GCC Real Estate Sector Quarterly Report 4Q-09 · 16% in 2010. Accordingly, we expect the demand for real estate to pick up. This will help to stabilize the real estate market through

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SectorMarch 2010

GCC Real Estate Sector Quarterly

• Signs of recovery in Kuwait’s residential segment • Economic Growth to benefit Qatar’s property sector • UAE market shows signs of stabilization, no recovery expected in 2010 • New mortgage law stimulating demand in Saudi Arabia

• In Bahrain, the increase in the supply of properties in the high end segment drove down prices

and rents. On the other hand, we expect demand for middle and low income housing to be buoyant considering the supply shortage.

• We expect prices in the residential segment in Kuwait to pick up in 2010. The segment is expected to witness increases in the range of 10%-15% during 1H10 supported by available financing through Shariaa compliant banks.

• Oman’s economy is expected to grow by 3% in real terms in 2010 benefiting from high crude oil prices and ongoing government spending. All sectors will benefit from this growth including real estate and construction. Thus, the Omani construction industry is expected to hit OR1.57bn by 2013 with 2.7% annual increase.

• Qatar Central Bank Governor announced that the economy shall experience real growth of about 16% in 2010. Accordingly, we expect the demand for real estate to pick up. This will help to stabilize the real estate market through 1H2010 as we estimate rentals might have hit the bottom without further steep declines expected.

• The UAE market started to show some signs of stabilization in prices in H2 2009. During 4Q 2009, popular developments with proper amenities and infrastructure fared better than others. However, with the new supply entering the market, we do not expect a market recovery in 2010.

• The expected implementation of the mortgage law in Saudi Arabia this year could turn out to be

an important factor for the sector development. With housing demand expected to range between 1.0 to 1.5mn units over next 5years, we expect the real estate sector to continue its growth trajectory at a steady pace with average annual rate of around 7% to 10% till 2014.

Value of Projects in the Gulf US$ mn February 2010 February 2009 % change On-hold projects (Feb. 2010)

Bahrain 68,502 68,337 0.2% 13,113Kuwait 268,745 308,139 -12.8% 45,093Oman 106,022 108,773 -2.5% 6,560Qatar 220,315 223,494 -1.4% 9,837Saudi Arabia 653,641 629,174 3.9% 53,008UAE 963,420 1,304,942 -26.2% 468,132otal GCC 2,280,645 2,642,859 -13.7% 595,743

Source: MEED Projects

• The GCC region witnessed a y-o-y decline of 13.7% in the value of ongoing and announced projects at the end of February 2010 as per MEED projects data. UAE witnessed the largest decline of 26.2%. Kuwait followed with a 12.8% of decline while Oman declined by 2.5%. Saudi Arabia and Bahrain reported an increase of 3.9% and 0.2% respectively. The total value of on hold projects stood at US$595.7bn. UAE’s share of on hold projects stood at 78.6%, followed by Saudi Arabia and Kuwait at 8.9% and 7.6% respectively.

Faisal Hasan, CFA Head of Research [email protected] Phone: +965-2295 1270 Abir G. Ahmed Assistant Vice President [email protected] Phone: +965-22951272 Walid S. Mohamed Senior Financial Analyst [email protected] Phone: +965-22951277 Mohammad Ali Shah Financial Analyst [email protected] Phone: +966-1 2199966

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Bahrain Real Estate Sector

4Q Highlights Latest Development Impact

Bahrain government to build six housing projects… Bahrain’s government announced its intention to construct six new government housing projects in the Bahraini Northern Governorate. The works on the projects are expected to begin shortly.

The government has been recently keen on solving the housing shortage for low and middle income segments of the market. It also announced plans earlier to build around 50,000 low cost housing units by 2014. These announcements are positive for the sector.

Performance

Average Monthly Office Rentals

0

2

4

6

8

10

12

Diplomatic Area

Seef Area Central Manama

Bahrain Financial Harbour

Al Moayyed Tower

BD

/sqm

Source: Bahrain Ministry of Industry and Commerce

Average Monthly Retail Rentals

0

5

10

15

20

25

30

35

Average Retail Rate Seef Mall Bahrain City CenterB

D/

sqm


During 4Q 2009, demand remained sluggish in the office market causing rents to soften. Prime office space in Seef District, Diplomatic Area, and Bahrain Financial Harbor still were able to command higher rental rates ranging between BD10 and BD 12 per sqm.

The retail market remained resilient, supported by the influx of Saudi population from the Saudi Causeway. In addition, work on the Bahrain/Qatar causeway is due to start in 2010 which is expected to provide further support to the retail segment.

Apartment Monthly Rental Ranges (in BD)

200 350 500 650 800 950

Juffair 1BR

Central Manama 1BR

Juffair 2BR

Central Manama 2BR

Seef 2BR


The residential segment in Bahrain witnessed a mixed performance with subdued demand for the high end segment and higher demand for middle and low income housing which is witnessing a supply shortage. During 4Q 2009, there was no significant activity in the residential freehold market with few signs of decline. There was a downward pressure on residential rents. However, in certain areas such as Saar, Budaiya, and Janabiya, rents were more resilient.

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Global – GCC Real Estate Quarterly

Market Forecast

Segment Future Trend Rationale

Residential ( High End) Middle/Low Income Housing

Downward

Upward

The increase in the supply of properties targeting the high end segment has put a downward pressure on prices and rents. On the other hand, we expect demand for middle and low income housing to be buoyant considering the supply shortage.

Office Space Downward As demand remains subdued for the office market in Bahrain, several projects are being delayed or cancelled. A recent report by DTZ indicated that 270,000 sqm of planned office space were cancelled over the last year.

Retail Stable The retail market in Bahrain is supported by the traffic from the Saudi Causeway. Another causeway linking Bahrain to Qatar is expected soon.

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Kuwait Real Estate Sector


Kuwait announced expansionary budget for 2010/2011 Preliminary figures for 2010/2011 budget were announced with expected KD7.4bn of deficit. The announced budget is expansionary one with total expenditures expected at KD16.16bn, 33.4% of growth over 2009/10 budgeted expenditures of KD12.12bn.

The budget is focused on capital expenditures to account for mega projects announced within the Kuwait Development Plan 2013/14. The government approved the allocation of KD4.78bn for development spending within the first year (2010/11) as a part of the 5 years plan to stimulate growth. Thus we foresee real estate sector will benefit from such capital expenditures in case it is really implemented.

Kuwait approves KD30bn Development Plan Kuwaiti National Assembly approved the development plan up to 2013/14 –the first plan since 1986. The plan will help to revive the Kuwaiti economy facing recessionary pressures since September 2008. The plan approved with estimated KD30bn of spending focusing on both oil and non oil economic sectors. The plan aims for turning Kuwait into a regional trade and financial hub through sustaining economic development, economic diversification and GDP growth.

The plan includes lots of Mega Projects that will have its impact on the real estate sector as well as the whole economy. Mega projects announced include, the new business hub (Silk City) with estimated cost US$77bn, railway and metro system, additional spending on new cities, infrastructure and services particularly health and education in addition to oil sector investments. We foresee that in case of actual implementation lots of hopes are set to come true. The real estate sector especially, residential segment will benefit as housing problems are set to be solved with the establishment of new cities.

Talks regarding allowing expatriates to own real estate in Kuwait Five lawmakers have proposed to add a new article –three, to law number 74/1979 in respect of regulations guiding ownership of properties by non-Kuwaitis. The draft bill opens the door for expatriates and gives them the right to own apartments not larger than 350 sqm.

We believe it will not be approved or implemented easily. Such bill is expected to create a new market for extra demand especially by expatriates. However, the trade off will always be to invest in real estate market in Kuwait as compared to Dubai that is seen as more attractive. If approved, such bill will have its impact on the real estate market, however, being successful doing so is directly related to the amendment of other laws and regulation governing real estate market, residency and sponsoring issues. Other issues to tackle are the current problems of real estate market in Kuwait, most important is to foresee the actual role of Real Estate Regulatory Authority as in Dubai. If such role is clear and validated, the proposed bill might be implemented successfully.

Central Bank of Kuwait cuts discount rate In a move towards boosting the non-oil sector and supporting domestic liquidity and economic activity, the Central Bank of Kuwait (CBK) cut its discount rate by another 50 basis points on February 7th, 2010 to reach a low of 2.5%, which was last seen in 2003. This was the first cut entering 2010 and the seventh cut since January 2008. Thus, the CBK is seen to be continuing its ongoing loose monetary policy to go hand in hand with the expansionary fiscal policy. As per CBK governor “the cut will provide the necessary environment conducive to boosting growth in non-oil sectors of national economy by reducing the cost of lending”.

We believe real estate sector will benefit from such rate cut especially residential segment in case new credit lines are available at lower rates. The availability of liquidity for the sector will improve the activity whether on the transaction or the construction levels. The decision will give another push to the sector especially after Kuwait Finance House (KFH) and similarly all Islamic banks were exempted from Laws 8 & 9 regulations that prevent banks and companies from dealing in residential real estate whether by trading or mortgaging.

Real Estate Financing On monthly basis, extended credit facilities for real estate sector continued its marginal monthly growth up to the end of December 2009 reporting a new record level of KD6.6bn, or a Y-o-Y growth of 10.6%. On the contrary extended credit facilities for construction sector reported marginal monthly declines this year retreating by 2.5% on a Y-o-Y basis reaching KD1.6bn. Extended facilities for both sectors accounted for 32.8% of total credit facilities by the end of December 2009.

Looking forward, we expect credit facilities extended to both sectors to pick up slightly after the new discount rate cut that followed the decision allowing mortgaging for residential real estate by Sharia’ compliant banks.

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99

92

162

127

102

167

167

132

121 134

174

126

114

89

130

85

68

127

108

94

54

128

163

106

522

747

711

427

231

265

482

205

155

157

341

334

179 237

256

231

246

280

307

280

169280

379476

0

100

200

300

400

500

600

700

800

020406080

100120140160180200

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

2008 2009

000'units000'units

Apartments & Commercial Residential Property (sec. axis)

‐66%

‐68%

‐64%

‐46%

6%

6%

‐36%

37%

9%

78%

11%

43%15%

‐3%

‐20%

‐33%

‐33%

‐24%

‐35%

‐29%

‐55%

‐4%

‐6%

‐16%

‐70%

‐50%

‐30%

‐10%

10%

30%

50%

70%

90%

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

Residential Property Apartments & Commercial

701

647

827 905

941

738

444

394

726

472

417

329 387

622

317

615

507

404

415

439

394

637

648

620

242

129

202 221

216

205

182 206 233

204

188 212

193

193

188

192

185

189

179 198 215

220

231

207

0

50

100

150

200

250

300

0

100

200

300

400

500

600

700

800900

1,000

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

2008 2009

000'KD/trans000'KD/trans

Apartments & Commercial Residential Property (sec. axis)

‐20%

49%

‐7%

‐13%

‐14% ‐8% ‐2%

‐4%

‐8%

8%

23%

‐2%

‐45%

‐4%

‐62%

‐32%

‐46%

‐45%

‐7%

12%

‐46%

35%

55%

89%

‐70%

‐50%

‐30%

‐10%

10%

30%

50%

70%

90%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecResidential Property Apartments & Commercial

Performance After a period of fading performance since last year and up to the end of 3Q09, real estate sector started to show signs of slight recovering by 4Q09 especially for the residential segment. However, the full year performance is still negatively impacted due to the good performance of 1H08. Total units sold for the year 2009 reported 25.8% of decline reaching 4,586 units down from 6,180 units during 2008. Residential segment was much more impacted retreating by 27.5% as compared with 21.0% decline in Apartments & Commercial segment. Similarly, average price per transaction for the year 2009 reported 15.8% of decline reaching KD700,000/transaction down from KD832,000/transaction during 2008. Residential segment retreated by 2.0% as compared with 20.3% decline in Apartments & Commercial segment.

Number of Real Estate Transactions

Source: Ministry of Justice & Global Research

Number of Real Estate Transactions Y-o-Y Growth

Source: Ministry of Justice & Global Research On Monthly basis, total number of transitions reported 7.4% of growth by the end of December 2009 standing at 582 units as compared to 542 units sold last month. Residential segment increased by 25.6% while apartments & commercial segment retreated by 35.0%.

Real estate transactions continued the declining trend up to the end of 3Q09. However, since October 2009 real estate transactions started to pick up especially for residential units. By the end of December 2009 residential units sold increased by 42.5% Y-o-Y.

Average Price/Trans

Source: Ministry of Justice & Global Research

Average Price/Trans Y-o-Y Growth

Source: Ministry of Justice & Global Research On monthly basis, residential segment continued to report signs of marginal recovery up to November 2009. However, it retreated by 10.5% in December 2009 to report KD207,000/transaction. Similarly, apartments & commercial segment retreated by 4.3% to report KD620,000/transaction by the end of December 2009.

Average price per transaction continued to decline for 9M09. However, 4Q09 started to report signs of recovery. December 2009 witnessed a huge increase in apartments & commercial segment increasing by 88.6% Y-o-Y. However, residential property continued its declining trend retreating by 2.4% Y-o-Y.

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‐100 200 300 400 500 600 700 800

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Kuwait (Capital) Hawally Farwaniyah

KD/m2

‐50 100 150 200 250 300 350 400 450

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Mubarak Al Kabeer Ahmadi Jahra

KD/m2

‐

50

100

150

200

250

300

350

400

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Salmiya Hawally Jaberiya Sharq

KD/month

3bed High class 2bed

‐

50

100

150

200

250

300

350

400

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Bneid Al Gar Kheitan Farwaniya Al Jahra

KD/month

3bed High class 2bed

Residential Segment After following a declining trend since 2Q08 and up to 1Q09, residential land prices are finally showing signs of recovery for 3Q09 and 4Q09. The recovery is directly linked to the abolition of laws 8 & 9 for 2008 thus backing the residential segment. In addition better views regarding the economic performance in general and more stabilized oil prices supported the good sentiments. Moreover, areas like Maseelah, Al Funaytees and Abu Fateera witnessed higher prices due to Cabinets decisions to allow construction permits in these areas. Generally, prices picked up in the range of 3% during 3Q09, however, areas in Hawally and Farwaniyah reported higher price increases in the range of 4% to 8%. Moving forward, 4Q09 prices kept the positive pace, however reporting higher growth rates.

Residential Land Prices by Area

Source: Kuwait Finance House

Residential Land Prices by Area

Source: Kuwait Finance House On a Q-0-Q front, the upward trend since 2Q09 continued in 4Q09, with prices in Kuwait (Capital), Farwaniyah & Hawally growing by 6.3%, 4.1% and 0.6% respectively. However, on a Y-o-Y basis, prices still reflect marginal declines. Hawally continued to report the largest decline of 12.9% with prices reaching KD525/m2 down from KD603/m2.

On a Q-0-Q front, Jahra reported the largest growth of 31.1% with KD328/m2 average price. Mubarak Al Kabeer & Ahmadi followed with 7.5% and 0.6% of growth respectively. On a Y-o-Y basis, prices reflect a sort of stabilization of 0.8% for Mubarak Al Kabeer and 40% growth for Jahra while Ahmadi reported 5.6% of decline.

Investment Segment After following a declining trend since the eruption of the financial crisis, investment properties continued the fading performance during 4Q09. However, rentals are showing a sort of stagnation after the declining trend during 1H09 when rentals declined in the range of 2% to 10%. Currently investment properties rentals are showing a sort of stagnation in prime locations. However, other areas like Kheitan and Farwaniya reported slight increases. This can be traced back to reshuffling demand moving from high end to medium and lower class segments.

Investment Property Rentals


Investment Property Rentals

Source: Kuwait Finance House Areas like Salmiya, Hawally & Jaberiya witnessed a sort of stagnation during 4Q09 with rentals unchanged from previous quarter. Sharq area reported 3% decline in high class 2-bedroom rentals from KD330/month to KD320/month during 4Q09.

Areas like Kheitan & Farwaniya reported higher rentals of 9.1% & 6.7% for high class 2-bedroom. In Kheitan, average rentals stood at KD240/month during 4Q09 up from KD220/month during 9M09. Similarly, Farwaniya rentals stood at KD240/month up from KD225/month over the same period.

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‐25%

‐15%

‐5%

5%

15%

25%

0

5

10

15

20

25

30

35

401Q

082Q

083Q

084Q

081Q

092Q

093Q

094Q

09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Farwaniya Kuwait City Salmiya Hawally

KD/m2

Retail Office Retail growth Office growth

Commercial Segment Similar to investment properties rentals, commercial properties rentals are showing some stability during 4Q09 as compared to the sharp decline reported during 9M09. The segment activity is mainly related to the business cycle and the overall economic sentiment. As a result, rentals for both office and retail properties declined sharply during 9M09. This was linked to the declining purchasing power for residents whether Kuwaitis or expatriates. Moreover, demand for office space declined with the economic downturn.

Commercial Property Rentals and Growth


After reporting sharp decline during 1H09, commercial properties rentals are showing slight stability for both retail and office properties during 4Q09. Rentals for retail properties stagnated for Farwaniya and Kuwait city, however, some areas in Salmiya and Hawally reported higher rentals in the range of 5% to 10%. Average retail rentals in Salmiya stood at KD25/m2 during 4Q09 up from KD20/m2 during 3Q09. However, it is important to note that on Y-o-Y basis rentals are still reporting a decline in the range of 15% to 20%. Office space rentals are not showing the same stability for prime locations in Kuwait City where rentals declined by 15% on average to reach a range of KD6-7/m2. Finally, office space in other areas like Farwaniya, Salmiya & Hawally stagnated at 3Q09 levels.

Market Forecast

Segment Future Trend Rationale Residential Upward We expect residential sector to witness a gradual pick up

in prices as signs of recovery are showing for 2010. According to market experts’ “the year 2010 is likely to b e the real get up year in the real estate market especially with the trend adopted by the government to launch giant development projects in a move which would stimulate all sectors including real estate as the first beneficiary especially residential segment”. Moving forward, the residential segment is expected to witness price increases in the range of 10%-15% during 1H10 supported by available financing through Shariaa compliant banks. Generally, residential real estate segment will continue to play the major role in real estate activity. The ongoing population growth among Kuwaiti nationals will continue to depict an under supplied market.

Investment (Apartments) Downward We still hold our downward view regarding investment segment for the short to medium terms. The segment is expected to go through a stagnation period for the short term before starting another wave of declines towards the summer vacation season that will be coupled with the delivery of new supply. The ongoing construction activity has lead to increasing supply that will not be matched with increasing demand in the next period. Thus rentals might dip in the range of 5% to 10% especially for medium &

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upper classes, respectively, due to increased vacancy rates. Looking forward, a rapid recovery for the segment is not expected, however, any recovery will be linked to the implementation of announced government plans aiming for reviving the overall economic growth. Consequently this will be linked to increased demand on expatriates labor force. Only at this time investment segment might pick up.

Commercial (Retail & Office) Downward We still hold our downward view regarding the commercial segment. Rentals are expected to stagnate at current levels in different areas with more tendency to decline during 1H2010. Moreover, the delivery of new supply will be exerting more downward pressures on rentals for both retail and office space. Thus, any recovery will be directly linked to economic activity and signs of positive growth. Thus any real pick up for the segment would not be seen before the end of 2010 or 1H11.

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1

2

3

4

5

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8

Ghala Madinat Sultan Qaboos

Al Ghubra North

OR/Sqm

Source: ERA Oman

‐

200

400

600

800

1,000

1,200

1,400

1,600

2 BD Apt 3 BD Apt 3 BD Villa 4 BD Villa 5 BD Villa

OR/Sqm

Source: ERA Oman

Oman Real Estate Sector


Real GDP growth seen at 3% in 2010… Omani economy is expected to grow by 3% in real terms in 2010 benefiting from high crude oil prices –in the range of US$70-80/b- and ongoing government spending in the final year of the seventh -five year development plan- as per Ministry of National Economy. Moreover, economic performance is expected to be bolstered by higher tourist arrivals and increased foreign direct investment.

All sectors will benefit from this growth including real estate and construction. This is mainly as the government will continue to spend on infrastructure projects aiming for diversifying the economy. Moving forward, Omani construction industry is expected to hit OR1.57bn by 2013 with 2.7% annual increase as per Business Monitor International.

New Income Tax Law removes ambiguity… Oman began implementing new income tax law for corporates under which a uniform tax rate of 12% on the taxable income after granting a basic exemption of OR30,000 to all entities carrying business in Oman irrespective of their status, residence, nationality or mode of operation. Foreign branches that were previously taxed at 30% no profits in excess of OR100,000 would now pay a tax of 12% on excess profits.

The newly implemented income tax law put to rest any ambiguity and will create a level playing field for all coroporates irrespective of nationality. Thus it will spur foreign investment and encourage foreign companies to operate through a branch rather than through a locally incorporated company. The increased business supported by economic growth will consequently support demand for real estate.

Performance Like other GCC countries, Oman witnessed considerable growth in its real estate sector prior to the global financial crisis. However, the year 2009 witnessed a sort of stagnation in real estate contribution to GDP. As indicated by Ministry of National Economy, the sector continued to grow at marginal rates of 1.1%, 0.3% and 0.4% for the first three quarters respectively. This was reflected on the trading activity that dropped by 53% reaching OR1.19bn in 2009. This figure is to be compared with OR2.5bn of trading activity in 2008. However, despite the decline in the trading activity, the crisis had little effect on residential prices and rentals. Both prices and rentals are showing some stability in general with tendency to increase in prime locations in the range of 10% to 15% during 2009. According to the ministry of national Economy, the price index for rent stood at 138.6 for the year 2009 compared to 124.4 in 2008, or 11.4% growth.

Average Residential Rentals

Average Residential Sales Prices

On the rentals front, there were rumors that residential rentals will decline drastically due to the financial crisis and expatriates leaving the country due to recessionary pressures. However, this did not happen due to the stable economic performance. Moreover, the country witnessed a sort of shifting of headquarters of many business houses towards Oman from other GCC countries. Such trend had its impact on rentals that started to pick up significantly especially in prime locations with a new element of quarterly payment of rents added to it.

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‐10%

0%

10%

20%

30%

40%

50%

60%

70%

5 Star Rev 5 Star Occupany

4 Star Rev 4 Star Occupancy

Source: Ministry of National Economy,

Q2 2009 Q3 2009 Q4 2009

0

2

4

6

8

10

12

Al Khuwair

Qurum Gubrah North

Ghala Al Seeb Al Hail

OR/sqm

Q3 Q4

Rentals for two bedroom apartments were in the range of OR450 – RO850/ month in Al Ghubra, Qurum, Azaiba and Al Khuwair depending on total area and quality. Sale prices, on the other hand, average around OR580/sqm, while reaching more than OR1100/sqm in high end residential areas.

Average Monthly Office Rental Rates

Performance of Hotel Industry (YoY Growth)

4Q09 rentals almost stagnated at last quarter levels. The majority of office space is concentrated around Muscat where average monthly office rents are currently between OR7-10 per sqm. However, as Muscat is getting increasingly congested, the growth is now happening in Qurum Commercial Center, Khuwair, and Azaiba.

The hospitality sector is still impacted by the financial crisis. However, it started to show signs of marginal recovery by 3Q09 and 4Q09 as compared to previous quarters. Five star hotels’ occupancy rates reached 34.4% and 62.7% for 3Q09 and 4Q09 respectively. Likewise, four star hotels’ occupancy rates were at 44.1% and 60.7% for the same period.

Market Forecast

Segment Future Trend Rationale Residential Stable Demand in Oman has been to a great extent

endogenous. The population in Oman is growing, at an average annual rate of 2%. Moreover, around 43% of Omanis are under the age of 14 indicating the increasing residential demand over the medium term. Thus, industry sources estimates that 20,000 to 25,000 units are needed over the next few years to keep up with increasing demand. Thus we still hold our stable view for the segment.

Office Space Stable We still hold our stable view for the segment for the short term. We expect a flattening demand in 2010 with marginal tendency to pick up towards the end of the year depending on actual economic performance. On a longer term, it might witness a correction with the delivery of 200,000 sqm of office space in Muscat by 2012, predominantly located in Azaiba Business Park and Al Qurum City Centre. Matching such supply with increased demand will be linked to economic performance.

Hospitality Downward We still hold our negative view for the hospitality segment for 2010 as the world economy did not recover the recessionary pressures completely. On the demand front, we still see a decline in tourists visiting Oman in the medium term through 2011 as more than 40% of Oman’s tourist count is from US, UK and other developed economies. On the supply front, the major projects in Muscat are expected to add about 5,500 rooms to the already existing 4 and 5-star rooms through 2012 leading to an oversupply.

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5,000 8,000 11,000 14,000 17,000 20,000 23,000 26,000

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09*

2Q09*

3Q09*

4Q09*

4Q08

1Q09

2Q09*

3Q09*

4Q09

Porto Arabia Viva Bahriya Qanat Quartier Pearl average

QR/m2

Low High Average

‐

5,000

10,000

15,000

20,000

25,000

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09

3Q09*

4Q09*

West Bay Lusail

QR/m2

Low High Average

Qatar Real Estate Sector


Economic growth at 16% in 2010. Central Bank Governor announced that “Qatari economy grew by 9% in 2009 and shall experience real growth of about 16% in 2010, fueled by ongoing investment in hydrocarbons especially the production of natural gas”. In a related development, Qatar’s Prime Minister announced that 2010-2011 budget will be expansionary one. It will be the largest ever based on an oil price ranging between US450 to 55/b. The budget aim is to stimulate and complete existing infrastructure projects with new giant projects will also be announced.

Generally, the higher economic growth will be linked to increased business activity. Consequently demand for expatriates labor force will increase and thus real estate demand will pick up for all segments office, residential and retail to match with increased supply.

Emir approves law on 100% foreign capital. The Emir H H Sheikh Hamad bin Khalifa Al Thani issued Law No. (1) of 2010 amending some key provisions of Law No. (13) of 2000 regulating the investment of non-Qatari capital in key economic sectors. The amendments specify the additional fields in which the Minister of Business and Trade may permit foreign investors to have equity stake beyond 49% up to 100%. The sectors included are: consultancy services, information technology, services related to sports, culture and entertainment and distribution services.

The amendment aims to attract more foreign investment to the country. Moreover, as an investment incentive foreign investors may take real estate on long-term lease for the purpose of conducting their business. The lease period is for 50 years and renewable. Such amendment will have positive impact on real estate sector as the increased inflow of foreign investment will create more demand on real estate especially office and residential segments.

Amendments to rent law no 4 of 2008. The Emir H H Sheikh Hamad Bin Khalifa Al Thani ratified Law No. (2) of 2010, amending Law No. (4) of 2008. The new rent law retains most of the provisions of the 2008 legislation except that landlords will now be free to raise rents of residential properties. The law however, freezes the rents of shops and other commercial premises for one more year until February 2011.

Such move will not have a great impact on lifting rentals considerably. However, we still foresee that the basic supply demand fundamentals will govern rental hikes. Thus landlords will not be totally free to raise rents on residential properties on their whims and fancies as tenants are in a position to haggle and insist that landlords reduce the rent. Finally, current demand supply conditions will help to reflect real rentals and thus avoid speculative actions.

Performance Qatar real estate sector reported a declining trend during 2009 after reaching record highs during the boom period last three years. The impact of the financial crisis and economic slowdown was reflected on real estate sectors in the region during 2009 and Qatar was not an exception. However, currently Qatari real estate sector is showing signs of stabilization and recovery is not expected before 2H2010.

Apartments Resale Prices

* Estimates Source: Asteco& Global Research

Apartments Resale Prices

* Estimates Source: Asteco & Global Research

Pearl is the first project offering ownership by foreigners in Qatar. On Y-o-Y basis, 4Q09 reported average decline in apartments’ resale prices by more than 20% mainly

Other prime locations like Lusail and West Bay witnessed the same declining trend during 2009. On Y-o-Y basis, prices declined by 35% and 11.5% on

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02,0004,0006,0008,000

10,00012,000

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09*

4Q09

Al Saad Bin Mahmoud Al Muntazah

QR/m

Low High Average

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09*

4Q09

Najma Al Maamoura Bin Omran

QR/m

Low High Average

05,00010,00015,00020,00025,00030,000

4Q08

1Q09

2Q09

*

3Q09

*

4Q09

2Q09

3Q09

4Q09

West Bay Porto Arabia

QR/m

Low High Average

due to stress selling. Generally, Porto Arabia reported the largest Y-o-Y declines by the end of 4Q09 retreating by 29.4% while Viva Bahriya retreated by 18.2%. On quarterly basis, 4Q09 witnessed marginal declines of 2.8% as compared to 3Q09 resale prices.

average in Lusail and West bay respectively by the end of 4Q09. On quarterly basis, industry sources are indicating 4Q09 prices are showing signs of stabilization at the same level as 3Q09 with marginal declines in some locations.

Generally, residential segment reported average declines in prices of more than 30% by 4Q09 on Y-oY basis, as compared with 2008 peak levels. The major declines were almost seen in prime locations and projects like Pearl, West Bay and Lusail. On the sales front, 2009 witnessed a lower activity on the off-plan projects with transactions more active in the secondary market. Thus, by the end of 4Q09 asking prices almost stagnated at the same level as 3Q09 with developers trying to hold their prices while repackaging payment terms with lower deposit payments. Secondary market especially for Pearl project and West Bay started to stabilize at 3Q09 levels with marginal declines. Comparing both markets reported a discount of more than 25% for secondary market prices as compared to primary prices. This is mainly as owners of projects approaching handover are able to offer their units at prices much lower than developers asking prices while realizing gains on their investments.

Average Apartments Rentals




By the end of 4Q09, average rentals continued the declining trend. On Y-o-Y basis, Al Muntazah area declined the most by 40% as average rentals reached QR5,500/m. Bin Mahmoud area reported 38% of annual decline with rentals in the range of QR4,500/m to QR6,000/m. Rentals in Al Saad area reported lower annual declines in the range of 20% as demand from expatriates is more due to proximity to commercial facilities.

Other older residential districts witnessed the same declining trend due to lower demand in such areas. That was mainly due to shifting interest toward new projects approaching completion that were available at convenient rentals compared to services and amenities provided. On Y-o-Y basis, rentals in Najma declined by 38% followed by Al Maamoura and Bin Omran declining by more than 25% each.



Rentals in new residential districts such as West Bay and Pearl were more stable due to shifting demand by expatriates to relocate in such areas. As a result rentals declined at lower rates compared to other old districts. On Y-o-Y basis, rentals declined in the range of 15% to 25% in Porto Arabia and West Bay respectively by the end of 4Q09.

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10,000

12,000

14,000

16,000

18,000

20,000

22,000

4Q08

1Q09*

2Q09*

3Q09*

4Q09

4Q08

1Q09*

2Q09*

3Q09*

4Q09

4Q08

1Q09*

2Q09*

3Q09*

4Q09

Dafna Abu Hamour / Ain Khaled Al Hilal

QR/m

Low High Average

10,000

15,000

20,000

25,000

30,000

35,000

40,000

4Q08

1Q09

2Q09*

3Q09*

4Q09

4Q08

1Q09

2Q09*

3Q09

4Q09

West Bay West Bay Lagoon

QR/m

Low High Average

0

50

100

150

200

250

300

4Q08

1Q09

*

2Q09

*

3Q09

*

4Q09

*

4Q08

1Q09

*

2Q09

*

3Q09

*

4Q09

*

4Q08

1Q09

*

2Q09

3Q09

*

4Q09

*

C ring road D ring road West Bay

QR/m2/m

Low High Average

Average Villas Rentals


Average Villas Rentals


On a Q-0-Q front, villa rentals in older districts are showing signs of stabilization during 3Q09 and 4Q09 with marginal increases in some locations. Thus it seems that rentals already hit the bottom. On Y-o-Y basis, rentals in Al Hilal area are showing 6.7% decline by the end of 4Q09 while rentals in Dafna are showing 17.1% of growth for the same period.

Rentals in new projects were more impacted as rentals reached speculative levels during 2008. Thus by the end of 4Q09, Y-o-Y declines reported in prime locations were steep in the range of 25% to 30% for West Bay Lagoon and West Bay respectively. However, we foresee that current rentals almost hit the bottom with no expectations for further steep corrections.

Average Office Rentals


Office rentals in older business district were impacted more as compared with new business district or grade A office space in Diplomatic district. This was due to the dual impact of financial crises and declining demand as business is relocating in new business district such as West Bay due to the availability of smart buildings with services and facilities. By the end of 4Q09, office space rentals in C & D ring road reported Y-o-Y declines of almost 40% each reaching an average of QR130 to QR150/m2/m. This is to be compared with average rentals of QR210 to QR250/m2/m during 4Q08. Similarly, rentals in new business district reported Y-o-Y declines however at lower rate of 20% on average reaching QR180 to QR220/m2/m by the end of 4Q09.

Market Forecast


Residential (Mid class Apartments)

Stable We foresee that rentals might have hit the bottom to stabilize through 1H2010 without further steep declines. On the supply front, residential mid class apartments will continue to be under supplied as almost all projects approaching delivery are concentrated in the upper class. Thus rentals will maintain their levels for the short to medium terms with a potential of growth in the longer term depending on overall economic conditions in addition to population demographics.

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Residential (Upper class Apartments & Villas)

Stable We foresee that current rentals almost hit the bottom with no expectations for further steep correction. Thus our view is stable for the short term. However, over the longer term, the ongoing delivery of new projects & units will lead to increasing supply at a higher rate than increased demand, thus rentals might go through another wave of corrections. This will depend mainly on economic performance and business activity.

Office space Downward Rentals are expected to witness further declines in the medium term due to the delivery of new supply and increased vacancy rates. Currently, office space average occupancy rates are estimated at 85% to 90%. On the supply side, it is estimated that around 350,000 sqm of additional grade A office supply were delivered by 4Q09. Consequently, rental rates are estimated to witness further declines if such supply is not matched with increased demand which will depend mainly on overall economic conditions during the course of 2010. However, it is important to note that rentals in older business district might witness further declines in the short term due to shifting or relocating from older business district to new prime locations.

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KSA Real Estate Sector 4Q Highlights

Latest Development Impact

Heightening anticipation for mortgage law… As per recent statement by some government officials, the long-awaited mortgage law could be implemented as early as in next few months. It is expected to be a historic move for the development of real estate financing landscape in the Kingdom as the financial institutions eagerly wait to capture larger pie of mortgage industry that currently stands at 1.5% of GDP. Besides the business development of financial institutions, the heightened real estate activity will also lead to higher ancillary business (cement, insurance, etc.)

The law once enacted will allow a wider access to property ownership rights and details about overall regulatory framework. The real estate financing currently dominated by REDF facilities is expected to be actively joined by other financial institutions (banks) especially after getting further clarity through mortgage law on the right of financial institutions in case of clients default. In addition to expansion of the banks’ credit portfolio, the mortgage law will also provide an opportunity to diversify the bank balance sheets.

Performance

Riyadh Residential Rates

0250500750

1,0001,2501,5001,7502,0002,2502,500

Rental price avg. Sales price avg.

(SR

/sqm

/pa)

Villas Apartments

Jeddah Residential Rates

0250500750

1,0001,2501,5001,7502,0002,2502,5002,750

Rental price avg. Sales price avg.

(SR

/sqm

/pa)

Villas Apartments

The residential rates in Riyadh are expected to have remained somewhat consistent as compared to 3Q2009, while in Jeddah both the rental and sales prices of residential units have witnessed a rising trend. The indication of immediate increase of residential prices in Jeddah can mainly be linked to unfortunate event of flooding witnessed by the city in 4Q09. Although the government has been keeping a close check to control any exploitation because of high property prices, the demand supply situation can only be managed to certain extent.

Many residents in the south and east of the city and areas which were greatly affected by flooding preferred to move to the safer areas. In Jeddah, overall the prices were high in the areas that were at an elevation (due to lower chances of being affected by any future rains), while the low-lying areas experienced drop in property prices. The government near future plan is reported to build around 8,000 housing units to fulfill immediate demand in the more acute shortage areas of the country. Overall, KSA real estate financing activity that has consistently grown during the past years is expected to continue on the growth trajectory led by housing demand by fast growing population.

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40,000

50,000

60,000

70,000

80,000

90,000

100,000

2001 2002 2003 2004 2005 2006 2007 2008 2009e

(SR

mn)

KSA Real estate financing activity

REDF

Source: SAMA & Global Research The government’s Real Estate Development Fund has been trying to fulfill the public housing needs (esp. low income category). REDF loans recorded an average annual growth of 3% since 2006. REDF outstanding loans estimated at around SR78bn in 2009 constitute more than 80% of the real estate financing activity in the Kingdom. Although the banks have been continuously trying to capture greater market share of the real estate financing (recording an average 2006-09 annual growth of 7%), the new mortgage law is expected to provide the real impetus. The real estate finance currently constituting 10% of total consumer banking loans, offer attractive potential for future growth.

Market Forecast


Residential Upward With around 50% of households living in owner-occupied units, there is consistent demand for housing supply and financing. The housing demand is expected to range between 1.0 to 1.5mn units till 2015. The market interest dominated by domestic buyers (with 60% population under the age of 30) also reflects robust demand fundamentals.

Office Space Downward KSA office space of around 7.0mn sqm augmented and modernized by projects like King Abdullah Financial District (over an area of 1.6mn sqm) is expected to grow by 15% to 20% over next 5years. With focus on providing high quality environment, cities like Riyadh & Jeddah have pockets of old structures that remain un-demanded. Although the government has been actively working to provide improved infrastructure for business facilities, these developments need time to show full results.

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UAE Real Estate Sector


Abu Dhabi steps in to support troubled Dubai World … After Dubai World’s announced in November 25 its intention to restructure its debt, Abu Dhabi agreed to provide US$10bn to support the debt restructuring of Dubai World, including the repayment of Nakheel’s US$3.65bn sukuk that were due in December 2009.

The stepping up of Abu Dhabi to stand behind its neighbor Dubai have restored some of the lost confidence after the announcement of Dubai World’s debt restructuring. However, it is still too early before confidence is fully restored to the market as uncertainties still remain.

Emaar Cancels Merger with Dubai Holding Units… Emaar's board of directors called off the merger with Dubai Holding that was announced earlier in June 2009 citing lack of economic feasibility as the main reason behind the decision.

We believe this decision to be positive for the shareholders of Emaar as the planned merger brought concerns over the dilution to Emaar shareholders, and the feasibility of the new merged entity.

Burj Khalifa Launched… The beginning of 2010 marked the inauguration the world’s tallest tower by Emaar properties; Burj Khalifa (previously named “Burj Dubai”).

We do not believe that the opening of the Burj Dubai will have an immediate effect on the prices and rents in surrounding areas, however, the launch has restored some of the lost the hype of Dubai, and enhanced its image as a business hub.

Real Estate Financing… Real estate mortgage loans stood at AED138.3bn in Sep-2009and grew by 4% in from 2008 year-end level according to the latest available data by the UAE central bank, while credit to the construction sector increased by 6% in 2009 from 2008 year-end level to reach AED126.8bn.

We expect credit for real estate to remain tight in the short term, given high interest rates and lower LTV’s. However, our long term outlook is positive as the real estate market gradually recovers and banks ease their lending constraints.

Performance Land Transactions in Dubai

0

5

10

15

20

25

30

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

AED/Bn

Source: Dubai Land Department,

Dubai Residential Sales Prices

500

700

900

1100

1300

1500

1700

1900

Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

AED/Sqft

Source: Colliers International Completed Incomplete

As the market started to show some signs of stabilization in prices in H2 2009, the total value of land transactions in Dubai improved in 4Q 2009 on a q-o-q basis. During 4Q 2009, popular developments with proper amenities and infrastructure such as Palm Jumeirah, Dubai Marina, Downtown Burj Dubai, Springs and Arabian Ranches still fared better than others. The average price for completed properties increased by 9% in 4Q 2009 on a q-o-q basis, whereas the price of incomplete properties increased by 8% on the back of the increase of selling prices of Jumeirah Village, Victory Heights and Dubai Marina. In terms of villas and apartments, the average rate for apartments stood at AED1,113 per sqft with a 4% decline on a q-o-q basis according to colliers price index, whereas villa prices stood at AED919 per sqft on average showing an increase of 7% on a q-o-q basis.

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Average Apartment Rental Rate in Dubai (Dec-2009)

‐

50,000

100,000

150,000

200,000

250,000

Downtown Burj Dubai

Dubai Marina Greens Palm Jumeirah Jumeirah Lake Towers

AED/pa

Source: Landmarck Advisory

2 BR 3 BR

Average Villa Rental Rate in Dubai (Dec-2009)

‐

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Jumeirah Islands Meadows Palm Jumeirah Springs

AED/pa

Source: Landmarck Advisory3 BR 4 BR

Leasing rates for apartments witnessed a mixed trend with rents increasing in popular developments such as Palm Jumeirah and Downtown Burj Dubai. However, during 4Q 2009, the rates of declines were lower than those witnessed in 3Q 2009.

Starting from 3Q 2009, leasing rates for villas in Dubai started to stabilize. During 4Q 2009, the trend continued with sales prices for Villas remaining stable to some extent with increased demand lifting up prices in certain key areas like Palm Jumeirah and Springs.

Average Apartment Rental Rate in Abu Dhabi (4Q-09)

-

50,000

100,000

150,000

200,000

250,000

Khalidiyah Corniche Passport Road Khalifa Street Airport Road

AED/pa

Source: Asteco 2 BR 3 BR

Average Villa Rental Rate in Abu Dhabi (4Q-09)

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Khalidiya Airport Raha Gardens Khalifa A

AED/pa

Source: Asteco3 BR 4 BR

In Abu Dhabi, apartment rents continued to slide marginally as new supply continues to enter the market, and people continue to relocate from Abu Dhabi to Dubai on the back of lower rents. In addition, tenants’ negotiating power strengthened resulting in lower rents. Rents for higher quality apartments fell by 10% on average while those for lower quality apartments declined by more than 10%.

During 4Q 2009, leasing rates for villas in Abu Dhabi witnessed declines in the range of 10% to 20% with the largest drops witnessed in the higher end segment of the market. However, rents were more stable on Abu Dhabi’s mainland developments such as Al Raha Gardends.

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Average Office Rents in Dubai (4Q-09)

‐50 100 150 200 250 300 350 400

AED/Sqft/pa

Source: Asteco

Average Office Rents in Abu Dhabi (4Q-09)

‐20 40 60 80 100 120 140 160 180 200

AED/Sqft/pa

Source: Asteco

During 4Q 2009, the office market in Dubai has seen limited activity and no significant changes in prices and rents. However, certain areas attracted interest such as Dubai International Financial Center, and Sheikh Zayed Road.

As the market still awaits the new supply coming in, the office market in Abu Dhabi witnessed a limited activity as companies are adopting the wait and see approach. Slowing demand has further pushed rents down.

Market Forecast


Dubai Residential Downward With new supply of residential units coming on stream, we do not expect a recovery in 2010. However, we do not believe that the market will drop significantly in 2010. Prices are not expected to bottom out before 2Q 2010.

Dubai Office Space Downward Around 30mn sqft of additional office space is expected to enter the market by the end of 2011, which will increase vacancy rates and put further downward pressure on rentals.

Abu Dhabi Residential Downward Lower rents in Dubai are still attracting residents in Abu Dhabi, putting downward pressure on prices and rents. In addition, new deliveries in 2010 from projects such as Marina Square, Sun &Sky Tower, and Al Bandar will further push down rents and prices.

Abu Dhabi Office Space Downward As more supply hits the market in 2010, landlords are forced to offer competitive rates, pushing prices and rents further down.

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Selected GCC Real Estate Listed Companies Company Bloomberg Current Mkt Cap P/E P/BV

Ticker Price (in US$ mn) 1m 3m 12m (TTM) (TTM) 2009 2008

UAE

ALDAR Properties ALDAR UH 3.8 2,709 (14) (30) 63 9.7 0.6 274 938 Arabtec Holding ARTC UH 2.1 703 (11) (29) 26 3.5 1.0 na 261 Deyaar Development Co. DEYAAR UH 0.5 771 (13) (34) (18) 3.6 0.4 8 179 Emaar Properties EMAAR UH 2.9 4,996 (12) (32) 34 - 0.6 89 45 RAK Properties RAKPROP UH 0.5 283 (4) (26) 20 5.7 0.3 46 103 Sorouh Real Estate Co. SOROUH UH 2.2 1,491 (13) (32) (8) 11.0 0.9 131 506 Union Properties UPP UH 0.5 449 (28) (51) (40) - 0.3 (136) 208

Kuwait

Abyaar Real Estate Development Co. ABYAAR KK 0.06 205 (7) 8 (64) 2.9 0.2 na 21Al Mazaya Holding Co. MAZAYA KK 0.15 253 (6) 10 (19) - 0.5 na 46First Dubai Real Estate Development Co. FIRSTDUB KK 0.05 156 (12) 7 (55) 29.4 0.5 na 2IFA Hotels and Resorts IFAHR KK 0.51 803 (6) 4 10 7.2 2.2 108 131Injazzat Real Estate Development Co. INJAZZAT KK 0.17 201 (2) 1 (19) 3.7 0.7 na 54Mabanee Co. MABANEE KK 0.76 1,179 9 10 76 22.9 3.1 na 22National Real Estate Co. NRE KK 0.22 655 7 (8) 14 9.4 0.7 na 64Salhia Real Estate Co. SRE KK 0.24 321 9 10 45 - 0.8 na -124Tamdeen Real Estate Co. TAM KK 0.27 343 (5) (7) 2 - 1.0 na 48The Commercial Real Estate Co. ALTIJARI KK 0.12 690 - (2) 19 44.3 0.8 na 51United Real Estate Co. URC KK 0.09 241 4 10 26 128.4 0.5 na 21

Saudi Arabia

Dar Al Arkan Real Estate Development Co ALARKAN AB 14 3,989 (1) (14) (0) 7.8 1.1 564 627 Emaar the Economic City EMAAR AB 10 2,278 1 (4) 10 - 1.1 (82) (78) Jabal Omar Development Co. JOMAR AB 21 3,724 11 10 9 - 2 (6) naSaudi Real Estate Co. SRECO AB 25 798 1 (9) 26 32.9 1.0 24 31 Taiba Holding Co. TIRECO AB 17 668 2 2 5 35.6 0.9 18 43

Qatar

Barwa Real Estate Co. BRES QD 30 2,150 6 (13) 41 11.3 1.5 na 85 Ezdan Real Estate Co. ERES QD 36 26,096 (8) 10 297 30.1 5.2 na 373 Qatar Real Estate Investment Co. QRES QD 30 727 3 14 84 10.8 1.3 na 86 United Development Co. UDCD QD 31 902 (15) (15) 15 6.4 1.2 139 86

Bahrain

Inovest* INOVEST BI 0.5 139 (9) (4) (25) 12.0 0.6 11 91 Seef Properties SEEF BI 0.1 177 (1) (1) (6) 4.3 0.7 na 42

Oman

Sahara Hospitality Co. SAHS OM 2.4 36 - 24 31 9.0 1.4 4 3

Earnings (in USD mn)Stock Performance (%)

All current prices are in local currency as on December 3rd 2009 unless otherwise mentioned. * Current price in USD Source: Bloomberg, & Zawya

21

Global Investment House

Global Tower Website: www.globalinv.net

Sharq, Al-Shuhada Str. Tel. + (965) 2295 1000

P.O. Box: 28807 Safat, 13149 Kuwait Fax. + (965) 2 295 1005

Disclaimer This material was produced by Global Investment House KSCC (‘Global’), a firm regulated by the Central Bank of Kuwait. This document is not to be used or considered as an offer to sell or a solicitation of an offer to buy any securities. Global may, from time to time, to the extent permitted by law, participate or invest in other financing transactions with the issuers of the securities (‘securities’), perform services for or solicit business from such issuer, and/or have a position or effect transactions in the securities or options thereof. Global may, to the extent permitted by applicable Kuwaiti law or other applicable laws or regulations, effect transactions in the securities before this material is published to recipients. Information and opinions contained herein have been compiled or arrived by Global from sources believed to be reliable, but Global has not independently verified the contents of this document. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. Global accepts no liability for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. This document is not to be relied upon or used in substitution for the exercise of independent judgment. Global shall have no responsibility or liability whatsoever in respect of any inaccuracy in or omission from this or any other document prepared by Global for, or sent by Global to any person and any such person shall be responsible for conducting his own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this or other such document. Opinions and estimates constitute our judgment and are subject to change without prior notice. Past performance is not indicative of future results. This document does not constitute an offer or invitation to subscribe for or purchase any securities, and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. It is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. Neither this report nor any copy hereof may be distributed in any jurisdiction outside Kuwait where its distribution may be restricted by law. Persons who receive this report should make themselves aware of and adhere to any such restrictions. By accepting this report you agree to be bound by the foregoing limitations.

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GCC Real Estate Sector Quarterly Report 4Q-09 · 16% in 2010. Accordingly, we expect the demand for real estate to pick up. This will help to stabilize the real estate market through

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