ADIB Press Release Q1 2016 Abu Dhabi - UAE , 17 May 2016:ABU DHABI: May 17 2016: Residential rents for apartments in Abu Dhabi have seen a moderate rental growth as supply and demand move towards equilibrium, according to the latest Abu Dhabi Real Estate Market report by Abu Dhabi Islamic Bank (ADIB) and its real estate advisory subsidiary MPM Properties. Overall, capital values for completed apartments have remained broadly stable, driven by low transaction volumes, as both buyers and sellers remain unwilling to enter the market. During Q1 2016, approximately 1,000 new homes were delivered to the Abu Dhabi market, comprising predominantly small to medium sized developments in Al Nayhan, Muroor Road and Mohammed Bin Zayed City. Across the villa segment, weak demand resulted in limited sales in most communities. Developers are countering market sentiment by offering attractive payment plans on off plan residential sales to spur demand. An analysis of the MPM portfolio in Abu Dhabi shows that 38% of lease renewals completed during the first quarter of this year were agreed at a zero percent increase, 61% achieved a modest increase and only 1% had a rent reduction. Paul Maisfield, CEO of MPM Properties commented, “We are seeing a shift in market dynamics as the first quarter of this year has seen a constrained new supply of homes coming into the market with the residential market expected to see less than 2% housing stock growth in 2016 vs. an average of 4.5% p.a. over the last 7 years. The slowdown in new supply will counter some of the downward pressure on rents, although a marginal correction is expected in the months ahead.” Demand for office space in Abu Dhabi, which is driven mainly by the government sector, has reduced as corporations cut spending and put expansion and relocation plans on hold. The report forecasts approximately 350,000 sq.m. of new office space, mainly in the form of owner occupied space, being added to the commercial stock by the end of 2016. The majority of the speculative space entering the market in 2016 is at City of Lights on Reem Island, with the remaining floors at Addax Tower being handed over in this quarter, and in Omega Tower which is due to be completed later in the year. Bucking the general office market trend, and now effectively operating as its own micro-market, is the Financial Free Zone on Al Maryah Island. Mubadala has released Al Sarab and Al Khatem Towers at ADGM Square which together extend to 98,000 sqm of Grade A space. Retail sector saw no new supply coming to the market, but retail revenues have come under pressure in the first quarter of the year as consumer spending in the emirate softened. This trend is expected to continue throughout 2016 but reverse in 2017, as a rebound in oil prices and the expected launch of new government projects leads a pick-up in consumer confidence. The hospitality sector saw an addition of approximately 210 hotel rooms during Q1 2016. Key projects scheduled for completion this year include the Four Seasons, Marriott, Grand Millennium Bab Al Qasr Hotel, and the Emirates Pearl hotel. The opening of the Louvre on Saadiyat Island in late 2016 and the $1 billion Warner Brothers theme park on Yas Island in 2018, will drive tourism growth over the next few years. ADIB’s real estate market data and rental indices are collated from transactions within its portfolio of over 23,500 units under MPM Properties’ management.