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

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

Markaz Research is available on: Bloomberg - Type “MRKZ” <Go> Thomson Research, Reuters Knowledge ReutersRealEstate.com Nooz Zawya Investor ISI Emerging markets

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

Real Estate Market Commentary 12-Feb-12 to 18-Feb-12

Dubai: The Real Estate Regulatory Authority (RERA) estimated a supply of 15k to 16k new residential units during 2012, 50% higher than 2011 supply of 10,700 units. The supply is expected to come from about 62 projects that were completed in 2011. Market estimates are much higher than this where JLL pegs the supply at 23,000 units; Asteco expects 33,000 units and CBRE expects 18,000 units to be added in 2012. Separately, the Dubai Supreme Fiscal Committee announced its GDP growth estimates ranging between 4.5- 5.0% for 2012, up from about 2.5% in 2010 and more than 3.0% in 2011 driven mainly by growth in trade, logistics and tourism sectors. Abu Dhabi: According to the Statistics Centre – Abu Dhabi (SCAD)‟s latest monthly release, the average prices of 14 of the 21 building material groups experienced an M-o-M decline during Jan-12. Price declines were noted on an Y-o-Y basis as well in steel, PVC pipes, stones and wires while increases were noted in sand, paints, roofing materials and cement. Likewise, average inflation slightly declined 0.3% M-o-M during Jan-12 while housing component remained unchanged over the month. Please refer „Charts to Note‟ section for more details. It was reported Manazel Real Estate would be handing over up to 1,482 units at Al Reef Downtown during April to December 2012. The comprises of 46 apartment buildings with 1,800 units catering affordable income segment. KSA: An analysis of figures from National Commercial Bank (NCB)‟s latest Construction Index report shows that the total value of construction contracts awarded during 2011 surged 155% Y-o-Y. Notably, nearly 70% of the contracts were awarded during the second half of 2011 and most contracts (20%) were in the Eastern Province reportedly due to the development of the petrochemical and industrial sectors in this region. Transportation, power and industrial sectors accounted for around 48% of the total value of contracts. KSA Construction Contracts’ Value (SAR Bn) 2010 105.9 H1-10 H2-10 H1-11 31.8 74.1 81.8

2011 270 H2-11 188.2

Source: NCB Construction Index report

Oman: Cluttons reportedly expects that the residential property market is set to improve in 2012, driven by the expat community who seek high quality, design and greater facilities. In its October 2011 report, Cluttons stated that superior properties such as The Wave and Muscat Hills remain much in demand, as they are in short supply. Lebanon: It was reported that rents paid by 80% of tenants in Beirut are substantially below the market value and averages as low as USD 120 per year as rents were not indexed for changes in cost of living and exchange rates. The Parliament reportedly is working on a law to cancel rent control regulations in a couple of years and would require landlords to give tenants up to 8 years notice. Landlords in turn, would be allowed to buy out tenants by paying them up to 20% of the apartment‟s value. Other details considered include offering subsidized bank credit facilities to tenants for them to buy apartment units in the sub-urban locations.

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 housing component – 2011-12

132 130 128 126 124 122 120 118 116

114 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012

CPI

Housing, water, electricity, gas and other fuels

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

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

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

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

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Villa

Land

Total No.

Value

No.

Value

No.

Value

W-o-W 14.9% 97.3%

54.0% 176.8%

-10.5% 88.9%

8.1% 152.3%

75.6% 200.0%

-18.3% 159.5%

No. 22.8% 113.7%

Value 13.0% 168.3%

80

70

60

50

40

30

20

10

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

No. of transactions

35 70

30 60

25

50

20

40

15

30

10

20

5

10

-

0

No. of transactions Value Transacted (AED Mn)

Transactions

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

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

No. of Transactions

MENA REAL ESTATE RESEARCH

Activity Monitor

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

Land Transactions

Value transacted (AED Mn)

Villa Transactions

Value transacted (AED Mn)

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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

No. of Transactions

600 600

500 500

400 400

300 300

200 200

100 100

0

No. of transactions

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.

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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

No. of Transactions

Private Residential

Investment

Commercial

Total No.

No.

Value

No.

W-o-W 50.0% 204.5%

Value 57.9% 150.7%

-37.9% -28.0%

42.2% -67.1%

100.0% 100.0%

Value 80.2% 292.2%

No. 34.8% 140.2%

Value 55.0% -7.5%

300 180

250 160

140

200 120

150 100 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 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

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

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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

No. of Transactions

Commercial

Total No. 7.2% -32.5%

Value 21.5% -13.2%

No.

Value

17.5% -15.1%

Value 7.1% 10.5%

No. 9.0% -29.8%

13.9% -2.9%

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)

Residential

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

No. of Transactions

MENA REAL ESTATE RESEARCH

KSA Real Estate Transactions (2011 & 2012)

Riyadh Real Estate Transactions W-o-W Transactions Y-o-Y

Riyadh – Residential transactions

Value Transacted (SAR Mn)

Source: MOJ

Riyadh – Commercial transactions

Value Transacted (SAR Mn)

Source: MOJ

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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

No. of Transactions

Commercial

Total Value

No.

Value

No. -18.0% -24.6%

Value -10.1% -81.1%

No. -28.9% -32.2%

40.1% 21.8%

-20.2% -26.1%

6.1% -70.5%

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

No. of Transactions Value Transacted (SAR Mn)

Residential

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

No. of Transactions

MENA REAL ESTATE RESEARCH

Dammam Real Estate Transactions Transactions W-o-W Y-o-Y

Dammam – Residential transactions

Value Transacted (SAR Mn)

Source: MOJ

Dammam – Commercial transactions

Value Transacted (SAR Mn)

Source: MOJ

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400 4,000

350 3,500

300 3,000

250 2,500

200 2,000

150 1,500

100 1,000

50 500

0 0

No. of transactions

Value Transacted (QAR Mn)

W01-2011 W02-2011 W03-2011 W04-2011 W05-2011 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 W22-2011 W23-2011 W24-2011 W25-2011 W28-2011 W29-2011 W31-2011 W32-2011 W33-2011 W34-2011 W36-2011 W38-2011 W40-2011 W41-2011 W42-2011 W43-2011 W44-2011 W47-2011 W48-2011 W49-2011 W51-2011 W52-2011 W01-2012 W02-2012 W03-2012 W04-2012 W05-2012 W06-2012 W07-2012 W08-2012

No. of Transactions

MENA REAL ESTATE RESEARCH

Qatar Real Estate Transactions (2011 & 2012)

Value transacted (QAR Mn)

Source: MOJ

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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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GCC Defensive Bellwether Stocks (Jan-12) KSE 15 Index (Sept-11) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07)

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