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Kuwait Financial Centre “Markaz” MENA REAL ESTATE RESEARCH Research Highlights: A weekly market commentary

Real Estate Market Commentary 11-Mar-12 to 17-Mar-12

Contents Market Commentary Charts to Note Activity Monitor:  Dubai,  Kuwait,  Riyadh - KSA,  Dammam – KSA

Kuwait: An analysis of the Ministry of Justice‟s data for Jan–Feb-12 indicated a 93% growth in number of transactions (1,810 transactions) and 40% growth in value transacted (KD 573 Mn) compared to Jan-Feb12. Private residential (Villas) transactions posted a 123.4% growth ( 1,528 transactions) and transacted values grew by 49% (KD 318 Mn) and number of investment properties (Apartments) transactions grew by 9.3% (269 transactions); while value transacted posted a 20.9% growth (KWD 225 Mn) compared to Jan-Feb-2011. Transactions in commercial properties posted a 62.5% growth (13 transactions) with value transacted growing by 176% (KWD 31 Mn) during Jan-Feb-12 compared to the first two months of 2011.

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Dubai: According to Knight Frank, residential prices in Dubai rose 2.3% Q-o-Q and 0.5% Y-o-Y in Q4-11; while its Global House Price Index exhibited a 0.3% Q-o-Q decline during the quarter as prices dropped in 60% of the 52 countries on the index and listed the emirate among the growing markets globally. Earlier, the Residential Sales Price Index for Dubai published by Reidin.com also reported a 2.3% Q-o-Q increase in Q4-11 to 167 from 163.2 as of Q3-11. Villa Index increased 4.9% Q-o-Q to 316.5, and Apartment Index declined 0.6% Q-o-Q during Q4-11. Knight Frank had previously reported a 1.3% Q-o-Q and 3% Y-o-Y declines in prime property prices during Q4-11 and other market reports by Asteco and JLL indicated stable price trends for Q4-11.

Venkat Ramadoss ACA, CFA Assistant Manager +965 2224 8548 rvenkateshwaran@markaz.com Bassam N. Al-Othman Executive Vice President +965 2224 8011 bothman@markaz.com M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Kuwait Financial Centre “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com

Abu Dhabi: According to the Statistics Centre – Abu Dhabi (SCAD)‟s latest monthly release, construction costs remained stable during Feb-12 posting a 0.8% M-o-M growth and a 0.4% decline on an Y-o-Y basis. Average prices of 7 of the 21 building material groups experienced an M-o-M increase during Feb-12, while prices of 9 groups remained unchanged. Notable price increases were reported in concrete and labor cost, while decreases were noted in cement, steel, transport equipment and aggregates & sand. SCAD also reported CPI data for Feb-12 reporting a 0.6% Y-o-Y growth in overall price level and 0.5% Y-o-Y decline in the housing component. Please refer „Charts to Note‟ section for more details. KSA: Central Department of Statistics reported that general price index grew by 5.4% Y-o-Y during Feb-12, up from 5.3% during Jan-12. It also reported a 10.4% Y-o-Y growth in housing rents, noting a 12.9% growth in apartment rentals and 7.6% growth in villa rentals during Feb-12 compared to an year ago (housing and related items carries a 40% weight in overall CPI). Estimates for 2012 inflation from Jadwa Investment stands at c.5.3%, up from 5% during 2011, driven primarily by housing rent component and in comparison, National Commercial Bank (NCB) estimated a 4.8% Y-o-Y increase in CPI in 2012. Jordan: The Landlords and Tenants law permitting landlords to increase rents to current market rent value and the consequent increase in residential rentals during Q4-11 is reportedly causing frictions between commercial tenants and owners of properties with longstanding tenancy contracts. Landlords, represented by The Jordanian Landlords and Land Owners‟ Society (JLLOS), claim the old rents are lower than the municipal tax paid for the property and tenants, represented by Jordan Chamber of Commerce (JCC), are reportedly suggesting a gradual 5% increases in rents.

Developments sourced from various sources including news portals like Gulfbase, Zawya, Reuters, Bloomberg, Trade Arabia, Business 24/7, Arabian Business, The Peninsula, Gulf News, Property wire, Khaleej Times, Saudi Gazette, KUNA etc and also from published reports of real estate brokers and investment research houses.


MENA REAL ESTATE RESEARCH Charts to note: Chart 1: Abu Dhabi – Consumer Price Index (CPI) and house rents – 2011-12

Source: Statistics Centre – Abu Dhabi (SCAD), Monthly Consumer Price Indices (2011 & 2012)

Chart 2: M-o-M Building Materials Price change – Abu Dhabi (Feb-12) 12%

10.5%

10% 8%

6.6%

6% 4% 2% 0%

3.2% 3.1% 2.7% 1.3% 1.1% 0.2% 0.3%

0.0% -0.2% -0.3% -1.6% -2.1% -2.3% -3.2%

-2% -4%

Source: Statistics Centre – Abu Dhabi (SCAD) Building Materials Price Statistics, February 2012

Kuwait Financial Centre “Markaz”

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MENA REAL ESTATE RESEARCH Chart 3: Y-o-Y Building Materials Price change – Abu Dhabi (Feb-12) 30% 25%

20% 15% 10% 5%

23.1% 21.1%

14.9% 14.3% 10.5% 7.6% 3.0% 2.3% 1.7%

0% -5% -10%

-15% -20%

-0.2% -2.4% -3.0% -3.5% -4.5% -6.4% -4.0% -5.9% -8.7% -9.3% -10.0% -9.8% -11.1% -13.0% -15.9%

Source: Statistics Centre – Abu Dhabi (SCAD) Building Materials Price Statistics, February 2012

Kuwait Financial Centre “Markaz”

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Villa

Land

Total

80

70

60

50

40

30

20

10

Value Transacted (AED Mn)

Transactions No.

Value

No.

Value

W-o-W 7.9% 16.1%

14.0% 43.3%

No. -47.4% 233.3%

Value -53.9% 422.5%

No. -17.6% 13.5%

Value -38.3% -23.4%

-0.4% 18.4%

-22.8% 0.7%

No. of transactions

35 70

30 60

25 50

20

40

15

30

10

20

5

10

-

0

No. of transactions

Kuwait Financial Centre “Markaz”

Value Transacted (AED Mn)

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W45-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

Apartment

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W45-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

Activity Monitor MENA REAL ESTATE RESEARCH

Dubai Real Estate Transactions (2011 & 2012) Y-o-Y

Land Transactions

1,000 900 800 700 600 500 400 300 200 100 0

Value transacted (AED Mn)

Villa Transactions

Value transacted (AED Mn)

4


W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W45-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

600 600

500 500

400 400

300 300

200 200

100 100

0

No. of transactions

Kuwait Financial Centre “Markaz”

Value Transacted (AED Mn)

MENA REAL ESTATE RESEARCH

Apartment Transactions

Value transacted (AED Mn)

Source: Dubai Land Department Note: 1) The above table/chart represents transactions as per the registration date and not the transaction date 2) Outliers identified are removed for better clarity.

5


W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W35-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012

No. of Transactions

Private Residential

Investment

Total Value

Commercial

W-o-W

No. 72.0% -43.4%

Value 89.4% -26.2%

No. 83.3% -46.3%

-44.3% -56.4%

No. N.A. -66.7%

Value N.A. -97.3%

No. 74.7% -44.1%

Value 10.1% -44.6%

350 180

300 160

250 140

200 120

100

150 80

100 60

50 40

20

0 0

No. of transactions

70 70

60 60

50 50

40

40

30

30

20

20

10

10

0

0

No. of transactions

Kuwait Financial Centre “Markaz”

Value Transacted (KWD Mn)

Transactions

Value Transacted (KWD Mn)

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W35-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012

No. of Transactions

MENA REAL ESTATE RESEARCH

Kuwait Real Estate Transactions (2011 & 2012) Y-o-Y

Private Residential Property transactions

Value transacted (KWD Mn)

Source: MOJ, Kuwait

Investment Property transactions

Value transacted (KWD Mn)

Source: MOJ, Kuwait

6


W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

Residential

Commercial

Total No.

W-o-W 5.9% -47.2%

Value -7.4% -36.2%

No. -2.0% -37.7%

Value 25.2% -6.7%

No. 4.5% -45.8%

Value 5.7% -25.0%

3,000 2,500

2,500 2,000

2,000 1,500

1,500

1,000 1,000

500 500

0 0

No. of Transactions

450 3,500

400

350 3,000

300 2,500

250

2,000

200

1,500

150

100

1,000

50

500

0

0

No. of Transactions

Value Transacted (SAR Mn)

Source: MOJ

Kuwait Financial Centre “Markaz”

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Value Transacted (SAR Mn)

Transactions

Value Transacted (SAR Mn)

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

MENA REAL ESTATE RESEARCH

KSA Real Estate Transactions (2011 & 2012)

Riyadh Real Estate Transactions Y-o-Y

Riyadh – Residential transactions

Value Transacted (SAR Mn)

Source: MOJ

Riyadh – Commercial transactions


W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

W-o-W

No. -5.9% -22.5%

-14.9% -1.9%

Commercial

Total Value

No.

Value

No.

Value

12.5% -2.7%

-38.6% 5.8%

-1.8% -18.2%

-27.3% 1.4%

600 1,800

500 1,600

1,400

400 1,200

300 1,000

800

200 600

100 400

200

0 0

No. of Transactions

180 1,200

160

140

1,000

120 800

100

80

600

60

400

40

20

200

0

0

Source: MOJ

No. of Transactions

Value Transacted (SAR Mn)

Kuwait Financial Centre “Markaz”

8

Value Transacted (SAR Mn)

Residential

Transactions

Value Transacted (SAR Mn)

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 W06-2011 W07-2011 W08-2011 W09-2011 W10-2011 W11-2011 W12-2011 W13-2011 W14-2011 W15-2011 W16-2011 W17-2011 W18-2011 W19-2011 W20-2011 W21-2011 W22-2011 W23-2011 W24-2011 W25-2011 W26-2011 W27-2011 W28-2011 W29-2011 W30-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W37-2011 W38-2011 W39-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W46-2011 W47-2011 W48-2011 W49-2011 W50-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012 W09-2012 W10-2012 W11-2012

No. of Transactions

MENA REAL ESTATE RESEARCH

Dammam Real Estate Transactions Y-o-Y

Dammam – Residential transactions

Value Transacted (SAR Mn)

Source: MOJ

Dammam – Commercial transactions


MENA REAL ESTATE RESEARCH

Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz) and its subsidiaries. Markaz is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and its subsidiaries and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz and its subsidiaries. Any user after obtaining Markaz and its subsidiaries permission to use this report must clearly mention the source as “Markaz and its subsidiaries “. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and its subsidiaries and are subject to change without notice. Markaz and its subsidiaries has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security‟s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) and its subsidiaries may seek to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz and its subsidiaries, Markaz and its subsidiaries has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz‟s and its subsidiaries own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz‟s and its subsidiaries website shall be at your own risk. For further information, please contact „Markaz‟ at P.O. Box 23444, Safat 13095, Kuwait; Email: research@markaz.com; Tel: 00965 1804800; Fax: 00965 22450647.

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