UnitasConsultancy(AGLOBALCAPITALPARTNERSGROUPCOMPANY) Q4 2016STRICTLYCONFIDENTIAL

OfficeNo.1706,IndigoIcon,PlotNo.F,JumeriahLakeTowers,Dubai,UAE1

This document is provided by Unitas Consultancy solely for the use by its clients. No part of it may be circulated,quoted, or reproduced for distribution outside the organization without prior written approval.

Dubai:Don’tBeDown

Executive Summary

• Amidst a plethora of schizophrenic opinions on the state of the markets ranging from a recovery to a continued decline, it bearsworth examining first principal differences, which arise partly due to the lens at which the data is analyzed. A closer examinationof price trends reveals that from its apartment peak prices are still down 13%, whereas city-wide villas are down 11%. However,if you measure price change from its lows, we can witness an uptick in apartment price action by 1.3% and villas by 1.6%. Agranular analysis of communities reveals that most have rebounded from their lows except for some of the high-end apartmentareas such as Dubai Marina, Palm Jumeirah and Downtown. In fact, from the start of the year a few communities such as JLT,Sports City and Springs have inched higher.

• In the rental space, city-wide indices continue to test lower limits, with apartment rents falling by 7.5% and villa rents by 11%from their peaks. However, a a community-wise analysis reveals that ‘green shoots’ have begun to arise in communities such asPalm Jumeirah apartments, Furjan Villas and JLT. These ‘green shoot’ could signal a bottoming out of rents as supply anddemand dynamics balance themselves, predominately driven by delay of handovers.

• In transactional activity, volume continues to remain below their peak levels by 60%. However, from the start of the year activityis up 15% (Jan 2016 vs Oct 2016), while from its lows it has rebounded by 25% (Jul 2016 vs Oct 2016). We opine that part of thereason why transactional activity has reduced has been due to the rising incidence of mortgages (highlighted in our last reportentitled, “Dubai: The Times they are Changing”), which delays trading, consequently lowering the velocity of transactions.

• Similar to the property market, we can witness a rebound in the equity market as well. In 2014, the equity market plummetedby 40%, coinciding with the collapse in oil prices. At the start of the year the DFM touched its lows for this cycle at 2621 points.Since plumbing those lows, (14TH Nov 2016) the market has recovered by 22%. The third quarter results of the real estate sectorshowed an improvement. Losses in companies such as Arabtec and Drake & Skull narrowed, while Emaar continued to showyear on year increase in profits, signaling that corporate performance has bottomed out. Given the fact that corporate resultsare a leading indicator for equity prices, which in turn are a leading indicator for real estate prices, we opine that the pricerecovery (at its incipient stage) is set to gain momentum.

ExecutiveSummary|Don’tbeDownQ4

1 AnalysisofPriceChangesforRealEstateAssets

2 ExaminationofDubaiRentalRates

3 AlookintoTransactionalActivityforRealEstate

4 ThePerformanceoftheDFM

5 Conclusions

Contents

AnalysisofPriceChangeforRealEstateAssets

“InGodwetrust.Allothersmustbringdata.”– W.EdwardsDeming

TheMetricsforMeasuringPriceChanges

Source:REIDIN

The above graph reveals the different metrics in which price change can be measured. Using the ‘min-to-now’ method reveals thatmarkets have bottomed out with a slight rebound from their lows. This method is more effective in analyzing inflection points comparedto a ‘Year-on-Year’ or ’Peak to Now’ metric.

AnalysisofPriceChangesforRealEstateAssetPrices |Don’tbeDownQ4 3

CityWidePrices

1250

1300

1350

1400

1450

1500

1550

2014

-05-01

2014

-06-01

2014

-07-01

2014

-08-01

2014

-09-01

2014

-10-01

2014

-11-01

2014

-12-01

2015

-01-01

2015

-02-01

2015

-03-01

2015

-04-01

2015

-05-01

2015

-06-01

2015

-07-01

2015

-08-01

2015

-09-01

2015

-10-01

2015

-11-01

2015

-12-01

2016

-01-01

2016

-02-01

2016

-03-01

2016

-04-01

2016

-05-01

2016

-06-01

2016

-07-01

2016

-08-01

2016

-09-01

2016

-10-01

DubaiApartments DubaiVillas

Apartments Villas

Min-Now 1.3% 1.6%

YoY -0.8% -0.2%

Peak-Now -13% -11%

YTD -0.5% 0.4%

ACommunity-WisePriceAnalysisbyMetrics– GreenShoots

Source:REIDIN

A community wise analysis reveals that prices are still in the range of 8-20% below their peak in mid 2014. However, there have been’green shoots’ in most communities ranging from 1-7%. However, the high-end apartment communities such as Dubai Marina,Downtown and Palm Jumeirah continue to test lower limit pricing.

CommunityPriceChangebyMetric:Apartments

DubaiMarina Downtown PalmJumeirah TheViews Greens JLT DubaiSportsCity DiscoveryGardens InternationalCity

Min-Now 0% 0% 0% 1% 2% 3% 4% 6% 1%

YoY -5% -9% -2% -2% -3% 0% -2% 0% -1%

Peak-Now -18% -19% -14% -13% -14% -12% -9% -8% -9%

YTD -3% -4% -5% 0% 0% 1% 4% 5% 0%

AlFurjan SpringsandMeadows ArabianRanches PalmJumeirah

Villas

Min-Now 4% 7% 1% 3%

YoY 0% 0% -6% -1%

Peak-Now -15% -8% -17% -13%

YTD 1% 5% -2% -3%

CommunityPriceChangebyMetric:Villas

AnalysisofPriceChangesforRealEstateAssetPrices |Don’tbeDownQ4 4

DubaiRentalRateChanges

“Ifwehavedata,let’slookatdata.Ifallwehaveareopinions,let’sgowithmine.”– JimBarksdale

TheMetricsforMeasuringRentalChanges

Source:REIDIN

Within the rental space, the city-wide index continues to breach its lower limit, with apartment rental rates fallen by 7.5% and villas 11%from their peaks. On a city wide basis, there appears to be no recovery as yet being witnessed, although the picture changes when agranular analysis is conducted on an inter community basis.

CityWideRentsbyMetric

ExaminationofDubaiRentalRates|Don’tbeDownQ4 6

7.6

7.8

8

8.2

8.4

8.6

8.8

5.50

5.70

5.90

6.10

6.30

6.50

6.70

6.90

2014

-05-01

2014

-06-01

2014

-07-01

2014

-08-01

2014

-09-01

2014

-10-01

2014

-11-01

2014

-12-01

2015

-01-01

2015

-02-01

2015

-03-01

2015

-04-01

2015

-05-01

2015

-06-01

2015

-07-01

2015

-08-01

2015

-09-01

2015

-10-01

2015

-11-01

2015

-12-01

2016

-01-01

2016

-02-01

2016

-03-01

2016

-04-01

2016

-05-01

2016

-06-01

2016

-07-01

2016

-08-01

2016

-09-01

2016

-10-01

DubaiVillas DubaiApartments

Apartments Villas

Min-Now 0.0% 0.0%

YoY -4.6% -7.7%

Peak-Now -7% -11%

YTD -2.3% -5.3%

ACommunity-WiseRentalAnalysisbyMetrics– GreenShoots

Source:REIDIN

A closer look into rental changes within communities reveals that several communities have had been a slight rebound from their lows(i.e. JLT, Sports City, Downtown) implying that a bottoming out could be on the horizon for the entire market. It is of interest to note thatthe highest rebound registered in Palm Jumeirah, indicating that a price recovery in this segment may well be at hand.

CommunityPriceChangebyMetric:Apartments

DubaiMarina Downtown PalmJumeirah TheViews Greens JLT DubaiSportsCity DiscoveryGardens InternationalCity

Min-Now 0.0% 0.3% 3.8% 0.0% 0.3% 1.1% 1.1% 0.0% 0.0%

YoY -7.2% -3.5% 3.4% -1.1% -3.4% -4.7% -2.9% -8.8% -8.1%

Peak-Now -11.1% -6.9% -4.7% -9.3% -6.2% -8.1% -6.9% -12.4% -9.1%

YTD -3.2% -2.0% -2.0% -3.8% -3.9% -0.2% -1.6% -3.3% -6.3%

AlFurjan SpringsandMeadows ArabianRanches PalmJumeirah

Villas

Min-Now 7.7% 0.0% 0.0% 0.0%

YoY 1.7% -6.8% -8.5% -7.6%

Peak-Now -8.4% -10.5% -15.4% -11.4%

YTD 7.8% -4.0% -6.3% -6.4%

CommunityPriceChangebyMetric:Villas

ExaminationofDubaiRentalRates|Don’tbeDownQ4 7

AcloserlookintoTransactionalActivityforRealEstate

“Ifyouaren’talittledifferentthanyourcompetition,you’reintrouble”– MarkSanborn

0

500

1000

1500

2000

2500

3000

2010

-01-01

2010

-03-01

2010

-05-01

2010

-07-01

2010

-09-01

2010

-11-01

2011

-01-01

2011

-03-01

2011

-05-01

2011

-07-01

2011

-09-01

2011

-11-01

2012

-01-01

2012

-03-01

20

12-05-01

2012

-07-01

2012

-09-01

2012

-11-01

2013

-01-01

20

13-03-01

20

13-05-01

2013

-07-01

2013

-09-01

2013

-11-01

2014

-01-01

20

14-03-01

20

14-05-01

20

14-07-01

20

14-09-01

20

14-11-01

20

15-01-01

20

15-03-01

20

15-05-01

20

15-07-01

20

15-09-01

20

15-11-01

20

16-01-01

20

16-03-01

20

16-05-01

20

16-07-01

20

16-09-01

TheMetricsforMeasuringTransactionalActivityChange

Source:REIDIN

A closer look into transactions reveals that activity remains 60% below its peak which was towards the end of 2013. However, since thebeginning of the year that has been an uptick in transactions by 15% (Jan ‘16 – Oct ‘16) and a 25% rebound from its lows (Jul ‘16 – Oct‘16). We opine that part of the reason why transactional activity has reduced has been due to the rising incidence of mortgages(highlighted in our last report entitled, “Dubai: The Times they are Changing”), which delays trading, consequently lowering the velocityof transactions

CityWideResidentialSaleTransactions

AcloserlookintoTransactionalActivityforRealEstate|Don’tbeDownQ4 9

City Wide

Min-Now 25%

YoY -20%

Peak-Now -60%

YTD 15%

ACommunity-WiseTransactionalAnalysisbyMetrics– GreenShoots

Source:REIDIN

The above table shows a community-wise transactional activity report. In most cases we witness that transactional activity has bouncedfrom its lows. Transactional activity has known to be a predictive indictor for real estate prices. As transactional activity continues toratchet higher, prices (which have already started to show an upward trend in most communities) will follow suit.

CommunityPriceChangebyMetric:Apartments

DubaiMarina Downtown PalmJumeirah TheViews Greens JLT DubaiSportsCity DiscoveryGardens InternationalCity

Min-Now 11.9% 28.9% 27.3% 0.0% 12.5% 20.5% 60.6% 54.8% 36.2%

YoY -16.3% -38.4% 10.0% -37.5% -36.0% -28.4% -42.3% 50.0% -12.8%

Peak-Now -72.8% -82.1% -74.4% -82.5% -61.0% -47.1% -60.8% -44.0% -52.1%

YTD -6.9% -11.8% 6.5% -33.3% -11.1% 19.7% 81.7% -12.5% -17.1%

AlFurjan SpringsandMeadows ArabianRanches PalmJumeirah

Villas

Min-Now 58.3% 40.5% 45.8% 66.7%

YoY -81.0% -17.8% 20.0% 100.0%

Peak-Now -82.6% -37.3% -51.0% -62.5%

YTD -36.8% 37.0% 4.3% 20.0%

CommunityPriceChangebyMetric:Villas

AcloserlookintoTransactionalActivityforRealEstate|Don’tbeDownQ4 10

ThePerformanceoftheDubaiFinancialMarket

“Ourstay-putbehaviorreflectsourviewthatthestockmarketservesasarelocationcenteratwhichmoneyismovedfromtheactivetothepatient”- WarrenBuffett

2000

2500

3000

3500

4000

4500

5000

5500

6000

AlookintothePeakandTroughsoftheDFM

Source:INVESTING.COM

A look into the equity market reveals that similar to the real estate market prices are down 40% from its peak. However, since the lowsof 2621 points prices have rebounded by 22%.

DFMGeneralIndex

ThePerformanceoftheDubaiFinancialMarket|Don’tbeDownQ4 12

City Wide

Min-Now 22%

YoY 2%

Peak-Now -40%

YTD 2%

StockPriceAnalysisintheDFMRealEstateSector

Source:INVESTING.COM

A closer look in the real restate sector of the equity market reveals that in most cases prices have rebounded from there lows, and sincethe beginning of the year prices have risen. The real estate sector has out-performed the index in the upturn

DFM:RealEstateSector

Arabtec DrakeandSkull Emaar Damac Deyaar Union Properties

Min-Now 38% 48% 48% 37% 30% 30%

YoY 21% 7% 9% -16% 6% 3%

Peak-Now -82% -77% -38% -39% -70% -71%

YTD 2% 7% 15% -13% 1% 4%

ThePerformanceoftheDubaiFinancialMarket|Don’tbeDownQ4 13

PNLAnalysisintheDFMRealEstateSector

Source:DFM

The third quarter results of the real estate sector showed an improvement. Losses in companies such as Arabtec and Drake & Skullnarrowed, while Emaar continued to grow profits, signaling a recovery. These financial indicators highlight that despite concerns ofchallenging economic conditions, corporate results have bottomed out for the most part, and this has been in large part due to theconstruction boom that is ongoing, as well as resilient consumer demand for end units.

DFMPNL9MonthsChange(inmillions)

Arabtec DrakeandSkull Emaar Damac Deyaar Union Properties

2016 (9M) -101 -297 3,620 2,839 167 146

2015 (9M) -1,169 -951 3,048 3,672 177 158

Change 91% 69% 19% -23% -6% -8%

ThePerformanceoftheDubaiFinancialMarket|Don’tbeDownQ4 14

ConclusionsPriceChangesforRealEstateAssets ExaminationofDubaiRentalRates

A granular analysis ofcommunities reveals that mosthave rebounded from theirlows except for some of thehigh-end apartment.

Transactional activity hasknown to be a predictiveindictor for real estate prices.As transactional activitycontinues to ratchet higher,prices will follow suit.

The recent debates over the performance of thereal estate market is partly attributed to the lensat which the data is being analyzed. There arevarious metrics to measure price performance.

Peak prices in city-wide apartments are still down13%, whereas city-wide villas are down 11%.However, if you measure price change from itslows, we can witness an uptick in apartment priceaction by 1.3% and villas by 1.6%.

Using the ‘min-to-now’ method reveals thatmarkets have bottomed out with a slight reboundfrom their lows. This method is more effective inanalyzing inflection points compared to a ‘Year-on-Year’ or ’Peak to Now’ metric.

In the rental space, both city-wide apartments andvillas continue to test new lows. Apartment rentalrates have fallen by 7.5% and villas 11% from theirpeaks.

A closer look into rental changes within areasreveals that several communities have had been aslight rebound from their lows implying that abottoming out could be on the horizon for theentire market.

‘Green shoots’ have begun to arise in communitiessuch as Palm Jumeirah apartments, Furjan Villasand JLT.

A city-wide transactional activity analysis revealsthat from the peak the number of transactionsare down by 60% from the peak.

However, from the start of the year activity is up15% (Jan 2016 vs Oct 2016), while from its lowsit has rebounded by 25% (Jul 2016 vs Oct 2016).We opine that part of the reason whytransactional activity has reduced has been dueto the rising incidence of mortgages

AlookintoTransactionalActivityforRealEstate ThePerformanceoftheDFM

A look into the equity market reveals that similarto the real estate market prices are down 40%from its peak. However, since the lows of 2621points prices have rebounded by 22%. The realsector has outperformed the index rebounding inthe range of 30-48%.

The third quarter results of the real estatecompanies showed an improvement. Losses incompanies such as Arabtec and Drake & Skullnarrowed, while Emaar continued to grow profits,signaling a recovery

REIDIN.com is the leading real estate informationcompany focusing on emerging markets.

REIDIN.com offers intelligent and user-friendly onlineinformation solutions helping professionals accessrelevant data and information in a timely and costeffective basis.

Reidin is the data provider for these research reports

ConcordTower,No:2304,DubaiMediaCity,POBox333929Dubai,UnitedArabEmiratesTel.+97142776835Fax.+97143604788www.reidin.cominfo@reidin.com

GCP believes in in-depth planning and discipline as amechanism to identify and exploit marketdiscrepancy and capitalize on diversified revenuestreams.

Our purpose is to manage, direct, and create wealthfor our clients.

GCP is the author for these research reports

IndigoIcon,1708JumeirahLakeTowers,POBox500231Dubai,UnitedArabEmiratesTel.+97144477220Fax.+97144477221www.globalcappartners.cominfo@gcp-properties.com

OurAspirationandMotto

“Nobarriercanwithstandthestrengthofpurpose”HHGeneralSheikhMohammedBinRashidAlMaktoum

TheRulerofDubaiandPrimeMinisterofUAE