJumeirah
2BR 3BR 4BR 5BR AVGFigures in AED/Sq FtSource: Propertyfinder & Chestertons
AED
REN
TAL
PRIC
ES
PERCEN
TAGE C
HA
NG
E
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
-
50,000
100,000
150,000
200,000
250,000
Studio 1BR 2BR 3BR QoQ Change
Business Bay DIFC DiscoveryGardens
DowntownDubai
Dubai Marina DubaiSilicon Oasis
Dubai Sports City
Dubailand InternationalCity
JLT JVC The Greens The Views DubaiMotor City
PERCEN
TAGE C
HA
NG
EAED
REN
TAL
PRIC
ES
Figures in AED/Sq FtSource: Propertyfinder & Chestertons
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
ArabianRanches
TheSprings
TheMeadows
The Lakes VictoryHeights
Al Furjan JVT JumeirahIslands
JumeirahGolf Estates
PalmJumeirah
2BR 3BR 4BR 5BR AVGFigures in AED/Sq FtSource: Propertyfinder & Chestertons
AED
REN
TAL
PRIC
ES
PERCEN
TAGE C
HA
NG
E
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
-
50,000
100,000
150,000
200,000
250,000
Studio 1BR 2BR 3BR QoQ Change
Business Bay DIFC DiscoveryGardens
DowntownDubai
Dubai Marina DubaiSilicon Oasis
Dubai Sports City
Dubailand InternationalCity
JLT JVC The Greens The Views DubaiMotor City
PERCEN
TAGE C
HA
NG
EAED
REN
TAL
PRIC
ES
Figures in AED/Sq FtSource: Propertyfinder & Chestertons
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
ArabianRanches
TheSprings
TheMeadows
The Lakes VictoryHeights
Al Furjan JVT JumeirahIslands
JumeirahGolf Estates
PalmJumeirah
2BR 3BR 4BR 5BR AVGFigures in AED/Sq FtSource: Propertyfinder & Chestertons
AED
REN
TAL
PRIC
ES
PERCEN
TAGE C
HA
NG
E
The Observer - Dubai Residential Q2 2018 4 The Observer - Dubai Residential Q2 2018 5
Developers are offering affordable, off-plan units to appeal to the growing mid-income sector.
HOT TOPIC Developers are increasingly offering competitive pricing and flexible payment plans as well as building smaller sized units at lower costs to cater to the mid-income sector. In 2018, 72% of the property transactions accounted for units under 1,000 sq ft, predominantly studio and one bedroom apartments.
The number of completed (ready to move in) unit transactions decreased by 3% from the previous quarter, with a 21% increase in transaction value, indicating a lower volume of sales but for a higher ticket size.
For off-plan units, transactions increased by 5% from the previous quarter, with a 10% uplift in values.
Dubai Marina continued to be the most popular community in terms of completed unit transaction volumes and values while Dubailand dominated the off-plan sales market.
5.696.66
1,000
0
2,000
3,000
4,000
5,000
6,000
Q1 2018 Q2 2018
Ready Properties Off-planFigures in AED/Sq FtSource: REIDIN & Chestertons
5.696.66
1,000
0
2,000
3,000
4,000
5,000
6,000
Q1 2018 Q2 2018
Ready Properties Off-planFigures in AED/Sq FtSource: REIDIN & Chestertons
5.696.66
1,000
0
2,000
3,000
4,000
5,000
6,000
Q1 2018 Q2 2018
Ready Properties Off-planFigures in AED/Sq FtSource: REIDIN & Chestertons
Volume of Residential Transactions Q2 2018
Value of Residential Transactions Q2 2018
The Observer - Dubai Residential Q2 2018 6 The Observer - Dubai Residential Q2 2018 7
Sales TransactionsCompleted Units
Top 10 Areas Based on Transaction Volumes Top 10 Areas Based on Transaction Volumes
Sales TransactionsOff-plan Units
Top 10 Areas Based on Ttransaction Values (in million AED) Top 10 Areas Based on Ttransaction Values (in million AED)
100 200 300 400 500
Jumeirah Lake Towers
Al Furjan
Jumeirah Village Circle
Palm Jumeirah
Downtown Dubai
Emirates Living
International City
Dubai Sports City
DubaiLand
Dubai Marina
200 400 600 800 1,000
Jumeirah Village Circle
Dubai Sports City
Arabian Ranches
DubaiLand
Al Furjan
Downtown Dubai
Emirates Living
Palm Jumeirah
Dubai Marina
Business Bay
0 100 200 300 400 500 600 700 800 900
Al Quoz
Dubai Marina
Dubai South
The Lagoons
MBR City
Downtown Dubai
Jumeirah Village Circle
Meydan City
Business Bay
DubaiLand
0 100 200 300 400 500 600 700 800 900 1000
Jumeirah Bay Island
Al Quoz
Jumeirah Village Circle
Meydan City
MBR City
The Lagoons
Dubai Marina
Downtown Dubai
Business Bay
DubaiLand
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
100 200 300 400 500
Jumeirah Lake Towers
Al Furjan
Jumeirah Village Circle
Palm Jumeirah
Downtown Dubai
Emirates Living
International City
Dubai Sports City
DubaiLand
Dubai Marina
200 400 600 800 1,000
Jumeirah Village Circle
Dubai Sports City
Arabian Ranches
DubaiLand
Al Furjan
Downtown Dubai
Emirates Living
Palm Jumeirah
Dubai Marina
Business Bay
0 100 200 300 400 500 600 700 800 900
Al Quoz
Dubai Marina
Dubai South
The Lagoons
MBR City
Downtown Dubai
Jumeirah Village Circle
Meydan City
Business Bay
DubaiLand
0 100 200 300 400 500 600 700 800 900 1000
Jumeirah Bay Island
Al Quoz
Jumeirah Village Circle
Meydan City
MBR City
The Lagoons
Dubai Marina
Downtown Dubai
Business Bay
DubaiLand
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
100 200 300 400 500
Jumeirah Lake Towers
Al Furjan
Jumeirah Village Circle
Palm Jumeirah
Downtown Dubai
Emirates Living
International City
Dubai Sports City
DubaiLand
Dubai Marina
200 400 600 800 1,000
Jumeirah Village Circle
Dubai Sports City
Arabian Ranches
DubaiLand
Al Furjan
Downtown Dubai
Emirates Living
Palm Jumeirah
Dubai Marina
Business Bay
0 100 200 300 400 500 600 700 800 900
Al Quoz
Dubai Marina
Dubai South
The Lagoons
MBR City
Downtown Dubai
Jumeirah Village Circle
Meydan City
Business Bay
DubaiLand
0 100 200 300 400 500 600 700 800 900 1000
Jumeirah Bay Island
Al Quoz
Jumeirah Village Circle
Meydan City
MBR City
The Lagoons
Dubai Marina
Downtown Dubai
Business Bay
DubaiLand
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
100 200 300 400 500
Jumeirah Lake Towers
Al Furjan
Jumeirah Village Circle
Palm Jumeirah
Downtown Dubai
Emirates Living
International City
Dubai Sports City
DubaiLand
Dubai Marina
200 400 600 800 1,000
Jumeirah Village Circle
Dubai Sports City
Arabian Ranches
DubaiLand
Al Furjan
Downtown Dubai
Emirates Living
Palm Jumeirah
Dubai Marina
Business Bay
0 100 200 300 400 500 600 700 800 900
Al Quoz
Dubai Marina
Dubai South
The Lagoons
MBR City
Downtown Dubai
Jumeirah Village Circle
Meydan City
Business Bay
DubaiLand
0 100 200 300 400 500 600 700 800 900 1000
Jumeirah Bay Island
Al Quoz
Jumeirah Village Circle
Meydan City
MBR City
The Lagoons
Dubai Marina
Downtown Dubai
Business Bay
DubaiLand
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
Source: REIDIN & Chestertons Source: REIDIN & Chestertons
The Observer - Dubai Residential Q2 2018 8 The Observer - Dubai Residential Q2 2018 9
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