Detailed research reports covering real estate sector in the GCC
Real Estate Market Commentary - 15 to 21 April 2012
Apr 21, 2012
Kuwait Financial Centre "Markaz"
MENA REAL ESTATE RESEARCH
Research Highlights: A weekly market commentary
Real Estate Market Commentary
15-Apr-12 to 21-Apr-12
Dubai: JLL in its Q1-12 report highlighted that, c.3000 residential units were added in Q1-12, taking the overall residential stock to 341,000 units. JLL outlined that c.90% of the 2011 completions were expected to be apartments, and c.44% of the additional supply since 2009 were located in Dubai Marina, International City, Discovery Gardens, JLT and Dubai Land. JLL expects an additional supply of 28,000 units in 2012, but attributed the large increase to delayed projects from 2011 mostly. On the office front, the report outlined a 2% Q-o-Q decline in average sales prices, in line with the drop noted by Asteco. As per JLL, the rental market also saw a downtrend, as prime office space rentals at locations such as CBD, TECOM, SZR and Burj Downtown remained flat, but declined for secondary locations, in line with trends highlighted by Asteco and Cluttons. JLL expects the decline in prices and rentals to continue, as c. 1m Sqm of new office space could be added in 2012. It was reported that the Dubai Land Department will issue a new law by Jun-12 for protection of real estate investors, where developers will be prohibited from sales of the project, prior to 20% completion. The legislation will have various sections to prevent irregularities across different stages of a project. However, it was noted that the law may not have any provision for initiating penal action against violators. Abu Dhabi: Cluttons reportedly observed a downtrend in residential sales prices in its Q1-12 report due to oversupply. This was led by a correction in apartment prices, in communities such as Al Reem (7.4%), Marina Square (-7.3%) and Al Raha Beach (-6.0%) compared to Q3-11. Earlier, Asteco had reported a lower price drop at Al Reem (2.3%) and Marina Square (-2.5%) and a -9.3% price decline at Al Raha Beach over the same time period. However, the decline was less prominent in villas, with developments such as Al Raha Gardens and Al Reef listing c. 2%≠5% drop, as per Cluttons. Asteco had earlier reported stable trends in villa prices Q-o-Q. On the rental front, Cluttons alluded to a sustained decline in suburban areas such as Khalifa A, Al Raha Beach and Al Raha Gardens of up to 10% compared to Q3-11 levels. Asteco also noted a decline in residential rentals in these areas. Cluttons forecasts freehold and rental rates to decline further in 2012, in line with Asteco expectations. In the office segment, Cluttons reported a decline in rental rates due to the constant additional supply, in contrast with flat trends reported by Asteco. According to Cluttons, prime office space (mainly Sowwah Square) continues to be in demand, especially from global corporate tenants, but anticipates a tough time for secondary office space in 2012. UAE: Real estate consultants Tasweek, reiterated its unfavorable outlook for the sector in 2012, and pointed towards surplus supply and volatile demand as the major drivers for the frail recovery witnessed. Qatar: CBRE reported a slight decline in average residential rentals in Q1-12, in line with NAI Qatar, while Asteco had earlier reported stable trends. CBRE reported stable rentals for apartments and villas in prime locations such as The Pearl Qatar, West Bay Lagoon & West Bay, in line with Asteco's estimates. As per CBRE, apartments at secondary locations listed the worst decline during Q1-12. The relatively feeble downtrend in the country's real estate sector is ascribed to constrained supply.
Contents Market Commentary Charts to Note Activity Monitor: Dubai, Kuwait, Riyadh - KSA, Dammam ≠ KSA Markaz Research is available on: Bloomberg - Type "MRKZ" Thomson Research, Reuters Knowledge ReutersRealEstate.com Nooz Zawya Investor ISI Emerging markets
Thomas K. Mathew Senior Research Analyst +965 2224 8000 Extn: 2712 firstname.lastname@example.org Venkat Ramadoss ACA, CFA Assistant Manager +965 2224 8548 email@example.com Bassam N. Al-Othman Executive Vice President +965 2224 8011 firstname.lastname@example.org
Developments sourced from various sources including news portals like Gulfbase, Zawya, Reuters, Bloomberg, Trade Arabia, Business 24/7, Arabian Business, The Peninsula, Gulf News, Property wire, Khaleej Times, Saudi Gazette, KUNA etc and also from published reports of real estate brokers and investment research houses.
MENA REAL ESTATE RESEARCH
Exhibit 1: Rental trends at a glance: Dubai & Qatar Q1-12
Qatar Residential Rental Rates - Q1-12 (QAR/pm) Apartments-2 BR Villas (high end) West Bay Lagoon Pearl Qatar West Bay Lagoon CBRE 9,750-13,000 18,500-27,500 Asteco 9,750 13,000 18,500-26,500
Source: CBRE Qatar report, Q1-12
Dubai Office Rentals (AED/Sqm/pa) and Sales Prices (AED/Sqm) DIFC Prime CBD Prime City-wide Sales Prices Q1-12 2,370 1,615 1,300 9,600 Q4-11 2,370 1,615 1,400 9,700
Source: JLL Dubai report, Q1-12
Charts to note:
Chart 1: Dubai Real Estate total supply ≠ JLL
400 369 350
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