Dubai Boom-Bust-ology

Unitas Consultancy (A GLOBAL CAPITAL PARTNERS GROUP COMPANY) Q1 2015

This document is provided by Unitas Consultancy solely for the use by its clients No part of it may becirculated quoted or reproduced for distribution outside the organization without prior writtenapproval

STRICTLY CONFIDENTIAL

Office No 103 The Palladium Plot No C3 Jumeriah Lake Towers Dubai UAE infounitasconsultancycom

1

bull Historically since the advent of the freehold phenomena Dubais population has grown by approximately 7per annum (75 of the growth from net influx of people) During this time the supply of homes in Dubai hastripled (from 156000 units to 465000 units) and the city has enjoyed a boom in asset prices for a numberof reasons principal amongst them being the investor phenomena (single investors buying multipleproperties either for rental yields andor for holiday home purposes) and the expansion of the cityspopulation as it became a magnet for the MENASA region in terms of employment opportunities

bull The structure of Dubairsquos real estate market is analogous to that of an hourglass There is a preponderance ofsupply at the top and the bottom end of the spectrum with a paucity in between If Dubai is going to movetowards a dynamic where demand going forward will be indigenously derived (from end users) as is the casein most mature economies and not emulate the Spanish model (holiday-home phenomena) then it serves toreason that the mid income space is what needs to be catered to

bull The market remains well (if not over) supplied at the top end of the spectrum (both in the villa and theapartment space) and the impact of lower oil prices and stronger dollar will undoubtedly dampen thedemand from overseas investors however domestic demand at the mid end remain inelastic to these macrotrends and developers and investors that capitalize on this will be amply rewarded in the years ahead

Executive Summary

2

Table of Contents

A) Boom-Bust-ology 4

B) Dubai Population Dissection 9

C) Dubai Supply Dynamics 12

A) Affordability Analysis 15

3

4

Boom-Bust-ology

ldquoThe opinions that the price of commodities depends solely on the portion of supply and demand or demand to supply has become an axiom in political economy and has been the source of much error in that sciencerdquo -

David Ricardo

5

(80000)

(60000)

(40000)

(20000)

-

20000

40000

60000

80000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(100000)

(80000)

(60000)

(40000)

(20000)

-

20000

40000

2015 2016 2017 2018 2019

-

10000

20000

30000

40000

2015 2016 2017 2018 2019

Demand Vs Supply Deficit Surplus Population Growing at 3 Demand Vs Supply Deficit Surplus Population Growing at 6

Demand Vs Supply of Dubai Real Estate Deficit Supply (2000-2014)

Over-Supply

Under-Supply

Bust Boom

Boom-Bust 2015-2019

The above graph clearly illustrates that if Dubairsquos population continues to grow at 3 per annum there will be a continued protractedoverhang of supply based on the number of projects that have already been announced However if the rate of population grows at6 per annum then there will continue to be a deficit in terms of housing supply relative to demand implying the house prices willrise from their current levels

Source REIDIN Dubai Statistics Centre

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

bull Historically since the advent of the freehold phenomena Dubais population has grown by approximately 7per annum (75 of the growth from net influx of people) During this time the supply of homes in Dubai hastripled (from 156000 units to 465000 units) and the city has enjoyed a boom in asset prices for a numberof reasons principal amongst them being the investor phenomena (single investors buying multipleproperties either for rental yields andor for holiday home purposes) and the expansion of the cityspopulation as it became a magnet for the MENASA region in terms of employment opportunities

bull The structure of Dubairsquos real estate market is analogous to that of an hourglass There is a preponderance ofsupply at the top and the bottom end of the spectrum with a paucity in between If Dubai is going to movetowards a dynamic where demand going forward will be indigenously derived (from end users) as is the casein most mature economies and not emulate the Spanish model (holiday-home phenomena) then it serves toreason that the mid income space is what needs to be catered to

bull The market remains well (if not over) supplied at the top end of the spectrum (both in the villa and theapartment space) and the impact of lower oil prices and stronger dollar will undoubtedly dampen thedemand from overseas investors however domestic demand at the mid end remain inelastic to these macrotrends and developers and investors that capitalize on this will be amply rewarded in the years ahead

Executive Summary

2

Table of Contents

A) Boom-Bust-ology 4

B) Dubai Population Dissection 9

C) Dubai Supply Dynamics 12

A) Affordability Analysis 15

3

4

Boom-Bust-ology

ldquoThe opinions that the price of commodities depends solely on the portion of supply and demand or demand to supply has become an axiom in political economy and has been the source of much error in that sciencerdquo -

David Ricardo

5

(80000)

(60000)

(40000)

(20000)

-

20000

40000

60000

80000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(100000)

(80000)

(60000)

(40000)

(20000)

-

20000

40000

2015 2016 2017 2018 2019

-

10000

20000

30000

40000

2015 2016 2017 2018 2019

Demand Vs Supply Deficit Surplus Population Growing at 3 Demand Vs Supply Deficit Surplus Population Growing at 6

Demand Vs Supply of Dubai Real Estate Deficit Supply (2000-2014)

Over-Supply

Under-Supply

Bust Boom

Boom-Bust 2015-2019

The above graph clearly illustrates that if Dubairsquos population continues to grow at 3 per annum there will be a continued protractedoverhang of supply based on the number of projects that have already been announced However if the rate of population grows at6 per annum then there will continue to be a deficit in terms of housing supply relative to demand implying the house prices willrise from their current levels

Source REIDIN Dubai Statistics Centre

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

Table of Contents

A) Boom-Bust-ology 4

B) Dubai Population Dissection 9

C) Dubai Supply Dynamics 12

A) Affordability Analysis 15

3

4

Boom-Bust-ology

ldquoThe opinions that the price of commodities depends solely on the portion of supply and demand or demand to supply has become an axiom in political economy and has been the source of much error in that sciencerdquo -

David Ricardo

5

(80000)

(60000)

(40000)

(20000)

-

20000

40000

60000

80000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(100000)

(80000)

(60000)

(40000)

(20000)

-

20000

40000

2015 2016 2017 2018 2019

-

10000

20000

30000

40000

2015 2016 2017 2018 2019

Demand Vs Supply Deficit Surplus Population Growing at 3 Demand Vs Supply Deficit Surplus Population Growing at 6

Demand Vs Supply of Dubai Real Estate Deficit Supply (2000-2014)

Over-Supply

Under-Supply

Bust Boom

Boom-Bust 2015-2019

The above graph clearly illustrates that if Dubairsquos population continues to grow at 3 per annum there will be a continued protractedoverhang of supply based on the number of projects that have already been announced However if the rate of population grows at6 per annum then there will continue to be a deficit in terms of housing supply relative to demand implying the house prices willrise from their current levels

Source REIDIN Dubai Statistics Centre

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

4

Boom-Bust-ology

ldquoThe opinions that the price of commodities depends solely on the portion of supply and demand or demand to supply has become an axiom in political economy and has been the source of much error in that sciencerdquo -

David Ricardo

5

(80000)

(60000)

(40000)

(20000)

-

20000

40000

60000

80000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(100000)

(80000)

(60000)

(40000)

(20000)

-

20000

40000

2015 2016 2017 2018 2019

-

10000

20000

30000

40000

2015 2016 2017 2018 2019

Demand Vs Supply Deficit Surplus Population Growing at 3 Demand Vs Supply Deficit Surplus Population Growing at 6

Demand Vs Supply of Dubai Real Estate Deficit Supply (2000-2014)

Over-Supply

Under-Supply

Bust Boom

Boom-Bust 2015-2019

The above graph clearly illustrates that if Dubairsquos population continues to grow at 3 per annum there will be a continued protractedoverhang of supply based on the number of projects that have already been announced However if the rate of population grows at6 per annum then there will continue to be a deficit in terms of housing supply relative to demand implying the house prices willrise from their current levels

Source REIDIN Dubai Statistics Centre

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

5

(80000)

(60000)

(40000)

(20000)

-

20000

40000

60000

80000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(100000)

(80000)

(60000)

(40000)

(20000)

-

20000

40000

2015 2016 2017 2018 2019

-

10000

20000

30000

40000

2015 2016 2017 2018 2019

Demand Vs Supply Deficit Surplus Population Growing at 3 Demand Vs Supply Deficit Surplus Population Growing at 6

Demand Vs Supply of Dubai Real Estate Deficit Supply (2000-2014)

Over-Supply

Under-Supply

Bust Boom

Boom-Bust 2015-2019

The above graph clearly illustrates that if Dubairsquos population continues to grow at 3 per annum there will be a continued protractedoverhang of supply based on the number of projects that have already been announced However if the rate of population grows at6 per annum then there will continue to be a deficit in terms of housing supply relative to demand implying the house prices willrise from their current levels

Source REIDIN Dubai Statistics Centre

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

6

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Change of Population

-30

-20

-10

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

YoY Price Change

YoY Supply Units

Correlation -04Correlation +04

YoY Price Change Vs YoY Change of Population YoY Price Change Vs YoY Change of Supply

Population Growth and Incremental Supply Pivotal to Price Action

A correlation analysis between the rate of population growth and prices reveals that there is a moderately strong relationshipbetween the two confirming the view that population growth rates have had a strong impact on price growth This is furtherconfirmed with supply which has a mirror relationship in the opposite direction implying that years where supply has lagged therehas been a positive impact on price

Source REIDIN Dubai Statistics Centre Source REIDIN Dubai Statistics Centre

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

7

79

-44

86

105

-41

86

35

-44

92

-60

-40

-20

0

20

40

60

80

100

120

Start to Peak Peak to Trough Trough to Peak

Prime

High-End

Affordable

Price Appreciation Analysis Boom and Bust Cycle

A time series analysis of price appreciation of different phases of the boom-bust cycle depicts that in the first phase high-endproperties out-performed the affordable segment This price action resulted in a construction boom skewed towards the high-endrelative to the population demographics In the second boom we witnessed a stronger price action in affordable housing asshortages within the segment widened

Source REIDIN

2002-2008 2008-2012 2012-2015

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

8

A Strengthening US Dollar has Negative Impact on Property Prices Correlation -03

For the first time since the freehold phenomenon was introduced in Dubai the USD has strengthened on a secularbasis Historical correlations indicate a moderately negative correlation of the USD index to aggregate freehold pricesimplying that astrengthening USD will have a negative impact on prices going forward This can be evidenced fromthe graph above where a strengthening of the USD index in the first half of 2014 led to a flattening of real estateprices shortly thereafter

Source REIDIN researchstlouisfedorg

75

80

85

90

95

100

105

0

50

100

150

200

250

300

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

05

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

06

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

07

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

08

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

09

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

10

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

11

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

12

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

13

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

20

14

-hellip

Price Index

Dollar Index

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

9

Dubai Population Dissection

ldquoNumbers are very dangerous but the main thing about them is that they humble your pride And thats goodrdquo ― Saul Bellow

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

10

Dubairsquos Population

26

23

36

3231

29

0

5

10

15

20

25

30

35

40

1993 2000 2005 2011 2012 2013

161768 199458

476733647796 647796 647796

449158

662929

844720

1355374 14580791566049

0

500000

1000000

1500000

2000000

2500000

1993 2000 2005 2011 2012 2013

Non-Labour

labour

Labor as Percentage of Total Population

Dubairsquos Economy Gravitates Towards a Stronger Middle-Class

A snapshot of Dubairsquos population shows that labor accounts for a approximately 36 of the population in 2005 which has decreasedby 20 in the last 9 years The key to Dubairsquos real-estate success will be the population growth of the non-labor class which isneeded to absorb the up-coming supply in future years

Source Dubai Statistics Centre

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

11

Dubai is Heavily dependent on the Job Creation Compared to a Natural Population Increase

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

age 0-4age 5-9age 10-14

age 15-19

age 20-25

age 25-29

age 30-34

age 35-39

age 40-44

age 45-49

age 50-54

age 55-59

age 60-64

age 65-69

age 70-74

age 75+

2013 1993

Population Topography 2013 vs 1993

25

75

Natural Increase Influx of People

Natural VS New Population Growth

The structure of Dubairsquos population in the last 20 years has had a youth bulge where the majority of the residents are in the agebracket of 19-44 The major reason for this bulge was due to the large number of young people entering the workforce to supportthe growth of Dubairsquos infrastructure The natural increase of the population only accounts frac14 of the growth highlighting theimportance of job creation to sustain Dubairsquos growing economy

Source Dubai Statistics Centre

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

12

Dubai Supply Dynamics

ldquoSupply always comes on the heels of demandrdquo Robert Collier

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

13

Overview of Dubai Housing Supply

0

100000

200000

300000

400000

500000

600000

2000 2002 2004 2006 2008 2010 2012 2014

Supply of Dubai Housing Units

In the last 14 years Dubai housing supply has more than tripled and is expected to grow at 5 for the next two years It isapparent that there has been a smoothening of supply in terms of delivery and to the extent that this remains the case a steadystate population growth of4-5 per annum will smooth price fluctuations ensuring that the market remains balanced on a holisticlevel

0

5

10

15

20

25

30

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Supply

Population

YoY Change of Supply and Population

Source Dubai Statistics Centre

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

14

Freehold Vs Leasehold Supply

63

37

Freehold

Leasehold

46

54

Freehold

Leasehold

Villas

Apartments

A dissection of current supply reveals that freehold units account for nearly half of overall supply Freehold units dominate theapartments space where as horizontal living is skewed towards leasehold areas The bulk of new supply being injected into themarket is in freehold areas catering to the expanding population which is driven by the influx of expats

47

53

Freehold

Leasehold

Dubai Supply

Source REIDIN Dubai Statistics Centre

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

15

Affordability Analysis

ldquoNeed is not demand Effective economic demand requires not merely need but corresponding purchasing powerrdquo ― Henry Hazlitt

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

16

17

45

12

10

4

43

2 4

gt1000

1000-2999

3000-5999

6000-9999

10000-13999

14000-17999

18000-21999

22000-25999

26000gt

Monthly Salary Range of the Working Population

Income Distribution Skewed Towards Affordable Housing

Where do the Working People Live

Given the income distribution of the population 73 of residents lives in labor camps and room sharing whereas 27 can afford torent units independently This landscape highlights the importance of affordable housing in Dubairsquos infrastructure in coming years

73

27Labour Camps Room Sharing

Independent Housing

Source Dubai Statistics Centre Source Global Capital Partners

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

17

Studios One Bed Two Beds Three Beds Four beds

International City International City International City International City International City

Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens Discovery Gardens

IMPZ IMPZ IMPZ IMPZ IMPZ

Sports City Sports City Sports City Sports City Sports City

JLT JLT JLT JLT JLT

Greens Greens Greens Greens Greens

Marina Marina Marina Marina Marina

Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah Palm jumeirah06

08

1

12

14

16

18

2

22

24

26

28

3

32

34

36

38

4

10000 AED 15000 AED 20000 AED 25000 AED 30000 AED 35000 AED 40000 AED

5 of Population

Salary

Pro

pe

rty

Val

ue

(in

mill

ion

s)

An Affordability Analysis Where Can we Buy

2 of Population

3 of Population

Mortgage Parameters

20 down payment

20 years

399 mortgage rate

40 value of salary

An affordability analysis highlights that 10 of the working population will be eligible for a home loan on their residence The majorbeneficiaries of this dynamics will be IMPZ and Sports City Only 2 of the population can either afford to rent or buy propertiesabove 2 million implying that within this segment there is a strong presence of lsquovacation home buyersrsquo or where the ultra-high networth own multiple properties as part of their asset portfolio

Affordability Analysis

Source Global Capital Partners

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

18

22 of the Supply is only Accessible to 2 of the Population

2014 2015-2016

Supply 54011 57927

Population 29517 32469

Surplus Deficit (Units) + 24494 + 25458

22

78

Above 2M

Below 2M

Freehold Supply Property Value Boom Bust

A segmentation analysis of property by value shows that 22 of freehold supply is above 2 million which is only accessible by 2 ofthe population The excess supply in the prime properties segment is aimed at the buyers of vacation homes or trophy properties forinvestors

Source REIDIN

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

ConclusionsBoom-Bust-ology Dubai Population Dissection

Dubai Supply Dynamics Dubai Affordability Analysis

22 of the Supply is only accessible to 2 of the population

Population growth and supplychange play a pivotal role ininfluencing price trends

Supply and population growth rates have amoderately strong correlation on price trendsThe increase in units being injected into thehousing stock will have adverse effect on priceswhereas a rise in population growth rates havethe opposite

A boom-bust scenario shows that if Dubairsquospopulation grows at 3 the overhang of supplywill lead to subdued prices however if it grows at6 prices are expected to rise

Dubairsquos labor population (as a percentage ofoverall population) has decreased by 20 in thelast 9 years accounting for 29 of the entirepopulation

Dubairsquos Population growth is still heavilydependent on job creation as 75 is from aninflux of expats whereas 25 is endogenous

This phenomenon has resulted in youth bulge inthe demographics making home-ownership astrong demand driver for the real estate market

In the last 14 years Dubairsquos housing stock hasmore than tripled with supply expected to growat 5 over the next couple of years

A dissection of Dubairsquos supply shows that nearlyhalf of the housing supply is in freehold areas Asnew mega projects begin to roll out (ie MBR CityCreek Harbor) the supply will begin to skew awayfrom leasehold areas catering to the influx ofexpatriates

The income distribution of Dubairsquos working classsuggest that 73 of the population is living inshared rooms or labor camps The balance 27 canafford to live in independent units

An affordability analysis highlights that 10 of theworking population will be eligible for a home loanon their residence where only 2 can affordproperties above 2 million of value

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

REIDINcom is the leading real estate informationcompany focusing on emerging markets

REIDINcom 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

Concord Tower No 2304 Dubai Media City PO Box 333929 Dubai United Arab Emirates Tel +971 4 433 13 98 Fax +971 4 360 47 88wwwREIDINcominfoREIDINcom

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

Indigo Icon 1708Jumeirah Lake Towers PO Box 500231 Dubai United Arab Emirates Tel +971 4 447 72 20 Fax +9714 447 72 21 wwwglobalcappartnerscominfogcp-propertiescom

17

21

Research Database

Title Report Date

Dubai Is Commercial Realty Commercially Viable REIDIN - UNITAS Real Estate Market Reports 2-Feb-15

Dubai Shocks Shifts amp a Return to First Principle REIDIN - UNITAS Real Estate Market Reports 19-Dec-14

Dubai The Hunt for Yields REIDIN - UNITAS Real Estate Market Reports 15-Dec-14

Dubai Amidst a Slowdown Underlying Strength REIDIN - UNITAS Real Estate Market Reports 15-Nov-14

Dubai Where to build REIDIN - UNITAS Real Estate Market Reports 22-Oct-14

Is there such thing as the ldquoCityscape Effectrdquo REIDIN - UNITAS Real Estate Market Reports 18-Sep-14

Dubai The Real Estate Value Guide REIDIN - UNITAS Real Estate Market Reports 3-Sep-14

Dubai The New Normal REIDIN - UNITAS Real Estate Market Reports 8-Aug-14

Dubai The Paradox of Affordable Housing REIDIN - UNITAS Real Estate Market Reports 21-Jul-14

Dubai A Tale of Two Markets REIDIN - UNITAS Real Estate Market Reports 17-Jun-14

Dubai The Trophy Buying Phenomena REIDIN - UNITAS Real Estate Market Reports 22-May-14

Dubai The Road Ahead REIDIN - UNITAS Real Estate Market Reports 5-May-14

Dubai Buy Land Where the City Ends REIDIN - UNITAS Real Estate Market Reports 7-Apr-14

Dubai A Closer Look into 2013 - Q1 2014 REIDIN - UNITAS Real Estate Market Reports 13-Feb-14

Dubai What Now - Q4 2013 REIDIN - UNITAS Real Estate Market Reports 28-Nov-13

Dubai If You Build It They Will Come - Q3 2013 REIDIN - UNITAS Real Estate Market Reports 30-Sep-13

Dubai The City is Built Upon itrsquos Commerce - Q1 2013 REIDIN - UNITAS Real Estate Market Reports 11-Apr-13

Home Ownership Dubais Road to Prosperity 2013 REIDIN - UNITAS Real Estate Market Reports 12-Mar-13

Our Aspiration and Motto

ldquoNo barrier can withstand the strength of purposerdquoHH General Sheikh Mohammed Bin Rashid Al MaktoumThe Ruler of Dubai and Prime Minister of UAE