Annual Report
Real Estate Sector
Performance 2019

Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Our Vision
To make Dubai theworld’s first real estate
destination ininnovation,
confidence
and happiness

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Annual Report: Real Estate Sector Performance 2019

It is my pleasure to present to you ‘The Annual Report:
Real Estate Performance 2019’ that is broken down into
four robust chapters, covering a variety of sections thatwill grant you a deeper insight into the performance of themarket during 2018.
We aimed with this report for it to be a reference where
researchers may find all sorts of information enhancedby illustrative means, indicating the prestigious positionof our economic sector and its renewed momentum thatpromises further progress and success, thanks to the cooperation of Dubai Land Department with many public andprivate sectors in line with the directives of His Highness
Sheikh Mohammed bin Rashid Al Maktoum, Vice President
and Prime Minister of the UAE and Ruler of Dubai, to position Dubai as an economic capital capable of competingwith major economic cities.

A comprehensive

This report, with its detailed analysis of the sectorial performance, is an invaluable tool for investors who want toknow the status of Dubai’s real estate market, and the investment horizons it presents them with, through incentive packages that are consistently being revealed by thegovernment to reinforce the UAE’s position as a premierinvestment destination and the ideal choice for thosewishing to live, work, and visit.

and rich report for
all of us

We wish you an interesting review of this report and hope
to meet you all with next year’s edition where we will reveal more of our successes and achievements on the pathof excellence for Dubai to be number (one).
HE Sultan Butti bin Mejren
Director General of DLD

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Annual Report: Real Estate Sector Performance 2019

A group effort
to achieve ourvisionDubai Land Department (DLD) is proud to strengthen its relationships
with all relevant parties, including developers, investors, and customers
by keeping them updated on the latest developments in the sector,
enabling them to make the right decisions based on updated data.
Through this approach, DLD strives to transform its values into practices,in line with its relentless efforts to establish transparency in all its
operations and the regular disclosure of its performance, especially as it
has been publishing daily, weekly, monthly, and quarterly reports in thebuildup to its comprehensive annual report.
This approach stems from our belief in the importance of the Emirate’s
real estate sector and its role in supporting the local economy as well as
in diversifying sources of income. This in addition to its direct relationshipwith other economic sectors that makes it a real mirror for its growth anddevelopment and an ideal catalyst for sustainability.
As we put this group effort in the hands of all those interested in ourreal estate sector, we hope that everyone will find through it a valuable
tool to help them monitor the performance of the sector and work with
us to reach the highest levels among international markets, whether bymaking suggestions, offering feedback or consultation to help overcome
any problem they may be monitored, or help us disseminate its data andresults more broadly.
I hope you all benefit from this report

Transparent
communication
Dubai Land Department (DLD) works to perform activities embodied by
its various operations as part of its belief in the central role played by thereal estate sector, which is one of the leading growth activities that hascontributed to the creation of quality transformations across economic
sectors.
As a result, Dubai has been able to attain an innovative global position,
having caught the attention of major global business index development
organisations, earning a superior ranking among the world’s leading
investment destinations.
The real estate sector reflects the progress achieved by the Emirate in all
fields, imposing on us a new kind of challenge. On the one hand, we must
continue this momentum that we have achieved through promotional
initiatives at the local and international levels by organising exhibitions
and shows in many of the most prominent Arab and international capitals.
On the other hand, we strive to ensure transparent communication and full
openness to all investors and other real estate-related parties.
This is a core message that we seek to convey through this report,emphasising the fact that Dubai is continuing its mission with determinationin line with the visions of our wise leadership by applying innovation in all
aspects of the real estate market’s operations.
In conclusion, we would like to thank all those who contributed to thesuccess of the report and wish all those interested an enjoyable read.
Majida Ali RashidCEO, Promotion and Real Estate Investment Management sector at DLD

HE Juma bin Humaidan
Deputy Director of DLD
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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Table of contents
About the report

12Completed Projects

54

Executive Summary

14

New Projects

58

Introduction

18

Under-construction Projects

62

Residential sector

67

Retail Sector

71

Chapter 1: Growth of the real estate sector and its role in economic growth20

Dubai Economic growth

22

Office Sector

75

Contribution of the real estate sector in economic growth24

Hotel sector

81

Real estate sector and population growth

26

Real estate sector growth and number of workers

27

84

Demand side analysis
Sales

84

Sales Distribution by property status on the procedure date86

Sales Distribution in terms of property type87

Chapter Two: Real Estate Sector Performance

28

Dubai Real Estate Market Performance

30

Real Estate Transactions

Sales Distribution in terms of ownership type

88

30

Number and value of transactions

Sales Distribution in terms of property use

8930

Real Estate Transactions by transaction type

Sales Distribution in terms of community

90

31

Real Estate Transactions by property use

Rents

93

33

Number of real estate transactions by investor category

New and Renewed Rent Contracts		

93

35Real Estate Transactions by property status (completed / under construction)

36

Chapter Three: Real Estate Sector Competitiveness96

Real Estate Transactions by community

38

The Ease of Doing Business Index

99

40

Methodology

100Real Estate Investments

41

Registering Property

102

New and active investors

42

Ease of Doing Business Index 2019

105

Investments Distribution by investor category

43

Investments Distribution by property status

46

Methodology

110

Investments Distribution in terms of property use

48

Real Estate Sector Performance in the Global Real Estate Sector Transparency Index

113

Investments Distribution by property status

49

Real Estate Investments Distribution by property use and status

50

Distribution of the investments by nationality (for Individuals only)51

Investments

Real Estate Supply and Demand Analysis

54

Supply side analysis

54

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Global Real Estate Sector Transparency Index

109

Chapter Four: Real Estate Sector Performance Expectation

116

Economic Growth Expectations

118

Real Estate Sector Growth Expectations

120

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

List of Figures and Tables

Figure 2.37 - Under construction Projects Distribution registered in 2018 in terms of Property Type64

Figure 2.38 number and area of Under construction by Project End Year

65

Figure 2.39 Share of residential transactions of total number of transaction

67

Figure 2.40 Share of residential transactions of total transactions value

67

Figure 2.41 Units Number and Area of Completed Residential units by Project End year

68

Figure 2.42 Number and area of New Residential Units by Project Start year

69

Figure 2.43 Units Number and Area under-construction Residential by Project End year

70

Figure 2.44 Contribution of Retail Sector in Dubai GDP

71

Figure 2.45 Number and Area of Completed Retail Stores by Project End year

72

Figure 2.46 Number and Area of new Retail Stores by Project End year

73

Figure 2.47 Number and Area of under-construction Retail Stores by Project End year

74

Figure 2.48 number of New Trade Licenses

75

Figure 2.49 Number and Area of Completed offices by Project End year

76

Figure 2.50 Number and Area of new offices by Project End year

77

Figure 2.51 Number and Area of under-construction offices by Project End year

78

Figure 2.52 Number of Hotels

82

Figure 2.53 Number of Hotel Rooms

82

Figure 2.54 Number of Hotel apartments

83

Figure 2.55 Number of Visitors

83

Figure 2.56 Share of number of sales transactions out of total number of transaction

84

Figure 2.57 Share of value of sales transactions out of total transaction values

85

Figure 2.58 Number of sales transactions by Property Status at procedure date

86

Figure 2.59 Number of sales transactions by property type87

Figure 2.60 Number of sales transactions by ownership type88

Figure 2.61 Real Estate sales by property use

89

Figure 2.62 Top 10 communities in terms of number of sales transactions

90

Figure 2.63 Top 10 communities in terms of sales transactions value

90

Figure 2.64 Number of New and Renewed Contracts

93

Figure 2.65 number of New and Renewed Contracts by contract period 201894

Figure 2.66 number of New and Renewed Contracts by property use 201895

Figure 3.1 Dubai performance in the Global Transparency Index

113

Figure 4.1 World economic Growth excpectations

118

52

Figure 4.2 Real Estate Transactions Number and Value per month120

Figure 2.27 Number of Completed projects by Project End Date

54

Figure2.28 Number of Completed projects by project classification 201855

Diagram 1 - pillars of Ease of Doing Business Index

100

Figure 2.29 - Completed Projects Distribution in 2018 in terms of property type56

Diagram 2 Sub-indices of Registering Property Pillar

102

Figure 2.30 Number and Area of Completed Units by Project Completion Year

57

Diagram 3 Assumptions about the related parties in Registering a Property Pillar

103

Figure 2.31 Number of New Projects by Project Start Date

58

Diagram 4 Assumptions about the property in Registering a Property Pillar

104

Figure 2.32 Number of New Projects by Project Classification 201859

Diagram 5 - The UAE ranking in the Doing Business Report 2019

105

Figure 2.33 - New Projects Distribution in 2018 in terms of Property Type60

Diagram 6 - Performance of sub-indices of Registering a property pillar

106

Figure 2.34 Number and area ofNew Units by Project Start Year

61

Diagram 7- Global Real Estate Sector Transparency Index

111

Figure 2.35 Number of Under- construction Projects by Registration Date

62

Table 1: Relative scale of sub-indices in the Global Real Estate Sector Transparency Index

112

Figure 2.36 Number of Under- construction Projects by Project Classification 2018

63

Figure 1.1 world economy and developed economies Growth22

Figure 1.2 GCC Growth Rate

23

Figure 1.3 Real Estate Sector contribution in GDP growth24

Figure 1.4 Construction and Real Estate Services Sectors growth rate

25

Figure 1.5 Building Cost Index

25

Figure 1.6 Number of Residential Units and Population Growth26

Figure 1.7 Share of workers in constructionand real estate activities sectors

27

Figure 2.1 Real Estate Transaction Number and Value

30

Figure 2.2 Real Estate Transactions Number by Procedure Type31

Figure 2.3 Real Estate Transactions Value by Procedure Type32

Figure 2.4 Real Estate Transaction Distribution by property use

33

Figure 2.5 Real Estate Value Distribution by property use

34

Figure 2.6 Number of Real Estate Transactions by investor category

35

Figure 2.7 Number of Real Estate Transactions by property status at the procedure date

36

Figure 2.8 Value of Real Estate Transactions by property status at the procedure date

37

Figure 2.9 Top 10 communities in terms of Real Estate Transactions Number

38

Figure 2.10 Top 10 communities in terms of Real Estate Transactions Value

39

Figure 2.11 share of Construction and Real Estate activities Sectors of Foreign Direct Investment

40

Figure 2.12 Real Estate Investments

41

Figure 2.13 share of New and Active Investors by number and value of investments in 201842

Figure 2.14 Number of by Investor's Category

44

Figure 2.15 Investments Value by Investor's Category

44

Figure 2.16 Average Value of Individuals and Corporate Investments

45

Figure 2.17 Value of investments by investor type and property use

45

Figure 2.18 Number of Inestments by property status in 201846

Figure 2.19 Inestments Value by ownership type in 201847

Figure 2.20 Number of Investments by property use in 201848

Figure 2.21 Investments Value by property use in 201848

Figure 2.22 2.20 Number of Investments by property status in 201849

Figure 2.23 Real Estate Investments Value Distribution in terms of property status in 201849

Figure 2.24 Investments Value by property use and status in 201850

Figure 2.25 Top 10 Nationalities in terms of Number of Investments 201851

Figure 2.26 Top 10 Nationalities in terms of Investments Value 2018

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Table 2: Transparency groups in the Global Real Estate Sector Transparency Index
Table 3: Transparency ranking of the real estate sector in the Middle East

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info@dubailand.gov.ae Dubai Landwww.dubailand.gov.aeAbout the Report

The Real Estate Performance Report 2019 is acomprehensive report that provides a complete
overview of real estate performance in 2018
through the analysis of the sector performanceaccording to macroeconomic indicators as well as
the sector performance indicators.
The report provides a reference for all real estate
stakeholders, through which they can follow
and compare the performance of the sector overyears and compare it with the other cities in atransparent manner.
The report consists of four chapters; The firstchapter deals with the economic growth and therole of the real estate sector in this growth while
the second chapter deals with the analysis of theperformance indicators of the sector. The thirdchapter is a thematic chapter deals with one of
the important issues of the sector; In the previous
year report, it dealt with the real estate sector
regulatory environment and the most recent realestate initiatives and products, while this year it
deals with the real estate sector competitiveness;
and The last chapter deals with the economic
growth expectations as well as the performanceof the real estate sector for the next year.

Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Executive Summary
The real estate sector in Dubai has led theeconomic growth of the Emirate for the last
decades, and effectively enhanced the positionon the Emirates worldwide and positively
contributed to the economic growth of the
Emirate, so that Dubai has become one of themost attractive investment destination all over
the world.
The real estate sector in Dubai has achieveda remarkable progress in the global
competitiveness indicators. In the Ease of
Doing Business Report 2019, the United
Arab Emirates has achieved an outstanding
performance and advanced 10 positions in alist of 190 countries around the world, reaching
11th place in the world, compared to the 21stplace in the world in 2018. This improvementin the ranking of the United Arab Emirates
represented by Dubai as the largest businesscity was a result of improving in a numberof sectors on top of which is the real estate
sector represented in "Registering a property"
indicator, which made a progress in three places
and ranked the seventh place in the world in2019 compared to the 10th place in 2018.
In the Global Real Estate Transparency Index,
the Emirate of Dubai has also achieved acontinuous improvement in its position andin the value of the Global Transparency Index
from 2014 to 2018. Dubai ranked 40th in 2018
compared to 49th in 2014 and 48th in 2016.
Dubai ranking improvement was the result of aseries of initiatives that have been implemented
to serve the real estate sector, including
the Building Classification Survey Project, aproject that addresses the classification of
all buildings in Dubai according to the bestinternational standards and practices in thisfield, in addition to the improvement in theregulatory procedures of the sector and thesmart applications which were provided toserve all the parties in the real estate sector
such as the unified lease contract and otherinitiatives, as well as the improvements made14

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to the rental increase calculator where thecommercial properties were included.
The real estate sector is connected with mostof other economic sectors in the Emirate ofDubai, by integration relations since the realestate sector represents one of the inputs foralmost all other economic sectors, in addition
to being one of the outputs of other economic
sectors.
The value of the gross domestic product (GDP)in the Emirate of Dubai reached AED 398 billion
in 2018 compared to AED 390 billion in 2017with GDP growth rate of 1.9% in 2018. And to
stimulate the GDP growth, the Government of
Dubai launched a series of initiatives that will
promote the growth process and increase theeconomic activities in the emirate by reducing
the cost of doing business and providing
facilities to entrepreneurs, in addition tomodifying the length of stay and providing longterm residence of up to 10 years for investors
and those with outstanding skills in an effort
to attract competencies in the scientific andpractical fields and to support demand in local
market.

transaction number with 61% of the total
number of the real estate transactions during
2018, and in terms of distribution of the valueof the transactions according to the use of
the property, the commercial properties werethe largest proportion in terms of transaction
value, although the largest percentage of thenumber of the transactions were on residential
properties, which shows the difference inthe value of both commercial and residential
properties in Dubai. The real estate transactions
on commercial properties represented almost
68% of the total transaction value in 2018,
while the real estate transactions on residential
properties represented 11% of the transactions
value in 2018.
Additionally, the value of the real estate
investments reached AED 80 billion in 2018with a number of investments reached morethan 41,000 made by more than 31,000 realestate investors from all over the world. The

Emirate of Dubai witnessed a remarkable
improvement in the value of the direct
foreign investments. According to Dubai FDI,
direct foreign investments reached AED 28.2
billion during the first nine months of 2018
compared to AED 27.3 billion total direct
foreign investment for the whole of 2017 and
AED 21.8 billion during the first nine months of
2017, with a growth rate of 29% as per Dubai
FDI Monitor report.
Moreover, results of the real estate investments
indicate an increasing growth in the numberof corporate investors compared to individual
investors. The percentage of the individual
investors decreased from 62.8% in 2017
to 59.8% in 2018, while the percentage ofcorporate investors increased from 37.2% in2017 to 40.2% in 2018. This increase in thepercentage of corporate investors reflects
the ability of the real estate sector to provide
investment options that attract corporate

The real estate sector significantly contributed
to the GDP growth; and the improvement ineconomic growth rates in the emirate wasaccompanied by an improvement in the realestate sector performance and we can clearly
see this through the contribution of the realestate activities in the GDP which reached7.2% in 2018 compared to 6.9% in 2017 and6.8% In 2016, while the construction sector
contribution in GDP reached 6.4% in 2018
compared to 6.2% in 2017 and 6.2% in 2016.
As for the real estate sector performance,
the value of the real estate transactions
reached AED 223 billion in 2018, with a
total number of transactions reached almost
53,000 in 2018. The real estate transactions
for residential properties were the largest
percentage in terms of the real estate

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

investors and effectively contribute in providing
huge real estate investments in the real estate
sector.

from these projects reached 130,000 new units
which shall be added according to the expected
dates of completion of those projects.

Business Bay area has been ranked as thehighest place in the Emirate of Dubai in terms ofthe number of the real estate transactions. The
number of the real estate transactions in thearea reached more than 4,000 transactions. It
has also maintained the highest place in termsof value of transactions and exceeded AED 11
billion.

Analysis for the residential sector shows thatthe number of completed residential units
in the freehold areas only and in accordancewith the projects registered in DLD reached
7469 residential units (excluding villas andvilla complexes), with a total area exceeded
893,000 square meters in 2018.

New investors represent 66% of the total
number of investors in 2018 while active
investors represent 34% of the total numberof investors, and in terms of the value of theinvestments, new investors represent 57% of
the total value of the investment in 2018 while
active investors represent 43% of the total
value of the investments.
Individual investors from UAE represented thefirst place in terms of the value of the realestate investments with investments worth
more than AED 10 billion, and in the second
place, investors from Republic of India withinvestments worth over AED 8 billion in 2018.
In terms of the real estate projects activity,
the number of the completed projects reached
62 projects in 2018. The building projects in2018 represented the largest percentage ofthese projects with 74% of the total projects
completed in 2018 while villas projects
represented 15% of and villa complexes
represented 11%.
The number of the new projects started in2018 reached 84 projects that varied in use
and types as units, villas, buildings and plots.
The units represented the highest percentageof the new properties in 2018 with number ofunits reached more than 20,000 units.

As for the demand side, which is expressed byboth sales and rents, the data indicates thatthe sales represented the largest percentageof the real estate transactions with more than
63% of the total number of transactions in2018 and represents the largest percentage ofthe transactions value as well with more than
AED 74 Billion in 2018.
In terms of rents, the growth in the populationand the growth in the number of employees
in Dubai has been reflected in the numberof leased units and the number of lease
contracts in the Emirate of Dubai. The numberof new lease contracts reached 246,509 newcontracts, while the renewed lease contracts
reached 251,409 renewed contracts in 2018,
and from 2013 to 2016, new lease contracts
were decreasing steadily against an increasein the renewed lease contracts, while from2017 until 2018, both the number of new andrenewed lease contracts increased. however,
new lease contracts growth rate was higher
than the renewed lease contracts which reflects
the additional demand on the residential andnon-residential units in the sector with theprice correction in rents started from 2014 in
the Emirate of Dubai.

In terms of the projects under construction,
the number of the projects under construction
registered in Dubai Land Department (DLD)in
the freehold areas only reached 102 projects in2018 according to the project registration dateand number of the units expected to be added

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17Introduction

The real estate sector in Dubai has led theeconomic growth for the last decades, andeffectively enhanced the position of the
Emirate worldwide and positively contributed
to the economic growth, so that Dubai has
become one of the most attractive investment
destination all over the world.
The real estate sector is related with most of
the economic sectors by integration relations
since the real estate sector represents one ofthe production inputs process of most of theeconomic sectors, in addition of being one ofthe outputs of the production of other economic
sectors.
Given the importance of this sector andits interrelationship with other economic
sectors, this report focuses on analyzing theperformance of the real estate sector in Dubaiin terms of the real estate sector growth, thevolume of its contribution to GDP growth andits relationship with other economic sectors
in addition to analyzing the performance ofthe real estate sector during 2018 and themost important operational indicators of
the performance of the sector in terms oftransactions and the real estate investments,
as well as highlighting the competitivenessof the real estate sector in the international
indicators, and providing an analytical viewof the performance of the sector expected in
2019.
The report is divided into four chapters, the firstchapter deals with the growth of the real estate
sector and its role in the economic growth interms of real estate growth rates, value addedof the sector and its contribution to the growthof the GDP of the Emirate of Dubai. The chapter
presents an analysis of the relationship of thereal estate sector with other economic sectors
such as retail and tourism sector as well assome other economic indicators.
The second chapter deals with a detailed
analysis of the performance of the real estate

sector using the sector operating indicators. The
chapter analyzes the real estate transactions
and investments during 2018, compares thesame with previous years, analyzes the realestate transactions and identifies the mostimportant features of the real estate investor in
the Emirate of Dubai. The report also includes
an analysis of demand and supply in the realestate sector, both commercial and residential,
in terms of new projects begun in 2018,
projects handed over during the year, and the
projects still under construction. It also includes
an analysis of sales and rents done during theyear and analysis of sub-sectors in the realestate sector, such as residential, retail, officeand hotel sectors.
In the third chapter, the report analyzes thecompetitiveness of the real estate sector in the
Emirate of Dubai by analyzing the performanceof the sector in the light of some indicatorsof competitiveness and global transparency,
identifies the performance of the sector
according to such indicators and compares
the real estate sector in other countries. The
chapter analyzes the performance of the realestate sector in two of the most important
indicators of global competitiveness, namely:
The World Bank’s Ease of Doing Business Index
and the Global Real Estate Transparency Index
issued by Jones Lang La Salle.
The final chapter of the report examines thereal estate sector performance expectations
during 2019 in terms of economic growth
expectations in the Emirate of Dubai andUnited Arab Emirates compared to the
expected growth in the various countries, theexpectations of the real estate transactions
under the performance of the sector during thefirst five months of 2019 and the expectationsof the real estate projects expected to enter thereal estate market during the coming period.

Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Chapter 1

Real Estate sector growth
and the economic growth20

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Gross domestic product (GDP)of Dubai reached AED 398
billion in 2018 compared to
AED 390 billion in 2017 witha growth rate of 1.9%, and thereal estate sector effectively
contributed in supporting
the economic growth of theemirate as both construction
and real estate services
achieved a remarkable growthduring 2018 where the realestate sector growth rate
reached 7% in 2018 compared
to a growth rate of 4.4% in2017 and the construction
sector also reached a growthrate of 4.5% compared to a
growth rate of 2.7% in 2017.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Dubai Economic growthOver the past decade, Dubai has achieved
unprecedented economic growth rates driven
by the growth of the real estate sector in theemirate beside the growth of other economic
sectors. Although this growth has slowed inrecent years, starting from 2014 due to thedecline in international trade and instability
in oil prices, the economic performance ofthe emirate is still ahead of many developed
countries.
The economic growth rate, measured by GDP
growth rate at constant prices, reached 1.9% in2018 and the value of the GDP in the Emirateof Dubai reached AED 398 billion in 2018.

As part of its drive to support the pace ofeconomic growth, Government of Dubai
launched a series of initiatives that will promote
the growth process and increase economic
activity in the emirate by reducing the costof doing business, providing facilities toentrepreneurs and projects owners, providing
a long term residence visa up to 10 years forinvestors and those with outstanding skills,
in order to attract the competencies in thescientific and practical fields by the Emirateof Dubai and supporting demand in the local
market.
In the coming years, economic growth rates ofDubai are expected to recover, especially as
Expo 2020 Dubai, which is attended by morethan 200 countries worldwide, is approaching
and is expected to attract more than 20 million
tourists during its tenure. In addition to thestructural changes undertaking to diversify

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the emirate’s economy and to maintain its
competitiveness.
In the region and the GCC countries, theeconomy of Dubai has achieved a high growth
rates compared to other GCC countries. In 2017,
the GDP growth rate in the Emirate of Dubai
reached 3.1%, while the growth rate in Kingdomof Saudi Arabia and Oman regressed to -0.9%
and reached 1.6% in Qatar, unlike Kingdomof Bahrain in which GDP growth rate reached3.8% in 2017 according to IMF estimates.
In 2018, growth rates in both Dubai and the GCC
get closer significantly and the real GDP growthrate ranged between 1.9% in both Dubai andOman and 3.2% in Bahrain, the highest among
the GCC countries.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Construction and real estate services sectors
achieved a remarkable growth in 2018 as thereal estate activities sector growth rate reached
7% in 2018, compared to a growth rate of 4.4%
in 2017. In addition to that, the construction

sector as well achieved a remarkable growth in2018, reaching 4.5% compared to a growth rateof 2.7% in 2017, according to Dubai Statistics
Center data.

The positive growth rates of construction andwhich witnessed a remarkable rise in 2018,

real estate services sectors in 2018 and 2017

reaching 107.74 in an increase of nearly 6

reflected on the prices of the building materi-points from the 2017 construction costs index

als reflected by the construction costs index,

which reached 101.9.

Contribution of the real estate sector in
economic growth
Real estate sector in Dubai represented theeconomic growth trends over the past years,
and has contributed effectively to the growthof the Emirate’s GDP. The improvement in theeconomic growth rates of the emirate wasaccompanied by a recovery in the performanceof the real estate sector.

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The contribution of the real estate activities
in the GDP of the Emirate of Dubai reached7.2% in 2018, compared with 6.9% in 2017and 6.8% in 2016, while the contribution of
the construction sector to GDP reached 6.4% in2018, compared to 6.2% in 2017 and 6.2% in
2016.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real estate sector and population growth
The real estate sector is closely linked topopulation growth as the population represents
the direct demand side of the residential sector,
as well as representing the indirect demand in
the retail and non-residential sectors in general.
Data from Dubai Statistics Center indicatesthat the number of residential units grew byapproximately 5% in 2017 compared to numberof the residential units in 2016. This growth isin response to population growth in the Emirateof Dubai, which grew by 10% approximately in
2017, Compared to 2016.

Population growth represents part of the in-of goods and services in other economic sec-

In 2018, the population grew by 7%, according
to the estimates of Dubai Statistics Center andthe growth rate of the residential units reached12%, with number of units reached 621,368
residential units according to Dubai Statistics
Center data as shown in figure (1.6).

direct demand for non-residential units whichtors. The same reflected in the number of new

represents the real estate demand in non-resi-

and renewed licenses issued by Dubai Econo-

dential sector such as offices, shops, industrial

my, which reached approximately 160,000 li-

and other demands derived from the demandcenses in 2018.

Real estate sector growth and number of workers
The construction sector in the Emirate of Dubai

the real estate services sector, the number ofhas the largest number of workers compared

workers as a percentage of the total workforce

with the other economic sectors with a 27.6%

reached 2.6% in 2007, compared with 2.3% inof the total workforce in the Emirate of Dubai

2016.

in 2017, compared with 25.6% in 2016. As for

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Chapter TWO

Real Estate Sector
Performance

In 2018, the total transactions
reached AED 223 billion, with total
sales of AED 74 billion. Meanwhile,the total mortgages reached AED
120 billion in 2018 compared to
AED 137 billion. Additionally, thetop three areas for transactionsin 2018 were Business Bay, Palm
Jumeirah and Dubai Marina.
Dubai’s real estate sector isconsidered as one of the key
sectors attracting new investors
as it continuously offers a variety
andinnovative
investment
opportunities. Such opportunities
are attractive to real estate investors
around the world to support their
existing investments and to enable
them to start new ones.
Real estate investments reached
AED 80 billion in 2018. Moreover,investments numbers in 2018exceeded 41,000 real estate
investments,
by
more
than
31,000 real estate investors fromaround the world. New investors
represented the largest percentage
of investors. The year 2018
witnessed a significant increasein the corporate investment value
compared to individual investments.
The average corporate investment
value reached approximately AED
7 million per investment compared
to an average investment value of
AED 1.2 million per investment forindividuals.

Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real Estate Transactions by transaction typeDubai Real Estate Market Performance
The Real estate transactions is considered as
one of the key indices used to indicate thedynamism and growth of the sector by linking

them with the macro indices of the sector
growth as well as number of investors.

Figure2.2 shows the continuous growth in theapproximately 34,000 transactions in 2018,

sales number compared to the mortgage trans-compared to 14,000 mortgages transactions.

actions. The sales transactions number reachedReal Estate Transactions
Number and value of transactions
Real estate transactions reached AED 223
billion in 2018 compared to AED 284 billion in2017 and number of transactions retreated toapproximately 53,000 transactions in 2018
compared to 69,000 transactions approximately
in 2016 as shown in figure 2.1.

a remarkable growth in 2018, by reaching 7%
in the real estate services sector compared to a
growth rate of 4.4% in 2017. The construction
sector also achieved a positive growth rate of.
4.5% in 2018, compared to a growth rate of
2.7% in 2017, as shown in figure 1.4.

The macro results of the sector performanceindicate that the real estate sector has achieved

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Annual Report: Real Estate Sector Performance 2019

Such decline in sales and mortgages numbers
was reflected on the value of each as thevalue of the sales reached AED 74 billion in2018 compared to AED 114 billion in 2017
while mortgages value reached AED 120
billion in 2018 compared to AED 137 billion in
2017.
Despite the decline in both sales andmortgages value, the mortgage value is still
greater than real estate sales value, despite

Annual Report: Real Estate Sector Performance 2019the real estate sales number is greater thanthe mortgages number. This highlights theimportance of the real estate finance ofhigh value units which real estate investors
in Dubai prefer to finance by mortgage,
which represents a small part of the costof investment, compared to the return ofinvestment rate (ROI) in the real estate sector
in Dubai.

Real Estate Transactions by property use
Real estate transactions on residential
properties represented the largest percentage
in terms of transactions number. Transactions
on residential properties share reached 61% of
the total number of transactions in 2018 andthis rate has not changed from the previous
year which reached 61% as well, while number
transactions on commercial properties reached
37% in 2018.
Moreover, the other transactions acquireda small share not exceeding 3% of the total
number of transactions in 2018, as shown in
Figure (2.4).

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In terms of transactions value by property use,commercial properties represented the largest
share of transactions, which indicates thedifference in the value of both commercial andresidential properties in Dubai. Additionally,
the transactions on commercial properties
represented 68% of total transactions value
in 2018. While transactions on residential
properties represented 11% of real estatetransaction value in 2018. Moreover, thetransactions on other properties represented
21% of total transactions value.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Number of real estate transactions by investor category
Real estate investors in Dubai are divided into
two main categories: individuals and corporate .
Figure 2.6 shows the distribution of real estatetransactions in Dubai by investor category.
The figure shows that the largest percentageof real estate investors since 2011 wereindividuals, representing approximately 60%of the total number of real estate investors
in Dubai. The corporate category represents
approximately 40% of the real estate investors
in 2018.

individuals since, the percentage of individuals
decreased from 62.8% in 2017 to 59.8%
in 2018. While the percentage of corporate
investors increased from 37.2% in 2017 to40.2% in 2018. This increase in the corporate
investors percentage represents the ability of
the real estate sector to provide investment
options that attract corporate investors andeffectively contribute to attracting large realestate investments into the real estate sector
in Dubai.

The figure also shows the incremental growthin the percentage of corporate compared to34

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real Estate Transactions by property status (completed /under construction)
Figure 2.7 shows the distribution of thetransactions number in terms of property status
at the procedure completion date. The figure
also shows the upward trend of the underconstruction property transactions comparedto the transactions on completed properties
until 2017. The percentage of transactions on

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under-construction properties reached 38%
in 2017, compared to 31% in 2016. However,this percentage decreased to 34% in 2018.
Additionally, the percentage of transactions
on completed properties during the same year
increased to 66% compared to 62% in 2017.

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In terms of transaction values, Figure 2.8
shows the distribution of the transaction
values by property status at the procedurecompletion date. The Figure shows the stabilityof the percentage of transactions value on
under-construction
properties,
compared
to transactions Off-Plan during the period
from 2011 to 2018, despite the continuous
increase in the number of transactions onunder-construction properties. This could

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be due to the decline in the prices of underconstruction properties, as well as the housing
policy adopted by most real estate developers.
Moreover, the value share of transactions oncompleted properties ranged from 87% to
97% during the period from 2011 to 2018. In
addition, the percentage of transactions value
on under-construction properties during thesame period ranged from 3% in 2011 to 14%.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real Estate Transactions by community
Figure (2.9) shows the top ten communities
in Dubai in terms of the transactions number.
Business Bay is ranked as the top in Dubai interms of number of transactions; with a numberof transaction exceeded 4000. It is followed by

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Dubai Marina, Al Barsha South Fourth, Warsan,
Al Thaniah Fifth, Burj Khalifa, Al Merkad, Jebel
Ali and Al Habiba Third and Palm Jumeirah(comes at the 10th place).

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In terms of transaction values, Figure 2.10
shows the top ten communities in Dubai in termsof transaction values. The same figure showsthat Business Bay community maintained thefirst place in terms of transaction values after
it exceeded AED 11 billion. Palm Jumeirahranked in the second place with a value of more

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than AED 9 billion, followed by Dubai Marina
with a value of more than AED 9 billion as well,followed by Burj Khalifa, Al Merkad, Sheikh
Mohammed Bin Rashid Gardens, Al Barsha
South Fourth, Business Bay, Al Thania Fifth.
Jabal Ali First came in 10th place.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Investments

Real Estate Investments

Investment is the growth cornerstone for any
country’s economy and reflects the economy’s
ability to generate income and production,
as well as the economy’s ability to generate
profit and support all economic indices of thecountry. All countries are looking forward toprovide an attractive investment environment
and maintaining existing investments, and as
for all the economic sectors; investments forthe real estate sector are much more importantand Dubai Land Department constantly takes
the necessary procedures and laws to regulate
the real estate market and improve the sector
investment environment.

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Data derived from Dubai Statistics Center
indicate that the contribution of the real estate
sector to the share of foreign direct investment
has increased in recent years. According to thelatest published data regarding the real estate
sector’s share to foreign direct investment in
Dubai, the contribution of real estate activities
in foreign direct investment reached 22% in
2016. The contribution of the construction
sector reached 3% during the same year as
shown in figure 2.11.

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The value of real estate investments reached
AED 80 billion in 2018, while the number ofreal estate investments increased to more than
41,000 real estate investments by more than
31,000 real estate investor from around theworld, as shown in figure (2.12).
Dubai has witnessed a remarkable improvementin the value of foreign direct investment flowing
into Dubai. In accordance with data from Dubai
Foundation for Developing Investment (Dubai
FDI), foreign direct investment reached AED
28.2 billion in the first nine months of 2018,
compared to AED 27.3 billion, the total value

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thereof in Dubai in 2017, and AED 21.8 billion
during the first nine months of last year, witha growth of 29% according to data of Dubai
Observatory for Foreign Direct Investment.
Within 2019 and 2020, real estate investments
are expected to grow significantly due to “Dubai
Expo 2020”, which is expected to attract moreinvestments into the real estate sector and to
add a new segment of real estate investors to
the sector.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

New and active investors
The real estate sector in Dubai is one of themain sectors attracting new investors as it
offers a variety and renewable investment
opportunities.
Such
opportunities
areconsidered by real estate investors aroundthe world as opportunities to support theirinvestments and to start new investments in
Dubai.
Furthermore, active investors increase thevalue of their investments compared to newinvestors, given the standard rates of return

offered by Dubai real estate market. Figure 2.13
shows the number of new and active investors
and the value of their investments in the realestate sector in Dubai.
The same figure shows that new investors
represent 66% of the total number of investors
in 2018 while active investors represent 34%.
In terms of the value of investments, newinvestors represent 57% of the total value ofinvestments in 2018 while active investors
represent 43%.

Investments Distribution by investor category
The real estate investor in Dubai is divided into
two main categories: Individual Investors andCorporate Investors. The type of real estate
investment varies according to the investor
category since the characteristics of each ofthem vary, as well as the volume and value of
their investments in the real estate sector in
Dubai.
Figure 2.14 shows the distribution of thenumber of real estate investments by investor
category. From the figure, it is clear that thepercentage of individual investors exceeds
the percentage of corporate investmentsfrom 2012 to 2018. However, the percentage
of corporate investments increased in 2018
compared to 2017, as it reached 9% of the total
number of real estate investments number in
2018, compared to 7% in 2017.
In terms of the value of investments, figure
2.15 shows the distribution of investments
values between individual investors andcorporate investors. The figure shows that thevalue of corporate investments percentage washigher than individual investments in terms ofthe number of investments, whereas it reached
31% in 2018, compared to 28% in 2017 which

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is considered as an indication that the valueof corporate investments is often greater than
the individual investments, which is asserted
by figure 2.16, which shows the average valueof individual investments, compared to theaverage value of the corporate investments.
The figure shows that the average value ofcorporate investments is greater than the
average value of individual investments,
reaching AED 7 million per investment in 2018
compared to the average value of individual
investments which reached AED 1 million
during the same year.
Under more analysis of individual and corporate
investments, figure 2.17 shows that thelargest percentage of the value of corporate
investments was in commercial properties,
while individual investments ranged between
commercial and residential properties by thesame percentage. The percentage of corporate
investments in commercial properties reached61%, compared to 15% in residential properties,
while the percentage of individual investments
in residential properties reached 47% comparedto 48% on commercial properties in 2018.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Investments Distribution by property status
Figure (2.18) shows the distribution of thenumber of real estate investments between
the freehold and non-freehold communities.
Investments in the freehold communities

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represented 94% of the total number of realestate investments in 2018 while investments
in non-freehold communities represented 6%.

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LandDptDubaiin terms of the real estate investments values,
investments in freehold communities alsoachieved the highest percentage of real estate

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investments values in 2018 reaching 85%
while investments in non-freehold communities
reached 15%.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Investments Distribution in terms of property use

Investments Distribution by property status

Figure (2.20) shows that investments inresidential properties represented 65% of
the total number of real estate investments
in 2018 while investments in commercial
properties represented 32% and investments inother properties reached only 3%. However, interms of the value of investments, investments

Figure (2.22) shows the distribution of thenumber of real estate investments by property
status. The figure shows that approximately
50% of the investments were in completed
properties, compared to 50% in underconstruction properties (Off-Plan).

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in commercial properties reached the largest
percentage of real estate investments in 2018
reaching 52% while investments in residential
properties represented 38% and investments
in other properties reached 10% as shown in
Figure (2.21)

in terms of the value of investments, figure(2.23) shows a significant difference in the

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share of investments in completed properties,
compared to investments in under-construction
properties whereas the percentage ofinvestments in completed properties reached
71% of the total value of investments, while
the under-construction properties investment
reached 29%.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real Estate Investments Distribution by property
use and status

Distribution of the investments by nationality(for Individuals only)

According to property use and status, Figure(2.24) shows that the largest share of realestate investments value for commercial
properties was for completed properties,
while the largest share of investments value
in residential properties were for underconstruction properties which highlights the
special nature of residential investments andcommercial investments. It can be said that

Figure 2.25 shows the distribution of thenumber of individual’s real estate investments
by the top 10 nationalities investing in the realestate sector in 2018. According to the figure,it can be seen that investors from the Republicof India ranked the first place in terms of50

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the investor in commercial properties, which isoften a corporate as per the analysis, aims toinvest in completed properties to benefit fromhigh rental rates while the residential properties
investor, who is often an individual, invests inproperties under construction due to their low
value compared to commercial properties andcompleted properties.

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number of investments, which exceeded 6,000
real estate investments during 2018, followed
by UAE nationals, with number of investments
exceeded 5,000 in 2018.

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Annual Report: Real Estate Sector Performance 2019

Although investors from the Republic of India
ranked the first in the number of investments,
UAE investors ranked the first in terms of thevalue of investments by more than AED 10

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Annual Report: Real Estate Sector Performance 2019billion and investors from the Republic of India
came in second place with over AED 8 billion in
2018.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Real Estate Supply and Demand Analysis
The analysis of the supply and demand aspects
in the real estate sector is one of the mostimportant features of the real estate sector
performance in Dubai whereas it shows thecurrent investment opportunities in the realestate sector, in addition to the new properties
that will be added to the real estate market
during the coming period, as well as analysis ofinvestors and tenants’ demand for real estate
products.

And by project classification, building projects
in 2018 represented the largest percentage
of projects completed during the year ina percentage of 74% of the total projects

completed in 2018. While villa projects
represented 15% and villa complexes 11% in2018, as shown in figure 2.28.

Supply side analysis
This section focuses on analyzing the current
and future supply in the real estate sector interms of completed projects which representing
an addition to the real estate sector in 2018

and the new projects started in 2018 and will
represent an addition to the real estate sector
in the coming years.

Completed Projects
Figure (2.27) shows the number of completed
projects in terms of the project end dateregistered in DLD. It shows that the numberof projects completed in 2018 reached 62
projects, compared to 80 projects completed

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in 2017 and 88 projects in 2016. The three
years witnessed the largest percentage of thecompleted projects in Dubai, as “Dubai Expo
2020” approaches.

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Annual Report: Real Estate Sector Performance 2019

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Number of completed units
In terms of the type of property, the units
represented the largest percentage of projects
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second largest percentage and villa complexes
represented a small percentage of properties
completed in 2018.

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Figure 2.30 shows the number and areas ofunits added to the real estate sector from thecompleted projects each year. It also showsthat more than 7,000 new units were added

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in 2018, with a total area exceeding 851,000
square meters, compared with 12,000 units
added in 2017, with a total area exceeded one
million square meters.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

New Projects
The new projects, started in 2018 , represent
the future supply expected to be added to thereal estate sector in the coming years. 2017and 2014 represent the highest years in termsof new projects according to the project startyear registered in Dubai Land Department.

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Moreover, the number of the new projects
started in 2018 reached 84 projects, withdifferent uses and types of units, villas,buildings and lands while the number of new
projects started reached 163 projects in 2017
and reached 119 projects in 2016, as shown infigure 2.31.

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Figure 2.32 shows that the majority of the
new projects started in 2018 were building
projects represented 79% of the total number

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of new projects in the same year, while villas
projects represented 10% and villas complexes
represented 12%.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Number of new units
In terms of the property type, the units
represented the largest percentage of
new projects in 2018 with a number ofunits exceeded 20,000 units and the villas

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represented a considerable percentage as well,while the villa complexes represented a small
number compared to the number of units andvillas.

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The number of new units expected to be added
to the real estate market from the new projects,
regardless of the current project status, reached
20,000 units in projects started in 2018,
compared to 40,000 units in projects started in

800 44 882017 while the area of the new units started
in 2018 exceeded 1 million square meters,compared to more than 3 million square metersin 2017, as shown in figure 2.34.

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Annual Report: Real Estate Sector Performance 2019

Under-construction Projects
The under-construction projects represent the
future supply in the real estate sector, whereas
they will add to the real estate stock during thecoming years according to the project end date.

only reached 102 projects in 2018 according to
the project registration date while there were
125 projects in 2017 and 70 projects in 2016,as shown in figure 2.35.

In terms of project classification, figure 2.36
shows the distribution of the active projects
in 2018 in terms of the project registration
date in DLD, and yhe figure shows that 82%of the projects were buildings, compared toapproximately 8% for villas and about 10% forvilla complexes.

The number of under-construction projects
registered with DLD in the freehold communities

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Number of under-construction units
In terms of the property type, figure 2.37
shows that the majority of the properties inunder-construction projects registered in 2018

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were unites with 26,000 unit, compared to
4,800 villas and 309 villa complexes.

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The number of units expected to be addedfrom the under-construction projects reached130,000 new units to be added according to
the projects expected completion dates. Figure(2.38) shows the number of units expected to
be delivered during 2019, 2020 and 2021. As
shown in the figure during 2019, it is expectedto add more than 14,000 new units, with a
total area exceeding one million square meters

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for the projects with a completion percentageof 85% and more, while the number of units tobe added to the real estate sector varies in thesubsequent years after 2019. It is expectedthat 30,000 units will be added in 2020, and24,000 units in 2021.

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Residential sector
In the real estate market, the residential sector
is one of the most important sectors in Dubai
and it is the main motive of demand therein
as well. Demand for residential properties in
the real estate sector is closely linked to the
population growth in Dubai. The residential
sector witnessed a remarkable growth over the
past years and is expected to grow similarly inthe coming years under strategic plans aim toincrease local demand in Dubai.

made in residential properties during the period
from 2012 to 2018. It shows the growth oftransactions on residential units, whereas
the percentage of transactions on residential
properties reached 62% of the total numberof transactions in 2018, similar to 2017.
The number of transactions on residential
properties reached almost 33,000 transactionsin 2018, with a total value exceeding AED 48
billion.

Figure (2.39) shows the number of transactions

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Annual Report: Real Estate Sector Performance 2019

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Completed residential units
The number of completed residential units
added to the real estate sector in the freehold
communities only, which are registered in DLD
reached 7,469 residential units (excluding villas
and villas complexes), with an area exceeding

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New residential units
893,000 square meters, compared to 12,723
units added in 2017, with a total area exceeded
one million square meters.

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Figure 2.42 shows the number and the area of
new residential units started during the year,
regardless of the current status of the project.
The figure shows that the year 2018 witnessed
the launch of 20,474 new residential units, withan area exceeding one million square meters,

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compared to 2017, which witnessed the launchof 36,222 units, with a total area exceeded 3
million square meters and is expected to be
added to the real estate sector in the next
three years.

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Residential units under construction
For units under construction, figure 2.43
shows that, according to the project end date,more than 12,000 new residential units are
expected to be added during 2019, with a total

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Retail Sector

area of more than 1 million square meters. It is
expected to add approximately 26,000 units in2020 and 16,000 units in 2021.

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The retail sector is one of the most importantsectors of Dubai economy. It has grownsignificantly over the past years and represents
the most remarkable contributing sectors to
GDP growth and is closely related to othereconomic sectors, including the real estate
sector whereas demand of stores represents
a demand driven from demand of goods and800 44 88

services traded in the retail sector.
Figure 2.44 shows the retail sector contribution
percentage to the GDP growth of Dubai. Its
contribution to the GDP growth of Dubai
reached 26.4% in 2018, compared to 26.6% in2017.

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71Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Completed retail stores
The total number of completed retail storesreached 170 stores with a total area of morethan 30,331 square meters in 2018 while
reached 376 stores in 2017 with a total area of
82,134 square meters, which is the largest areain all years, as shown in figure 2.45. This decline
in both the number and area of completed retail

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New Retail Storesstores in 2018 is a result of supply and demandin the real estate sector, and an achievement of
the balance between the demanded units andthe supplied units in the retail sector in realestate sector.

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Figure (2.45) shows the number and areaof retail stores started during each year,
regardless of the current status of the project.
For projects started in 2018, it is expected to
add 415 stores with a total area of 54,344

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square meters compared to the number ofstores expected to be added from the projects
started in 2017 which reached 549 retail storeswith a total area of 85,626 square meters.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Retail stores under construction
Figure (2.47) shows the number and area of
retail stores expected to be added to the realestate sector in the coming years as per the
project end year within the projects underconstruction until 2018. The figure shows that
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Office Sector

end of 2019 with a total area of 16,671 Square
meters. It is expected to add 318 stores in2020 and 329 in 2021.

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Offices represent one of the importantcomponents of the real estate sector. It is thelink between the real estate sector and thecorporate sector. Offices represent one of the
production input and its demand is driven fromthe demand of different businesses corporate
and institutions. Dubai has witnessed a growthin the number and areas of offices in recent
years in terms of the number of new and rentd
offices.

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This growth was greatly related to the growth in
the number of new and renewed trade licenses
in Dubai. The number of new licenses in Dubai
reached 20,469 licenses issued by Departmentof Economic Development (DED) compared to
the number of new licenses issued in 2017
which reached 20247 licenses as shown infigure 2.48.

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Completed Offices
The number of offices completed declined
significantly in 2018, compared to 2017 interms of number and area, as a result of supplied
offices in the real estate sector. The total
number of offices completed in the freehold

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New Offices
communities in 2018 reached 86 offices witha total area of 8,706 square meters comparedwith 1139 completed offices in 2017, with a
total area of 87,199 square meters, as shownin figure 2.49.

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New offices also witnessed a significant decline
in 2018, as none of the new projects started in2018 were office projects and no new offices
will be added to the real estate sector in the
projects started during 2018, compared to new

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offices to be added to the real estate sector
reached 40 offices only in the projects started
in 2017 as shown in figure 2.50.

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Annual Report: Real Estate Sector Performance 2019

Offices under construction
The total number of offices expected to be
added to the real estate sector from the
projects currently under construction in thefreehold communities reached 458 offices witha total area of 81062 square meters, of which

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11 only are expected to end in 2019, 425 are
expected to end in 2020 and 22 are expected
to end in 2021.

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Annual Report: Real Estate Sector Performance 2019

Hotel sector
The hotel sector is an important link between
the real estate sector and the tourism sector
in Dubai. The hotel sector represents one of
the most important inputs which contributes in
the growth of tourism and real estate sectors.
The tourism sector in Dubai has witnesseda remarkable growth in previous years. It
is expected that this growth will continue
during the upcoming years, especially with theupcoming Dubai Expo 2020, which is expected
to attract more than 20 million tourists fromaround the world.
The number of hotels in Dubai has grown inprevious years. This growth continued in 2018
whereas the number of hotels reached 519
hotels, compared to 485 hotels in 2017, witha growth rate of approximately 7% and anincrease of 34 new hotels added to the tourism
sector, as shown in figure 2.52.

which reached 91,085 hotel rooms in 2018
compared with 82,733 in 2017, with a growthrate of approximately 11%. The number of hotel
apartments also grew during 2018, with a totalof 24,882 hotel apartments in 2018, compared
to 24,698 apartments in 2017, with a growthrate of approximately 1%.
Not only the number of hotels and hotel
apartments increased in 2018, but also thenumber of Dubai visitors has grown significantly
over the same year, as shown in figure 2.55
whereas the number of Dubai visitors reached15,920,000 visitors in 2018 compared to
15,790,000 in 2017 and 14,900,000 visitors
in 2016.

This increase in the number of hotels wasreflected in the number of hotel rooms in Dubai

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Demand side analysis
Sales
Sales represent a significant percentage oftransactions in the real estate sector in Dubai,
reaching more than 63% of the total number oftransactions in 2018. Sales are one of the mostimportant aspects of demand in the real estate
sector. Figure (2.56) shows the developmentof the sales percentage to the total numberof transactions. The figure shows that despite

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the decline in the contribution of the sales inthe total number of transactions from 71% in2017 to 64% in 2018, however, the sales still
represent the largest percentage of the numberof transactions.

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Sales also represent a large percentage oftransaction values. The value of sales reachedmore than AED 74 billion in 2018, representing

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more than 33% of the total transactions value
as shown in figure 2.57.

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Sales Distribution by property status on the procedure date
Figure (2.58) shows the distribution of realestate sales in terms of the status of theproperty. The figure shows the growth of thereal estate off-Plan sales percentage compared86

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to completed properties. In 2018, the real estate
off-Plan sales percentage reached 51%, whichis the same percentage in 2017 compared to
40% in 2016.

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Sales Distribution in terms of property typeFigure 2.59 shows the sales distribution interms of property type. It is clear from thefigure that the sales of the units represent
the largest percentage of the sales during theperiod from 2011 to 2018. The percentage
of unit sales reached 78% in 2018, compared

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to 74% in 2017 and 70% in 2016. While landsales represent a considerable percentage ofsales, representing 15% in 2018 compared to
17% in 2017.

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Annual Report: Real Estate Sector Performance 2019

Sales Distribution in terms of ownership type

Sales Distribution in terms of property use

Properties sales in the freehold communities
represented 97% of total sales in 2018, withalmost the same percentage since 2011. ThisIn terms of property use, the sales of residential
properties represented the largest percentage
of sales during the period from 2011 to 2018
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confirms the fact of the real estate development
and diversity of real estate investors in the realestate sector in Dubai as shown in figure 2.60.

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commercial properties while sales of residential
properties represented 62% in 2017, compared
to 35% for commercial properties, as shown infigure 2.61.

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89Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Sales Distribution in terms of community
Figure 2.62 and figure 2.63 show the
distribution of the number and value of realestate sales in terms of community. Figure
2.62 shows the top 10 communities in terms ofthe number of sales. While figure 2.63 shows
the top 10 communities in terms of the valueof sales. Business Bay community ranks the90

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first place in terms of number and value of thesales reaching 3400 transactions with a total
value exceeded AED 6 billion. Dubai Marina
came second in terms of number and value ofsales reaching about 2500 transactions with a
total value exceeded AED 5 billion.

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91Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Rents
Rents are one of the important componentof real estate demand and are an important
link between the real estate sector andother economic sectors in Dubai. Demandof properties for rent is an important index

of economic activity in the State where thenumber of rent contracts and the numberof rented properties reflect the volume of
employment and population in Dubai.

New and Renewed Rent Contracts
Growth in population and in the number of
employees in Dubai was reflected on thenumber of rented units and rented contracts.
Figure 2.64 shows the number of new andrenewed rent contracts in 2018. The numberof new rent contracts reached 246,509, while
renewed rent contracts reached 251,409. The
figure shows that from 2013 to 2016, newrent contracts have been steadily decreasing
against an increase in renewed rent contracts.

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From 2017 to 2018, the number of new andrenewed rent contracts increased. However,
the increase rate of new rent contracts ishigher than renewed rent contracts, reflecting
the additional demand of residential and nonresidential units in Dubai, under the Rent
Correction in Dubai.

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93Annual Report: Real Estate Sector Performance 2019In terms of rent contract term, the largest
percentage of new and renewed rent contracts isannual rent contracts, although the percentageof new non-annual rent contracts is higher than
the renewed rent contracts. New non-annual
rent contracts percentage reached 13% of the94

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total number of rent contracts in Dubai in 2018,
compared to 87% for annual rent contracts. As
for renewed rent contracts, the non-annual rent
contracts reached 7%, compared with 93% ofannual rent contracts as shown in figure 2.65.

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In terms of property use, rent contractsof residential properties represented thelargest percentage of new and renewed rent
contracts. However, the percentage of renewed
commercial contracts was greater thanresidential contracts, whereas the first reached

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28% compared to 23% in residential contracts
as shown in figure 2.66. This is significantly
due to the nature of commercial rent contracts
requiring long-term rent contracts, given thehigh costs of moving the business from place
to another.

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95Chapter three

Real Estate Sector
CompetitivenessIn the Ease of Doing Business report
2019, the United Arab Emirates (UAE)showed impressive performance,
improved 10 positions among 190
countries worldwide and ranked the11th in the Ease of Doing BusinessIndex 2019 compared to 21st placein 2018.
The improvement of the UAE’s
ranking represented by the Emirateof Dubai was a result of the
improvement of a number of pillars,
especially “Registering property”,
which achieved a remarkableprogress with four positions andranked the 7th position in 2019
compared to the 10th position in
2018.
The Emirate of Dubai is continuously
improving its position in the Global
Transparency Index from 2014 to2018. Dubai ranked 40th in 2018
compared to 49th in 2014 and48th in 2016, and is considered as
one of the world’s most improved
economies in the Real EstateTransparency Index and ranked the
1st in the Middle East.

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Annual Report: Real Estate Sector Performance 2019

The Ease of Doing Business Index
The Ease of Doing Business Index is an effective toolthat provides objective measures of business regulations and enforcement across 190 countries in selected cities at the national and regional levels.
The Ease of Doing Business Index measures the efficiency of doing business process in each country,
through a set of pillars that measure the time, costand efficiency of the procedures in each country bycollecting and analyzing the comprehensive quantitative data to make a comparison between the environments of government regulations governing businessactivities and economies over time. The Ease of Doing
Business Index encourages economies to compete towards enhancing the efficiency of such systems andprovides measurable benchmarks for reformation.

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Methodology
The Ease of Doing Business Index ranks theeach country over time. However, the ranking

190 different economies, which are included inof ease of doing business reflects the relative

the report, with two main scales. The first scale

improvement of each country relative to otheris the index score (distance from the upper limit.countries./ best practice). The second scale is ranking

The World Bank’s ease of doing business index

The first scale uses comparison between the

covers 10 pillars in the largest business city insituation of each country to the best practiceeach country (excluding some countries withrelated to the subject of comparison, which canmore than 100 million people which they calcu-

be the practice of a specific state or practicelate it for the biggest two cities). The ten pillars

carried out by one of the leading institutions

cover the regulatory and legal environment forof practice. While the second scale, which isdoing business within each country, starting

relevant to ranking the ease of doing businessfrom business activity start in the country, un-

to compare different economies and countries

til resolving insolvency. Diagram (1) illustrates

over time. Therefore, the improvement in thethe ten pillars that make up the ease of doingscore of ease of doing business measures the.business index

Data for each of the ten pillars are collectedfrom several different sources to ensure
the completeness and validity of the datacollected. The data sources include the WorldBank’s regional staff in different countries of
the world, the respective regulations and lawsof each pillar in addition to a form filled by theprivate sector in each country and a form to be
filled by the government entities responsible
for each of the ten pillars.

It should be noted that a number of assumptions
are made for each pillar, which relates to thetransaction, for which time, procedures andcost are measured to consolidate the unit ofmeasurement among the different countries of
the world.

improvement in the business environment in

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Registering Property
This pillar records all procedures necessary forcompleting a property transfer process by acompany to another, so that the new landlord
can dispose the property by sale, mortgage or
to expand its business.

each of these procedures in addition the otherindex of land management system type. Diagram (2) illustrates the indicators used in Reg.istering Property pillar

It also measures the time and cost to complete

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In addition to the assumptions about theparties, there are other assumptions regarding
the type of property to standardize the unit ofmeasurement among the different countries inthe ease of doing a business report. Diagram (3)illustrates the assumptions about the partiesof the transaction used to measure registeringa property pillar of all economies in the easeof doing a business report that both parties

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should be limited liability companies basedin Dubai (Dubai is the largest business city in
the UAE, and is used by the World Bank formeasuring the Ease of Doing Business Indexof the UAE). In addition, both companies of thetransaction should be owned by nationals of
the State of the private sector, each with 50
national employees, works in general trade.

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103Annual Report: Real Estate Sector Performance 2019

In addition to the assumptions about theparties, there are other assumptions related tothe type of the property in order to standardize
the unit of measurement among the different
countries in the ease of doing business report.
Diagram (4) shows the assumptions about theproperty in Registering a Property Pillar, someof which relate to the value of the property,
others relate to the property use and others
related to the property readiness for use. The
property value under measurement in theease of doing business index should equal 50
times the average per capita national income,Annual Report: Real Estate Sector Performance 2019should be fully owned by the seller, should not
bear mortgages, should be under the sameownership for the past 10 years, should be
registered in registry, should be free of title
disputes, should be located in a business zone,
should consist of a land and a building, should
not be subject to renovations nor construction
works following the purchase, should be withno trees, wells or historical monuments of any
kind, should not be used for special purposes
require special permits, should be vacant, andno party holds a legal right therein.

The data are collected using the above four
methods for the transactions on which theterms of the parties are applied, as well as theconditions of the property, a value is given toeach item of time, cost, number of procedures

Ease of Doing Business Index 2019
In the Ease of Doing Business Index 2019, theUnited Arab Emirates (UAE) showed impressive
performance, improved 10 positions among
190 countries worldwide and ranked the 11thin 2019 compared to 21st globally in 2018.
The improvement of the UAE’s ranking,represented by the Emirate of Dubai, was a
result of the improvement of a number of pillars,

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and the land management system type pillars
and the value of the ease of doing businessindex is extracted after ranking the different
countries according to the value of the index.

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especially the registering a property pillar,
which improved by four positions and ranked
the 7th globally in 2019 compared to the 10thin 2018. Diagram (5) illustrates the ranking of
the UAE in the Ease of Doing Business Index
2019.

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Annual Report: Real Estate Sector Performance 2019

Diagram (6) shows the performance of thereal estate sector in the Emirate of Dubai
within Registering a property pillar in theease of doing business index 2019. The realestate sector ranked the 7th in the world in2019 compared to the tenth place in 2018.
The Diagram shows the performance of the
sub-indices of Registering a property pillar.

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As shown in the Diagram, Dubai’s real estate
sector outperforms the Middle East and North
Africa regions average. It also outperforms
the OECD high-income countries performance
average in all indices except for the quality of
the land management system.

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Global Real Estate Sector
Transparency Index
The real estate sector transparency index, by JLL incollaboration with LaSalle Investment Management, is
one of the key indices for measuring the transparencyof the real estate sector in more than 150 cities and 100
countries around the world. This index measures thedegree of transparency of the real estate sector in eachcity/country using 186 indices divided into questions
compiled by a questionnaire and data collected from therelated cities and countries.
A report and an index are issued each two years. The
first version was released in 1998, covering only 30
countries, and the last version was in 2018 and covered
100 countries and 158 city.

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Methodology
The Global Real Estate Sector Transparency
Index consists of six main sub-indicesthat measure all aspects related with thetransparency of the real estate sector:•

Performance measurement index•

Market Fundamentals index•

Governance of listed vehicles index•

Regulatory and legal framework index•

Transaction Process index•

Sustainability Index

Each of the six sub-indices used to calculate the
Global Real Estate Sector Transparency Index iscomposed of a set of indices that measure all
aspects of the sub-index, which in turn consistof more detailed indices. The index includes
186 sub-indices in 2018 compared to 139 subindices in 2016, as well as a wider geographic
coverage in 2018 where the index includes
158 cities in 2018 compared to 109 in 2016.

real estate sector in each country. The collected
hard data represent 31% of the data used in
the calculation of the general index, accountingfor 61 indices out of a total of 186 indices.
Each index is given a score of 1 to 5, where 1
represents the highest level of transparency,
and 5 represents a lack of transparency.
In addition, the indices data collected fromthe questionnaire represent 69% of the total
indices of which the Transparency Index iscomposed represents 125 indicators collectedby the regional teams in each country. Eachquestion is answered by giving a score from
1 to 5, where 1 represents the highest levelof transparency and 5 represents the lack oftransparency.
All hard data with the questionnaire results arecomposed in 14 indices to be used to calculate
the above-mentioned six sub-indices. Diagram(7) shows the indices of which each sub-index
is composed from.

The index is based on two main sources of data;
i.e. data collected from the country’s institutions
and entities (hard data), and a survey carriedout on the business community to identify
their views regarding the transparency of the110

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Annual Report: Real Estate Sector Performance 2019

Real Estate Sector Performance in the Global Real Estate
Sector Transparency Index
The index is based on the scales determined
for the six sub-indices before obtaining thetotal index value for each country as shown in
the following table:

The Emirate of Dubai is continuously improving
its position in the Global Transparency Index
since 2014 until 2018, where it ranked 40thin 2018 compared to 49th in 2014 and 48th
in 2016 and it falls in the Semi-Transparent
Countries.

transparent countries through its initiatives
in cooperation in various fields, including
the “Derayah” initiative aimed at spreading
knowledge and enhancing data quality of thereal estate sector needed by the real estate
investors.

The Dubai Land Department’s strategy aims
to ensure that Dubai will fall within the highly

After aggregating the value of each country’s
real estate sector transparency index, countries
are divided into five groups: high transparent,

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transparent, semi-transparent, low transparent
and opaque as shown in table (2):Land_Department

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Annual Report: Real Estate Sector Performance 2019

The Emirate of Dubai is one of the world’s
most improved economies in the Global Real
Estate Sector Transparency Index, ranking firstin the Middle East, achieving 8 scores in 2018

compared to 2016. Dubai’s ranking was 40th in2018 compared to 48th in 2016, as shown in
Table (3).

The improvement in Dubai’s ranking was a
result of different initiatives that have been
implemented to serve the real estate sector,
including the Building Classification Project, aproject to classify all buildings in Dubai as per
the best international standards and practices
in this field. In addition to the improvement of
the Sector’s regulatory procedures and smart

applications that have been introduced toserve all parties in the real estate sector, suchas the standard lease and other initiatives, aswell as the improvements of the rental increase
calculator, where commercial properties werelisted therein.

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Chapter FourReal Estate Sector
Performance Expectation
The results of real estate sector
performance within the first
5 months of 2019 indicate asignificant improvement in thevalue of real estate transactions
and investments. The value of realestate transactions in the Emirateof Dubai during the first five monthsof 2019 reached AED 106 billion
compared to AED 95 billion in 2018,at a growth rate of 12%.
The first five months of 2019
witnessed the launch of 49 newreal estate projects expected torepresent a new addition to the realestate sector. These projects ranged
in residential apartments, villas andvillas complexes.

Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Economic Growth Expectations
The global economic grew slowly over the past
years as a result of many economic and politicalfactors, which has had a negative impact onmost of the world’s economies and led to a
decline in growth rates in many countries.
The International Monetary Fund (IMF)’s recent
reports indicate that global economic growthhas declined to 3.3% in 2019, compared
to a growth rate of 3.6% in 2018. Global
economic growth is expected to witness some
improvement in 2020.

is higher than the average growth rates inboth developed and the Middle East and North
Africa countries. as the expected growth rate
reached 1.8%, 1.7% and 1.7% for the group of
developed countries during 2019, 2020 and
2021 respectively, while the expected growthrate for the Middle East and North Africa
reached 1.3%, 3.2% and 2.8% during 2019,2020 and 2021 respectively.

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Expo 2020 Dubai, is the first international
Expo exhibition to be organized in the Arabworld. The exhibition will be held under thetheme “Connecting Minds, Creating Future”
expressing Dubai’s strategies towards a bright
future of cooperation.

investments in infrastructure projects andpreparations for the exhibition.
Moreover, it is expected that the exhibition will
add a value to the economy of the Emirate ofDubai during the period from 2013 to 2031,
with more than AED 122 billion according to therecent studies. This is in addition to creating
new employment opportunities and direct andindirect investments to be added to its economy
which will be significantly reflected in the realestate sector in terms of new investments andproducts added to the sector.

The exhibition is expected to contributesignificantly in increasing the flow of capitals
into the Emirate of Dubai, with Dubai’s

IMF data indicate an expected improvement in
the growth rate of the UAE’s economy to 2.8%
in 2019, 3.3% in 2020 and 3% in 2021, which

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With regard to Dubai’s economy, it is expected
to witness a boost in 2019 and 2020, as
the Expo 2020 Dubai approaches. This is inaddition to the economic incentives launched
by Government of Dubai, which will bring a
positive impact on many economic sectors of
the Emirate specially the real estate sector.

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Annual Report: Real Estate Sector Performance 2019

Real Estate Sector Growth Expectations
The improvement indices were shown in realestate sector performance in the first fivemonths of 2019, which witnessed a remarkable
growth in the real estate transactions value
with AED 106 billion compared to AED 95 billion
in 2018, with a growth rate of approximately
12%.

2019, and the figure shows the growth of realestate transactions value by 58% in April 2019
compared to the same month of 2018 and thegrowth of real estate transactions value by 1%
in May 2019 compared to the same month of
2018, and this growth is expected to continue
for the coming months.

In terms of real estate projects growth, thefirst five months of 2019 witnessed thelaunch of 48 new real estate projects, which
are expected to represent a new addition to
the real estate sector. These projects ranged
between residential apartments, villas and villas
complexes. Upon completion, these projects
are expected to add approximately 8,000 new
residential units to the real estate sector with a

total area of more than 730,000 square meters
while the residential apartments represent thelargest percentage thereof, compared to retails
stores, offices and other commercial units,
where the number of residential units in the
new projects reached 7,537 units with a total
area of more than 668,000 square meters.

Figure (4.2) shows the number and the valueof real estate transactions on a monthly basis
during the period from January 2018 to May

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Annual Report: Real Estate Sector Performance 2019

Annual Report: Real Estate Sector Performance 2019

Team Work
This report was prepared by the team of the Real Estate Research and Studies Department at
Dubai Land Department, under the guidance and support of the Executive Director of the Sector,
HE Majida Ali Rashed, and under the leadership of the Director of Real Estate Research and Studies Department, Ms. Latifa Ibrahim.

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Annual Report: Real Estate Sector Performance 2019

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