Property Review UAE Real Estate Report 3 0...apartments no. of units villas no. of units offices sq.m. completed in completed in expected in abu dhabi supply 4 abu dhabi real estate

In the Middle East for over 30 Years

Property Review

UAE Real Estate Report Q3 2018

CONTENT

03ABU DHABI

11DUBAI

25AL AIN

20NORTHERN EMIRATES

31AL TAMIMI & CO.

30OXFORD ECONOMICS

Abu Dhabi Real Estate Report - 3

ABU DHABI MARKET OVERVIEW

SUPPLY RENTAL RATES SALES PRICESAsteco recorded the delivery of circa 2,150 residential units over Q3 2018. The majority (approximately 60%) of this supply was located within the Abu Dhabi Investment Zones, including but not limited to Al Reem Island, Al Raha Beach and Yas Island. Lamar, situated on Al Raha Beach, comprising 430 units, represented the single largest project handed over this quarter. In addition, several buildings within the Rawdhat district were also completed, with further inventory expected for delivery over the next 6 to 12 months. Although more delays are likely, Asteco projects another 3,100 apartments and villas will be handed over prior to the end of 2018 within the following communities: • Al Reem Island – circa 1,000 units; • Yas Island and Saadiyat Island – circa 900 units; • Abu Dhabi Island (predominantly within Rawdhat Abu Dhabi) – circa 470 units; and • Abu Dhabi Mainland – balance of units, including 580 villas within Hydra Village. There was no notable change in office supply over Q3. However, the ADIB HQ situated on Airport Road is due for handover by the end of 2018.

Residential rental declines continued over the third quarter, the result of new supply and subdued levels of demand, largely attributed to a bearish economic/business outlook. These conditions contributed to an increase in vacancy rates, particularly in buildings with lower quality specifications. Apartment rental rates decreased by 3% on average since last quarter and by 11% compared to the same period last year, with the highest drop recorded for mid and lower end properties. Villa rental rates followed a similar trend, observing quarterly and annual declines of 1% and 8%, respectively. Al Reef Village and Hydra Village registered a more pronounced quarterly drop of 4%. Demand for office space remained limited. Proactive Landlords have been offering discounted rental rates at contract renewal in order to retain Tenants. Whilst average rental rates softened by 1% over the last three months and by more than 4% since Q3 2017, some mid to low quality commercial buildings recorded significant annual drops of up to 10%.

Similar to the previous quarter, demand for completed units available within the secondary market was limited, translating into low transactional volumes. Off-plan and newly completed properties fared better and continued to generate interest. Apartment sales prices recorded marginal declines of 1% over the third quarter, contributing to an annual decline of 8%. However, there have been more pronounced variations within specific master plan communities. Al Reem Island and Al Reef Downtown areas, for example, decreased approximately 11% YoY. Whilst Al Reef Villas and Al Raha Gardens recorded average annual declines of 6%.

Q3 2018

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESSQ.M.

COMPLETED IN COMPLETED IN EXPECTED IN

ABU DHABI SUPPLY


2,450 1,700 1,500

220 450 1,600

0 0 62,000

Q3 2018

H1 2018 Q3 2018 Q4 2018


INVESTMENT AREA

(All figures in AED 000’s p.a.)

Since market low Q2 2012

Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI ISLAND

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

ABU DHABI APARTMENT RENTAL RATES

FROM FROM FROM FROMTO TO TO TO

ABU DHABI ISLANDCentral Abu DhabiCornicheKhalidya / Bateen

INVESTMENT AREA

Al Raha BeachMarina SquareShams Abu DhabiSaadiyat Beach

ABU DHABI ISLAND

INVESTMENT AREAShams Abu DhabiNajmat & Tamouh

OFF ISLAND Khalifa & MBZ City

ABU DHABI ISLANDCentral Abu DhabiCornicheKhalidiya / Bateen

INVESTMENT AREA Al ReefOFF ISLAND Khalifa & MBZ City

PRIME PROPERTIES- 85 130 115- 170 160 245 -1%

80 105 100 155 180 300 0%

- - - - 80 138- 75 90 90 125

80 75 95 80 130-

- - 80 100 120 14550 60 60 80 80 12055 60 65 80 95 125- - 105 115 135 165

70

132135

145135120160

145

165170

195165155185

190

135 215-8%-4%

-1%-2%

-10%-15%

-4%-1%

-15%-9%

-3%0%

-12%-14%

-5% -11%

MID END PROPERTIES

45 65 55 95 70 145- - 60 70 80 110

42 55 58 70 75 11535 45 50 82 65 125

LOW END PROPERTIES

35 40 50 55 60 7040 45 50 55 60 70 -7% -13%38 40 45 50 60 7545 55 55 65 70 8030 40 40 50 55 65

115 160110 140110 150135 140

80 11085 11080 10590 11065 90

-2% -9%-4%-3%

-14%-11%

-2% -10%

-4% -10%

-8% -18%-3% -13%-3% -5%

Q3 2018Q2 2018 - Q3 2017 -

Q3 2018

Since Q3 2017Since Q2 2018

3%

-20%-11%-3%

Q3 2018

HIGH END PROPERTIES

1,350 1,750

900 1,100

1,150 1,350

1,300 1,500

750 850

1,350 1,500

1,100 1,300

1,100 1,250

750 850

1,100 1,250

6

AED per sq.ft. 0

AL BANDAR

AL MUNEERA

AL ZEINA

CITY OF LIGHTS - HYDRA

MARINA SQUARE

REEF DOWNTOWN

SAADIYAT BEACH RESIDENCES

SUN & SKY TOWERS

THE GATE

YAS ISLAND

500 1,000 1,500Q-o-Q % Change Y-o-Y % Change

2,000


Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI APARTMENT SALES PRICES

Abu Dhabi Real Estate Report -

28%

Since Q2 2018

-1%

Since Q3 2017

-8% -20%

Q3 2018

(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

-1% -3%

0% -6%

0% -2%

0% -11%

-2% -15%

0% -11%

0% 0%

0% -8%

-2% -8%

0% n/a



Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI VILLA RENTAL RATES


3 BEDROOMS 4 BEDROOMS 5 BEDROOMS % CHANGE2 BEDROOMS

FROM FROM FROM FROMTO TO TO TO

ABU DHABI ISLANDKhalidiya / Bateen Mushrif / Karama / Manaseer Nahyan Camp / Muroor

INVESTMENT AREA

Al Raha Beach Al Reef Hydra Village Saadiyat Island - Beach Villas

Hidd Al Saadiyat

OFF ISLAND

Al Raha Gardens Golf Gardens Khalifa City Mohamed Bin Zayed

- 160 175 170- 180 180 220 0%- - 155 175 180 210 0%150 185

-3%-5%

-9%- 125 170 145- 175 165 200 -1%- - 180 190 250 270 -1%190 265

-6%

-12%90 105 120 14095 150 145 165 -4%70 80 80 90 - - -4%- -

-7%

n/a- 285 310 280- 370 400 700 0%- - - - 350 780 -1%300 340

-5%

-13%- 150 170 160- 195 190 220 -2%- - 165 200 170

135240 290220

-8%0%

-7%- 115- 130 140 140 155 -2%- - 100 115 130 155135

-10%

Q3 2018Q3 2017 -

Q3 2018Q2 2018 -

115 -1%

-11%-13%-8%

Since Q3 2017

-1%

Since Q2 2018

Q3 2018

1.38

3.10

1.73

3.90

6.35

0.92

2.10

4.88

8.00

1.20

2.452.75

3.80

5.756.55

10.25

2.55

8

AL REEF VILLAS

GOLF GARDENS

HIDD AL SAADIYAT

HYDRA VILLAGE

AL RAHA GARDENS

SAADIYAT BEACH VILLAS

AED Million

2 BR 3 BR 4 BR 5 BR

3 BR 4 BR 5 BR

4 BR 5 BR

2 BR 3 BR

3 BR 4 BR 5 BR

3 BR 4 BR5 BR

120 2 4 6 8 10


Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI VILLA SALES PRICES

Q-o-Q % Change Y-o-Y % Change

Abu Dhabi Real Estate Report -

0% -6%

0% -1%

-4% n/a

-2% -4%

-2% -6%

-2% -2%

(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

-2% -4% -5%

Since Q2 2018 Since Q3 2017

33%

Q3 2018



Since peak Q4 2015

Y-o-YQ-o-Q% Change

ABU DHABI OFFICE RENTAL RATES

(All figures in AED per sq.m. p.a.)

AVERAGE RENTAL RATES % CHANGE

FROM TO

FITTED*

FITTEDSHELL AND CORE

GOODTYPICAL BUILDINGLOW QUALITY BUILDING

* Includes developments such as Al Maryah Island, Aldar HQ, International Tower, Nation Towers, Ittihad Towers, Capital Plaza, Etihad Tower, etc.

QUALITY STOCK

1,500

770

MATURE STOCK700

650580500

2,500

1,3001,050

800700600

0%

0%0%

0%-2%-3%

0%

-4%0%

-6%-2%-5%

Q3 2017 - Q3 2018Q2 2018 - Q3 2018

-13%-15%

Since Q3 2017

-4%-1%

Since Q2 2018

Q3 2018

PRIME STOCK

10

1 Al Bandar – Raha Beach2 Al Bateen Wharf3 Al Gurm4 Al Maqtaa5 Al Muneera – Al Raha Beach6 Al Nahyan Camp7 Al Raha Gardens8 Al Rayanna9 Al Reef10 Al Zeina – Al Raha Beach11 Baniyas12 Bateen Airport Area13 Bateen Area14 Bawabat Al Sharq15 Capital District (ADNEC)16 CBD / Tourist Club Area17 Corniche 18 Danet Abu Dhabi19 Eastern Mangroves20 Golf Gardens21 Hydra Village22 Khalidia / Al Hosn / Al Manhal23 Khalifa City A24 Khalifa City B25 Maryah Island26 MBZ City27 Mina28 Mushrif / Karama / Manaseer / Muroor29 Officer’s City30 Rawdhat Abu Dhabi31 Reem Island - Marina Square32 Reem Island – Najmat Abu Dhabi33 Reem Island – rest of Shams Abu Dhabi34 Reem Island – City of Lights35 Reem Island – The Gate District36 Rihan Heights37 Saadiyat Beach District38 The Hills

YASISLAND

11

33

2211

14

11

17

132

22

31

25

19

33

35

34

32

37

36

38

29

15

18

28

24

6

12

4

26

2320

8

1

7

10 9

5

30

27

16

3

21

ABU DHABI PROPERTY MAP

Abu Dhabi Real Estate Report - Q3 2018

11 Dubai Real Estate Report -

DUBAI MARKET OVERVIEW

SUPPLY RENTAL RATES SALES PRICESAsteco has revised the 2018 supply forecast in line with recent developer progress reports and on-site inspections. The total anticipated delivery for 2018 is now estimated at 16,750 residential units (apartments and villas). Whilst still a significant volume, this figure represents a notable decline on previous projections. Although the number of project delays is substantial, it is noteworthy that construction milestones have (in general) been observed with delays ultimately resulting from overly ambitious handover programmes. As such, a sizeable number of units previously forecasted for completion in the second half of the year will fall into 2019. New inventory in Q3 2018 followed a similar pattern to the first two quarters of the year with the completion of 3,850 apartments and 570 villas/townhouses, bringing the total (Q1 – Q3) to just over 12,000 residences. Projections for the final quarter are similarly aligned. It is important to note that whilst a number of projects may have received their completion certificates by the relevant authorities, Asteco does not consider a project delivered until the handover process has been initiated, or the units are available for lease in the open market. With no major office completions registered this quarter, Q4 2018 is expected to record the ‘modest’ addition of approximately 370,000 square feet of office space.

Apartment and villa rental rates continued to follow the downward trajectory observed over the previous quarters, declining by 3% and 2% since Q2 2018, and 11% and 9% compared with the same period last year. Neighbourhoods with high handover volumes (recent, current & imminent), both within the community as well as in surrounding developments, recorded the sharpest rental rate declines and a significant rise in tenant turnover. Wider economic uncertainties resulted in many Residents downsizing, or to seek value-for-money properties in less established areas. Conversely, many Tenants continued to take advantage of the abundance of choice and decreasing rents to upgrade to larger units, better quality specifications and/or more popular locations. Following a period of relatively stability (with headline rental declines being somewhat offset by increasingly generous incentives such as longer rent free/fit-out times), office rental rates declined by 5% over the last three months and by 9% since Q3 2017. These declines are the result of both new supply and limited, if not adverse, business and employment growth. Rental rates across all asset classes are expected to come under further pressure this year, a trend that is likely to spill over into early 2019.

Residential sale price declines have been more pronounced than rental rate changes, with corrections of 4% over the quarter and 14% (apartments)/13% (villas) annually. With a slowdown in new project launches, emphasis in Q3 was on completed properties available directly from Developers, or offered in the secondary market. Relatively new (in this market) initiatives such as rent-to-own schemes and crowdfunding have been promoted to stimulate the market and tap into, what Asteco believes, is a significant amount of pent-up demand from End-users and/or first-time Buyers. In addition, Real Estate professionals and participants have been increasingly vocal in urging the UAE Central Bank to lower existing loan-to-value (LTV) ratios to facilitate home ownership for those unable to afford the current mortgage deposit requirements. Although no such changes have been announced at the time of writing the report, there appears to be a consensus among many that these reforms would provide the stimuli needed to boost the Real Estate market. Finally, with the 2018 Dubai Cityscape around the corner, it will be interesting to see the extent of new project launches and how Developers plan to entice Investors, whether with proven schemes or by offering new and improved incentives and payment terms.

Q3 2018

12

APARTMENTSNO. OF UNITS

VILLASNO. OF UNITS

OFFICESMILLION SQ.FT.

COMPLETED IN COMPLETED IN EXPECTED IN

DUBAI SUPPLY

12 Dubai Real Estate Report -

5,400 3,850

1,625

H1 2018 Q3 2018 Q4 2018

2,650

570 1,500

1.36 0 0.37

Q3 2018

DIFCDOWNTOWN DUBAIPALM JUMEIRAH

DISCOVERY GARDENSDUBAI SPORTS CITYINTERNATIONAL CITYJUMEIRAH VILLAGE

DUBAI MARINAGREENSJUMEIRAH BEACH RESIDENCE

13



Since peak Q2 2014

Y-o-YQ-o-Q% Change

1 BEDROOM 3 BEDROOMS % CHANGESTUDIO 2 BEDROOMS

DUBAI APARTMENT RENTAL RATES

FROM FROMFROM FROMTO TOTO TO

SHEIKH ZAYED ROAD

BUSINESS BAY

JUMEIRAH LAKES TOWERS

DEIRA

Dubai Real Estate Report -

Q2 2018-Q3 2018

Q3 2017-Q3 2018

55 80 70 160110 90 140 230 -4% -13%6045 75 100 85 165 130 230 -3% -12%

Q3 2018

55 75 70 180130 100 130 230 -3% -14%60 80

MID TO HIGH END65 160105 80 90 170 -2% -10%

45 65 55 80 75 115 120 165 -3% -10%40 80 50 100 65 135 200 -1% -8%45 60 60 80 90 120

95115 165 -4% -11%

60 75 70 95 90 120 120 170 -2% -14%40 57.5

AFFORDABLE

50 70 65 105 90 150 -4% -13%

45 35 6520 45 80 115 -3%65 -12%27.5 37.5 45 55 75 90 -3% -14%27.5 85

-80

-42.5 40 60 55 110 -3% -10%

22.5 27.5 32.5 42.5 45 60 65 85 -4% -10%30 40 40 57.5 60 80 85 115 -6% -15%

21%

-28%

Q3 2017

-11%-3%

Q2 2018

HIGH TO LUXURY END

950

900

950

750

600

900

425

900

500

1,950

1,400

850

2,000

1,750

900

750 1,350

1,300

800

850 2,150

1,400

900

HIGH TO LUXURY END

MID TO HIGH HIGH END

AFFORDABLE

600

14

DIFC

DOWNTOWN DUBAI

PALM JUMEIRAH

BUSINESS BAY

DUBAI MARINA

GREENS

JUMEIRAH BEACH RESIDENCE


DISCOVERY GARDENS

DUBAI SPORTS CITY

INTERNATIONAL CITY

JUMEIRAH VILLAGE

AED per sq.ft. 0 500 1,000 1,500Q-o-Q % Change Y-o-Y % Change

2,5002,000


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI APARTMENT SALES PRICES


Q2 2018-Q3 2018 Q3 2017-Q3 2018

-3% -15%

-3% -14%

-3% -13%

-7% -17%

-2% -12%

-4% -15%

-5% -18%

-5% -13%

-3% -13%

-3% -19%

-4% -12%

-3% -12%

31%

Since Q2 2018

-4%

Since Q3 2017

-14% -28%

Q3 2018

15


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI VILLA RENTAL RATES


3 BEDROOMS 5 BEDROOMS % CHANGE2 BEDROOMS 4 BEDROOMS

FROMFROM FROM FROMTOTO TO TO

ARABIAN RANCHESDUBAI SILICON OASIS (CEDRE VILLAS)DUBAI SPORTS CITY (VICTORY HEIGHTS)JUMEIRAHJUMEIRAH PARKJUMEIRAH VILLAGEMEADOWSMIRDIFPALM JUMEIRAHSPRINGSTHE LAKESUMM SUQEIM


Q2 2018 - Q3 2017 - Q3 2018 Q3 2018

100 130 120 170 150 240 170 280 -3% -12%- - 140 170 160 180 190 210 0% -3%- - 145 175 160 220 180 270 -2% -6%

7%

Since Q3 2017

-9% -29%

Since Q2 2018

-2%

Q3 2018

- - 130 210 150 250 170 300 -1% -5%- - 160 180 165 215 190 260 -2% -13%

100 130 100 150 100 160 120 180 -4% -11%- - 170 210 180 250 190 290 -2% -6%

70 100 80 120 95 145 100 180 -3% -9%- - 180 320 240 400 300 800 -3% -9%

90 120 120 160 - - - - -1% -8%- - 155 210 210 270 240 280 -2% -8%- - 130 210 150 295 170 315 -1% -3%

750 1,350

700 800

875 1,000

675 950

450 900

850 1,200

1,500 4,250

700 1,000

16


Since peak Q2 2014

Y-o-YQ-o-Q% Change

DUBAI VILLA SALES PRICES

ARABIAN RANCHES

DUBAI SILICON OASIS (CEDRE VILLAS)

DUBAI SPORTS CITY (VICTORY HEIGHTS)

JUMEIRAH PARK

JUMEIRAH VILLAGE

MEADOWS

PALM JUMEIRAH

SPRINGS

0AED per sq.ft. 1,000 2,000 3,000Q-o-Q % Change Y-o-Y % Change

5,0004,000


(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

-3% -13%

-3% -14%

-5% -12%

-3% -23%

-4% -16%

-5% -14%

-4% -10%

-6% -15%

-4% -13% -30%


18%

Q3 2018

17


Since peak Q3 2015

Y-o-YQ-o-Q% Change

DUBAI OFFICE RENTAL RATES

(All figures in AED per sq.ft. p.a.)


FROM TO

BARSHA HEIGHTS (FORMER TECOM)BUR DUBAIBUSINESS BAYDIFCJUMEIRAH LAKES TOWERSSHEIKH ZAYED ROAD


Q2 2018 - Q3 2018 Q3 2017 - Q3 2018

-5%50 -5%110-10%60 -5%130-11%60 -6%120

100 300 -6% -8%-11%40 -6%120

100 160 -4% -11%

Q3 2018

-5% -9% -14%


26%

600

700

1,000

425

1,050

1,500

2,400

1,000

18


Since peak Q1 2015

Y-o-YQ-o-Q% Change

DUBAI OFFICE SALES PRICES

BARSHA HEIGHTS (FORMER TECOM)

BUSINESS BAY

DIFC


AED per sq.ft. 0 500 1,000 1,500Q-o-Q % Change Y-o-Y % Change

2,5002,000


-3% -12%

-3% -14%

Q3 2018

(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

-3% -9%

-7% -13%

-4% -13% -21%


23%

19

DUBAI PROPERTY MAP

611

1 Akoya2 Al Barari3 Al Barsha4 Al Furjan5 Al Nahda6 Al Qusais7 Al Warqaa8 Arabian Ranches9 Barsha Heights

(Tecom C)10 Bur Dubai11 Business Bay12 City Walk13 Culture Village14 Deira15 DIFC16 Discovery Gardens17 Downtown Dubai18 Downtown Jebel Ali19 Dubai Creek Harbour20 Dubai Design District21 Dubai Festival City22 Dubai Healthcare

City Phase 223 Dubai Hills Estate24 Dubai Investment

Park25 Dubailand

Residential Complex26 Dubai Marina27 Dubai Production

City (IMPZ)28 Dubai Silicon Oasis29 Dubai South30 Dubai Sports City31 Dubailand

32 Emirates Hills33 Green Community34 International City35 JBR36 Jumeirah37 Jumeirah Golf Estates38 Jumeirah Islands39 Jumeirah

Lakes Towers40 Jumeirah Park41 Jumeirah Village Circle42 Jumeirah Village

Triangle43 Living Legends44 Liwan45 Meydan46 Mirdif47 MotorCity48 Mudon49 Muhaisnah50 Palm Jumeirah51 Pearl Jumeirah52 Remraam53 Residential City54 Rigga Al Buteen55 Sheikh Zayed Road56 Springs / Meadows57 Studio City58 The Greens59 The Lakes60 The Villa61 Town Square62 Umm Suqeim63 Uptown Mirdiff64 Victory Heights

60

611

611

311

11

11

11

11

44

44

44

311

311

311

611

611

3526

39

4

1640

3

62

33

18

37

29

24

52

3064

47

57

8

1

48

61

43 2

23

31

41

42

27

2844

25

34

63

46

50

58

32

59

56

38

9

17

45

21

2022

11

36

51

10

15

12

55 14

54

5

6

7

49

13

19

53

To SharjahTo Abu Dhabi

Arabian Gulf

Dubai Real Estate Report - Q3 2018

20 Northern Emirates Real Estate Report -

NORTHERN EMIRATES MARKET OVERVIEW

Apartment rental rates in the Northern Emirates recorded average quarterly declines of 4% with Ras Al Khaimah (RAK) and Ajman taking the lead with 6%, followed by Sharjah and Fujairah with 3%, whilst Umm Al Quwain (UAQ) rates softened marginally by 1%. Annual decreases were more prominent and ranged from an average of 5% in UAQ to 15% for high-end properties in Ajman, the largest drop in that segment and Emirate for two quarters in a row. Sharjah office rental rates continued their downward trend with quarterly and annual declines of 3% and 8% on the back of low demand. Despite the rather tepid market outlook, Developers, particularly in Sharjah, have been gearing up with statements of ambitious project launches, progress reports and completion updates including, inter alia: • Nasma Residences – delivery of phase 1 anticipated by year-end, whilst the entire project is earmarked for completion by Q4 2019; • Al Mamsha – handover of the first phase (7 out of a total of 33 buildings) expected in H1 2019; and • Uptown Al Zahia, a newly launched project, part of the Al Zahia development, which upon completion in 2023 will comprise approximately 2,270 villas, townhouses and apartments.

RAK also added to the hype by announcing that 2,632 Real Estate transactions were registered in the first half of the year, a 33% increase compared to the same period in 2017. Following the launch of Northbay Residence, Verde villas, the InterContinental Hotel and the Anantara Mina Al Arab Ras Al Khaimah Resort, another project, including 205 beachfront Marbella villas, was announced as part of the aspiring 6 million square feet mixed-use Hayat Island on Mina Al Arab (RAK). As a result of the rise in master-plan communities and large-scale developments, concerns in regards to a marked future oversupply situation are starting to emerge, particularly as increasing supply and declining rates in Dubai generally encourage Tenant movement to the neighbouring Emirate. However, it is yet to be seen how efficiently the new inventory will be absorbed. In the meantime, further pressure on rental rates is to be expected.

Q3 2018

SHARJAHTYPICALHIGH END

AJMANTYPICALHIGH END

UMM AL QUWAIN

RAS AL KHAIMAHTYPICALHIGH END

FUJAIRAHTYPICALHIGH END

21

(All figures in AED 000's p.a.)


Since peak Q1 2015

Y-o-YQ-o-Q% Change

STUDIO 1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

NORTHERN EMIRATES APARTMENT RENTAL RATES

FROM FROM FROMTO TO TOFROM TO

Northern Emirates Real Estate Report - Q3 2018

12

Q3 2018Q3 2017 -

Q3 2018Q2 2018 -

2117 2812 1815 2214 1813 2020 2818 20- -

18 2628 3615 2519 3118 2418 2827 4220 27.535 45

22 3645 6020 3022 4025 2926 4045 6022 3640 50

33 4460 8530 4035 4525 4533 4565 9040 5065 75

-3% -9%-3% -8%-7% -12%-5% -15%-1% -5%-6% -11%-6% -10%-3% -9%-3% -6%

-4% -9% -22%


8%

22


Since peak Q1 2015

Y-o-YQ-o-Q% Change

STUDIO 1 BEDROOM % CHANGE

SHARJAH APARTMENT RENTAL RATES


2 BEDROOMS 3 BEDROOMS

FROM FROM FROMTO TO TOFROM TO

AL MAJAZAL QASIMIAHAL NAHDAAL KHAN (AL MAMZAR)ABU SHAGARAAL BUTINAAL YARMOOKROLLAAL WAHDACORNICHE


Q2 2018 - Q3 2017 - Q3 2018 Q3 2018

18 25 25 40 28 50 38 70 -2% -9%15 24 20 30 23 40 35 55 -2% -8%18 25 20 35 26 45 38 68 -3% -9%18 28 26 40 37 57 44 75 -2% -7%17 23 22 35 26 40 38 50 -2% -6%13 18 18 28 22 34 35 49 -1% -6%14 18 20 25 23 30 35 45 0% -3%12 18 18 25 25 30 40 45 -2% -10%20 28 24 30 33 40 38 50 -4% -11%20 28 28 38 35 50 40 67 -5% -13%

20%

Since Q3 2017

-9% -24%

Since Q2 2018

-3%

23

SHARJAH OFFICE RENTAL RATES


FROM TO

Y-o-YQ-o-Q% Change

(All figures in AED per sq.ft. p.a.)

AL TAAWUN ROADCORNICHE AREAAL WAHDAAL QASEMEHCLOCK R/AAL YARMOOKINDUSTRIAL AREA

Northern Emirates Real Estate Report -

2845403040

27.5 404550456040 -8%

-3%-1%-5%0%-1% -9%

-2%-7%

-10%-5%

-16%

Q2 2018 - Q3 2018 Q3 2017 - Q3 2018

28 42 -3% -8%

Since Q3 2017

-8%

Since Q2 2018

-3%

Q3 2018

24

NORTHERN EMIRATES MAP

Arabian Gulf

311

11

11

11

5

1

10

8

9

3

2

6

4

7

ABU DHABI

DUBAI

SHARJAH FUJAIRAH

RAS AL KHAIMAHUMM AL QUWAIN

AJMAN

SHARJAH

1 Abu Shagara2 Al Khan3 Al Majaz4 Al Nahda5 Al Qasimiyah6 Al Taawun7 Al Wahda8 Corniche / Buhaira9 Khaledia10 King Faisal and King Abdul Aziz Streets

Mina Al Arab

Marjan Island

1

2

Al Hamra

3

RAS AL KHAIMAH

1 Mina Al Arab2 Marjan Island3 Al Hamra

UNITED ARAB EMIRATES


25

AL AIN MARKET OVERVIEW

Al Ain Real Estate Report -

Limited demand and overall subdued market activity has resulted in relatively static rental rates in Q3 2018 across the majority of asset classes in Al Ain with moderate annual drops of 6% for apartments, and 5% for office and retail rents. Villa rental rates, on the other hand, recorded marginal declines of 2% over the quarter and 13% compared with the same period last year. Although rates remained broadly unchanged, Landlords continued to offer discounts and incentives including rent-free periods and flexible payment terms (up to 12 cheques) in order to retain Tenants. Quality residential communities with supporting facilities achieved solid levels of interest translating into high occupancy rates. No major project completions were registered in Q3 2018, although several residential buildings in the Town Centre and Asharej areas are expected for handover by the end of the year.

Q3 2018

26


Since peak Q4 2015

Y-o-YQ-o-Q% Change

1 BEDROOM 2 BEDROOMS 3 BEDROOMS % CHANGE

AL AIN APARTMENT RENTAL RATES

FROM FROM FROMTO TO TO


MATURE BUILDINGS NEW BUILDINGS PRIME COMPOUNDS


Q2 2018 - Q3 2017 - Q3 2018 Q3 2018

24 27 35 38 45 50 0% -8%3429 37 45 54 68 0% -6%

34 38 45 52 63 85 0% -5%

2%

Since Q3 2017

-6% -17%

Since Q2 2018

0%

Q3 2018

27


Since peak Q4 2015

Y-o-YQ-o-Q% Change

AL AIN VILLA RENTAL RATES

5 BEDROOMS3 BEDROOMS 4 BEDROOMS % CHANGE

FROM FROM FROMTO TO TO


MATURE VILLAS

Town CentreOther(*)ZakerAl TowayaAl JimiPrime Compounds

RECENT BUILD

Town CentreOtherZakerAl TowayaAl JimiPrime Compounds


Q3 2018Q3 2017 -

Q3 2018Q2 2018 -

52 60 68 75 85 95 -1% -14%52 60 68 75 85 95 -1% -14%52 60 68 75 85 95 -1% -14%

9065 70 85 97 100 0% -8%52 60 68 75 85 95 -1% -14%

90 9885 103 120 125 0% -4%62 70 75 85 95 110 -2% -16%62 70 75 85 95 110 -2% -16%62 70 75 85 95 110 -2% -15%75 80 92 95 105 115 0% -16%62 70 75 85 95 110 -2% -16%95 100 105 115 140 150 0% -5%

9%

Since Q3 2017

-13% -21%

Since Q2 2018

-2%

Q3 2018

570

570

570

855

855

855

380 570

28

KHALIFA STREET

AUD AL TOUBA STREET

MAIN STREET

SENAYA STREET

KHALIFA STREET / MAIN STREET

PRIME MALL

SENAYA STREET

0

0

AED per sq.m. p.a.

AED per sq.m. p.a.

400

1,5001,000

200

500

600

2,000

800

2,500

Q-o-Q % Change

Q-o-Q % Change

Y-o-Y % Change

Y-o-Y % Change

1,000

3,000

AL AIN RETAIL RENTAL RATES

AL AIN OFFICE RENTAL RATES

Since market low Since peak Q4 2015

Y-o-YQ-o-Q% Change

Since market low Since peak Q4 2015

Y-o-YQ-o-Q% Change

950

1,400

700

2,280

2,900

1,600


(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

0% -5%

0% -5%

0% -5%

0% -5%

Since Q2 2018 Since Q3 2017 Q3 2012

0% -5%

(Q2 2018-Q3 2018) (Q3 2017-Q3 2018)

0% -5%

0% -3%

0% -8%


0% -5% -11% -4%

-10% -24%

Q4 2011

Q3 2018

Town Centre

Al Jimi

Al Khabisi

Al Muwaiji

Al Masoudi

Zaker

Al Towaya

East Airport District

Al Foaa

Hili

Al Oattara

Al Buraimi

Al Mutaredh

Al Jahili

AlMutawa’a

Al Sarooj

Al Shuwaimah

Aflaj

Al KhrairDefence

Al Dhahir Um GhafahJebel Hafeet

NeimaAl Qisais

Al Shuaibah

Al Aqabiyya

Zoo District

Falaj Hazza’a

Asharej

Al Markhaniya

Al Dahmaa

Al Bateen

Al Maqam

Gharebah

Al Salamat District

Al Yahar South

Al Yahar North

Al AinInternational

Airport

SULTANATE OF OMAN

Khalifa Bin Zayed St.

Khalifa Bin Zayed St.

Moh

d Bi

n Kh

alifa

St

Baniyas St

Ardh

Jow

St

Emira

tes

St

Zayed Bin Sultan St.

29 Al Ain Real Estate Report -

AL AIN PROPERTY MAP

Q3 2018

30 Oxford Economics -

We lowered our GDP growth forecast by 0.6 percentage points from 2.6% to 2.0% in 2018, reflecting lower oil production in the UAE this year and a slower-than-expected pace of growth in the non-oil sector. Nevertheless, economic activity will still be buoyed in 2018 by higher oil prices and rising levels of government spending and investment ahead of Expo 2020.

Oil production in the UAE has averaged 2.86m b/d in H1 2018, down from the average of 2.93m b/d in H1 2017, due to pre-scheduled maintenance in its oil fields and stricter compliance with the OPEC mandate of production curbs. We expect oil production to rise in H2 2018 to an average of 2.97m b/d, in the face of anticipated supply disruptions to the global oil market due to the resumption of US sanctions against Iranian crude exports later this year. Overall, we see the oil sector contracting by 0.3% in 2018 (down from 0.3% growth previously).

The Purchasing Managers’ Index for the UAE, a gauge of the performance of the non-oil private sector, has averaged 55.8 from January to July 2018, slightly above the 55.6 level recorded over the same period last year, despite improving macroeconomic conditions, expansionary fiscal stance and elevated levels of investment this year in preparation to Expo 2020. Due to the slightly lower than expected pace of acceleration of the PMI, we have lowered our growth rate for non-oil GDP from 3.5% to 3.0% in 2018, which is still higher than the 2.5% level recorded last year.

Inflation picked up pace from 3.3% in June to 3.8% in July, the highest level in 5 months. ‘Tobacco’, ‘textiles, clothing and footwear’, and ‘transportation’ recorded the biggest y/y jumps, rising by 86.4%, 18.5% and 17.3% respectively.

GROWTH NOW SEEN AT 2.0% IN 2018…Real GDP is forecast to grow by 2.0% in 2018, up from just 0.8% last year, supported by expansionary fiscal policy and an improving investment climate ahead of Expo 2020, particularly in Dubai. But despite the UAE’s relatively diversified economy, the hydrocarbon sector still plays a key role, comprising around 30% of overall GDP. After a 3% decline in 2017, we expect the oil sector to contract further by 0.3% this year due to:

• Slightly lower oil output in 2018 due to maintenance and strictercompliance with OPEC policy;

• Higher oil prices.

UAE: Inflation UAE: Real GDP growth

% year % year

Source: Oxford Economics Source: Oxford Economics

1999 19912001 2003 19942005 19972007 20002009 20032011 20062013 20092015 20122017 20152019 2018

F’Cast F’CastMiddle East &North Africa Middle East &

North Africa

UAE

UAE

14 14

12

10

1210

8

8

6

6

4

4

2

2

0

-4

-2

0 -6

Who we are - Oxford EconomicsOxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modeling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities. Our best-of-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact.

Headquartered in Oxford, England, with regional centres in London, New York, and Singapore, Oxford Economics has offices across the globe in Belfast, Chicago, Dubai, Mexico City, Miami, Milan, Paarl - South Africa, Paris, Philadelphia, San Francisco, and Washington DC. We employ over 200 full-time people, including more than 120 professional economists, industry experts and business editors—one of the largest teams of macro economists and thought leadership specialists.

To find out more and request your free trial please contact Paul de Cintra on [email protected]

Q3 2018

31 Al Tamimi & Co. -

Al Tamimi & Company is the largest full service law firm in the Middle East with 17 offices across 9 countries. For more information, please visit www.tamimi.com.

AUTHORS Aruna Mukherji and Ruksana Ellahi

KEY CONTACT Tara Marlow Partner, Head of Real Estate, Hotels & Leisure [email protected]

FAMILY BUSINESSIn the Middle East, family controlled businesses dominate most industries. Recognising the need for specialist advice and tailored legal solutions for these types of businesses, Al Tamimi & Company recently launched its specialist Family Business practice. The team of lawyers within this practice build legal structures which defend family assets from risk and put in place binding arrangements needed to pave the way for succession and stewardship in family businesses.

• Sharia Compliant Structures: Al Tamimi are well versed inSharia Law so can easily advise and build legal frameworksfor family businesses in harmony with the principles of theSharia.

• GCC Based Trust Structures: Our lawyers are experts inMiddle Eastern laws. Many of which trained in common lawjurisdictions and specialise in trust solutions and structureswhich assist GCC families. GCC based family trust structuresare an option for families and these arrangements candeliver succession, stewardship and governance solutions.

• Estate Planning: Our lawyers are well versed in all aspectsof estate planning and inheritance related matters andfacilitate the execution of private legal arrangements suchas trust and common law wills to govern holding of familyassets for the benefit of future generations.

EXPATRIATES AND UAE ASSETS Most expatriates living in the UAE are unaware that the process of transferring ownership of local real estate assets after death can prove time consuming, costly and fraught for family members left behind, in the absence of a formal Will recognised under the UAE legal system.

DO SHARIA INHERITANCE RULES APPLY TO ALL EXPATRIATE’S UAE ASSETS?

Inheritance issues for all Muslims are dealt with in accordance with Sharia rules as those rules are codified in the Law of Personal Status (Federal Law No. 28 of 2005) which governs UAE inheritance law. However, for expatriates who are non-Muslims, the law of the deceased’s nationality can be applied in most circumstances, provided the right steps are taken.

If there is no formal Will, the division of assets is governed by the mandatory Sharia rules reflected in the UAE Inheritance Law. Typically, the husband or wife, son, daughter, father and mother would inherit a portion of the estate after debts are satisfied. Whilst this default position applies to all Muslims irrespective of their nationality, an ‘opt out’ is available to individuals who are both expatriates and non-Muslims.

The Law allows non-Muslim expatriates, with assets in the UAE to make a Will under the law of the country of their home nationality (i.e. the country of their passport), to govern succession to the expatriate’s UAE estate instead of the Sharia-based rules. However, the Will must be proved in the formal legal fashion before the UAE Inheritance Court - a process greatly expedited if the individual making the Will previously had it translated into Arabic and notarised in the UAE; or arranged for it to be formally registered with the courts in Dubai.

THE DIFC WILL OPTION

Launched in May 2015, DIFC Resolution No. 4 of 2014 allows non-Muslims to register Wills in respect of their Dubai and Ras Al Khaimah real estate assets with the DIFC Wills Service Centre (“WSC”). The benefit of registration of a Will at the DIFC WSC is that it allows individuals to have testamentary freedom to dispose their assets as they wish by aid of a simple probate process before the DIFC courts. The DIFC WSC currently offers any eligible individual with the options of a: (a) guardianship Will; (b) property Will; (c) full Will; or (d) free zone company Will. The registration fee for a single DIFC Will is currently set at AED 10,000 plus VAT. Non-DIFC Wills carry differing fees. MOU’s have been concluded with the Dubai Economic Department and with the Dubai Land Department to facilitate a smooth DIFC probate process as far as Dubai assets are concerned.

CAN A NON-MUSLIM REGISTER A WILL WITH DUBAI COURTS?

The Ruler of Dubai recently approved Law No. 15 of 2017, which relates to estate management and execution of Wills of Non-Muslims in Dubai, and will permit registration of Wills by Non-Muslims with the local courts. This law is yet to be implemented and is currently awaiting a decision by the Chairman of the Executive Council.

WHAT ABOUT ASSETS OF NON-MUSLIM IN ABU DHABI?

The Abu Dhabi Judicial Department allows for the registration of Non-Muslim Wills. Under an Abu Dhabi Will, a non-Muslim can have full testamentary capacity to leave their Abu Dhabi assets to their heirs and not be subject to Sharia inheritance rules. The process is relatively simple and straightforward and the registration cost is currently set at AED 5,500.

SUCCESSION PLANNING AND REAL ESTATE FOR FAMILY BUSINESS AND EXPATRIATES IN THE UAE

Q3 2018

DISCLAIMER: The information contained in this report has been obtained from and is based upon sources that Asteco Property Management believes to be reliable; however, no warranty or representation, expressed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Asteco Property Management will not be held responsible for any third-party contributions. All opinions and estimates included in this report constitute Asteco Property Management’s judgment, as of the date of this report and are subject to change without notice. Figures contained in this report are derived from a basket of locations highlighted in this report and therefore represent a snapshot of the UAE market. Averages, however, represent a wider range of areas. Particularly exclusive or unique projects have been excluded from the data to avoid distorting averages. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, involve risk and uncertainty because they relate to future events and circumstances which are beyond Asteco Property Management’s control. For a full in-depth study of the market, please contact Asteco Property Management’s Research team. Asteco Property Management LLC. Commercial License No. 218551. Paid-up Capital AED 4,000,000. | ORN 180

About Asteco

John Stevens MSc, BSc (Hons), MRICSManaging Director/ Director - Asset Services+971 600 54 [email protected]

John Allen BSc, MRICSDirector - Valuation & Advisory+971 600 54 [email protected]

James Joughin BSc (Hons), MRICSAssociate Director - Valuation +971 600 54 [email protected]

Jenny Weidling BA (Hons)Manager - Research and Advisory, Dubai+971 600 54 [email protected]

Ghada Amhaz MScManager - Research and Advisory, Abu Dhabi+971 2 626 [email protected]

Tamer Ibrahim Chaaban BEBranch Manager - Al Ain office+971 3 [email protected]

The Middle East’s largest full service Real Estate Services Company, Asteco was formed in Dubai in 1985. Over the years, Asteco has gained enormous respect for consistently delivering high quality, professional, value-added services in a transparent manner. It is also widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the Emirates.

Asteco has an essential combination of local knowledge and international expertise. A deeply established brand, renowned for its application of the latest technological advances, its commitment to transparency, winning strategies and human expertise. Undisputed Real Estate experts, Asteco represents a significant number of the region’s top property Owners, Developers and Investors.

VALUATION & ADVISORY Our professional advisory services are conducted by suitably qualified personnel all of whom have had extensive Real Estate experience within the Middle East and internationally.

Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with extensive local experience.

The Professional Services Asteco conducts throughout the region include:

• Consultancy & Advisory services• Market research• Valuation services

SALES Asteco has established a large regional property Sales division with representatives based in the UAE, Qatar and Jordan. Our Sales teams have extensive experience in the negotiation and sale of a variety of assets.

LEASING Asteco has been instrumental in the Leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT Asteco provides comprehensive Asset Management services to all property Owners, whether a single unit (IPM) or a regional mixed-use portfolio. Our focus is on maximising value for our Clients.

OWNERS ASSOCIATION Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy services to residential, commercial and mixed-use communities throughout the GCC Region.

SALES MANAGEMENT Our Sales Management services are comprehensive and encompass everything required for the successful completion and handover of units to individual unit Owners.

LICENSING Our brand, network, system and procedures are now available in territories across the MENA region. Our Licensing services currently include Real Estate Brokerage Franchising and associated support services with many of the key elements designed specifically around the Franchisee, making it a truly unique and bespoke franchise opportunity.

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Property Review UAE Real Estate Report 3 0...apartments no. of units villas no. of units offices sq.m. completed in completed in expected in abu dhabi supply 4 abu dhabi real estate

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