Dubai Real Estate Market Overview

Dubai Dubai Real Estate Market Overview Q4 2013 Macroeconomic overview Indicator 2011 2012 2013 (f) 8.9 9.2 9.3 Real GDP Growth (Y-o-Y) 3.9%...
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Dubai Dubai Real Estate Market Overview Q4 2013

Macroeconomic overview Indicator



2013 (f)




Real GDP Growth (Y-o-Y)




Consumer Price Index (% change)










Real GDP Growth (Y-o-Y)




Inflation (% Change)




United Arab Emirates Population (millions)

Real Estate Mortgage Loans (millions AED)

Dubai Population (millions)

Sources: IHS Global Insights (December 2013); UAE Central Bank; Dubai Statistics Center 2013 f: forecasted * Figure for January-November 2013


Market highlights – Q4 2013 The year 2013 saw the recovery of all sectors of the Dubai Real Estate market (residential, retail, hotel, industrial and offices). However, not all sectors performed similarly. While the residential, retail, hotel and industrial sectors witnessed strong and relatively broad-based growth, the recovery of the office sector remains more selective and concentrated in a few prime locations, with high vacancies and significant new supply depressing rental pressure elsewhere. •

The Dubai economy ended the year 2013 on a positive note with real GDP growth estimated at 4.7% according to the Dubai’s Department of Economic Development (DED). This robust growth is mainly driven by the strong performance of sectors such as retail, transportation, manufacturing, tourism and real estate.

The business outlook of Dubai continues to improve as expectations of better revenues, higher sales and increased profits remain high. The Department of Economic Development’s composite Business Confidence Index (BCI) stood at 141.6 points in Q3-2013, up 17% Q-o-Q, with more businesses willing to invest in growth and expansion in coming months.

The real estate investment market in Dubai saw a limited number of transactions in Q4 2013, as most sellers adopted a wait-and-see approach ahead of the results of the Expo 2020 bid. The main buyers in the Dubai market continue to be the Gulf Arabs with an increased interest in land.

The office leasing market witnessed more activity in Q4, boosted by seasonal factors as many corporates acted ahead of year end. Prime rents continue to improve as the flight to quality continues to increase demand for the best quality space. Elsewhere, average office rents have remained unchanged with increases in some projects being offset by declines in others.

The residential market ended 2013 on a strong note, with prices increasing 22% Y-o-Y on average and rents improving 17% Y-o-Y. The recovery has been broad based and evident in prime as well as secondary and more affordable locations. While further growth in rents and prices is anticipated, 2014 is expected to see a slowdown in the unsustainable levels of growth seen in 2013.

The retail market registered growth in 2013, with turnover and rents increasing in both primary malls and community based centres. Street shops have been also increasingly popular in select locations within Dubai in 2013.

The hotel sector had a very positive year with record tourist arrivals. Despite a number of notable openings, the market registered remarkable occupancy rates (Year-to-Date of 80%) and high Average Daily Rates (Year-to-Date reaching USD 241). Securing the Expo 2020 bid is expected to give an additional boost to the sector and lead to further hotel developments in 2014 and beyond.

The industrial market registered solid growth in 2013 with a number of infrastructure projects benefiting the sector. Demand continues to shift to newer areas to the south of Dubai, and this is expected to remain the case given the proximity of these areas to the Expo 2020 site.


Talking points – Q4 2013 •

The Expo 2020 win for Dubai is expected to • Dubai Roads and Transport Authority (RTA) has boost the Dubai economy, which is projected awarded a AED 500 million contract to a to have an annual average growth of 6.4% Turkish company for the construction of Phase over the next three years. 1 of the Water Canal project. The Canal will link Dubai Creek with the Arabian Gulf, passing Dubai recorded real GDP growth of 4.7% in beneath Sheik Zayed Rd and entering the sea H1-2013, the fastest expansion in six years, to the South of the Jumeirah Beach Park. with a similar rate of growth projected for the second half of the year. The strong • Dubai Land Department has launched a new performance was supported by the expansion online portal, eMart, for the auction, sale, and of key sectors such as trade, industry and rental of properties. The first on-line auction hotels. within this platform secured the sale of 17 residential and commercial properties. This Dubai is expected to welcome around 25 initiative highlights Dubai’s commitment to million international visitors during the Expo greater transparency and ease of business event, while more than USD 8 billion will be within the real estate sector. spent on new infrastructure. • Following the Expo 2020 win, the developers of The Expo win will lead to an acceleration of the world’s tallest commercial tower (located in major infrastructure projects near Dubai World the DMCC Free Zone Business Park adjacent Central. Most notably these include the Al to the existing JLT) have changed the name of Maktoum International Airport and the the announced project to Burj 2020. expansion of the Dubai Metro Purple. • A new decree (Decree N0.41 of 2013) has been Working for the Dubai bid committee, Oxford issued to expand the holiday homes market in Economics estimate that securing the Expo will Dubai. The Department of Tourism and create more than 277,000 job opportunities in Commerce Marketing (DTCM) is established as the UAE between 2013 and 2021. Most of the the responsible entity for licensing and new jobs will be within the construction and controlling the rental of furnished residences on tourism sectors. a short-term (up to 12 months) basis.

DAMAC has raised USD 348 million from its initial public offer (IPO) in London, down from an initial target of USD 500 million. The IPO is the first by a Dubai property developer since the property market crashed in 2008.

Dubai Municipality has announced the construction of the AED 120 million Dubai Frame project next to Zabeel Park. The project consists of a 150 feet-high glass bridge with views of old and new Dubai.

Emaar is banning the re-selling of off-plan properties until handover. This move is intended to reduce the flipping of off-plan units and hence limit speculative buying.

Nakheel has launched more than 500 residential plots within the Al Furjan project. The developer also launched several new projects during Cityscape including a mixed used development in Deira, two beachfront projects on Palm Jumeirah and new hotels at Ibn Battuta, Dragon Mart and Palm Jumeirah.

The second tower of the JW Marriott Marquis, the world’s tallest hotel, is set to open in Q12014. The new tower will see the addition of an extra 800 rooms along with further food and beverage options.


Top 10 Property Events of 2013

Dubai secures World Expo 2020

Dubai International Airport, the world’s second busiest

Recovery of all sectors

Major project launches

Return of IPOs

Re-emergence of Cityscape Global

Further high rise development (Cayan Tower, Burj 2020, etc. )

Moving towards sustainability

(MBR City, Dubai Hills Estate, Akoya , etc)

More regulations and legislations

Tourism led growth


Dubai prime rental clock Q4 2013

Q4 2012

Rents Falling

Rental Growth Slowing

Rental Growth Slowing

Rents Falling

Rental Growth Accelerating

Rents Bottoming Out


Rental Growth Accelerating

Rents Bottoming Out



Residential Retail




*Hotel clock reflects the movement of RevPAR. Note: The property clock illustrates where Jones Lang LaSalle estimates each prime market is within its individual rental cycle as at end of the relevant quarter. Source: Jones Lang LaSalle


Dubai office market overview

Office supply •

The total office stock within areas monitored by JLL at the end of 2013 stood at 7.3 million sq m. The last quarter of the year saw the completions of more than 32,500 sq m of office space, with the Opal Tower and the Oxford Tower, both in Business Bay, being the main completions.

The total office space delivered in 2013 stood at 390,000 sq m, 34% less than the completions in 2012. Like in the previous years, a number of projects have been delayed at the final completion stage. While there is a total of more than 850,000 sq m of additional office space that could be completed 2014, in reality the supply pipeline is likely to be significantly lower.

The CBD (DIFC, Burj Downtown and SZR) currently accounts for around 19% of the existing office stock. The fastest growing area is Business Bay, which accounts for almost 50% of the future supply expected over the next 3 years.

Total Stock (million sq m)


According to developers, around 1.4 million sq m of additional office space could enter the market by 2016. Eagerly awaited projects include Central Park in DIFC, DTCD at the Dubai World Trade Centre, Jumeirah Business Center 6 in JLT, and the Dubai Design District by TECOM.

Almost half of the proposed upcoming office supply (2014 – 2016) is located in Business Bay, with major completions including Tamani Art Offices, Bay Square by Dubai Properties, Capital Bay and Park Central by DAMAC and Bay View. Other areas proposed to witness significant completions by 2016 include DIFC, and JLT, along with two new emerging areas, the Dubai Design District and Dubai World Central.

Breakdown of Expected Completions (2014-2016) by Sub Market 7%

Dubai Office Stock (2011 – 2016) 0.9



Business Bay






6 4

Dubai Design District JLT

6% 6.3







Dubai World Central Greens



Dubai Investment Park


0 2011

2012 2013 Completed Stock

Source: Jones Lang LaSalle, Q4 2013

2014 2015 Future Supply




Source: Jones Lang LaSalle, Q42013


Major office completions - 2013/2014 CBD SZR Al Yaquob Tower

Barsha API Trio Tower

SZR 48 Burj Gate

Business Bay Opal Tower, Oxford Tower

Business Bay The Burlington, Prime Tower

Silicon Oasis Donna Towers, The Lynx

Completed Under Construction



Office demand •

The last quarter of the year typically • sees a seasonal increase in take-up in the Dubai office market, as tenants seek to close deals ahead of their year end. 2013 was no exception with a significant increase in leasing activity recorded in the final quarter of the year. A continuing trend remains the “flight to quality”, with a number of companies • relocating from older buildings and secondary locations towards prime areas and higher quality buildings. Another aspect of this trend has been for companies to consolidate their operations in one location. However there were few examples of this • consolidation trend during Q4 2013. Companies continue to focus on optimising efficiency by redesigning office layouts and accommodating more people in less space. • Single ownership buildings continue to account for the majority of demand, while strata projects remain less popular, especially amongst large global companies.

Two aspects of location are becoming increasingly important to occupiers, proximity to a metro station and the availability of car parking. Most of the demand in Business Bay is concentrated on those buildings facing SZR, especially those close to the metro station. Landlords remain more bullish in the most prime locations, being less flexible on rents or willing to offer rent-free periods. Landlords in secondary locations however remain flexible as they continue to struggle to attract tenants. Vacancy rates within the CBD have decreased slightly to 29% by year-end with a number of deals closing in the last quarter as corporates sought new space to align with their business strategies. Securing Expo 2020 has had no immediate impact on demand for office space in Dubai. While the office sector is likely to benefit from the overall increase in economic activity generated by winning Expo 2020, it remains unlikely that Expo will generate significant additional for office space in the short term.

Examples of Recent Lease Acquisition Deals Industry

Area Acquired


sq m Consulting



Law Firm



Management Consulting



Financial services



Law Firm



Real Estate



IT Software









Technical Services


Business Bay

Source: Jones Lang LaSalle, Q4 2013


Rental performance •

There was no significant change in office rents recorded in Q4 2013. • While rents increased marginally in some prime buildings, they remained unchanged or dropped slightly elsewhere as landlords competed to attract occupiers seeking to sign deals ahead of their year-end. The positive vibe surrounding the Expo 2020 win did not impact office rents and is unlikely to affect the office market significantly in 2014.

This two tier market is also evident within individual locations such as Business bay and JLT. Prime rents (those for the best building) in Business Bay have improved by 21% Y-o-Y and 5% Q-o-Q. However, not all the commercial buildings in the area have seen such increases. Towers overlooking SZR, in proximity to the metro station and those with single ownership seem to be more popular.

The top open-market rent* in the DIFC remained unchanged in Q4 at • AED 2,610 per sq m, while it improved marginally (less than 2%) to AED 1,850 per sq m elsewhere in the CBD.

The average quoting rent across the broader market remained unchanged at AED1,390 per sq m in Q4 2013. •

Prime rents in JLT remained stable in the last quarter, having witnessed a dramatic 75% increase Y-o-Y rise but once again this increase has been limited to the best quality buildings that have been able to capitalise on JLT’s metro access and free zone status.

The office market in Dubai continues to see a “flight-to-quality”, with the best performing locations being DIFC, Burj Downtown and TECOM A&B. Rental values in secondary locations remain under downward pressure.

Index of Average Office Rents

Yearly Performance of Prime Rents in Selected Commercial Locations


Yearly Change





Burj Downtown









Business Bay




Downtown Jebel Ali


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

Q2 2009 = 100


2014 is expected to see a continuation of the two-tier office market in Dubai, with prime locations improving and secondary areas remaining under downward pressure. The strong supply pipeline will continue to apply a natural break to potential rental growth.

Note: The average office rents are based on a basket of quality office buildings across Dubai * See Definition & Methodology for definition of Prime rents.

Source: Jones Lang LaSalle, Q4 2013


Office market summary Indicator


Comment / Outlook

Current Office Stock

7.3 million sq m

Includes all grades Jones Lang LaSalle.

Future Supply (2014 – 2016)

1.4 million sq m

Assuming that all pipeline supply tracked by Jones Lang LaSalle will complete.

CBD Single Ownership Vacancy

Prime CBD Rental (excl. DIFC)

Prime Capital Value







CBD vacancy levels dropped slightly but remain high at around 29%. The take up of office space continues to be counterbalanced by new supply entering the market.

AED 1,850 / sq m

Prime rents continue to improve in the best quality offices in the prime locations. Secondary locations seeing further downward pressure on rentals due to high current vacancies and additional future supply.

AED 19,140 / sq m

Prime Capital Value refers to the market price for the best office space (excluding DIFC). Prime Capital Values increased in Q4 2013, reflecting the improvement in market sentiment.


Dubai residential market overview

Residential supply •

At the end of 2013, the total residential stock in areas monitored by JLL • stood at around 365,000 units, with over 9,700 residential units delivered throughout the year, 26% less than the number completed in 2012.

The last quarter of the year saw the handing over of around 950 residential units. Most of the projects delivered in Q4 were outside Central Dubai and included the Whispering Pines villas in Jumeirah Golf • Estates, Cappadocia residences and the Dana Tower in Jumeirah Village, the City Oasis in Silicon Oasis, in addition to a number of buildings and villa compounds in Dubai Sports City.

If all projects announced are delivered on time, there would be around 28,000 additional units completed in 2014, representing an increase of approximately 8% over the current stock. In reality some of these projects are likely to be delayed beyond their scheduled completion dates.

Dubai Residential Stock (2011 – 2015)

Number of Units (in 000's)

The positive sentiment prevailing in Dubai, coupled with the economic growth and the anticipated increase in demand, have led a number of developers to announce pre-sales within large-scale developments. Among these projects are Al Furjan Villas, the Deira Project and Al Warsan Village by Nakheel, while Emaar has announced Burj Vista, The BLVD ,The Address Residences and The Opera District in Downtown, The Hills in Emirates Living and other projects in Arabian Ranches. DAMAC has also announced a number of projects in the pipeline such as AKOYA while Meydan and Meraas have also announced new residential projects in 2013.

Breakdown of Expected Future Completions 10%

500 400





300 200

Dubailand accounts for almost 33% of the announced future supply, with around 16,000 residential units expected before the end of 2016. Other areas that should see major residential completions are Dubai Marina (4,200 units); Dubai Sports City (3,700 units); IMPZ (3,000 units); Business Bay (2,700 units) and Dubai Silicon Oasis (2,600 units).

2% 2% 2% 4%


4% 342




4% 5% 5%

0 2011

2012 2013 2014 Completed Stock Future Supply

Source: Jones Lang LaSalle, Q4 2013


9% 6%


Source: Jones Lang LaSalle, Q4 2013


Dubailand Dubai Marina Dubai Sports City Business Bay IMPZ DSO Jumeirah Village SZR JLT Palm Jumeirah Jumeirah Park DIP Jumeirah Golf Estates Others


Major residential completions - 2013/2014

Downtown Dubai Burjside Boulevard

Dubai Marina Marina Wharf II, Atlantic Tower

Silicon Oasis Silicon Gate 1, Serenity Heights

Jumeirah Village Dana Tower, Cappadocia Dubailand Madison

Dubai Sports City Champions Tower 1, The Matrix, Elite 5 Completed Under Construction


Residential performance The residential sector in Dubai has ended the year 2013 on a very strong • note, with both prices and rents on the rise, supported by an extra boost from the Expo 2020 decision.

The REIDIN Sale Index improved by 22% Y-o-Y as of November 2013, with apartments outperforming the villa sector in 2013. The apartment sale price index increased by 25% Y-o-Y but is 6% less than the peak of August • 2008. The villa price index went up by 15% Y-o-Y and is 9% below its peak value. Over the year 2013, prices improved the most in Palm Jumeirah, International City and Jumeirah Lakes Towers.


On the leasing front, the REIDIN Rent Index went up by 17% Y-o-Y and 6% Q-o-Q. Apartments outperformed villas once again. The apartment rental index improved by 18% Y-o-Y but remains 14% lower than its record value of Q3-2008 while the villa rental index has reached its highest value since the creation of the index in January 2009 and has progressed by • 13% Y-o-Y.

Dubai Residential Property Sale Indices January 2009 = 100

400 300 200 100 0 Jan 2008 Mar 2008 May 2008 Jul 2008 Sep 2008 Nov 2008 Jan 2009 Mar 2009 May 2009 Jul 2009 Sep 2009 Nov 2009 Jan 2010 Mar 2010 May 2010 Jul 2010 Sep 2010 Nov 2010 Jan 2011 Mar 2011 May 2011 Jul 2011 Sep 2011 Nov 2011 Jan 2012 Mar 2012 May 2012 Jul 2012 Sep 2012 Nov 2012 Jan 2013 Mar 2013 May 2013 Jul 2013 Sep 2013 Nov 2013

January 2003 = 100


Residential General

Residential Apartment

Residential Villa

140 120 100 80 60 40 20 0

Secondary locations have continued to recover and have outperformed some of the primary locations during Q4. As such, rental values have increased the most on a yearly basis in areas such as Sports City, International City and JLT while the percentage growth was lower in prime locations such as Dubai Marina or the Palm Jumeirah. The Dubai residential market ended the year 2013 with an increase in both rental values and sale prices across almost all areas. Success in securing Expo 2020 has further boosted sentiment that is causing rents and prices to increase at unsustainable levels. The rapid price growth, return of speculation and the dominance of cash buyers could translate into excessive price growth or over development that, if not managed carefully, could result in a bubble that would be harmful to the Dubai residential sector in the longer term. Our expectation is that while rents and prices will continue to increase during 2014, the rate of growth will decline from the levels witnessed during 2013.

Dubai Residential Property Rent Indices

Jan 2009 Mar 2009 May 2009 Jul 2009 Sep 2009 Nov 2009 Jan 2010 Mar 2010 May 2010 Jul 2010 Sep 2010 Nov 2010 Jan 2011 Mar 2011 May 2011 Jul 2011 Sep 2011 Nov 2011 Jan 2012 Mar 2012 May 2012 Jul 2012 Sep 2012 Nov 2012 Jan 2013 Mar 2013 May 2013 Jul 2013 Sep 2013 Nov 2013

Residential General

Residential Apartment

Residential Villa

Note: RPPIs use monthly sample of offered/asked listing price data and land registry price data (transaction data). Dubai sales/ rent index series are calculated monthly and cover 7 city-wide, 8 main districts and 4 major communities/ projects. REIDIN tracks asking prices and rents Source: REIDIN, Q4 2013


Residential market summary Indicator


Comment / Outlook

Current Residential Stock


Around 9,700 units were added to Dubai’s residential stock inventory in 2013.


Assuming that all supply tracked by Jones Lang LaSalle will complete. In reality, some of the proposed projects may be delayed beyond their scheduled date.

Future Supply (2014 – 2016)

Apartment Rent

Asking rents went up by 18% Y-o-Y. The recovery is relatively broadbased, with the secondary and more affordable areas growing at faster pace than the prime locations

Apartment Sale Price

Asking apartment sale prices went up by 25% Y-o-Y. The growth has been noticeable in almost all areas of Dubai

Villa Rent

Villa rents have increased by 13% Y-o-Y. Asking rents for villas in the secondary and more affordable locations have been increasing, sometimes at a faster rate than in the well established areas.

Villa Sale Price

Asking prices for villas have increased by 15% Y-o-Y but overall prices are growing at a decelerating rate.

Note: Direction arrows are based on the performance of the REIDIN monthly index.


Dubai retail market overview

Retail mall supply •

Having seen no new supply for the first 9 months of 2013, the Dubai retail • market witnessed the completion of two significant projects in Q4, increasing the total stock of mall based retail space to approximately 2.9 million sq m. These completions in Q4 2013, were Phase II of Al Ghurair City (35,000 sq m) and Phase I of the Avenue by Meraas (12,800 sq m).

2014 is forecasted to see an additional 36,000 sq m of retail space enter the market. Most of this will be in community and neighborhood malls including the Jumeirah Park Community Center and the Discovery Gardens Retail Centre by Nakheel; the Beach by Meraas and the extension of the Mall of the Emirates. •

It is estimated that around 471,000 sq m of new retail space will enter the Dubai market by the end of 2016. This includes Phase II of the Dragon Mart, the Agora Mall in Jumeirah, the expansion of Ibn Battuta Mall (all scheduled for 2015); in addition to the Phase II of The Avenue and the • expansion of the Dubai Mall (due for completion in 2016).

GLA in '000s sq m

Dubai Retail Stock (2010 – 2016) 3,200


Some of the existing shopping centres have been on board with redevelopment and expansion plans in order to compete with the new and modern malls. This is the case of Deira City Centre, Bur Juman and Wafi Mall which are revamping their facilities. The Dubai retail market continues to be dominated by the large superregional and regional centres, even though the majority of the upcoming retail space will be constituted of community and neighbourhood centres.

Breakdown of Under-Construction Retail Space by Type of Mall





2% 2% Super Regional



Regional 3,085

2,600 2,400

The healthy performance of the retail market and the strong demand for retail space has led to a number of announcements recently. These include the 400,000 sq m Phoenix Mall in International City, Phase II of Dubai Outlet Mall, the Art Centre in Barsha, Al Furjan Community Centre, as well as Mall of the World as part of MBR City. A number of the mega projects unveiled during Cityscape Global last October include retail components, such as the Dubai Water Canal, which is expected to have around 450 F&B units, the Deira project by Nakheel, The Lagoons by Emaar and Dubai Holding, and AKOYA by DAMAC among others.








Community Boutique

2,200 2010

2011 2012 2013 2014 Completed Under Construction

Source: Jones Lang LaSalle, Q4 2013



79% Source: Jones Lang LaSalle, Q4 2013


Major retail projects 2013 / 2014 Deira Al Ghurair Centre - Phase 2 Al Wasl The Avenue

Downtown Dubai Dubai Mall - Phase 2

International City Dragon Mart Phase 2

Al Barsha Mall of the Emirates Extension


JBR The Beach

Under Construction


Rental performance – Estimated Rental Value (ERV) •

The retail market in Dubai continues to experience strong growth, supported by the overall optimism in the market, a growing number of tourists and an improved purchasing power.

The Dubai Mall and the Mall of the Emirates have maintained their supremacy as market leaders, achieving the highest rents, occupancy rates and footfalls. The Dubai Mall has set an ambitious target of attracting 100 million annual visitors by 2020.

The top open market net rent for a notional standard shop in prime super regional centres has increased by 3.5% in Q4 2013 to stand at AED • 5,900 sq m. The average increase across Primary super regional malls has been somewhat less at 2.5% (to an average of AED 5,100 sq m.)

An increasing number of future retail projects are in the form of community malls. These include Jumeirah Park Community Centre and the Discovery Gardens Retail Centre (which is fully leased out). The newly announced 30,000 sq m Al Furjan retail space by Nakheel should serve residents of Al Furjan, Discovery Gardens and the Gardens communities. Street shops continue to be popular and demand has been high recently for retail space in prime streets such as Sheikh Zayed Road, the Marina Walk or the Sheikh Mohammed Bin Rashid Boulevard in Downtown.

With the Primary Super Regional Malls asking for high rental values and • The retail market is expected to maintain its strong performance in 2014, offering very limited vacant space, the community centres are gaining in both the large primary and community malls. While the Expo 2020 win more importance. Those centres are becoming increasingly popular as might not have an immediate impact on the sector, more retail projects they cater to the basic needs of the surrounding communities. In line with might be announced in a couple of years to support the event. the growth of community centres, grocery stores and supermarkets such Dubai Retail Rents Q1 2009 - Q4 2013 6,000 Q4 2013



Super Regional















Note: Based on a basket of malls of different size. (See definitions for further details)

5,000 4,000 3,000 2,000

1,000 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

AED / sq m

AED / sq m

as ZOOM, Carrefour Express, Waitrose and Spinneys have been expanding.



Note: Chart shows mid-point ERV for an in-line store in a basket of Primary and Secondary Super Regional shopping malls. The rent quoted reflects a notional “standard” line store unit of 100 sq m. Source: Jones Lang LaSalle, Q4 2013


Retail sector summary Indicator Current Retail Space (GLA)

Future Supply (2014 – 2016)

Level 2,865,110 sq m

Two major new additions in Q4 2013: Phase II of Al Ghurair City and Phase I of the Avenue by Meraas.

471,400 sq m

The main retail completions for 2014 will be Jumeirah Park Community Centre and the Discovery Gardens Retail Centre, both by Nakheel; the Beach by Meraas and the expansion of the Mall of the Emirates.

Average Retail Rents in Primary Malls

AED 5,100 / sq m

Average Retail Rents in Secondary Malls

AED 1,725 / sq m

Average Regional Mall Vacancy

Comment / Outlook


Rents of prime units in better performing centres have improved slightly in Q4 2013. Rental growth is expected to continue in 2014 in most primary and modern secondary malls.

Citywide retail vacancy has dropped slightly to 12% in Q4 2013 as demand for retail space remains strong and large primary centres are almost fully occupied.


Dubai hotel market overview

Hotel supply The fourth quarter of 2013 saw a total of just over 1,000 additional hotel rooms enter the market in a number of openings, including the Mövenpick Hotel Jumeirah Lakes Towers, Novotel Al Barsha and the expansion of the Millennium Airport Hotel.

The most renowned opening for the first quarter of the year will be the upscale Waldorf Astoria hotel on The Palm (319 rooms).

A total of almost 5,500 additional rooms are scheduled for completion in 2014 including the Sofitel Dubai Downtown, the InterContinental Dubai Marina, the Double Tree Hilton Barsha, the Phase II of the JW Marriott Marquis in Business Bay and the Palazzo Versace which has been pushed back for the end of 2014.

Several new hotel developments were announced during the last quarter of 2013, including a high-end hotel on Sheikh Zayed Road, the Mövenpick Hotel on Palm Jumeirah, the Tenora Hotel Apartments in Dubai World Central and the Opus Hotel under the ME by the Meliã brand in Business Bay. With Dubai winning the Expo 2020 bid, the Emirate now expects to attract 25 million total tourists between October 2020 and April 2021, 17.5 million of whom are expected to visit from abroad. The Expo is expected to spur hotel developments and help Dubai to reach its target of attracting 20 million foreign tourists by 2020.

Dubai Hotel Stock (2013 – 2016) 5,100

75,000 3,750

70,000 5,450 No. of Keys

65,000 60,000 65,750

55,000 60,300



50,000 45,000 2013

2014F Current Supply

2015F Future Additions


Source: Jones Lang LaSalle, Q4 2013

The Dubai government has introduced a number of new measures to accommodate the forecast increase in tourists. These include a twoyear tax exemption on new 3 and 4-star hotels, signalling a strategic shift towards increasing the supply of mid-priced hotel products.


Major hotels completions – 2013/2014

Mariott (Jadaf) 352 Rooms JW Marriott Marquis (Second Phase) 800 Rooms Waldorf Astoria 319 Rooms (Soft Opening in Dec 2013) Novotel 466 Rooms InterContinental Marina 132 Rooms Completed

Movenpick 168 Rooms

Under Construction


Hotel performance

In addition to more visitors there has also been an increase in the average length of stay, from 3.5 nights in 2012 to 3.9 nights between January and September 2013.

Airport arrivals from January to September 2013 registered a 16% increase compared to the same period in 2012. The fourth quarter also saw the opening of Al Maktoum International Airport in Dubai World Central for passenger traffic.

Year-to-November occupancy rates have increased by 3.9% compared to the same period in 2012, reaching 80% on a city-wide basis.

• •

Average Daily Rates have reached USD 241 in YT November, marking a 5.2% growth rate from 2012. The resulting RevPAR showed an impressive 9.3% growth from the same period in 2012, reaching USD 193.

Dubai Hotel Performance (YT November 2010 - 2013) 80%



77% 200


75% 71%






Dubai received over 7.9 million tourists in the first nine months of 2013, registering a 10% increase over the same period in 2012. The city is expected to exceed 10 million visitors for the full year 2013. This continued growth in tourism demand has resulted in strong performance metrics.



2010 YTD

2011 YTD ADR

2012 YTD

2013 YTD



Source: STR Global


Hotel market summary Indicator

Current Hotel Supply

Future Supply (2014 - 2016)

2013 YTD Occupancy

2013 YTD ADR


Comment / Outlook

60,300 rooms

The fourth quarter of 2013 witnessed the addition of three hotels and resorts – Mövenpick Hotel Jumeirah Lakes Towers, Novotel Al Barsha and Waldorf Astoria on the Palm – plus expansion of the Millennium Airport Hotel.

14,300 rooms

Major openings scheduled for 2014 include the Four Seasons, InterContinental Marina, The Sofitel Downtown, the Double Tree Hilton Barsha, TheSheraton Grand Dubai Sheikh Zayed Road, the second tower of JW Marriott Marquis and Marriott Al Jaddaf among others.


Increase in YTD levels of occupancy with strong growth witnessed across all sub-markets.

USD 241

Average rates maintained the strong growth seen throughout 2013. As a result of resurgence in occupancy and stabilization in ADRs, RevPAR levels have seen a notable 9.3% increase on a city-wide average basis.


Dubai industrial market overview

Industrial supply & demand •

The industrial sector in Dubai continues to perform well, supported by • strong economic growth and solid infrastructure.

The main contributors to the growth of the industrial and logistics sector in Dubai are the transportation, oil and gas, food, metal, automotive and aviation sectors.

The Expo 2020 win is expected to boost the industrial and logistics sector in Dubai, benefiting mostly the areas located south of the city around the Expo site, such as Dubai Industrial City (DIC), Dubai Investment Park (DIP), and Jebel Ali Free Zone Authority (JAFZA).

• •

The Expo win will also trigger significant investment in airports, roads, ports and rail, which will all benefit the industrial and logistics segment. The Al Maktoum International Airport is undergoing an expansion of its passenger facilities and development of its cargo infrastructure. Expansion to the Dubai metro will also be fast tracked for the 2020 event, with the • current Red metro line being expanded to the event site. Another infrastructure development is the creation of an integrated sea and air freight facility at Jebel Ali. The proximity of the new airport to one of the world’s largest existing seaports at Jebel Ali allows for the creation of a single freezone for the shipment of goods, acting as a major boost to the already significant re-export sector of the Dubai economy.

Another large infrastructure project that will affect the Dubai industrial market is the planned Etihad Rail. The rail network will span around 1,200 Km across the Emirates and will have a stop in DIC.

The Expo win will strengthen further the aviation sector in Dubai, as 70% of the 25 million predicted visitors to Expo are expected to travel from outside of the UAE.

The good performance of the aviation sector can be highlighted by the following facts: •

Dubai International Airport is now the world’s second busiest airport by passenger traffic. Year-to-November passenger traffic reached 60,384,407, 15.3% more than the same period in 2012. Dubai International is also working to increase its capacity.

The new Al Maktoum International Airport is anticipated to be the largest in the world. It will have capacity for 160 million passengers and 12 million tons of cargo per year. The airport will start passenger flights by the end of October.

Emirates Airlines continues to prove itself as a world leading airline. In 2012, the airline carried around 39 million passengers and 1.8 million tonnes of cargo.

The Dubai ports have also been contributing strongly to the growth of the industrial sector: •

Jebel Ali sea port opened its third terminal that will increase its capacity to 19 million TEU* a year. By 2014 Jebel Ali is expected to be the biggest port in the Middle East

DP World handled 26.6 million TEU across its global portfolio in the first half of 2013.

*TEU - Twenty-foot equivalent units


Industrial supply & demand Overview of main industrial areas in Dubai Area


Land Area (sq m)

Regulatory Status

Al Quoz




Fedex, Mercedes-Benz



Maxell, Sabco


Al Futtaim, Al Ghurair Group, Al Habtoor Leighton


Aramex, Total, Unilever, Easa Saleh Al Gurg Group

Al Qusais Traditional Areas

Free Zone Areas

New Onshore Areas


Umm Ramool


Selected tenants

Ras Al Khor




JAFZA North- 45,000,000 JAFZA South- 35,000,000


DHL, Danube, LG, Kenwood, Heinz, Kraft, Mars, P&G





Clarins, Rolls-Royce, National Foods Products Company, Fedex Logistics

Dubai World Central



Free Zone Areas – Logistics and Aviation City only

Jebel Ali Industrial Area


Dubai Investment Park


Dubai Industrial City


16,500,000 52,000,000

Dnata, RSA, Caliper


Landmark Group, Jumbo, Bridgestone,


Paris Group, Drake & Scull


Nestle, Baker Hughes


Industrial supply & demand •

Activity in the industrial market continues to be strong in Q4 2013, especially in the new industrial areas and the free zones.

automotive companies such as Honda, Nissan, Ford, etc. •

Given the high demand in the newly developed locations such as DIC, DIP or Dubai World Central (DWC) and the free • zones (JAFZA and DAFZA), those areas are expanding and developing their facilities. DAFZA has started its third-phase expansion while DIC (which is 95% occupied) will begin an expansion in 2014 with new warehouses, infrastructure and housing planned. The new areas capitalise on their large • plots of land to attract heavy industries such the automobile sector. DIP for example has recently opened a new car showroom for both new and used cars • and have around 14 automobile vehicle outlets and repair facilities, in addition to a number of service centres, workshops, spare parts and accessories outlets. JAFZA is also trying to impose itself as an automotive centre by attracting Chinese and other Asian automotive companies. JAFZA counts today more than 500

A large number of enquiries for industrial space continues to emanate from food & beverage (F&B) companies.

Main Recent Industrial Transactions Company



Size (sq m)





6,500 sq m built-to-suit

January 2014 October 2013

With the traditional onshore areas such as Al Quoz or Ras Al Khor being saturated and ageing, the trend continues to shift towards the newer areas such as Dubai Industrial City (DIC) and Dubai Investment Park (DIP) and the free zone locations such as the Jebel Ali Free Zone Authority (JAFZA) and Dubai Airport Free Zone Authority (DAFZA).








32,500 sq m

September 2013

Hellman Calipar



12,500 sq m expansion

September 2013

Total Freight

Freight/ Transport


5,600 sq m

July 2013

Dubai industrial zones are being the centre of interest of a number of international companies, mainly from China, the USA, Switzerland and others.

Barloworld Logistics



2,000 sq m

July 2013

RSA Logistics



9,500 sqm temperature controlled facility

July 2013

Al Islami Foods

Food Production


1,100 sq m built-to-suit

June 2013

Rolman Group



33,000 sq m expansion

June 2013




86,000 sq m

April 2013

The Expo win will reinforce Dubai’s position as a key economic and industrial hub and will benefit mostly the new locations such as DIP or DIC which are located near the exhibition site. More companies might be setting up their businesses in these areas soon, creating more need for shipping and logistic solutions.

Source: Jones Lang LaSalle, Q4 2013


Main industrial areas


Jebel Ali Industrial

JAFZA Extension

Umm Ramool



Al Qouz




Ras Al Khor

Al Qusais


Industrial performance •

The industrial sector is considered one of Dubai’s most resilient real estate markets, with rates remaining stable due to the lack of speculation in the market.

Warehouse Rents Area

Rental rates in completed industrial units in Dubai currently vary significantly from one area to another, with no real standardization of logistics facilities.

Older Onshore Areas

Excluding the freezone areas such as JAFZA and DAFZA, the areas located in the older part of Dubai like Al Qouz, Al Qusais and Ras Al Khor continue to command high warehouse average rents, despite the lower quality of their stock and the relatively underdeveloped infrastructure systems. Completed units in newer but more peripheral locations (such as DIC and DIP) have started to offer higher average rents as they are seeing increasing demand.

Freezone areas

Unit Lease AED / sq m / p.a.

Lease term




3-5-10 years (DIC) 1 year (DIP)

350-600 JAFZA 600-800 DAFZA

1 or 3 years JAFZA 1-2 years DAFZA

Newer Onshore areas (excl. Freezone areas)

Land Lease

Land is typically leased from the relevant authority for a term of 15, 25 or 30 years, on renewable terms. On occasion, TECOM has provided land on a 99 year leasehold basis.

Although hypothetically land sales are permitted to GCC nationals in free zones, the typical practice observed in the market is long-term leasing.

Older Onshore Areas


With trade activity strongly picking up in Dubai and the recent Expo 2020 win, the industrial market is expected to benefit accordingly and areas located towards the South of Dubai and in proximity to the Expo site (e.g. DIC, DIP, JAFZA) are projected to see higher rates in the future and stronger demand.

Newer Onshore areas (excl. Free Zone areas)



Free Zone areas

Land Lease AED / sq m / p.a

20-80 (JAFZA) 40-100 (DAFZA)

Source: Jones Lang LaSalle, Q4 2013


Definitions and methodology Office:


• The supply data is based on our quarterly survey of 20 • The supply and stock data is based on our quarterly survey of 37 sub-markets, starting from 2009. sub markets, starting from 2009. This data excludes labour accommodation and local Emirati housing supply. • Completed building refers to a building that is handed over for immediate occupation. • Completed building refers to a building that is handed over for immediate occupation. • Central Business District includes DIFC, DTCD, Sheikh Zayed Road, Burj Khalifa Downtown. Free Zone areas include Jumeirah • Residential performance data is based on the REIDIN monthly Lake Towers, DIFC, TECOM, Dubai Silicon Oasis, DWC, Dubai index. Dubai Residential Property Price Indices Outsource Zone and IMPZ. (RPPIs) use monthly sample of offered/asked listing price data and land registry price data (transaction data). Index series are set at • Prime Office Rent represents the top open-market rent (open 100 starting at the beginning of each data set. market refers to a new leasing – not to a sitting tenant) that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date. Data relates to headline rents, exclusive of incentives.

• Prime Capital Value represents the top open-market capital value that could be expected for a notional office building of the highest quality and specification in the best location on the survey date. • Prime capital values are a calculation, derived from prime rents and yields: Capital Value = (Prime Annual Rent / Prime Yield From) * 100


Definitions and methodology Retail:


• Classification of Retail Centres is based upon the ULI definition and • Hotel room supply is based on existing supply figures provided by based on their GLA: DTCM as well as future hotel development data tracked by Jones Lang LaSalle Hotels. Room supply includes all graded supply • Super Regional Malls have a GLA of above 90,000 sq m and excludes serviced apartments. • Regional Malls have a GLA of 30,000 - 90,000 sq m • Community Malls have a GLA of 10,000 - 30,000 sq m • STR performance data is based on monthly survey conducted by • Neighbourhood Malls have a GLA of 3,000 - 10,000 sq m STR Global on a sample of more than 32,000 rooms across Dubai. • Convenience Malls have a GLA of less than 3,000 sq m


• Primary Malls are the good performing malls with high levels of turnover. Secondary Malls are the average performing malls with • Industrial Stock is calculated on the basis of applying a site coverage to the total developed industrial land. lower levels of turnover. • Prime Rent Shopping Centre represents the top open market net • Industrial rental values are based on average asking rents across 14 major industrial areas in Dubai. rent that could be expected for a notional standard in line unit shop of 100 sq m situated in a specified shopping centre as at the survey date.


Contacts: Dana Williamson Head of Agency MENA [email protected]

Andrew Williamson Head of Retail MENA [email protected]

Chiheb Ben-Mahmoud Head of Hotels & Hospitality MEA [email protected]

Michael Heitmann National Director, Industrial MENA [email protected]

Craig Plumb Head of Research MENA [email protected]

Cynthia Nasseh Senior Research Analyst MENA [email protected] JLLMENA joneslanglasalle jones-lang-lasalle EMEAResearch– COPYRIGHT © JONES LANG LASALLE IP, INC. 2014 This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.