Real Estate Activity. Residential Prices. Residential Rents. Disclaimer. People

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2 FOREWORD CONTENTS 4 Real Estate Activity Cavendish Maxwell is a highly respected independent firm of chartered surveyors and property consultants, focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell is now one of the most influential property consultancies in the region. As a fully qualified member firm of the Royal Institution of Chartered Surveyors (RICS), and with extensive knowledge of the region, Cavendish Maxwell has the necessary experience, expertise and insight to deliver property advice of the highest standard. Our reports are used for loan security, audit, insurance reinstatement, dispute resolution, risk management, debt recovery, performance analysis, project financing, development strategy and government initiative implementation. We provide a comprehensive range of property services across all our departments, each of which is headed by highly skilled, experienced and fully qualified RICS chartered surveyors. Our various teams provide valuation, agency, advisory, plant and machinery valuations, capital investment, research and building consultancy services across all property types and sectors. Our provides a summary of the residential, retail and office market as of March 2018, highlighting rent performance and factors impacting demand. The report also includes an overview of the freehold Integrated Tourism Complex (ITC) developments and outlook for the property sector in Tourism Overview - Oman Integrated Tourism Complex (ITC) Developments Residential Prices Residential Rents Office Market Overview Retail Market Overview Disclaimer 15 People 2 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me

3 REAL ESTATE ACTIVITY Oman s GDP is expected to rise to 3.4% in 2018 and settle at 2.9% in 2019 from an estimated 0.1% for 2017, according to the World Bank. TOURISM OVERVIEW OMAN Oman is focusing on its tourism industry as a driver of economic growth. The gradual recovery of oil prices alongside the introduction of natural gas production at the Khazzan Gasfield and the opening of a new Muscat International Airport are expected to improve confidence and encourage private sector investment in the country, thus bolstering Gross Domestic Product growth. Consequently, this is likely to boost the real estate sector performance in the country. Despite economic slowdown over the last two to three years, the contribution of the real estate sector to the Oman economy (GDP) continued to increase from 3.9% in 2014 to 5.2% in However, 2017 proved to be a challenging year for the sector as rents and price across all segments of the market, including residential, commercial and retail, declined against weakening demand. The latest figures released by the Ministry of Housing, Oman, indicate that the total value of property traded in the country during 2017 amounted to OMR 2.6 billion, down around 61% against Mortgage contracts registered the steepest decline of 74% from 2016 to OMR 1.4 billion in To boost investment in the Oman real estate sector, the Capital Market Authority (CMA) of Oman issued the regulatory framework for introduction and trading of Real Estate Investment Trusts (REITs) on the Muscat Securities Market in January The regulation opened the market to all Omani residents, including expats, allowing them to purchase a part of a real estate development in the Muscat Securities Market. This is expected to further boost real estate market activity. Since the launch of the 2040 Tourism Strategy of Oman, the contribution of tourism to the Sultanate s GDP increased to 2.8% in 2016, with year on year inbound tourists increasing to 3.3 million by December 2017, according to the National for Statistics and Information (NCSI). Government initiatives are focused on boosting the sector s contribution to GDP to 6%-10% in 20 years whilst creating more than 500,000 jobs through an investment of OMR 20 billion. One of the key initiatives to boost the sector s contribution is the launch of e-visa services in July 2017, to enhance efficiency of the arrival process in Oman and the overall arrival experience. Further, it continues to promote Integrated Tourism Complexes (ITC) which are freehold areas that offer residence visas for those who buy properties in the country. The upcoming new international airport in Muscat, expected to open in 2018, is also likely to boost incoming tourism numbers to 21 million by 2035, up from eight million at the end of 2015, registering an annual growth rate of more than 5%, according to International Air Travel Association (IATA). 3,000 3,150 Key Indicators for Real Estate Sector, Oman Q October November December Total 2017 % change ( ) 2,500 2,635 Traded value of the property in the Sultanate (OMR million) 6, , % Fees collected for all legal documents % 2,000 2,225 Traded value of sales contracts (OMR million) 1, , % Sales contracts (numbers) 68,145 5,671 4,921 3,943 14,535 59, % Traded value of mortgage contracts (OMR million) 5, , % Mortgage contracts (numbers) 22,608 1,588 1, ,909 18, % Traded value of barter contracts % Number of inbound Tourists ( 000) 1,500 1,000 1,713 1,922 Barter contracts , % 500 Properties issued (numbers) 230,403 21,743 20,677 16,273 58, , % Properties issued for GCC states citizens 1, , % Source: Ministry of Housing, Oman Source: NCSI, Oman GCC Other Arabs Asian European Other 4 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me

4 INTEGRATED TOURISM COMPLEX (ITC) DEVELOPMENTS As a part of its move to reduce the country s reliance on oil and diversify the economy, the government of Oman has opened the real estate sector to investment from expatriates in Integrated Tourism Complexes (ITC). The ITCs are freehold mixed-use developments featuring different asset classes including residential, hospitality, retail, leisure and offices. Expatriates constitute 45% of the total population as of December 2017 and have historically had limited exposure to the property market. The government is developing more than 5,000 homes in collaboration with private developers in five ITC projects namely, Diyar Ras Al Hadd Resort, Omagine Project, Quriyat Integrated Project, Naseem Al Sabaah Project and Al Nakheel Project. Oasis Mall Muscat Qurum City National Museum of Oman Muscat City Muscat International Airport Zawawi Mosque Ruwi Mosque Sultan Qaboos Grand Mosque Saeed bin Taimoor Mosque Panorama Mall Mall of Oman 6 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me 7

5 RESIDENTIAL PRICES Residential property rents and prices continue to decline in Oman and adjust to the economic slowdown. A combination of factors including readjustment of salaries and job losses in key sectors, as well as new project handovers are impacting demand. According to the latest figures released by the Ministry of Housing, the total value of property traded in the country during 2017 amounted to OMR 2.6 billion, down around 61% against Demand has also been hampered by the pressure on housing budgets resulting from taxation. Additionally, the oversupply of residential stock has provided buyers with more choice at competitive prices. OMR 81,700 OMR 199,500 OMR 69,830 OMR 180,000 OMR 475,000 Mabela South OMR 21,850 OMR 26,600 OMR 31,980 Average Prices (in OMR) Apartment Villa/Townhouse 1 BR Price 3 BR Price 2 BR Price 4 BR Price 3 BR Price 5 BR Price OMR 60,000 OMR 190,000 OMR 171,000 Al Khoudh Al Hail South OMR 61,750 OMR 66,500 Muscat City The Wave OMR 57,600 OMR 132,400 OMR 189,000 OMR 237,500 Muscat International Airport OMR 475,000 Mall of Oman Muscat Hills OMR 145,000 OMR 180,000 OMR 282,600 Azaiba OMR 75,000 OMR 161,500 OMR 147,200 Zawawi Mosque Bawshar OMR 35,100 OMR 54,400 OMR 99,700 OMR OMR 242,200 Al Khuwair OMR 70,000 OMR 76,000 Madinat Al Sultan Qaboos OMR 66,500 OMR 83,600 Qurum OMR 63,600 OMR 76,000 Ruwi OMR 57,900 * Data as of March 2018 Source: Cavendish Maxwell Research 8 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me 9

6 RESIDENTIAL RENTS Continuous decline in rents have put tenants in a stronger position to negotiate terms with owners, who in turn are offering better rents and flexible lease terms. Landlords have also been offering three and six-month advance payments, as opposed to annual payments, to reduce vacancy risk on the property. Furthermore, housing demand is shifting towards more affordable housing causing a stronger rental decline in the premium locations. Tenants are migrating and showing a preference towards larger communities with a broader array of existing infrastructure and amenities being offered at affordable value. Rents are expected to fall further due to the government s move for Omanisation through the imposition of a new expatriate law causing six months ban on expat visa issuance in 87 occupations, as well as residential project oversupply from previous years. OMR 700 OMR 1,050 Apartment OMR 300 OMR 350 OMR 2,230 Mabela South OMR 140 OMR 170 OMR 240 Villa/Townhouse OMR 570 OMR 480 OMR 260 OMR 310 Average Rents (OMR per month) Al Khoudh Al Hail North OMR 380 OMR 400 OMR 430 Al Hail South OMR 150 OMR 220 OMR 480 OMR 1,430 OMR 1,480 OMR 2,230 Muscat City The Wave OMR 640 OMR 910 OMR 1,050 Muscat International Airport OMR 1,520 Mall of Oman Muscat Hills OMR 620 OMR 960 Azaiba/Ghubrah North OMR 270 OMR 440 OMR 670 OMR 670 OMR 1,330 OMR 2,120 OMR 520 OMR 920 OMR 590 OMR 950 OMR 290 OMR 440 OMR 650 Bawshar Al Khuwair Shatti Al Qurum OMR 1,050 Madinat Al Sultan Qaboos OMR 1,160 OMR 620 OMR 760 Qurum OMR 330 OMR 390 OMR 540 Ruwi OMR BR Rent/month 3 BR Rent/month 2 BR Rent/month 4 BR Rent/month 3 BR Rent/month 5 BR Rent/month OMR 670 OMR 860 OMR 270 OMR 400 OMR 390 * Data as of March 2018 Source: Cavendish Maxwell Research 10 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me 11

7 OFFICE MARKET OVERVIEW Mixed use developments to lead demand for offices. RETAIL MARKET OVERVIEW The retail market is in transition given the changing shopping preferences and habits of consumers. Job cuts due to the economic slowdown have continued to put pressure on the office real estate market. Rents continue to decline, especially in central business districts (CBD). Tenants are becoming more sensitive to the location and quality of the property they rent, amenities being offered at the property and the price they are paying, giving rise to the development of new CBDs. Landlords who are responding proactively to the market conditions by offering competitive rents for the high quality properties are witnessing quicker absorption and higher occupancy levels. The performance of the office market is expected to be largely driven by a combined effect of economic diversification and development of sectors other than oil and gas, as well as accessibility and amenities such as parking facilities being offered. The mixed-used developments featuring a combination of residential, office and retail developments are further likely to underpin the performance of the country s real estate sector as they offer competitive prospects to both the developers as well as tenants. These master developments have started to attract an increasing number of tenants by offering better quality of life, reduced commute times to work and offering accessible retail outlets. Despite weaker consumer sentiment and declining retail sales due to poor market conditions, a significant amount of retail space is being added to the existing stock in the country, mainly in the capital city. The retail landscape of the country is gradually shifting towards larger format malls from standalone retail outlets, owing to changing shopping preferences of the population. The consumers now look forward to a holistic shopping experience combined with leisure and entertainment. In 2018 two new malls from Landmark Group, branded Oasis Malls, in Sohar (33,000 sqm) and Salalah (35,000 sqm), as well as Majid Al Futtaim s My City Sur and City Sohar, among others, are expected to be added to the supply. Retail Rents in Key Locations (OMR per month) Office Rents in Key Areas (OMR per sqm) Qurum OMR 6-8 per sqm Mabela OMR Al Khoudh OMR Mawaleh South OMR Shatti Al Qurum OMR 6-8 per sqm Qurum City Muscat City Muscat International Airport Azaiba OMR 6-8 per sqm Zawawi Mosque Oasis Mall Muscat Ghubrah OMR 6-8 per sqm Sultan Qaboos Grand Mosque Al Khuwair OMR 4-6 per sqm Saeed bin Taimoor Mosque Shatti Al Qurum OMR 680 Qurum City National Museum of Oman Ruwi OMR Ruwi Mosque Panorama Mall Ghala OMR 4-6 per sqm 12 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me 13

8 DISCLAIMER PEOPLE This report may not be reproduced, either in whole or in part, nor altered in any way, without the prior written consent of Cavendish Maxwell. The information and analysis contained in this report has been obtained from or is based on information from a variety of sources generally regarded to be reliable and assumptions which are considered reasonable, and which were current at the time of undertaking market research. However, no representation is made, or responsibility accepted by Cavendish Maxwell or Property Monitor, in respect of the accuracy or currency of this information. Potential investors or developers are encouraged to carry out their own assessment of market potential and investment returns. It should be noted that the estimation of future sales prices, rental levels, development and investment returns and development viability is a very problematic exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute values. The process of making forward projections for such key elements involves assumptions which are acutely sensitive to changing conditions, variations in any one of which factors may significantly effect the viability of a project and we draw your attention to this factor. Cavendish Maxwell and Property Monitor do not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this report. 40 BANKS Our documents and advice meet banking and audit criteria, proven by our presence on over 40 bank panels across the Middle East. Jay Grant MSc IRRV (Hons) Founder and Chairman E: jay.grant@cavendishmaxwell.com Miles Phillips BSc (Hons) MRICS Senior Partner E: miles.phillips@cavendishmaxwell.com Nigel Armstrong FMAAT Chief Executive Officer E: nigel.armstrong@cavendishmaxwell.com Khalil Alzadjali Head of Oman E: khalil.alzadjali@cavendishmaxwell.com KEY SERVICES Market Research Due Diligence for Land Acquisition Asset Management Property Data STRATEGIC CONSULTING AND RESEARCH By working with our strategic consulting team, our clients immediately gain access to our knowledge base, technical expertise and highly skilled individuals, making us the development partner of choice. Our rigorous analysis, research and unique access to Property Monitor allows our team to produce reports and advice with a refreshingly different vision leading to creative and effective strategies. Manika Dhama BA (Hons), MBA Senior Consultant Strategic Consulting and Research E: manika.dhama@cavendishmaxwell.com Sofia Underabi MRICS AAPI Partner Head of Residential Valuation E: sofia.underabi@cavendishmaxwell.com Highest and Best Use Studies Feasibility Studies Buyer Profiling Advisory Services We have advised on schemes with a gross development value of over AED 3 billion in the last year. Our reports are used internally for business planning purposes and to satisfy the criteria of external financiers and auditors. Our name is trusted by all major banks across the Middle East, supported by our presence on over 40 bank panels across the region. Lynnette Abad BBA (Hons) Partner Head of Property Monitor E: lynnette.abad@propertymonitor.ae Paul McCambridge Head of Sales Property Monitor E: paul.mccambridge@propertymonitor.ae Joint Venture Structuring Site Analysis Education Advisory and Valuation 14 Cavendish Maxwell 2018 cavendishmaxwell.com Property Monitor 2018 propertymonitor.me

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