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

Real Estate Market Commentary 15-Apr-12 to 21-Apr-12

Contents Market Commentary Charts to Note Activity Monitor:  Dubai,  Kuwait,  Riyadh - KSA,  Dammam – KSA Markaz Research is available on: Bloomberg - Type “MRKZ” <Go> Thomson Research, Reuters Knowledge ReutersRealEstate.com Nooz Zawya Investor ISI Emerging markets

Thomas K. Mathew Senior Research Analyst +965 2224 8000 Extn: 2712 tmathew@markaz.com 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

Kuwait Financial Centre “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com

Dubai: JLL in its Q1-12 report highlighted that, c.3000 residential units were added in Q1-12, taking the overall residential stock to 341,000 units. JLL outlined that c.90% of the 2011 completions were expected to be apartments, and c.44% of the additional supply since 2009 were located in Dubai Marina, International City, Discovery Gardens, JLT and Dubai Land. JLL expects an additional supply of 28,000 units in 2012, but attributed the large increase to delayed projects from 2011 mostly. On the office front, the report outlined a 2% Q-o-Q decline in average sales prices, in line with the drop noted by Asteco. As per JLL, the rental market also saw a downtrend, as prime office space rentals at locations such as CBD, TECOM, SZR and Burj Downtown remained flat, but declined for secondary locations, in line with trends highlighted by Asteco and Cluttons. JLL expects the decline in prices and rentals to continue, as c. 1m Sqm of new office space could be added in 2012. It was reported that the Dubai Land Department will issue a new law by Jun-12 for protection of real estate investors, where developers will be prohibited from sales of the project, prior to 20% completion. The legislation will have various sections to prevent irregularities across different stages of a project. However, it was noted that the law may not have any provision for initiating penal action against violators. Abu Dhabi: Cluttons reportedly observed a downtrend in residential sales prices in its Q1-12 report due to oversupply. This was led by a correction in apartment prices, in communities such as Al Reem (7.4%), Marina Square (-7.3%) and Al Raha Beach (-6.0%) compared to Q3-11. Earlier, Asteco had reported a lower price drop at Al Reem (2.3%) and Marina Square (-2.5%) and a -9.3% price decline at Al Raha Beach over the same time period. However, the decline was less prominent in villas, with developments such as Al Raha Gardens and Al Reef listing c. 2%–5% drop, as per Cluttons. Asteco had earlier reported stable trends in villa prices Q-o-Q. On the rental front, Cluttons alluded to a sustained decline in suburban areas such as Khalifa A, Al Raha Beach and Al Raha Gardens of up to 10% compared to Q3-11 levels. Asteco also noted a decline in residential rentals in these areas. Cluttons forecasts freehold and rental rates to decline further in 2012, in line with Asteco expectations. In the office segment, Cluttons reported a decline in rental rates due to the constant additional supply, in contrast with flat trends reported by Asteco. According to Cluttons, prime office space (mainly Sowwah Square) continues to be in demand, especially from global corporate tenants, but anticipates a tough time for secondary office space in 2012. UAE: Real estate consultants Tasweek, reiterated its unfavorable outlook for the sector in 2012, and pointed towards surplus supply and volatile demand as the major drivers for the frail recovery witnessed. Qatar: CBRE reported a slight decline in average residential rentals in Q1-12, in line with NAI Qatar, while Asteco had earlier reported stable trends. CBRE reported stable rentals for apartments and villas in prime locations such as The Pearl Qatar, West Bay Lagoon & West Bay, in line with Asteco’s estimates. As per CBRE, apartments at secondary locations listed the worst decline during Q1-12. The relatively feeble downtrend in the country’s real estate sector is ascribed to constrained supply.

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 Exhibit 1: Rental trends at a glance: Dubai & Qatar Q1-12 Qatar Residential Rental Rates - Q1-12 (QAR/pm) Apartments-2 BR Villas (high end) West Bay Lagoon Pearl Qatar West Bay Lagoon CBRE 9,750-13,000 18,500-27,500 Asteco 9,750 13,000 18,500-26,500 Source: CBRE Qatar report, Q1-12

Dubai Office Rentals (AED/Sqm/pa) and Sales Prices (AED/Sqm) DIFC Prime CBD Prime City-wide Sales Prices Q1-12 2,370 1,615 1,300 9,600 Q4-11 2,370 1,615 1,400 9,700 Source: JLL Dubai report, Q1-12

Charts to note: Chart 1: Dubai Real Estate total supply – JLL 400 369

300

341

338

324

5.8

6.8

9 7.3

8 7

5.8

6

4.9

5 4

Mn Sqm

Units ('000)

350

10

381

3

250

2 1

200

0 2010

2011 Residential

2012E

2013E

2014E

Office (RHS)

Source: JLL Dubai report, Q1-12; Markaz analysis

Kuwait Financial Centre “Markaz”

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MENA REAL ESTATE RESEARCH Chart 2: Dubai Consumer Price Index (CPI) and house rents – 2011-12 140 120

100 80

60 40

20 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012

CPI

Housing Component

Source: Dubai Statistics Center, Monthly Consumer Prices Indices (2011 & 2012)

Chart 3: Abu Dhabi Consumer Price Index (CPI) and house rents – 2011-12 132

130 128 126 124

122 120 118 116

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

CPI

Housing Component

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

Kuwait Financial Centre “Markaz”

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MENA REAL ESTATE RESEARCH Chart 4: M-o-M Building Materials Price Change – Abu Dhabi (Mar-12) 8% 6% 4%

5.7% 4.0% 3.5% 2.2% 2.2% 0.9% 0.1%

2% 0%

0.0%

-0.3% -0.3% -1.1% -1.0% -1.9% -1.7% -2.4%

-2%

-4% -6%

-4.9%

-8% -10%

-12% -11.9%

-14%

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

Chart 5: Y-o-Y Building Materials Price Change – Abu Dhabi (Mar-12) 25%

21.1%

20% 15%

10% 5% 0%

-5% -10%

10.6% 6.7% 5.3% 3.6% 3.9% 3.1% 3.0% 0.0% -0.2%

-0.4% -0.2% -0.8%

-4.0% -5.9% -6.5% -7.8% -4.0% -4.7% -6.4% -6.5%

-15%

-13.0% -14.1%

-20%

-19.9%

-25%

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

W-o-W

No. 0.0% 43.8%

Value 0.6% 42.7%

No. 75.0% 250.0%

Value 56.9% 858.8%

No. -31.5% 42.9%

Value -30.9% 33.6%

-5.1% 50.9%

-14.8% 53.2%

No. of transactions

35 80

30

70

25 60

20

50

15

40

10

30

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 W12-2012 W13-2012 W14-2012 W15-2012 W16-2012

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 W12-2012 W13-2012 W14-2012 W15-2012 W16-2012

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)

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 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 W12-2012 W13-2012 W14-2012 W15-2012 W16-2012

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.

6


MENA REAL ESTATE RESEARCH Kuwait Real Estate Transactions (2011 & 2012) Transactions

W-o-W

No. Value No. Value No. Value No. Value

-28.7% 14.5% 15.6% -10.4% 100.0% 1681.7% -22.3% 13.1%

Private Residential Investment Commercial Total

Y-o-Y 183.1% 212.0% 246.7% 88.0% N.A. N.A. 196.5% 166.1%

Private Residential Property transactions

Source: MOJ, Kuwait

Investment Property transactions

Source: MOJ, Kuwait

Kuwait Financial Centre “Markaz”

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Commercial

Total No.

No.

Value

W-o-W 41.2% -62.1%

Value 45.2% -32.8%

16.5% -47.0%

-45.2% -32.1%

No. 36.5% -60.3%

Value -8.6% -32.6%

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

150

1,500

100

1,000

50

500

0

0

No. of Transactions

Value Transacted (SAR Mn)

Kuwait Financial Centre “Markaz”

8

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 W12-2012 W13-2012 W14-2012 W15-2012

No. of Transactions

Residential

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 W12-2012 W13-2012 W14-2012 W15-2012

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 W12-2012 W13-2012 W14-2012 W15-2012 W16-2012

No. of Transactions

W-o-W -7.7% -56.3%

-29.3% -49.6%

-7.8% -60.5%

57.4% -8.9%

-7.7% -57.2%

-4.6% -36.2%

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”

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Value Transacted (SAR Mn)

Transactions No. Residential Value No. Commercial Value No. Total Value

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 W12-2012 W13-2012 W14-2012 W15-2012 W16-2012

No. of Transactions

Source: MOJ

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

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