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This year’s Gulf Real Estate Study (GRES) is a reaction to the challenging landscape of the
real estate market we face today, and a shift in the way we both question and celebrate the
events spurred by the industry in the past twelve months.
Having focused and built many of the leading brands in this region and category for over ten
years, we are continually looking to assess achievements and failures as well as to measure
the performance of the brands that remain and those that we hope will capitalize. As our
name suggests, we seek insights and trends that will inform the brands’ future.
Where hyperbole once ruled, today the focus is on moderation. Developers are turning their
attention to previously neglected segments of the market with a broader variety of develop-
ments that cater not only to the luxury customer but also to the more affordable end of the
market. Countries in the Gulf Cooperation Council (GCC) are starting to create strong national
brands and forge themselves into cultural and leisure destinations that are not defined by
iconic real estate offerings but are complemented by them.
Given these changes, developer brands are going to have to proactively connect with and
listen to their end customers — both prospective clients and current residents. Those
who will best manage their reputations and build real trust in this period of difficulty will
ultimately succeed and endure.
We hope you enjoy reading this report. We’d love to have your thoughts and comments on our
findings and insights!
Cover image courtesy of Katarina Premfors
katarinapremfors.com
GULF REAL ESTATE STUDY 3
Year in Review 2009 Facts and Findings Examining DUBAI THE FUTURE
The Highs & The Lows 7 Impact of the Downturn 49 Dubai Marina 75 The Rise of Abu Dhabi 89
News & Noteworthy 9 Developer Recognition 50 Villas 77 Portfolio Rationalization 90
2009 Notables 21 Developer Reputation 51 Apartment Transactions 78 Financial Innovation 93
2009 Trends 23 Developer Preference 52 Dubai vs. NYC 79 Breaking the Silence 94
Developer Outlook 53 A New Dialogue 97
REGION AT A GLANCE Developer Image 55 EMERGING TRENDS Delivering the Promise 98
Saudi Arabia 27 Preferred Locations 65 Fact or Fiction - The Credibility Crisis 82
Qatar 31 Preference Drivers 67 From Concept to Completion 84
Bahrain 35 Breakdown by Transaction Type 69
UAE 39 Breakdown by Nationality 71
GULF REAL ESTATE STUDY 5
Developers claim that Bahrain will need 80,000 housing units targeting the middle and
lower-income market segments to meet demand by 2020. The Bahraini government has
State of the Market announced plans to build 50,000 low-cost housing units by 2014.7
By the end of 2008, Dubai’s hospitality sector was reporting Analysts forecast that the Kingdom of Saudi Arabia will have to build 1.5 million new homes
an average occupancy level of 79%, the lowest in five by 2015 to meet its housing demand. Projections estimate that at current levels of supply,
years.3 the KSA market will see a shortage of 150,000–800,000 housing units by 2012.8
Projects in Bahrain currently hold a cumulative worth of over $36 billion. Since the start of
the economic crisis, 54 projects have been cancelled or put on hold, while construction and
planning continue on 148 projects.9
GULF REAL ESTATE STUDY 11
State of the Market Dubai World, which owns the property unit Nakheel, has asked creditors to allow the firm to
delay debt payment until May 2010 at the earliest. The Dubai government announced that
One in four homes and a quarter of all office space in Dubai it had borrowed $5 billion — half of the $10 billion it initially planned to raise by the end of
is currently unoccupied. Oversupply has created a glut 2009 — from Abu Dhabi’s government-controlled banks.12
in the market, and an additional supply coming onto the
market is expected to further depress prices.10 The Dubai government announced that it would not guarantee Dubai World’s debt of $59
billion and that lenders must bear part of the responsibility.13
As part of an initiative to protect property investors, the Dubai Land Department is working
on drafting a new law that would further regulate the relationship between developers
and investors.14
Due to a new supply of hotel rooms, the average occupancy rate has dropped below 70% from
peaks of over 87% experienced between January and June 2008.15
GULF REAL ESTATE STUDY 13
By the end of 2008, Dubai’s commercial sector reported a 16% vacancy rate, up 7% from six
months earlier.19
MARKET CORRECTION
A 400-square-meter villa in Qatar was for sale at $549,390 in September 2009, down from
In January 2009, 500 developers were officially registered
$824,085 in September 2008.20
with RERA, down from 800 in November 2008.16
Qatar’s current projects have a cumulative worth of over $42 billion. Since the start of the
economic crisis, seven projects have been cancelled or put on hold, while construction and
planning continues on 124 projects.21
Market Correction
Delays
By the end of 2009, the
$220 billion worth of projects have been put on hold or cancelled in the GCC since the start
number of developers had
of the global economic slowdown, with 91% of the cancellations announced in Dubai. Besides
been reduced to 473.
17
the announced postponements and cancellations, 54% of all announced projects in the GCC,
totalling $1.05 trillion in projected costs, are under threat of being put on hold or cancelled.22
GULF REAL ESTATE STUDY 15
Infrastructure projects worth $28.5 billion are currently Amlak and Tamweel declared in November 2008 that they would initiate a merger between
under construction in the UAE, with another $76.9 billion themselves and two other government-owned banks, which was to have been completed by
worth of projects planned for the coming decades.24 Q1 2009. The global real estate crisis and deepening recession have negatively affected both
lending institutions, and the nationwide steering committee responsible for seeing through
the merger is still reviewing the plans.28
In March 2009, Qatar’s Ezdan Real Estate Company — the country’s largest property firm, with
market capital of $2.6 billion — revealed that it was looking into the possibility of merging
INFRASTRUCTURE with the Group of International Housing Co. to help both companies weather the economic
slowdown.29
Though $62 billion worth of public works projects were put
on hold or cancelled between October 2008 and April 2009
After months of talks about combining Deyaar and Union Properties into a single company,
in Saudi Arabia, the government awarded $137 billion in
the merger was scrapped because the new entity would not be able to secure financing in the
new public-sector contracts over the same period.25
tough real estate climate.30
GULF REAL ESTATE STUDY 17
Commercial
Average Dubai office prices were down 58% and office rents fell 44% in Q3 2009 as
Abu Dhabi’s prime office sector saw compared with the same period in 2008.33
a year-on-year drop of 40% in office rents.
Office rents in Dubai’s free zones have fallen by as much as 63%. While Dubai International
Finance Centre (DIFC) continues to command the highest rates in Dubai (AED 280–325/
square foot), Jumeirah Lale Towers (JLT) has seen a significant drop in asking prices, down
In Q3 2008, prime from AED 240–280/square foot in Q3 2008 to AED 70–120/square foot in Q3 2009.34
rental rates stood at
AED 5,000/square RETAIL
meter. Retail rents in Dubai have fallen by 18% in the past year due to an oversupply of stock and
lack of demand.35
UAE Central Bank figures show that mortgages provided by the nation’s 52 national and
foreign banks rose by AED12 billion from January to June in 2009, as compared to AED44
billion for the same period in 2008.38
Layoffs
Layoffs
In December 2008 Dubai Properties laid off an
estimated 600 staff members, while Damac let 200 In December 2008, Nakheel made 500 staff members, or 15% of its work force, redundant,
workers go at around the same time.36 while its sister company Istithmar World cut almost 10% of its work force. Facing continuing
cancellations and project delays, Nakheel cut another 400 staff members in July 2009.39
Deyaar laid off 20% of its work force in October 2009, days after posting a 74% drop in Q3
profits as compared to the same period in 2008.40
GULF REAL ESTATE STUDY 21
2009 NOTABLES
Transportation Networks
Dubai Metro began operations in 2009. The project will serve as a litmus test for other GCC
governments interested in developing domestic and regional transportation infrastructure.
Despite the economic downturn, Nakheel launched its Palm Jumeirah Monorail this year, and
others in the region (such as Masdar) appear committed to providing internal transportation
networks that link to the greater public transportation grid.
Regulatory Authorities
Following the launch of RERA (Real Estate Regulatory Authority) in 2008, ARERE (Ajman
Real Estate Regulatory Establishment) was launched in January 2009. Various regional
governments, including Saudi Arabia, have announced plans for establishing similar entities
to provide greater transparency and stability.
2009 TRENDS
Affordable Housing
Perhaps in reaction to the oversaturation of luxury products, developers are starting to cater
to the middle to lower-income brackets. Governments (Bahrain, Saudi Arabia) as well as
developers and financial institutions (Aldar, Saudi Binladin, Kinan, Islamic Development
Bank) have all announced products to serve a previously neglected market segment.
Trading Up
Falling prices have empowered various segments of the rental market to move into bigger or
better properties at the same or lower cost as their previous tenancy. This has led to some
noticeable shifts in the demographics and concentration of different neighborhoods. This
trend is also affecting the commercial real estate market, albeit at a slower pace.
Failure of Auctions
Once an attractive way to achieve record-high prices, two property auctions held in Dubai
during 2009 have been largely considered failures, with many of the available plots failing to
meet the reserve prices.
GULF REAL ESTATE STUDY 25
REGION AT A GLANCE
GULF REAL ESTATE STUDY 27
Dar Al Arkan launched the mixed-use Shams Al-Arous project, a $2 billion project which will Kingdom Holdings deferred the Kingdom Tower project — projected to become one of the
create 10,000 residential units as well as commercial outlets and public amenities including world’s tallest towers — for an undetermined period.45
parks, schools and mosques.41
Many projects announced in Jeddah during 2007-08 are showing little or no progress as
In the largest-ever redevelopment program undertaken in the Kingdom, the government has companies scale back the momentum of construction. Sama Dubai, Damac and Diamond
unveiled plans to reinvigorate the underdeveloped residential districts of Mecca and Medina Tower along the Corniche are prime examples.46
and the holy sites of Mina, Arafat and Muzdalfa.42
Saudi Arabia has revealed plans to develop “airport cities” in Jeddah, Riyadh and Dammam.
Located in Medina, the recently launched $1 billion Knowledge Economic City aims to attract The three new airports will anchor distinct cities that will offer commercial offices, hotels and
knowledge-based industries in the medical sciences and biotechnology sectors by offering residential units, as well as schools and shopping complexes.47
research centers and scientific development companies and organizations. The project will
also develop housing for 150,000 residents and create 20,000 jobs.43 Facing a growing population and rising demand for accommodation in the Kingdom, the Saudi
government is set to build 8,143 new housing units across 16 cities and governorates.48
The Riyadh office market has been buoyed by news that the GCC Monetary Union Central
Bank will be located in the King Abdullah Financial District, which is currently undergoing
site preparation.44
GULF REAL ESTATE STUDY 31
The first phase of development for Lusail City is currently under way and set for completion Qatar launched Qatar Railway with an initial capital of $100 million to spearhead government
in 2011. Once complete, Qatar’s largest new development will house 455,000 people in 17 plans to connect regions to each other and to link Qatar to neighboring countries. The first
mixed-use districts connected by a light rail network.49 phase of the countrywide railway project will begin in 2012 with a monorail linking the towers
in the West Bay area of Doha.52
Work has begun on the $5.5 billion Dohaland project. Slated for completion in 2016, the
project aims to reinvigorate the center of Doha and reinstate it as the social and commercial A new law in Qatar has addressed tenant uncertainty by decreeing that a landlord must give
heart of the city while creating housing for 27,000 people.50 six months notice to a tenant in order to recover the rented property. Furthermore, a tenant
can be removed from a property only if the housing unit will be used by the landlord or his/
New retail complexes such as Lagoona Plaza and Salam Bounian’s The Gate will soon be her legal dependents.53
complete. In a traditionally undersupplied market, retail market rents are set to dampen as
the cumulative shopping mall supply increases by an expected 100% between Q1 2009 House prices fell by 20% in Q1-3 in 2009 and are expected to fall a further 15% in 2010
and Q4 2010.51 due to more housing units coming onto the market.54
GULF REAL ESTATE STUDY 35
Manara Developments unveiled Nurana, a $1 billion waterfront reclamation mega project Eskan Bank’s planned Seef Garden project has been postponed indefinitely. The project was
with 60% of the project site allocated for residential units. In addition, it has announced to bring 670 apartments and 42 villas to the market.58
the development of Kenaz Homes, a plan for 75 semi-detached houses that will be sold
exclusively to GCC and Bahraini nationals.55,56 First Bahrain postponed its 21,000-square-meter development in Seef district, which was to
have featured commercial and residential towers, a five-star hotel, and serviced apartments.59
Marsa Al Reef, a waterfront project spanning 2.6 million square meters that will offer
residential, retail and leisure elements, was announced in April 2009.57 The $2.65 billion Uptown Bahrain project, which was due to start construction in Q1 2009
and was to become the new commercial and residential hub of Bahrain’s Seef area, has been
put on hold indefinitely.60
GULF REAL ESTATE STUDY 39
In an event that closed a tough year for the UAE real estate market, Emaar Properties All major projects in Abu Dhabi, such as Saadiyat Island, Al Sowwah, Reem Island, Yas
launched the world’s tallest structure at 828 meters. In a surprise move, the tower was also Island and Masdar, are in progress, with a demonstrated commitment by the government to
renamed and will henceforth be known as Burj Khalifa. It is named after the current UAE see them through to completion in their initially envisioned form.65
President and Ruler of Abu Dhabi.61
Residents of Discovery Gardens, a Nakheel property, have asked the Ruler’s Court in Dubai to
In Q2 2009, Hydra Properties declared that it is considering delaying, canceling or selling freeze their service fees to the developer in light of substandard building maintenance and a
many of its scheduled developments. With sales of less than 10% in some developments, general failure to develop common areas. The residents insist that the newly increased annual
Hydra has begun an internal assessment of its project portfolio to evaluate which develop- service charges ($5,948 for every 1,000 square feet) are unjustified because the services
ments are worth completing. Developments in Abu Dhabi, Dubai, Kuwait, Libya, Pakistan and they are being charged for are either poorly maintained or do not exist.66
Mexico could be affected.62
Manarat Al Saadiyat, a 15,400-square-meter visitor center that will host a gallery and special
The $5.4 billion Awali City project could be scaled back to half its original size. Most events, is scheduled to be opened at the end of the year on Abu Dhabi’s Saadiyat Island. The
investors have defaulted on their monthly payments for the past eight months, and the redevelopment of the natural island, which has been undertaken by the Tourism Development
developer is re-evaluating plans to continue with the entire project.63 and Investment Company (TDIC), is set for completion in 2018 and will promote Abu Dhabi
as a world-class cultural destination.67
In Ras Al Khaimah, Rakeen bought the La Hoya Bay project from a private developer to
maintain confidence in the RAK market during the economic crisis.64
GULF REAL ESTATE STUDY 43
Emaar Properties’ US development arm, John Laing Homes — a company it bought for $1.05 In Q3 2009, commercial rates in prime office locations around Abu Dhabi fell by around
billion in 2006 and into which it poured another $614 million during subsequent financial 40% as compared to the same period in 2008.72
troubles — was written down as a loss. John Laing Homes initiated bankruptcy proceedings
in 2009.68 In Q3 2008, the average lease rate for residential properties in Dubai was AED 110–120,000
per year; a year later rates had dropped to AED 55–65,000 per year.73
The UAE Minister of Economy has reported that the government will soon be amending the
laws governing foreign ownership of businesses located outside designated free zones. In Office lease rates in Dubai have fallen below 2006 levels. Since Q3 2008, rates in Dubai’s
the hope of attracting a wider range of foreign investors to the country, the government may CBD have seen a decrease of 55% year-on-year, while other business districts as well as
choose to allow 100% foreign ownership of businesses across the UAE; currently foreign newly developed commercial areas have seen an average fall of 67%.74
investors may own a 100% stake in a company only if it is located within a free zone.69
Though Dubai house prices are currently 47% lower than in Q3 2008, transaction volumes in
As part of the Abu Dhabi 2030 plan, the Abu Dhabi government has launched a media production Q3 2009 rose 64% in comparison to the previous quarter.75
free zone, twofour54, which aims to become a regional hub for Arabic-language content production.70
A tenfold increase over Q2 and Q3 2009 was noted in active and potential demand for
Abu Dhabi’s TDIC has launched the first phase of the Desert Islands project by inaugurating commercial office space in Dubai.76
Sir Bani Yas Island. As part of a larger plan to develop the Al Gharbia region of Abu Dhabi,
the government plans to develop the Desert Islands project as a showcase for sustainable, Dubai is set to see an influx of 50,000 housing units in 2010, of which 20% are expected to
eco-friendly developments. Work continues on two other islands as part of the Desert Islands be villas and only half of which are expected to be available for rent.77
project: Dalma Island and Discovery Islands.71
GULF REAL ESTATE STUDY 45
Abu Dhabi saw the fifth-fastest fall in office rents as compared to other cities in the world. The UAE jumped from 31st to 18th rank in a global property opportunity index designed to
With a 39% decrease in commercial rents in Q3 2009 as compared with 2008, Abu Dhabi’s inform the expansion plans of property developers.81
office real estate also faces a 6% vacancy rate.78
Masdar’s eponymous $22 billion green city has decided to focus on the first phase of its
Office space in Dubai is facing a 40% vacancy rate, with over 10 million square feet unused project, due for completion by 2013, while relaxing its 2016 deadline to complete the
as demand has dried up. Analysts predict that 150,000 white collar jobs would need to be whole project.82
created in Dubai to fill the office space that is currently available.79
With a third of the 29 stations planned on Dubai Metro’s Red Line operational and the
Dubai tops the list of the world’s cities that have experienced housing price declines in 2009. remainder set to open by April 2010, the Dubai Roads and Transport Authority now faces
Dubai was the worst performer on a list that surveyed 42 cities, with the emirate suffering a a contractual dispute over overdue back payments with the consortium building the rail
47% year-on-year decrease.80 network. The consortium has declared that it is stopping all work on the network and is
focusing on securing back payments. The RTA has dismissed the reports.83
GULF REAL ESTATE STUDY 47
Changes in Consumer Attitudes toward the Gulf Real Estate Industry Belief that Property Prices in the Future Likelihood of Investing in
Region Today Offer Good Value for the Region
I am more aware of risk now 56.4% the Money
I am less likely to buy or invest in the Believe Likely
region again 22.6%
I see great value and opportunities to buy a
home here right now 38.0%
I am disappointed with the way the region 69% 63%
responded to the downturn 24.6%
I now have more fear/concern of losing
money
45.7%
Top 2 Box*
TopFamiliarity
2 Box* Familiarity
Across the
Across the ∆ Vs. 2008
∆ Vs. 2008 ExcellentExcellent
Overall Rating
Overall(Top
Rating
Box)*
(Top Box)* ∆ Vs. 2008
∆ Vs. 2008
UAE, Saudi
UAE,
Arabia
SaudiandArabia
Qatarand Qatar
Emaar 69%
Emaar 69% 0.31 0.31
-8% -8% Emaar Emaar 56% 56% 0.44 -14%
0.44 -14%
Nakheel 41%
Nakheel 41% 0.59 0.59
+9% +9% Aldar Aldar 41% 41% 0.59 0.59
+28% +28%
Barwa 18%
Barwa 18% 0.82 0.82
+8% +8% Dar Al Arkan
Dar Al Arkan 37% 37% 0.63 0.63
+33% +33%
Aldar 17%
Aldar 17% 0.83 0.83
+3% +3% Barwa Barwa 32% 32% 0.68 0.68
+25% +25%
UDC 15%
UDC 15% 0.85 +7%
0.85 +7% Dubai Properties
Dubai Properties 31% 31% 0.69 0.69
+29% +29%
Damac 13%
Damac 13% 0.87 -19%
0.87 -19% UDC UDC 26% 26% 0.74 +19%
0.74 +19%
Dar Al10%
Dar Al Arkan Arkan 10% 0.9 +1%0.9 +1% Sorouh 18%
Sorouh 18% 0.82 N/A0.82 N/A
Sorouh 5%
Sorouh 5% 0.95 N/A0.95 N/A Damac 14%
Damac 14% 0.86 -12%
0.86 -12%
0% 0%25% 25%50% 50%75% 75% 100% 100% 0% 0% 38% 38% 75% 75% 113% 113% 150%
*Top 2 Box*
*Top
Tidentifies
op 22 Box
Boxtheidentifies
percentage
identifies the percentage
the of respondents
of respondents
who rated the
respondents who
who rated
rated the
the
developer as
developer
the one as
developer with
asthewhom
theone
onewith
they
withwhom
are
whommost
they
orare
they second-most
aremost
mostororsecond-most
familiar. familiar.
second-most familiar. *
Toppercentage
*Top Box is*Top
the Boxisisthe
Box thepercentage
percentage
of who ratedwho
of therated
who the
developer
rated developer
the Excellent.
developerExcellent.
Excellent.
GULF REAL ESTATE STUDY 53
Most Want
Most
to Buy
WantAto
Home
Buy A Home ∆ Vs. 2008
∆ Vs. 2008
From (Top
From
Box)*
(Top Box)* In 50%
the Current Economic Situation, Which Developer Will...
50%
38%
Fare The Best
Emaar Emaar 52% 52% 0.48 0.48
-3% -3% 50%
50%
25%
38%
Fare The Best
Aldar Aldar 40% 40% 0.6 0.6
+27% +27% 13% 10% 7% 6% 6% 5% 4% 7%
4% 1%
25%
Dar Al Arkan
Dar Al Arkan 34% 34% 0.66 +29%
0.66 +29% 0%
10%
Emaar
Aldar
Nakheel
Barwa
Properties
Arkan
Damac
UDCUDCUDCUDC
Sorouh
of These
13%
Al Arkan
7% 6% 6% 7%
DubaiProperties
5% 4% 4%
Nakheel
Barwa Barwa 30% 30% 0.7 0.7
None ofNone of
+27% +27% 1%
Sorouh
Damac
Emaar
Barwa
Dubai Dubai
These
Aldar
0%
Dar Al
Emaar
Aldar
Nakheel
Barwa
Properties
Arkan
Damac
Sorouh
These
+21% +21%
Al Arkan
Dubai Properties
Dubai Properties 28% 28% 0.72 0.72
ofNone
DubaiProperties
Dar
Nakheel
Sorouh
Damac
Emaar
Barwa
0%
NoneThese
Aldar
UDC UDC 24% 24% 0.76 +17%
0.76 +17%
Dar Al
13% 3% 3% 4% 4% 4% 1%
Dar
Nakheel 19%
Nakheel 19% 0.81 0.81
+1% +1% 0% 10% 12%
25% 14%
13% 3% 3% 4% 4% 4% 1%
Sorouh 16%
Sorouh 16% 0.84 N/A0.84 N/A 38% 10% 12%
25% 14%
Damac 11%
Damac 11% 0.89 0.89
-8% -8% 50% 44%
38% Fare The Worst
0% 0% 38% 38% 75% 75% 113% 113% 150% 150%
*Top Box is the percentage of respondents who agree completely with the 50% 44%
statement, “This is the developer I would most want to buy a home from.” Fare The Worst
GULF REAL ESTATE STUDY 55
Developer Image
If “room to improve” and “parity at the top” were the two key takeaways in the 2008 Innovative
Innovative
examination of developer brand image, in 2009 the themes would touch on “weakening” AverageAverage
Grade: B-
Grade: B-
and “decentralization.” Perhaps not surprisingly, given the downturn-fueled events of 2009,
Emaar Emaar 4.4 4.4
ratings of developers across measures have declined, typically by between 5% and 10%.
This is compared with the 2008 performance figures that had room to improve. Overall, the
average grade fell from a B to a C+/B-. The other big story of 2009 is the continued decline Aldar Aldar 4.1 4.1
of the Nakheel brand, the dramatic fall of Damac and the rise of non-Dubai-based developer
brands including Abu Dhabi’s Aldar, Saudi Arabia’s Dar Al Arkan and Qatar’s Barwa. Nakheel Nakheel 4.1 4.1
Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior), Damac Damac 3.9 3.9
among home buyers familiar with the developer.
Dar Al Arkan
Dar Al Arkan 3.8 3.8
3.6 3.8
3.6 43.8 4.24 4.4
4.2 4.4
High-Quality
High-Quality
Construction
Construction Builds Great
BuildsPlaces
Great to
Places
Live to Live
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: B-
Grade: B-
Emaar Emaar 4.4 4.4 Emaar Emaar 4.3 4.3
Dar Al Arkan
Dar Al Arkan 4.2 4.2 Dar Al Arkan
Dar Al Arkan 4.0 4.0
Dubai Properties3.9
Dubai Properties 3.9 Damac Damac 3.9 3.9
3.8 3.95
3.8 4.1
3.95 4.25
4.1 4.4
4.25 4.4 3.8 3.925
3.8 4.05
3.925
4.175
4.05 4.3
4.175 4.3
GULF REAL ESTATE STUDY 57
Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior),
among home buyers familiar with the developer.
Easy toEasy
WorktoWith
Work With Good Value
Goodfor
Value
the Money
for the Money
AverageAverage
Grade:Grade:
B- B- AverageAverage
Grade: C+
Grade: C+
Emaar Emaar 4.3 4.3 Emaar Emaar 4.1 4.1
3.8 3.925
3.8 4.05
3.9254.175
4.05 4.175
4.3 4.3 3.6 3.725
3.6 3.85
3.725
3.975
3.85 4.1
3.975 4.1
Experienced
Experienced
in RealinEstate
Real Estate
Development
Development ProvidesProvides
Homes Homes
that Arethat
a Good
Are aInvestment
Good Investment
Average
Average
Grade:Grade:
B- B- AverageAverage
Grade: C+
Grade: C+
Emaar Emaar 4.4 4.4 Emaar Emaar 4.2 4.2
3.8 3.95
3.8 4.1
3.95 4.25
4.1 4.4
4.25 4.4 3.6 3.75
3.6 3.9
3.754.05
3.9 4.2
4.05 4.2
GULF REAL ESTATE STUDY 59
Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior),
among home buyers familiar with the developer.
Luxurious
Luxurious
Homes Homes Reasonably
Reasonably
Priced Priced
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: C
Grade: C
Emaar Emaar 4.3 4.3 Emaar Emaar 4.0 4.0
Dar Al Arkan
Dar Al Arkan 4.1 4.1 Dar Al Arkan 3.7
Dar Al Arkan 3.7
3.8 3.925
3.8 4.05
3.925
4.175
4.05 4.3
4.175 4.3 3.6 3.7
3.6 3.8
3.7 3.9
3.8 43.9 4
Environmentally
Environmentally
Oriented
Oriented Financially
Financially
Sound Sound
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: B-
Grade: B-
Emaar Emaar 4.3 4.3 Emaar Emaar 4.3 4.3
Dar Al Arkan
Dar Al Arkan 4.0 4.0 Dar Al Arkan
Dar Al Arkan 4.0 4.0
Dubai Properties
Dubai Properties 3.9 3.9 Nakheel Nakheel 3.9 3.9
3.6 3.775
3.6 3.95
3.775
4.125
3.95 4.3
4.125 4.3 3.8 3.925
3.8 4.05
3.925
4.175
4.05 4.3
4.175 4.3
GULF REAL ESTATE STUDY 61
Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior),
among home buyers familiar with the developer.
PremiumPremium
Amenities
Amenities Responsive
Responsive
Customer
Customer
ServiceService
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: C+
Grade: C+
Emaar Emaar 4.3 4.3 Aldar Aldar 4.2 4.2
Dar Al Arkan
Dar Al Arkan 4.0 4.0 Dar Al Arkan
Dar Al Arkan 3.8 3.8
Dubai Properties
Dubai Properties 3.8 3.8 Damac Damac3.7 3.7
3.6 3.775
3.6 3.95
3.775
4.125
3.95 4.3
4.125 4.3 3.6 3.75
3.6 3.9
3.754.05
3.9 4.2
4.05 4.2
Well-Planned
Well-Planned
Units Units Government
Government
Affiliated
Affiliated
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: C
Grade: C
Emaar Emaar 4.3 4.3 Emaar Emaar 4.2 4.2
Dar Al Arkan
Dar Al Arkan 4.2 4.2 Dubai Properties
Dubai Properties 3.8 3.8
3.8 3.925
3.8 4.05
3.925
4.175
4.05 4.3
4.175 4.3 3.6 3.75
3.6 3.9
3.754.05
3.9 4.2
4.05 4.2
GULF REAL ESTATE STUDY 63
Scores represent the average rating on a 5-point scale, from 1 (Unacceptable) to 5 (Superior),
among home buyers familiar with the developer.
Trustworthy
Trustworthy Communicates
Communicates
ProgressProgress
AverageAverage
Grade: Grade:
C+ C+ AverageAverage
Grade: C+
Grade: C+
Emaar Emaar 4.2 4.2 Emaar Emaar 4.2 4.2
Dar Al Arkan
Dar Al Arkan 3.9 3.9 Nakheel Nakheel 3.9 3.9
3.6 3.75
3.6 3.9
3.75 4.05
3.9 4.2
4.05 4.2 3.6 3.75
3.6 3.9
3.754.05
3.9 4.2
4.05 4.2
Desirable
Desirable
Locations
Locations DeliversDelivers
on Timeon Time
AverageAverage
Grade: Grade:
B- B- AverageAverage
Grade: B-
Grade: B-
Emaar Emaar 4.3 4.3 Emaar Emaar 4.4 4.4
3.8 3.925
3.8 4.05
3.925
4.175
4.05 4.3
4.175 4.3 3.6 3.8
3.6 43.8 4.24 4.4
4.2 4.4
GULF REAL ESTATE STUDY 65
Preferred Locations
This chart illustrates the performance of cities in the region in driving preference.
50.0000% 50.0000%
43.5% The
43.5% Most Desired Locations
2009 2008
12.5000% 11.5%
12.5000%
11.1% 11.5% 11.1%
9.4% 9.2% 9.4% 9.2% 9.9% 9.9%
18.8%
Innovative
15.6%
GULF REAL ESTATE STUDY
6.8%
Easy to
Work With
6.7%
Preference Drivers
Experienced
in Real Estate
a homebuyer’s predisposition toward a developer.
6.3%
Development
Provides Homes
That Are a Good
5.7%
Investment
Good Value
5.3%
Luxurious
Homes
5.2%
Environmentally
Oriented
4.6%
This graph depicts the relative importance of key attributes in terms of their ability to predict
0
0.2
Reasonably
Priced
4.2%
Financially
Sound
3.8%
Premium
Amenities
3.2%
Well-Planned
Preference Drivers (Continued)
Units
2.6%
Responsive
Customer Service
2.5%
Government
Affiliated
2.3%
Trustworthy
2.0%
Desirable
Locations
2.0%
Delivers on
Time
0.2%
67
GULF REAL ESTATE STUDY 69
300,000 285,331
225,000 213,560
Number of Transactions
69% 63%
223,528
Value (AED)
200,000 150,000
69% 63%
34,432
28,320 27,576
17,92912,225 9,134 8,615
2,216 7,153 2,575
177 56 24 45 1
0 0
Mortgage
Sales
Valuation
Granted
Leasing
Other
Inheritance
Rent
Investment
Compensation
Mortgage
Sales
Valuation
Granted
Leasing
Other
Inheritance
Rent
Investment
Compensation
*data as of January 31st, 2010 *data as of January 31st, 2010
This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department
GULF REAL ESTATE STUDY 71
Breakdown by Nationality
BreakdownBreakdown
by value (AED)
by value (AED)
Breakdown by value
Breakdown
(AED)Breakdown
by area (sq.
byft.)
area (sq. ft.)
Breakdown
Breakdown
by
Breakdown
by
area
price
(sq.per
ft.)
bysquare
price per
footsquare
Breakdown
(AED/sq.
footft.)
(AED/sq.
by price per
ft.) square foot (AED/sq. ft.)
Iran Iran Iran Kuwait Kuwait Kuwait
KSA KSA KSA Kuwait Kuwait Russia
Kuwait Russia
1% Oman 1% Oman Russia 1% Oman
10% 10%
9% 9% 10% Russia9% Russia 17% 17% 9% 17%
37% 37%Russia 37% 9% 9%
Pakistan Pakistan Pakistan 3% 3% 3%
Breakdown
Breakdown
by value
by value
(AED)
(AED)
Russia Russia Breakdown Breakdown
Breakdown
by value by(AED)
Russia area
by area
(sq.(sq.
ft.) ft.) Breakdown
Breakdown
Breakdown
by price
byby
price
per
areaper
square
(sq.
square
ft.)
footfoot
(AED/sq.
(AED/sq.
Breakdown
ft.) ft.) by price per square foot (AED/sq. ft.)
12% 12% 7% 12%7% KSA KSA 7% KSA
Iran Iran KSA KSA 10% 10%
Iran KSA 10% KSA Russia KSAKuwait
Russia
Kuwait
1% 1%OmanOman
CanadaKSA Canada Russia
Kuwait
1% Oman
Canada
10%10% 10% Kuwait
Kuwait 6% 17% 17%6% Kuwait 12%6% 12%17% 12%
9% Kuwait
9% Kuwait Russia
Russia 9%
Kuwait 37%37% Russia 37% 9% 9% 9%
Pakistan
Pakistan 5% 5% Pakistan 3% 3% 5% 3%
Russia
Russia Russia
12%12% 7% 7% 12% KSA KSA
Iran Iran 7% Iran KSA
69% 69% Oman Oman 6%69% 10%63%
10%6% 63%
Oman 6% 63%
10% KSA KSA Canada
Canada KSA Canada
4% 4% 4% Iran6%
6% Iran 12%12% Iran6% 12%
Kuwait
Kuwait Kuwait 11% 11% 11%
Oman Oman Oman USA USA USA
UK UK UK 5% 5% Canada
Canada Canada 5% 3% 3% 3% 12% 12% 12%
21% 21% 4% 4% Iran Iran 4% Iran
69%69% USA21% Oman USA Pakistan
Oman Pakistan
6% 6% 63%69% 63% USA Oman Pakistan 6% 63%
4% 4% 4%4% 8% 8% 4% 4% USA 8% Canada USA Iran Iran
Canada USA Canada Iran
2%
Oman Oman
2% 2% 11%2%11% 2% Oman 2% USA USA 11% USA
UK UK Canada
CanadaUK Canada 3% 3% Pakistan Pakistan
4% 4% 21%Pakistan 4% 12%12% Pakistan
3% India India India 12%
21%21% UK
Pakistan UK UK
Pakistan 10% India 10% 10%
USA USA India
USA India 10% 10% 10%
8% India
8% 12% USA USA 8%12%
India India 4% 4% 12% 17% 4%
2%17%2%
Canada
Canada 17% UK USA2%
Canada
UK UK
24% 24% 24% 2% 2% 12% 12%2% 12%
Pakistan
Pakistan Pakistan
UK UK UK
10%10% IndiaIndia 10% India
IndiaIndia India 10%10% 10%
IndiaIndia 12%12%
India 17%17% 12% UK
17% UK UK
24%24% 24% 12%12% 12%
Examining Dubai
Dubai has been put under a magnifying glass across the
globe. When news spread of the Dubai World default, people
feared a second global economic crisis, with its epicenter in
the Dubai real estate market.
GULF REAL ESTATE STUDY 75
Dubai Marina
The graph below shows the fluctuation of the average value of a 1 bedroom apartment in the
Average price per square foot for a 1 bedroom apartment
Marina
in fromMarina
Dubai January 2003 to November 2009.
2000
Brand Dubai has been closely associated with its real 1750
to reveal the state of the real estate market in hard facts 500
and statistics. The case study takes a wide-angle view that
250
considers foreign investment, the rise and fall in prices of
residential property, and the number of transactions year by 0
January 2003
June 2003
October 2003
February 2004
June 2004
October 2004
February 2005
June 2005
October 2005
February 2006
June 2006
October 2006
February 2007
June 2007
October 2007
February 2008
June 2008
October 2008
February 2009
June 2009
October 2009
This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department
Average
500
GULF REAL ESTATE STUDY 77
250
Villas 0
January 2003
June 2003
March 2004
July 2004
January 2005
June 2005
May 2006
December 2006
November 2007
February 2008
May 2008
August 2008
December 2008
April 2009
July 2009
October 2009
Even at the higher end of the spectrum with four bedroom villas in Emirates Hills, there is
a similar rise and fall of the average price back to 2006 levels.
Average price per square foot for a 4 bedroom villa in Emirates Hills Average price per square foot for all types of villas in Emirates Hills
1,500 1500
1,250 1250
1,000 1000
750 750
500 500
250 250
0 0
January 2003
August 2003
January 2004
June 2004
November 2004
April 2005
September 2005
February 2006
July 2006
December 2006
May 2007
October 2007
March 2008
August 2008
January 2009
June 2009
November 2009
January 2003
June 2003
March 2004
July 2004
January 2005
June 2005
May 2006
December 2006
November 2007
February 2008
May 2008
August 2008
December 2008
April 2009
July 2009
October 2009
Average price
This data per square
is contributed foot for– Aall
by DUBAIFocus types ofproduct
REIDIN.com villaspowered
in Emirates Hills
by Dubai Land Department This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department
1500
GULF REAL ESTATE STUDY 79
3,750
1,875
10000
8,113 1,250
5000
625
2,992
0 0
January 2003
June 2003
November 2003
April 2004
September 2004
February 2005
July 2005
December 2005
May 2006
October 2006
March 2007
August 2007
January 2008
June 2008
November 2008
April 2009
September 2009
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedrrom
This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department This data is contributed by DUBAIFocus – A REIDIN.com product powered by Dubai Land Department
New York City Data from Zillow.com – http://www.zillow.com/local-info/NY-10010-home-value/r_61624/
#metric=mt%3D11%26dt%3D1%26tp%3D6%26rt%3D7%26r%3D61624
GULF REAL ESTATE STUDY 81
EMERGING TRENDS
GULF REAL ESTATE STUDY 83
Emerging Trends “We remain committed to our projects and optimistic about the long-term outlook for
Ambiguous
Much of the angst voiced and documented over the past year has centered not only on the Limitless on Arabian Canal86
falling prices of investments but also on the continued ambiguity of project progress and
completion dates. The shifting completion target dates coupled with the reluctance of developers “Shifting away from the fast-track development of its Jumeirah Gardens project and in
to commit to a definite time scale has resulted in the diminishing of their brands’ credibility. light of rapid change in the real estate market and global economic conditions, Meraas
Development is now focusing on adapting its master plan, designs and product mix to
Real estate brands are now faced with the same issues of trust as the credibility crisis suffered suit market conditions.”
by financial institutions in the aftermath of the global economic crisis. This sentiment has Meraas statement87
affected the entire sector regardless of individual performances and past records.
“The tower [Nakheel Harbor & Tower] will be delayed until the market changes. You can’t
Emaar remains a highly regarded brand in the region. Despite the global downturn and some build something like that in this kind of market. Whatever is under construction will
international downsizing, it still delivered significant retail and hospitality offerings in 2009. be continued. Whatever is planned will be shelved, delayed. Anything committed to we
CanceLlation?
However, the rescheduling and renaming of the world’s tallest tower from September 9, 2009 to shall finish; everything that cannot currently be financed will be delayed.”
December 2, 2009, and eventually to January 4, 2010, raised eyebrows in a market looking for Sultan Ahmed bin Sulayem, Chairman of Dubai World88
“This year we will be revisiting our operations. Revisiting depends on many parameters
and the world financial problem also dictates that ... we have to look into phasing of the
project and timing of the project.”
Salem Al Moosa, Chairman and CEO of Falcon City of Wonders85
GULF REAL ESTATE STUDY 85
Emerging Trends
By the end of 2009, you could watch the reflection of the rising sun on the world’s tallest In a region where the change from new to old is measured in months rather than years, it is
tower. You could live, dine and relax on a man-made island in the shape of a palm tree. From easy to lose sight of these monumental feats. With each completed project and each home
the backyard of your luxurious villa, you could watch the world’s top 60 golf players compete handed over, the successes of the region’s real estate market provide a counter argument to the
in a season-ending tournament. From the deck of your yacht, you could toast the Abu Dhabi critics and skeptics.
F1 Grand Prix Champion under a night sky bright with the colorful illumination of a newly
built hotel. Families could enjoy a walk along the new boardwalks that fringe the coastline As new communities start to live, work and play in what once was merely a vision, the role of
and seek shelter from the summer heat in megamalls. Nowhere else in the world could all the destination brand must evolve from promotion to engagement. The criteria for long-term
these destinations and events be built from scratch in such a time frame. success will now be the building of strong community brands - not just iconic structures.
Brands that promote their neighborhood identity while forming strong connections to their
immediate surroundings will instill a sense of pride and ownership for the residents who will
become ambassadors for these new communities.
THE FUTURE
GULF REAL ESTATE STUDY 89
THE FUTURE
Since the global financial crisis, however, no other city has suffered a more dramatic fall
from grace than Dubai. Emerging to take its lead is its neighboring city, the Emirate of Abu
Dhabi. As the future home of the Guggenheim and the Louvre, host of the F1 Grand Prix at
an immaculate new racecourse, and the rising prominence of Masdar in the global discussion
of alternative energy; Abu Dhabi is putting on an impressive — albeit more reserved — and
diversified bid to claim the title of the new capital of the Middle East. With its financial
strength and its rise as a destination of note, Abu Dhabi is best-placed to lead the region’s
real estate recovery. It is also poised to be the first place in the region to attract foreign
investment and partnership opportunities in the future, should the Emirate seek these.
GULF REAL ESTATE STUDY 91
THE FUTURE
Portfolio Rationalization
The steady flow of news of various cancellations, delays and re-evaluations have left investors,
the media and industry analysts confused as to the true scale and scope of both tier 1 and
tier 2 developers. Many developers remain silent about the true situation of many of their
projects, with many continuing to market though their websites developments that have been
suspended, cancelled or delayed.
THE FUTURE
Financial Innovation
Demand is at an all-time low as an increasing amount of property is flooding the market.
Surprisingly, the region has been slow in enacting some of the financial measures put in place
in Europe and the US to stabilize and boost the real estate sectors. Mortgage rates (from
those institutions that still offer mortgages) remain high, with no signs of relief for those
burdened with properties decreased in value. In an unfortunate state of affairs, the banks and
lending institutions are often treating existing and potential customers as potential liabilities
and defaulters rather than as prized clients.
Through closer partnership with financial institutions or state-backed offerings, new and
innovative financial products will be critical to generating any real boost in demand.
GULF REAL ESTATE STUDY 95
THE FUTURE
Instead of ignoring these voices or the new media available, it is imperative for brands to
embrace them. If nothing else, it can serve as a valuable way to better gauge the brand’s
performance and take the pulse of market sentiment. Brands should look to develop strategies
to engage their audiences in a positive dialogue.
GULF REAL ESTATE STUDY 97
THE FUTURE
A new dialogue
Across the region many units are being completed and handed over to residents (whether
rental tenants or owners), and people who live in the developments are finally emerging as an
important audience. To date, this large audience has been neglected or siloed as a concern
for the facilities management company. During times when long queues at sales launches
were commonplace, the focus was on converting potential buyers into actual customers.
Once the sales agreement was executed, customers were no longer of primary importance
unless they remained potential buyers of future properties. Worse still, rental tenants were
completely disregarded, as they were not considered direct clients of the developers.
Tenants and residents represent the largest group of potential brand detractors or brand
ambassadors, and they will wield significant weight in shaping the public perception of the
brand. How effectively and innovatively developer brands can connect with the residents,
tenants and the wider community will be a critical element in building brands of the future.
GULF REAL ESTATE STUDY 99
THE FUTURE
Crisis management teams that involve the full spectrum of the organization need to be
seriously considered as a vital part of the organizational structure of the future. Even though
most players in the region are private entities, adapting the PR practices of publicly listed
companies in managing crises will help them better weather the storms that might lie ahead.
GULF REAL ESTATE STUDY
Contacts
William Shintani Jae Hwang
FutureBrand Dubai FutureBrand Dubai
P.O. Box 502162, Dubai, UAE P.O. Box 502162, Dubai, UAE
971.4.367.8285 971.4.367.1624
contact-dubai@futurebrand.com
www.futurebrand.com
SOURCES
For a complete list of all sources contained in this document, visit
http://www.futurebrand.com/gres/sources
Disclaimer: All material presented herein is intended for informational purposes and has been compiled
from sources deemed reliable including developers, sales staff, published data and secondary sources.
Though content is believed to be correct, material presented is subject to errors, omissions, changes or
withdrawal without notice.