Dubai Residential Market Report - Q2 2015

Dubai Residential Market ReportQ2 2015

- Dubai residential market headlines

- Sale price and performance

- Rental rates and performance

- Off-plan market supply

- Cavendish Maxwell Residential Market Survey

- Key facts - Q2 2015

Content

Q1 - Q2 2015

-2%

-2.4%

© Cavendish Maxwell 2015 | www.cavendishmaxwell.com 2

Dubai Residential Market Report - Q2 2015

• A relatively stable quarter in terms of price movements, recording an overall market decline of 1.7%, an improvement from the 2.3% decline in Q1 2015.

• Whilst this might suggest a slowing in the general rate of decline, the extent of the compression will be better established throughout the third quarter and leading up to Cityscape Dubai where the activity at and preceding the event is typically a good gauge of market sentiment.

• Villa prices in Q2 2015 have declined by 2.4%, a slowdown from the 3.2% drop in Q1 2015, whilst the decline in apartment prices has remained constant at 2% throughout both quarters.

Recently numerous indices have been released as the private sector looks to track the residential market in Dubai. All should be encouraged in a push to improve market transparency which ultimately benefits all concerned, provided data is reliable. The figures in our Q2 2015 report represent a consensus view of Cavendish Maxwell’s market leading team of chartered surveyors and residential valuers. The Cavendish Maxwell Property Monitor Index offers a unique perspective on the market due to our unrivalled access to real-time data, fuelled by the Property Monitor data service. (www.propertymonitor.ae) In formulating the index our valuers have access to various data sources that should provide users with confidence in the results: • Property Monitor, Approved Partner

data: includes an expanding number of reputable agencies and developers, capturing data in real-time

• Agent consultation: evidence sourced from reputable and active agents to support our valuation business.

• Publically available evidence: variety of published data sources.

• New launches in 2015 (approximately 24 schemes to date) have partially shifted transaction volumes towards the off-plan market from the secondary market, especially towards areas such as Dubai World Central (DWC), Dubailand and Mohammed Bin Rashid City (MBR City).

• Cavendish Maxwell Residential Market Survey Q2 2015 results show that there has been a decrease in buyer enquires in Q2 2015. Buyers seem to be in a “wait and see” period following the decline in prices in Q1 and Q2 of 2015.

• Whilst some agents have witnessed an increase in transactions in Q2 2015, these are likely to have been supported by a number of bulk deals and off-plan transactions. The majority of the market transactions have remained stable in Q1 and Q2 as prices have continued to soften.

Dubai residential market headlines

Property Monitor Index

3© Cavendish Maxwell 2015 | www.cavendishmaxwell.com


Apartments: trends by area

• Whilst the majority of areas showed slight declines this quarter, we have seen that established locations such as Downtown Burj Khalifa, The Views and The Greens had an accelerated rate in decline in Q2 2015 in comparison to Q1.

• An increase in the supply in locations such as DWC, Dubai Silicon Oasis and Dubailand, has shifted investor and end-user attention away from completed properties to off-plan developments.

• In Q2 2015 prices in Dubai Marina, Jumeirah Beach Residences and Dubai Sports City declined the least at 1% whilst Motor City and Discovery Gardens declined the most at 3%.

• When looking at the market over a 12 month period (Q2 2014 to Q2 2015) there is still a significant variance in the rate of price compression throughout Dubai. Property prices declined by 4% in established areas such as Dubai Marina, Jumeirah Beach Residences and Downtown Burj Khalifa, whilst properties in peripheral areas such as International City declined by 14%.

Sale price and performance

4

Apartments - sale 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

2,500

2,000

1,500

1,000

500

0

5%

0%

-5%

-10%

-15%

-20%

1,715 1,549 1,605 855 871 6989201,455 1,799 2,448

Ave

rag

e p

rice

AED

/ s

q. f

t.

% c

hang

e-4%

-1% -1% -1%-3% -3%

-2% -2% -2% -2% -2%

-4% -4% -4%

-8%-9% -9% -9%

-14%

-6%

Apartments: market wide“In Q2 2015, average apartment prices have shown a marginal decline of 2% market wide, consistent with the decline in Q1 2015”

© Cavendish Maxwell 2015 | www.cavendishmaxwell.com


QoQ % change Q1 - Q2 2015 12 Month % change Q2 2014 - Q2 2015

Figure 1

Source: Property Monitor Index

Villas: trends by area

• Jumeirah Islands, Victory Heights, Arabian Ranches and Al Furjan declined the slowest in Q2 2015 by 1%.

• Jumeirah Islands recorded the lowest decline of 5% over 12 months (Q2 2014 to Q2 2015), whilst areas such as Jumeirah Village Triangle declined at 14% within the same period.

• Prices in The Springs have dropped the most in Q2 2015 (6%) as well as over the last 12 months (16%). Although rental rates and occupancy levels are stable in this community, new buyer demand has been shifting towards secondary villa locations such as Jumeirah Village Triangle, Green Community and Al Furjan as buyers look for more value for their money.

Sale price and performance

5

Villas - sale performance

QoQ % change Q1 - Q2 2015 12 Month % change Q2 2014 - Q2 2015

Villas: market wide“In Q2 2015, average villa prices declined at a rate of 2.4% market wide, which is a slower decline from the 3.2% recorded in Q1 2015.”

Jumeirah Golf Estates

The MeadowsJumeirah Islands

Arabian Ranches

The Lakes The SpringsJumeirah Park

Jumeirah Village Triangle

Victory Heights

Al Furjan Villas

2,000

1,600

1,200

800

400

0

5%

0%

-5%

-10%

-15%

-20%

1,506 1,635 1,500 1,327 1,000 9351,1501,460 1,160 1,296

Ave

rag

e p

rice

AED

/ s

q. f

t.

-4%-5%

-9%

-7%-7%

-6% -6%

-16%-14%

-11%

-3%-4%

-6%

-1% -1% -1% -1%-2% -2% -2%


% c

hang

e


Figure 2

Source: Property Monitor Index

Apartments

• Overall apartment rental rates in Q2 have remained stable throughout the major freehold areas of Dubai, evidenced in the below table.

• Prime and popular locations such as Dubai Marina, Palm Jumeirah and Downtown Burj Khalifa still show strong occupancy levels and command the highest rents.

• Motor City rental rates have increased in Q2 2015, partially due to a shift in demand towards secondary locations in Dubai.

Villas

• Villa rental rates in Q2 have declined marginally at approximately 1.4% as landlord rental expectations have dropped over the past three months.

• Rents in locations such as The Springs, Jumeirah Village Triangle and Jumeirah Islands have remained largely unchanged in Q2 2015.

Rental rates and performance

6

International City

Motor City

Dubai Sports City

Discovery Gardens (1 Bed)

Emirates Living

Jumeirah Beach Residences

Dubai Marina

Business Bay

Downtown Burj Khalifa (Upscale*)

Downtown Burj Khalifa (Luxury**)

Victory Heights

The Springs

Arabian Ranches

Jumeirah Village Triangle

Jumeirah Islands

The Meadows

Jumeirah Park

The Lakes


Location Location

(Assumes 2 bed apartment) (Assumes 4 bed villa)Rent/sq.ft./annum

Rent/sq.ft./annum

Q1 2015 Q1 2015Q2 2015 Q2 2015Q2 2015 Q2 2015

Rental rate/sq ft

/annum

Rental rate/sq ft

/annum

Rental rate/sq ft

/annum

Rental rate/sq ft

/annumRent/unit

(‘000)Rent/unit

(‘000)QoQ % change

QoQ % change

59

77

70

75

108

104

114

95

120

155

80

72

69

53

60

67

64

70

73

66-75

115-130

90-115

67-78

130-150

130-160

130-160

130-160

135-175

260-280

190-215

190-220

180-230

190-230

295-335

240-280

250-300

275-310

320-370

60

76

70

75

108

105

114

96

120

155

81

72

70

53

60

68

65

71

74

-1.7%

1.3%

0.0%

0.0%

0.0%

-1.0%

0.0%

-1.0%

0.0%

0.0%

-1.2%

0.0%

-1.4%

0.0%

0.0%

-1.5%

-1.5%

-1.4%

-1.4%



* Excluding service apartments ** Serviced apartments

Figure 3 Figure 4

Source: Property Monitor IndexSource: Property Monitor Index

Apartments - rental performance Villas - rental performance

• Approximately 24 off-plan launches were recorded in the first half of 2015, 19 of which were released in Q2 2015. This resulted in approximately 7,900 additional units being added to the 1,781 units added in Q1 2015, all set to be delivered over the next three years.

• Of the 7,900 units introduced in this quarter, apartments made up 82%, whilst townhouses equated to 17%.

• There has been a general increase in townhouse developments as these more reasonably priced units are proving attractive to families.

• The majority of the developments launched in Q2 are in secondary locations such as Dubai Silicon Oasis, MBR City and DWC, which will extend the development borders of the city inland in the next few years as these locations become more established and populated.

• Initiatives by developers to encourage Single Unit Purchasers (SUPs) alongside flexible payment plans has opened up the off-plan market to a new end-user and investor market. This is a significant step in this emerging market and is encouraging first time buyers who may previously have been in the ‘wait and see’ category.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Location

Arabian Ranches Phase 2

Business Bay

Business Bay

Downtown Burj Dubai

Downtown Burj Dubai

Downtown Burj Dubai

Dubai Bypass Road, Al Qudra Road

Dubai Bypass Road, Al Qudra Road

Dubai Creek Harbour

Dubai Hills Estate

Dubai Hills Estate

Dubai Silicon Oasis

Dubai Silicon Oasis

Dubai Studio City

Dubai World Centre

Dubailand

Dubailand

Dubiotech

Dubailand


Jumeirah Village Circle

Mohammad Bin Rashid City

Mohammad Bin Rashid City

Palm Jumeirah

Development Name

Azalea

AG5 Tower

Paramount Residences

Forte 1 & 2

Mon Reve

Downtown Views

Safi Apartments

Zahra Apartments

Dubai Creek Residences South Tower II & III

Maple Phase 1 & 2

Acacia at Park Heights

Topaz Residence

Binghatti Apartments

Glitz Residence 3

MAG 5 Boulevard

The Nest

Ashjar 2

Cayan Cantara

Mudon Phase 2 - Arabella

Al Andulas

Reef Residence

Acacia Avenue

Jade at the Fields

Serenia Residence

Type

Villas

Apartments

Hotel Apartment

Apartments

Apartments

Apartments

Apartments

Apartments

Apartments

Townhouse

Apartments

Apartments

Apartments

Apartments

Apartments

Villa

Apartments

Apartments

Townhouse

Apartment / Townhouses

Apartments

Apartments

Townhouse

Apartment

Off-plan market supply

7

Developer

Emaar Properties PJSC

Arabian Gulf Properties

Damac


Credo Investments


Nshama

Nshama




GGICO Properties

Binghatti Developers

Danube

MAG Property Development

Al Barari

Al Barari

Cayan Group – Real Estate Investment & Development

Dubai Properties Group


Reef Real Estate

Abyaar Real Estate

G&Co.

Palma Development


Off-plan project highlights


Figure 5 Figure 6

Figure 7

MAG 5 Boulevard, DWC Zahra Apartments, Town Square

Source: Cavendish Maxwell

Looking forward - Q3 2015 sentiment

Sales• The majority of agents surveyed have predicted price drops of up to 5% across apartments and villas.

• 33% of agents surveyed have predicted no change in apartment prices and 26% have predicted the same for villa prices.

• Sale market sentiment for Q3 2015 suggests an increase in new buyer enquires, new seller instructions and most importantly an increase in agreed sales.

Rents• The majority of agents surveyed have predicted no change in rental rates for both apartments and villas.

• 23% of agents surveyed have predicted apartment rents would decrease up to 5% whilst 17% have predicted the same for villa prices.

• Rental market sentiment for Q3 2015 points towards an increase in tenant demand and new landlord instructions, whilst agent predictions are divided between those who believe rental expectation will increase and those who believe there will be no change.

Looking back - Q2 2015 - sales

Q3 2015 sales outlookApartmentsPercentage of agents who predicted apartment prices would:

VillasPercentage of agents who predicted villa prices would:

Q3 2015 rents outlookApartmentsPercentage of agents who predicted apartment rents would:

VillasPercentage of agents who predicted villa rents would:

Cavendish Maxwell Residential Market Survey

8

68% of agents surveyed had predicted overall market price decline between 1% to 5% during Q2 2015.

predictions vs reality

44% of agents surveyed had predicted villa prices to decline between 1 and 5%

41% of agents surveyed had predicted apartment prices to decline between 1% and 5 %

Overall market prices fall by 1.7% in Q2 2015.

Villa prices fell by 2.4%

Apartment prices fell by 2%



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 8 Figure 9

Source: Cavendish Maxwell Residential Market Survey Source: Cavendish Maxwell Residential Market Survey

40%

9%

33%

18%24%

38%

12%

26%

34%

16%

23%

22%

39%

20%

17%

2%

27%

0%0%0%

Disclaimer:

The information contained in this report is collated from a number of sources which Cavendish Maxwell believes to be reliable, all of which are verified by primary market research of our employees. The figures relating to price represent Cavendish Maxwell’s view and are made in the knowledge of our internal market data. Cavendish Maxwell does not accept any liability in negligence or otherwise for any loss or damage suffered by any damage suffered by any party resulting from reliance on the figures included in this report. Any statements made in relation to future market forecasts are made in the best knowledge but represent opinion formed at a point in time. The process of making forward projections are acutely sensitive to changing conditions, variations in any one of which factors may significantly effect future market pricing.

Villa rents in Q2 2015 have declined marginally by an average of approximately 1.4%.

Key facts - Q2 2015

Sales

Rents

Project launches

Market sentiment - Q3 2015

9

Dubai wide average sale price: Q2 2015 launches adding:

Overall market price movement: Additional apartment units:

Apartment price movement:

The majority of agents surveyed have predicted price drops of up to 5% across apartments and villas.Villa price movement:

More than half of agents surveyed have predicted an increase in sales throughout Q3 2015 alongside predicted increases in buyer and seller instructions.

Apartment rents have remained stable throughout the major freehold areas of Dubai.

Majority of agents surveyed have predicted no change in rental rates in apartments and villas.

Rental market sentiment points towards an increase in tenant demand and new landlord instructions.

AED per sq. ft.

1,321 7,900

-1.7% 82%

-2.0%

-2.4%


units


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

CavendishMaxwell.com

PROPERTY SERVICESMIDDLE EAST & AFRICA

Miles Phillips BSc (Hons) MRICS ACIArbPartnerHead of Operations - UAE

M: +971 56 604 2750 E: [email protected]

Jay Grant MSc IRRV (Hons) Managing Partner


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


Adam Wellfair BSc (Hons) MRICSManaging Partner


Residential Valuation

Commercial Valuation

Machinery and Business Assets

Valuation

Investment and Commercial Agency

Project and Building Consultancy

Development Advisory and Real Estate Research

Hotels, Hospitality and Leisure

Property Monitor

Also contact us for:

Dubai Residential Market Report - Q2 2015

Documents

Transcript of Dubai Residential Market Report - Q2 2015