Dubai House Price Index - Commercial Real Estate Brokerage ......Compared to Q2 2008 (the peak of Dubai’s residential real estate market), the total volume of transactions remains

Dubai House Price IndexFirst Quarter 2016

Dubai House Price Index | Q1 2016 | Colliers International2

DUBAI HOUSE PRICE INDEX:

YEAR ON YEAR

Q1 2015 / Q1 2016

167

152

148

144 144

130

135

140

145

150

155

160

165

170

Q1 Q2 Q3 Q4 Q1

2015 2016

Index

Poin

ts

-3% -9% -3% 0%-3%

167

144

130

135

140

145

150

155

160

165

170

Q1 2015 Q1 2016

Index

Poin

ts

-14%

Source: Colliers International


Executive Summary

Overview

The overall quarterly index registered no major change in Q1 2016, standing at 144 index

points. The blended average rate for residential property in Q1 2016 was AED 1,276 per sq

ft (AED 13,739 sq m) compared to AED 1,283 sq ft (AED 13,809 sq m) in Q4 2015.

The Annual Dubai House Price Index registered a 14% Y-O-Y decrease in Q1 2016. The

blended average rate for residential property in Q1 2016 was AED 1,276 per sq ft (AED

13,739 sq m) compared to AED 1,482 per sq ft (AED 15,953 sq m) in Q1 2015.

DUBAI HOUSE PRICE INDEX:

QUARTER ON QUARTER

Q1 2015 / Q1 2016

Dubai House Price Index | Q1 2016 | Colliers International


The Villa development saw the largest

year on year decrease, (22%), while The

Meadows recorded the second largest

decrease (21%) over the period Q1 2015

to Q1 2016.

-22%-21%

-20%

-18%-17%

-25%

-20%

-15%

-10%

-5%

0%The Villa The Meadows

Jumeirah BeachHotel

Green Community -Townhouses Jumeirah Islands

TOP 5 DEVELOPMENTS BY DECLINE IN SALE PRICE YEAR ON YEAR

59%

15%

26%

3

BREAKDOWN OF TRANSACTIONS

BY PROPERTY TYPE Q1 2016

Q1

2016

Apartments Townhouses Villas


Dubai Marina recorded the highest number of transactions

in the HPI, equating to 17.6% of the total transactions.

Jumeirah Lakes Towers obtained a 6.5% share of the

total transactions followed by The Springs and Arabian

Ranches - Villas at 6.2%, both. In fifth place was

Downtown Dubai at a 5.5% share.

17.6%

6.5% 6.2% 6.2%5.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Dubai Marina Jumeirah LakesTowers

The Springs Arabian Ranches -Villas

Downtown Dubai

TOP 5 DEVELOPMENTS BY VOLUME OF TRANSACTIONS Q1 2016


3% 5%


70%

75%

80%

85%

90%

95%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

2014 2015 2016 2017 2018 2019 2020

Additio

nal

Units

Demand vs. Supply2014 / 2020

Demand Supply Occupancy Levels

4

Forthcoming Supply

In 2015 the occupancy level for both owner

occupied and rented properties in Dubai was 88%.

Colliers’ projections estimate that by the end of

2016, occupancy levels are expected to stay at

88% as demand and supply are expected to grow

side by side. By 2020 the number of household

units supplied is estimated to increase by an

additional 16% adding approximately 73,300 units

to the market.

However, demand is also estimated to increase by

28% (approximately 111,100 units), adding further

pressure and potentially leading to an

undersupplied market.

At the end of 2015, there were approximately

212,300 freehold Units. By Q4 2016 the number of

freehold units is expected to increase by 7%,

reaching an estimated 227,500 units, adding

around 15,200 units and this constitutes 47% of

the total number of residential units in Dubai. By

2018, the total number of freehold units is

expected to increase by another 20% adding

around 43,100 units to the market.



8,415

39,315

50,685

15,754

13,975 12,383

9,880

19,118

10,587

14,760 15,211 15,096 12,802

-

10,000

20,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Additio

nal

Units

Additional Freehold Units


Historical Performance

Over 2012 to 2013, the Dubai residential real estate market registered a growth of 50% reaching 156

index points in Q4 2013, compared to 104 index points in Q4 2011. In 2014 the index increased by a

further 10%, to reach 171 points in the last quarter of 2014. Over Q1 to Q4 2015 the HPI registered 14%

decrease from 167 to 144 index points. The total number of transactions decreased 11% over the same

period, from 438 to 389 transactions. In the first quarter of 2016 the HPI registered no major change in

value. On the other hand, the total number of transactions decreased 21% to 306 transactions, down from

389 transactions in the previous quarter.

Compared to Q2 2008 (the peak of Dubai’s residential real estate market), the total volume of

transactions remains 49% lower and the average price per sq ft 30% lower in Q1 2016, highlighting the

successful measures introduced by the government to dampen property speculation.

250

300

350

400

450

500

550

130

135

140

145

150

155

160

165

170

175

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2013 2014 2015 2016

Sam

ple

Siz

e

Index

Poin

ts

Index Points vs. Sample Size

Index Points Sample Size


596

44159 156

113

515449 438 412 394 389

306

1,833

1,038 1,018 915 949

1,226

1,463 1,482

1,354 1,318 1,283 1,276

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Q2 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 Q2 Q3 Q4 Q1

2015 2016

Sample Size & Price Per Sq ft

Volume Price / Sq ft (AED)



0

25

50

75

100

125

150

175

200

225

250

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

DFM / HPI ComparisonInvestment Performance

DFM HPI

-80%

-60%

-40%

-20%

0%

20%

40%

60%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

DFM / HPI ComparisonVolatility of Returns - Quarter on Quarter

DFM HPI

6

Alternative Analysis

Real Estate Returns

In Q1 2016, Dubai Financial Market registered a

7% increase of its value while the HPI registered

no major change, standing at 144 index points.

The second chart shows that the HPI has, since

its inception in Q1 2007, outperformed the DFM

index. In this regard, a residential investment

purchased in Q1 2007 has to date, over the nine

years period, generated returns of circa 44%. A

similar investment in the DFM for the same period

has generated 10% in losses in Q1 2016, down

from 6% losses recorded in Q1 2015.




0.95

1.05

1.15

1.25

1.35

1.45

1.55

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Price to Rent Ratio

Ratio LTA

7

Price to Rent Ratio

To provide further analysis of the residential real

estate market, Colliers International introduced the

concept of Price-to-Rent Ratio (PRR). This ratio is

widely used as an indicator of the fundamental

value, generated from rental income, of real estate

assets.

The ratio simply measures the relationship

between the prices (taken from the HPI) of

purchasing a residential property and the rental

income. A high property price associated with a

flat rental market (as in most western markets)

increases the value of the ratio, indicating that

property values are expensive. However, if rents

are falling there would be the expectations of a

greater fall in property prices as investors

receiving less income would pay less for

residential property.

For the purpose of this analysis, Q2 2007 is

assumed as the base quarter and the ratio is

rebased at 1 (Q2 2007 = 1).

The ratio in Q1 2016 has seen 2% increase

compared to Q4 2015, standing at 1.35. The long

term average (excluding the mid-2008 boom)

stands at 1.336, meaning that in Q1 2016 the

price to rent ratio is 1.24% above the long term

average. When comparing the ratio during this

quarter (Q1 2016) to the ratio in Q1 2015, there

has been a 7.4% decrease.



Apartment Index

Year on Year

The Annual Overall Apartment Index decreased

14% in Q1 2016 compared to Q1 2015, decreasing

to 133 points from 155 points.

The blended average rate per sq ft for apartments

in Dubai in Q1 2016 was AED 1,346 (AED 14,488

per sq m) compared to AED 1,563 per sq ft (AED

16,824 per sq m) in Q1 2015.

Quarterly

The Quarterly Overall Apartment index decreased

2% in Q1 2016.

The blended average rate per sq ft for apartments


per sq m) compared to AED 1,376 (AED 14,811

per sq m) in Q4 2015.



155

143 143

136

133

120

125

130

135

140

145

150

155

160

Q1 Q2 Q3 Q4 Q1

2015 2016

Index

Poin

ts

APARTMENT INDEX: QUARTERLYQ1 2015 / Q1 2016

-1% -8% -5% -2%0%

155

133

120

125

130

135

140

145

150

155

160

Q1 2015 Q1 2016

Index

Poin

ts

APARTMENT INDEX: YEAR ON YEARQ1 2015 / Q1 2016

-14%


Townhouse Index

Year on Year

The Annual Overall Townhouse Index decreased

11% in Q1 2016 compared to Q1 2015,

decreasing to 133 points from 150 points.

The blended average rate per sq ft for townhouses



12,788 per sq m) in Q1 2015.

Quarterly

The Quarterly Overall Townhouse index saw a 1%

decrease in Q1 2016.

The blended average rate per sq ft for townhouses







150

133

120

125

130

135

140

145

150

155

Q1 2015 Q1 2016

Index

Poin

ts

TOWNHOUSE INDEX: YEAR ON YEARQ1 2015 / Q1 2016

-11%

150

133

129

134133

115

120

125

130

135

140

145

150

155

Q1 Q2 Q3 Q4 Q1

2015 2016

Index

Poin

ts

TOWNHOUSE INDEX: QUARTERLYQ1 2015 / Q1 2016

0% -11% 4% 1%-3%


Villa Index

Year on Year

The Annual Overall Villa Index decreased 15% in

Q1 2016, compared to Q1 2015, decreasing to

171 points from 200 points.

The blended average rate per sq ft for villas in

Dubai in Q1 2016 was AED 1,235 (AED 13,295


15,576 per sq m) in Q1 2015.

Quarterly

The Quarterly Overall Villa index saw a 3%

increase in Q1 2016.

The blended average rate per sq ft for villas in

Dubai in Q1 2016 was AED 1,235 (AED 13,295





200

171

155

160

165

170

175

180

185

190

195

200

205

Q1 2015 Q1 2016

Index

Poin

ts

VILLA INDEX: YEAR ON YEARQ1 2015 / Q1 2016

-15%

200

181

167 167

171

150

160

170

180

190

200

210

Q1 Q2 Q3 Q4 Q1

2015 2016

Index

Poin

ts

VILLA INDEX: QUARTERLYQ4 2014 / Q4 2015

-6% -9% 0% 3%-8%


About the Index

The Colliers International House Price Index (HPI) was created in 2007 and established in January 2008 by

Colliers International and five leading banks and financial institutions in the Emirate of Dubai to provide

statistics specifically designed to reflect the average growth - decline rate of house prices across certain

foreign ownership areas of Dubai, United Arab Emirates. The data that forms the basis of the indices

presented in this HPI has been provided by all the member financial institutions and relates to properties

which have been mortgaged through these institutions. The member banks - financial institutions associated

with the Colliers International House Price Index are as follows:

• HSBC Bank Middle East Limited

• Emirates NBD

• Standard Chartered Bank

• Amlak Finance

• Noor Bank

• Citi Bank

We have used the weighted average method to construct the overall index. Based on our coverage of 21

master developments in Dubai, weighting has been apportioned on the basis of unit type (Apartment, Villa

or Townhouse). Apartments, Villas and Townhouses have been weighted at 59%, 26% and 15%

respectively in order to provide an accurate representation of market trends. The Recommended minimum

sample size for this HPI is 10 property transactions.

Primary Authors:

Ian Albert, BSc (Hons) MRICS

Regional Director | MENA

[email protected]

Tremaine Ferreira NDPV CIEA

Director | Residential Valuations

[email protected]

Tel +971 4 453 7400

Fax +971 4 453 7401

Colliers International | Dubai

Al Shafar Tower 1

Tecom, Dubai | UAE

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 15,800

professionals operating out of more than 485 offices in 63 countries. Colliers International delivers a

full range of services to real estate users, owners and investors worldwide, including global corporate

solutions, brokerage, property and asset management, hotel investment sales and consulting,

valuation, consulting and appraisal services and insightful research. The latest annual survey by the

Lipsey Company ranked Colliers International as the second-most recognized commercial real estate

firm in the world. In MENA Colliers International has been providing leading advisory services

through its regional offices since 1996. Colliers International currently has four corporate offices in

Dubai, Abu Dhabi, Riyadh and Jeddah.

colliers.com

Copyright © 2014 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has

been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers

are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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Dubai House Price Index - Commercial Real Estate Brokerage ......Compared to Q2 2008 (the peak of Dubai’s residential real estate market), the total volume of transactions remains