Q3 2017 Residential Market Report - Dubai Q3 2017 ... · PDF fileQ3 2017 Residential Market Report ... This has resulted from a combination of factors including new project handovers,

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Q3 2017 Residential Market Report - Dubai Q3 2017 Residential Market Report - Dubai

ForewordCavendish Maxwell is a highly respected, independent firm of chartered surveyors and property consultants, focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell is now one of the region’s most influential property consultancies. We provide comprehensive and detailed reports prepared to internationally accepted standards that meet a diverse range of client requirements. As a fully qualified member firm of the Royal Institution of Chartered Surveyors (RICS), with extensive knowledge of the region, we have the necessary experience, expertise and insight to deliver property advice of the highest standard.

Our experience covers property, land and business asset valuations; investment; disposals and acquisitions; rent reviews; lease renewals; development appraisals; advisory services; market research; feasibility studies; education advisory and valuation; project management; building consultancy and data analytics.

Our Quarterly Residential Market Report for Dubai provides an analysis and summary of the apartment and villa/townhouse properties, as well as the factors affecting housing demand. Price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties is provided through Property Monitor, a real estate data analytics and intelligence platform, powered by Cavendish Maxwell. The report also incorporates the Property Monitor Residential Survey, conducted among partner agents operating within Dubai. The survey showcases how new enquiries, leasing activity and transactions, among other metrics, changed over the previous quarter. It also provides an outlook on the following quarter, with predictions by professionals being studied against real performance.

Contents• Dubai House Price Timeline

• Housing Demand

• Price Performance

• Rent Performance

• Transactions Overview

• Supply Overview

• Property Monitor Residential Survey



Villa/Townhouse Apartment

Dubai House Price Timeline

Lower priced inventory continues to enter the market in locations such as Dubailand for villas and Dubai South, Jumeirah Village Circle and Al Furjan for apartments, thus impacting price dynamics for existing developments. Developers are launching more efficient unit sizes to keep ticket prices attractive, along with offering incentives, such as Dubai Land Department (DLD) fee waivers and aggressive payment plans. For established developers with alternate sources of project financing (such as equity from conglomerate businesses or raising debt from the market), margins may be protected or enhanced through such payment plans, as these allow them to attract buyers without discounting prices. The majority of the new plans on offer are structured with post-handover payments such as 40/60 and 25/75

schedules, where the bulk of the payment (e.g. 60% and 75% in the above examples) is due after construction completion. Additionally, mortgages have become more accessible as banks are also offering newer products to this segment. The DLD reported that for property transactions in Dubai, the value of mortgage transactions increased to AED 60 million in the first six months of 2017 fromAED 48 million over the same period last year. These factors are together helping expand the buyer base for residential properties in Dubai.

VILLAS/TOWNHOUSES

AED 2.02 Million

Average Sales Price In Q3 2017

In 2017 residential property transaction prices traded within a close range of AED 1.25 to 1.5 million for apartments and AED 1.7 to 2.1 million for villas/townhouses on average.

Note: Dubai House Price Timeline tracks residential property transactions from Dubai Land Department (off-plan and secondary) to derive monthly and quarterly average transacted prices for apartments and villas/townhouses.

Source: propertymonitor.me

4.0M

3.5M

3.0M

2.5M

2.0M

1.5M

1.0M

0.5M

Ave

rag

e sa

le p

rice

AED

Q1-

2008

Q2-

2008

Q3-

2008

Q4-

2008

Q1-

2009

Q2-

2009

Q3-

2009

Q4-

2009

Q1-

2010

Q2-

2010

Q3-

2010

Q4-

2010

Q1-

2011

Q2-

2011

Q3-

2011

Q4-

2011

Q1-

2012

Q2-

2012

Q3-

2012

Q4-

2012

Q1-

2013

Q2-

2013

Q3-

2013

Q4-

2013

Q1-

2014

Q2-

2014

Q3-

2014

Q4-

2014

Q1-

2015

Q2-

2015

Q3-

2015

Q4-

2015

Q1-

2016

Q2-

2016

Q3-

2016

Q4-

2016

Q1-

2017

Q2-

2017

Q3-

2017

Dubai House Price Timeline - Sales Price (AED) from the period January 2008 to September 2017

Average villa/townhouse prices reduced to AED 2.2 million due to the increased supply of lower priced units.

APARTMENTS

AED 1.34 Million



Source: Dubai Statistics Centre

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

50%

40%

30%

20%

10%

0%

Total population White-collar workers as a % of total poplulation

Dubai Population

2011 2012 2013 2014 2015 2016

Dubai Land Department Residential Sales Volume - Secondary Market Transfers vs. Off-Plan

Apartment Transactions2,250

2,000

1,750

1,500

1,250

1,000

750

500

250

0

Num

ber

of t

rans

actio

nsPo

pul

atio

n

Whi

te-c

olla

r wor

kers

as

a %

of t

otal

pop

lula

tion

Sales volume (secondary market transfers) Sales volume (off-plan) Source: propertymonitor.me

Sep 2016 Oct 2016 Nov 2016 Dec 2016 Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 Jun 2017 July 2017 Aug 2017 Sep 2017

858

664

981

875

875

1,34

2

893

1,21

3

569

1,75

2

1,57

0

1,04

3

1,57

01,73

5

927

1,20

3

1,58

8

945

1,56

6

1,13

4

1,52

8

624

1,08

2

2,21

1

804

2,08

1

Villa/Townhouse Transactions1250

1000

750

500

250

0

Num

ber

of t

rans

actio

ns

Source: propertymonitor.meSales volume (secondary market transfers) Sales volume (off-plan)

92 118

89 136 13

3

187

121

130

135

585

146

465

124

245

150 20

9

80

188

67

221

63 65

349

232

122

1,17

2

Sep 2016 Oct 2016 Nov 2016 Dec 2016 Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 Jun 2017 July 2017 Aug 2017 Sep 2017

Housing DemandHousing demand in Dubai is primarily a factor of affordability as well as population growth, particularly of the white-collar labour force, as blue-collar workers are housed in speciality accommodation in line with the 2014 decree and subsequent 2016 announcement. According to recently released data from Dubai Statistics Centre, the total population for the emirate in 2016 stood at 2.7 million, rising by nearly 16% since 2014, which was the last residential market peak. In comparison, the white-collar population has increased by 5% over the same period to reach 1.1 million in 2016 and the percentage contribution of the white-collar workforce in the total population has declined from 44% in 2014 to 40% in 2016.

While investor demand for residential properties in Dubai continues to remain strong, as witnessed in transactions levels over the last 18 months, the sluggish growth in the white-collar worker population combined with new supply is impacting rents and contributing to high vacancy levels in some emerging communities. Over the next two years, job creation ahead of Expo 2020 is expected to attract additional labour force to the emirate, though it remains to be seen what percentage of that will be white-collar population and hence translate into housing demand.

789



180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Dubai

Marina

Emira

tes Li

ving

(The V

iews)

Emira

tes Li

ving

(The G

reens

)

Jumeir

ah Bea

ch Re

siden

ce

Jumeir

ah La

ke To

wers

Busine

ss Bay

Downto

wn Burj

Khalifa

DIFC

Dubai

Sport

s City

Motor C

ity

Discov

ery G

arden

s

Intern

ation

al City

(Clus

ters)

Jumeir

ah G

olf Es

tates

Jum

eirah

Islan

ds

Jumeir

ah Pa

rk

The L

akes

The M

eado

ws

The S

pring

s

Arabian

Ranc

hes

Victor

y Heig

hts

Al Furj

an Vi

llas

-2.0

-4.0

-2.0

-4.0 -4.0

-2.0

-3.0

-2.0

-3.0-3.0 -3.0

-4.0

-3.2 -3.3

-3.8

-4.8

-4.1

-2.6

-3.2-3.2-3.0

-2.0%

-2.5%

-3.0%

-3.5%

-4.0%

-4.5%

-5.0%

-5.5%

-6.0%

-6.5%

0.0%

-0.5%

-1.0%

-1.5%

-2.0%

-2.5%

-3.0%

-3.5%

-4.0%

-4.5%

-5.0%

500,000

600,000

700,000

400,000

300,000

200,000

100,000

0

Apartment Rent Performance

Villa/Townhouse Rent Performance

3 BR Rent 4 BR Rent 5 BR Rent 12 month % change Source: propertymonitor.me

Studio Rent 1 BR Rent 2 BR Rent 12 month % change Source: propertymonitor.me

Price Performance

Prices in established communities with limited upcoming supply have held stronger than emerging locations even as marginal price declines continued in Q3.

According to the Property Monitor Index, 12 month change in prices for key communities in Dubai registered marginal declines of 1.2% for apartments and 1.4% for villas/townhouses as of September. This downward trend over the last twelve months has created a wider gap in the price performance of quality stock in established areas with limited upcoming supply against that of newer developments in emerging locations. Factors such as proximity to central business district, social infrastructures like schools, supermarkets as well as build quality and developer track record will continue to play a larger role in maintaining price levels in the Dubai residential market.

Rent PerformanceRent declines for residential properties in Dubai have been more pronounced than price declines over the last 12 months. Over the last 12 months, rents in Dubai have declined by 2.8% for apartments and 3.5% for villas/townhouses on average, according to the Property Monitor Index. This has resulted from a combination of factors including new project handovers, especially of lower priced inventory, as well as the readjustment of salaries and job losses in some key sectors. In response, to limit void periods on their properties, landlords have begun offering incentives such as the first month rent free as well as the option to pay through multiple cheques. According to Property Monitor, four cheques annually are now the average compared with the earlier practice of single cheque payments being prevalent in the Dubai residential market.


Apartment Price Performance

Q2 2017 Price Q3 2017 PriceQoQ% change Q2 2017 - Q3 2017 12 month change Q3 2016 - Q3 2017

Q2 2017 Price Q3 2017 PriceQoQ% change Q2 2017 - Q3 2017 12 month change Q3 2016 - Q3 2017

International City (Clusters)

Dubai Silicon Oasis

Discovery Gardens

Dubai Sports City

IMPZ

Jumeirah Village Circle

Uptown Motor City

Al Furjan

Jumeirah Village Triangle

Jumeirah Lake Towers

The Greens

Business Bay

The Views

Dubai Marina

Jumeirah Beach Residences

DIFC

Palm Jumeirah

Downtown Burj Khalifa0 500 1,000 1,500 2,000 2,500

0

-0.5%

-1.0%

-1.5%

-2.0%

-2.5%

-3.0%

-3.5%

-4.0%


Villa/Townhouse Price Performance

Al Furjan Villas

Cedre Villas Silicon Oasis

Jumeirah Village Triangle

Green Community Motor City

The Springs

Jumeirah Park

Arabian Ranches

Victory Heights

The Meadows

The Lakes

Jumeirah Golf Estates

Jumeirah Islands

The Fronds Garden Homes

0 500 1,000 1,500 2,000 2,500 3,000

0

-0.5%

-1.0%

-1.5%

-2.0%

-2.5%

3.0%

-1.3

-2.5

-1.2

-1.5

-2.1

-1.8

-0.6

-1.2-0.2

-1.2

-0.4

-0.7

-1.4

-0.4

-0.2

-0.3

-0.8

-0.4

-0.2

-1.1

-0.7

-1.2

-0.4-1.0

-0.9-3.6

-0.6-1.7

-0.6

-0.2-0.9

-0.9 -0.3

-0.2-1.1-0.6-1.2

-0.2 -0.4

-1.1-1.8-0.1-1.0

-0.6 -0.4

-0.4-1.5-0.9-2.4

-1.2 -0.4

-0.5 0.0

Ave

rag

e p

rice

AED

/ s

q ft

Ann

ual r

ent

(AED

)A

nnua

l ren

t (A

ED)

12 m

onth

% c

hang

e12

mon

th %

cha

nge

Ave

rag

e p

rice

AED

/ s

q ft

-0.6-1.5

-0.3-0.7

-0.9 -0.1

-0.2

-0.4

-0.1



7,992APARTMENTS

Sales Volume Q3 2017

Top Five Locations For Apartment Transactions In Q3

Top Five Locations For Villa/Townhouse Transactions In Q3

Off-Plan Transactions Secondary Market Transactions

Num

ber

of t

rans

actio

ns

Num

ber

of t

rans

actio

ns

1,000

800

600

400

200

0

350

300

250

200

150

100

50

0

Dubai

South

Dubai

Marina

Downto

wn Burj

Khalifa

Intern

ation

al City

Jumeir

ah Vi

llage

Circ

le

Jumeir

ah La

ke To

wers

Moham

med Bin

Rash

id City

Dubai

Sport

s City

Busine

ss Bay

Discov

ery G

arden

s


Off–Plan Transactions Secondary Market Transactions

Num

ber

of t

rans

actio

ns

Num

ber

of t

rans

actio

ns

250

200

150

100

50

0

70

60

50

40

30

20

10

0

Dubai

South

Emira

tes Li

ving

Moham

med Bin

Rash

id City

Reem

(Mira

)

Wad

i Al S

afa

Jumeir

ah Vi

llage

Circ

le

Seren

a

Wad

i Al S

afa

Town S

quare

Arabian

Ranc

hes


Transactions Overview

More than 8,900 residential property transactions were recorded in Q3, with July accounting for nearly 40%.

Off-plan sales continued to drive residential market activity in the third quarter, accounting for 77% of the total with nearly 6,850 transfers. The current momentum in sales activity is driven by a larger proportion of end users than before, particularly first-time buyers, who are entering the market enthused by lower prices and encouraged by attractive payment plans offered by some developers. The introduction of new innovative mortgage products by some local banks has also contributed towards this increased activity. Prices and accessibility criteria for a home mortgage, traditionally the two biggest barriers for new entrants to the property market, have been lowered, thus resulting in an uptick in market activity.

948VILLAS/TOWNHOUSES



Residential SupplyApproximately 11,800 residential units have been handed over across Dubai this year.

As of September 2017, approximately 32,000 units are scheduled for handover for the remainder of the year, though actual completions may vary significantly. New supply continues to exert pressure on rents, which have been declining at a faster pace than prices over the last 12 months. Some developers have begun responding to this market reality by phasing the delivery of projects. Additionally, master developers are also differentiating among the various asset classes within their master plan, such as residential, retail, schools, hotels, etc., to launch and begin construction for projects in line with prevailing absorption trends. The profile of transacted properties is also driving unit size and mix optimisation within residential projects to match end user demand more closely than ever before.

According to the Property Monitor Supply Tracker, the upcoming supply for the remainder of 2017 is largely concentrated in Dubai Marina, Jumeirah Village Circle, Dubai Sports City, Al Quoz and Business Bay. All these locations have more than 2,000 units projected to be handed over in the last quarter of the year.

Upcoming Supply (Q4 2017)

VILLAS/TOWNHOUSES

15%APARTMENTS

85%



Q4 2017 Price Outlook

Looking Forward – Q4 2017

Q4 2017 Rent Outlook

ApartmentsPercentage of agents who predicted apartment prices would:

ApartmentsPercentage of agents who predicted apartment rents would:

Villas/TownhousesPercentage of agents who predicted villa/townhouse prices would:

Villas/TownhousesPercentage of agents who predicted villa/townhouse rents would:

Increase by more than 5% Increase by up to 5% Not change Decrease by up to 5% Decrease by more than 5%

Source: Property Monitor Residential Survey

Source: Property Monitor Residential Survey

The majority of agents surveyed had predicted apartment and villa/townhouse prices would remain unchanged.

The majority of agents had predicted that apartment and villa/townhouse rents would remain the same during Q3 2017.

The majority of agents had predicted new buyer enquiries, seller instructions and agreed sales would increase in Q3 2017.

Apartment and villa/townhouse rents have remained largely unchanged QoQ though 12 month decline is around 4% on average.

According to data from real estate agencies, transaction levels for Q3 2017 are higher than Q2.

Predictions

vs

Reality

Apartment and villa/townhouse prices have remained largely stable in Q3 2017 with a 12 month decline of 1.0% on average.

3%

46%

0%

18%

33%

0%

43%

11%3%

43%

5%

36%

0%

17%

42%

3%

32%

0%

16%

49%

Increase by more than 5% Increase by up to 5% Not change Decrease by up to 5% Decrease by more than 5%

Property Monitor Residential Survey – Q3 2017

Looking back – Q3 2017

MethodologySale prices and rents are derived from Property Monitor (www.propertymonitor.me), a comprehensive real estate data analytics platform established by Cavendish Maxwell in 2014. Property Monitor provides real-time, market-wide transactional data and trends. Working with agencies, banks, developers and corporate investors, it provides deeper insight into real estate advisory, investment, and lending activities. The average sales price per sq ft is based on the Property Monitor Index which incorporates signed contracts, registered transactions, valuations and listings verified by Cavendish Maxwell’s market leading valuation department.

Property Monitor Residential Survey is a quarterly study of agent opinion designed to identify residential market sentiment. This research highlights how new enquiries, leasing activity and transactions, among other metrics, changed from quarter to quarter with agent predictions compared to actual real market performance.

Supply projections for residential projects are based on the regular tracking of construction projects, new launches and delays etc. This is achieved through site inspections as well as regular feedback from developers, contractors, Cavendish Maxwell’s building consultancy team and related government entities.

Strategic Consulting and ResearchCavendish Maxwell’s strategic consulting and research team uses its in-depth knowledge of the real estate sector and extensive network to support our clients through the development process, providing strategic consultancy and advice to guide and support investment decisions from concept to delivery.

We have advised on schemes with a gross development value of over AED 3 billion in the last year. Our reports are used internally for business planning purposes and to satisfy the criteria of external financiers and auditors.

Our name is trusted by all major banks across the UAE, supported by our presence on over 35 bank panels across the region.

Disclaimer© Cavendish Maxwell and Property Monitor 2017. The information and analysis contained in this report has been obtained from or is based on information from a variety of sources generally regarded to be reliable and assumptions which are considered reasonable, and which was current at the time of undertaking market research. However, no representation is made, or responsibility accepted by Cavendish Maxwell or Property Monitor in respect of the accuracy or currency of this information. Cavendish Maxwell and Property Monitor do not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

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Q4 2017 Transaction Outlook

Percentage of agents who predicted

new buyer enquiries would:


new seller instructions would:


agreed sales would:

Increase Decrease Remain the same



23.4%

62.9%

37.1%

11.3%

51.6%

56.4%

12.1%

31.5%

13.7%

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Also contact us for:

Lynnette Abad BBA (Hons)Partner, Head of Property Monitor

M: +971 50 894 7880E: [email protected]

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M: +971 54 355 0772 E: [email protected]

Jay Grant MSc IRRV (Hons) Founder and Chairman


Miles Phillips BSc (Hons) MRICS Senior Partner


Sofia Underabi MRICS AAPI Partner, Head of Residential Valuation


Manika Dhama BA (Hons), MBA Senior Consultant, Strategic Consulting and Research


Sathya Srinivasan Msc MRICS Head of Strategic Consulting and Research


Dubai

2205 Marina PlazaDubai MarinaP.O. Box 118624DubaiUnited Arab Emirates

T: +971 4 453 9525 E: [email protected]

Abu Dhabi

605 West Tower, Abu Dhabi MallTourist Club AreaP.O. Box 126609Abu DhabiUnited Arab Emirates

T: +971 2 448 4677E: [email protected]

Muscat

Villa 836, Way 3012Al SaroojP.O. Box 3438Muscat

Sultanate of Oman


Dubai

2205 Marina PlazaDubai MarinaP.O. Box 118624DubaiUnited Arab Emirates

T: +971 4 453 9525 E: [email protected]

Abu Dhabi

605 West Tower, Abu Dhabi MallTourist Club AreaP.O. Box 126609Abu DhabiUnited Arab Emirates


Muscat

Villa 836, Way 3012Al SaroojP.O. Box 3438Muscat

Sultanate of Oman


Documents

Q3 2017 Residential Market Report - Dubai Q3 2017 ... · PDF fileQ3 2017 Residential Market Report ... This has resulted from a combination of factors including new project handovers,