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Transcript of Cavendish Maxwell_Dubai Residential Market Report_Q3 2015
Dubai Residential Market Report
Q32015
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 32
Dubai Residential Market Report - Q3 2015
• Dubai residential market headlines
• Macro-economic factors
• Sale price performance
• Rental rates performance
• Residential supply
• Cavendish Maxwell Residential Market Survey Q3 2015
Content
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 54
Dubai Residential Market Report - Q3 2015
• As the Dubai market continues to go through a correction phase, overall market prices have continued to decline by 2% throughout Q3 2015.
• Apartment and villa prices have both dropped by an average of 2% in Q3 2015, consistent with the declines in the previous quarter.
• Apartment rents have remained stable in Q3 2015, whilst villa rents decreased in most of the major villa communities.
• Approximately 6,000 residential units have been introduced into the market in Q3 2015, in areas such as Dubai Sports City, Dubailand, International City, Jumeirah Golf Estates and Jumeirah Village Circle.
• Cavendish Maxwell Residential Market Survey Q3 2015 results show that buyer inquires continued to decrease whilst seller instructions increased. The number of agreed sales, however, has remained the same.
Dubai residential market headlines
Q2 2015 - Q3 2015
-2% -2%
Q3 2014 - Q3 2015
-6% -9%
“Inflation rate as of August 2015 stood at 4.41, the highest level since 2008.”
“Petrol prices in the UAE have dropped by approximately 16% in October 2015 from the hiked prices of August.”
• Dubai Consumer Price Index (CPI) and inflation rate increased during August to the highest levels in years. This was mainly driven by a 10% increase in transportation cost in August, due to the deregulation of petrol prices.
• CPI represents the prices paid by consumers for a select basket of goods allocated into 12 categories, including food, clothing, housing, transport, etc. The three categories with the highest weight are housing and utilities, transportation and food and non alcoholic beverages.
• Following the hike in petrol prices in August, the Fuel Prices Committee reduced prices by 8% in September and a further 9% with the recently released petrol prices for the month of October 2015.
• Over the course of 2015, food and non-alcoholic beverages prices have increased by 5.14% from January to August 2015, followed by an increase of 2.59% during the same period in the housing, water, electricity, gas and other fuels category.
Macro-economic factors
128.00
126.00
124.00
122.00
120.00
118.00
116.00
114.00
112.00
110.00
108.00
5%
4%
3%
2%
0%
-1%
-2%
-3%
Inflation rateCPI
2014 June201120102009 August2012 2013
CPI
% in
flatio
n
Source: Dubai Statistics Centre
Figure 1
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 76
Dubai Residential Market Report - Q3 2015
• As overall apartment prices continue to drop, the rate of decline in prime locations such as Business Bay, Downtown Burj Khalifa and Palm Jumeirah has decreased.
• In Q3, prices continued to drop at the same rate as Q2 2015 in Dubai Marina, the Greens and Views, Jumeirah Beach Residence and International City, whilst prices in Dubai Sports City and Motor City declined at a more accelerated rate throughout this quarter.
• Prices in secondary locations such as International City, Motor City and Discovery Gardens have declined the most at 10%, 10% and 9% respectively over a 12 month period from Q3 2014. In the more central and established areas, prices have dropped between 4% and 5% during the same period.
• These slower rates of decline may suggest that prices will level out and stabalise leading to the end of this year.
Apartments: market wide“Apartment prices declined by 2% in Q3 2015”
Figure 2
Sale price performance
Apartments pr ice performance
Dubai Marina
Palm Jumeirah (Shoreline
Apartments)
Emirates Living (Views and Greens)
Dubai Sports City
Business Bay
Motor CityJumeirah Beach
Residences
Discovery Gardens
Downtown Burj Khalifa
International City
3,000
2,500
2,000
1,500
1,000
500
0
0%
-2%
-4%
-6%
-8%
-10%
-12%
Ave
rag
e p
rice
(AED
/ s
q. f
t.)
% c
hang
e
Q2 2015 Q3 2015 QoQ % changeQ2 – Q3 2015
12 Month % changeQ3 2014 - Q3 2015
-1%
-5% -5% -5%
-4% -4%
-6%
-7%
-10%
-9%
-10%
-2%
-1% -1% -1% -1%
-2% -2% -2% -2%
• The decline in villa prices slowed in Q3 2015 in communities such as Jumeirah Golf Estates, the Meadows, Springs and Lakes.
• Price declines accelerated significantly in Jumeirah Islands, Victory Heights, Arabian Ranches and Al Furjan during the third quarter in comparison to Q2 2015.
• Jumeirah Golf Estates villa prices dropped by 1% in Q3, a notable improvement from the 3% in the previous quarter. The Meadows and Springs prices declined at a slower rate in Q3 than in Q2 2015
• The villa market prices have dropped by approximately 4.4% throughout the first three quarters of 2015 and 9% over a 12 month period with further supply of these units being launched and completed during this time period.
Villas: market wide“Average villa prices declined at a rate of 2% in Q3 2015, consistent with the decline in Q2.”
Figure 3
Vi l las pr ice performance
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
0%
-3%
-6%
-9%
-12%
-15%
-18%
-21%
-24%
-28%
Ave
rag
e p
rice
(AED
/ s
q. f
t.)
-1%
-6%-5%
-8%
-7% -7%
-12%
-7%
-20%
-12%
-7%
-2%-1%
-2%-3%
-2% -2%
-5%
-2% -2%
Jumeirah Golf Estates
The MeadowsJumeirah Islands
Arabian Ranches
The Lakes The SpringsJumeirah Park
Jumeirah Village Triangle
Victory Heights
Al Furjan Villas
Q2 2015 Q3 2015 QoQ % changeQ2 – Q3 2015
12 Month % changeQ3 2014 - Q3 2015
% c
hang
e
Source: Property Monitor Index Source: Property Monitor Index
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 98
Dubai Residential Market Report - Q3 2015
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 1110
Dubai Residential Market Report - Q3 2015
• Whilst rents remained stable in most locations across Dubai, rents in Business Bay dropped by approximately 2% and by 3% in Dubai Sports City.
• Prime locations still demand premium rents with a one bed apartment in Downtown Burj Khalifa ranging from AED 110,000 to AED 125,000 per annum. Similarly a one bed in the Views or Greens ranges from AED 95,000 to AED 110,000.
• Rents have declined on average by 1% in the Meadows, Springs and Lakes. These communities continued to have strong rental activity throughout this year.
• In locations such as Victory Heights and Jumeirah Park, rents have dropped by up to 3% in Q3 2015 from the previous quarter.
Apartments: “Apartment rents remained stable in most locations in Q3 2015.”
Villas: “Villa rents have marginally declined in most of the major villa communities in Q3 2015.”
Figure 4 Figure 6
Rental rates performance
Dubai Marina
The Views
The Greens
Business Bay
Jumeirah Beach Residence
Downtown Burj Khalifa
Dubai Sports City
Motor City
Discovery Gardens
International City
2 bed1 bedStudio
Rental rate/sq.ft./annumSeptember 2015
96
149
148
99
110
180
95
84
88
71
114
122
112
95
114
138
72
67
67
62
106
110
100
89
112
118
70
71
-
59
Apartment rents by unit type Q3 Villa rents by unit type Q3
Jumeirah Golf Estates
Jumeirah Islands
The Lakes
Jumeirah Park
Victory Heights
The Meadows
Arabian Ranches
The Springs
Jumeirah Village Triangle
Al Furjan Villas
5 bed4 bed3 bed
-
-
79
65
-
62
72
72
-
50
67
56
85
63
78
64
68
75
60
-
61
64
-
60
71
66
69
-
50
44
Rental rate/sq.ft./annumSeptember 2015
Average annual rent - 4 bedroom vi l la
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0Jumeirah
Golf EstatesJumeirah Islands
The Lakes Jumeirah Park
Victory Heights
The Meadows Arabian Ranches
The Springs Jumeirah Village Triangle
Average annual rent - 2 bedroom apartment
250,000
200,000
150,000
100,000
50,000
0Dubai Marina
The Views The Greens Business Bay
Jumeirah Beach Residences
Downtown Burj Khalifa
Dubai Sports City
Motor City International City
Figure 5 Figure 7
Ave
rag
e an
nual
rent
(AED
)
Ave
rag
e an
nual
rent
(AED
)
Source: Property Monitor Index
Source: Property Monitor Index
Source: Property Monitor Index
Source: Property Monitor Index
© Cavendish Maxwell 2015 | www.cavendishmaxwell.com © Cavendish Maxwell 2015 | www.cavendishmaxwell.com 1312
Dubai Residential Market Report - Q3 2015
• During the first three quarters of this year, 6,000 residential units have been introduced into the market. These figures exclude any serviced/hotel apartments.
• The completed developments in the first three quarters of 2015 are in locations such as Dubai Sports City, Dubailand, International City, Jumeirah Golf Estates and Jumeirah Village Circle.
• Over 70% of the completed developments in 2015 have been apartment units, the remaining percentage are villas and townhouses.
• Some of the most densely developed areas such as Dubai Marina, Jumeirah Lakes Towers and Downtown Burj Khalifa have had a limited number of newly launched residential developments during this year as the reach their development capacity.
Completions:“Approximately 6,000 residential units have been completed in the first three quarters of 2015.”
Figure 8
Residential supply
1
1220
3
2
19
21
29
28
7
10
13
26
21
18
24
6
11
8
16
4
5
22
25
7
6
5
4
3
2
1
15
27
9
17
23
14
6
5
4
3
2
1
21
16
2
3
9
1319
29
12
11
1
25
74
15
23
14
27
16
1 Al Furjan2 Al Jaddaf3 Arabian Ranches4 Business Bay5 DIFC6 Discovery Gardens
7 Downtown Burj Khalifa8 Dubiotech9 Dubai Creek Harbour10 Dubai Festival City11 Dubai Investment Park I and II12 Dubai Marina
13 Dubai Silicon Oasis14 Dubai South15 Dubai Sports City16 Dubailand17 Emirates Living18 IMPZ
19 International City20 Jumeirah Beach Residences21 Jumeirah Golf Estates22 Jumeirah Islands23 Jumeirah Lake Towers24 Jumeirah Park
25 Jumeirah Village Circle26 Jumeirah Village Triangle27 Mohammed Bin Rachid City28 Motor City29 Palm Jumeirah
1 Al Furjan2 Al Jaddaf3 Arabian Ranches4 Business Bay7 Downtown Burj Khalifa9 Dubai Creek Harbour
11 Dubai Investment Park I and II12 Dubai Marina13 Dubai Silicon Oasis14 Dubai South15 Dubai Sports City16 Dubailand
19 International City23 Jumeirah Lake Towers25 Jumeirah Village Circle27 Mohammed Bin Rachid City29 Palm Jumeirah
< - 2,000
2,001 - 6,000
6,001 - 10,000
10,001 - 14,000
14,001 - 18,000
18,001 - 22,000
22,001 - <
< - 2,000
2,001 - 4,000
4,001 - 6,000
6,001 - 8,000
8,001 - 10,000
10,001 - <
Range Range
• There were approximately 18,000 residential units scheduled to enter the market in 2015. Of those 6,000 units have been completed so far. We have seen many developments initially scheduled to be completed at the end of 2015, delayed to the first half of 2016 or to a later date in 2017.
• The recently launched community The Villages in Dubai South is set to deliver 20,000 residential units with Cluster 1 providing 6,000 units to be completed by 2019, ahead of the Expo 2020.
• A number of residential developments have been launched in Mohammed Bin Rashid City and Dubai Creek Harbour over the past two quarters. We see areas such as these being a focus of development moving forward as new communities are created.
• Additional supply entering the market could place further pressure on prices to the end of 2015 and through 2016. Factors such as the estimated population and job growth leading to the year 2020, alongside the UAE’s initiatives to encourage investment, should help support the absorption of this upcoming supply.
Pipeline Supply:“Whilst a number of residential projects entered the market during the first three quarters of this year, other projects have been delayed to 2016 and 2017.”
Figure 9
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Dubai Residential Market Report - Q3 2015
Q4 2015 sales out lookApartmentsPercentage of agents who predicted apartment prices would:
VillasPercentage of agents who predicted villa prices would:
Q4 2015 rents out lookApartmentsPercentage of agents who predicted apartment rents would:
VillasPercentage of agents who predicted villa rents would:
increase by more than 5% increase by up to 5% not change decrease by up to 5% decrease by more than 5%
increase by more than 5% increase by up to 5% not change decrease by up to 5% decrease by more than 5%
Figure 10
Figure 11
Source: Cavendish Maxwell Residential Market Survey
Source: Cavendish Maxwell Residential Market Survey
28% 36%
0% 0%
40%32%
28% 28%
4% 4%
16%
24%64%
44%
8%12% 20%
4% 4% 4%
Looking back - Q3 2015Cavendish Maxwell Residential Market Survey
The majority of agents surveyed had predicted apartment and villa prices to decline by up to 5%
predictions vs reality
Apartment and villa prices fell by 2% during Q3 2015.
Miles Phillips BSc (Hons) MRICS ACIArbPartnerHead of Operations - UAE
M: +971 56 604 2750 E: [email protected]
Adam Wisher BSc (Hons) MRICSPartnerHead of Development Advisory and Real Estate ResearchM: +971 56 139 4315E: [email protected]
Sofia Underabi BPropEc AAPI PartnerHead of Residential Valuation M: +971 50 435 6527 E: [email protected]
Dima Isshak BScResearch Manager
M: +971 50 482 7938 E: [email protected]
PROPERTY SERVICESMIDDLE EAST & AFRICA
Jay Grant MSc IRRV (Hons) Managing Partner
M: +971 50 192 1658 E: [email protected]
T: +971 (0) 4 453 9525 E: [email protected]
2205 Marina Plaza, Dubai Marina, P.O. Box 118624, Dubai, United Arab Emirates1006 Corniche Bakery Building, Al Firdous Street, Tourist Club Area, Abu Dhabi, United Arab Emirates
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