Middle East & North Africa: Corporate Occupier Conditions and Practices. Enjoy the Ride. MENA Corporate Occupier Conditions Q2 2011

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1 MENA Corporate Occupier Conditions Q Middle East & North Africa: Corporate Occupier Conditions and Practices Enjoy the Ride Improvements in corporate confidence and willingness to invest in smart growth translated into early signs of demand expansion. Prime rents are stabilising in some markets, but many continue to soften, becoming more tenant favourable. Secondary buildings and locations continue to expereince rent declines.

2 On Point MENA Corporate Occupier Conditions Q June Introduction Welcome to our first MENA Corporate Occupier Conditions report, covering 9 markets across the Middle East & North Africa (MENA) for Q Confidence starts to build Momentum is building among corporate occupiers at both the global and European levels. Confidence across Europe is now at long-run averages and this is beginning to translate into more real estate activity. There is an on-going desire to upgrade the quality of occupied space, combined with either consolidation strategies or lease events. Since corporate cash balances remain strong, investment is available to follow through. In Q1 2011, the first whisperings of that all important word expansion emerged in select markets across the region. This attunes fully with the findings of our recent Global CRE Survey, which illustrated the dual pressures of pursuing growth and right-sizing. 1. Higher demands on productivity: CRE teams are required to be resourceful, enabling CRE leaders to further enhance productivity and efficiency. 2. Balancing the dual forces of growth and right-sizing: CRE organisations are exposed to complex targets, such as dealing with the contrary pressures of growth and right-sizing. 3. Progressing towards partnerships: CRE teams are moving towards more sophisticated partnership models with real estate service providers. 4. Reshaping CRE structures and sizing: A new talent requirement is emerging, resulting from a tougher operational environment, forcing CRE leaders to rethink team structures and skills. Corporate occupiers looking to expand their operations in the MENA region are finding that real estate market conditions continue to move in their favour. Across various regional markets, increasing supply is changing attitudes of owners, who now recognise that the balance of power has shifted in favour of occupiers. Although the position varies between markets, the level of choice available to corporate occupiers is generally increasing. This is providing opportunities for companies to consolidate and expand into new, higher quality premises without increasing their real estate occupancy costs. Quality remains an issue. Although overall choice is increasing in many markets, the availability of high quality completed space remains limited, leading some occupiers to pre-commit in new developments. The most striking example of this trend is the decision by Standard Chartered bank to pre-commit to a new headquarters built to their precise specifications in Dubai, a market characterised by overall vacancy levels in excess of 40%. Innovating in the pursuit of excellence We remain committed to bringing our first-class market research to you via new platforms and in more accessible formats. Based on our well established EMEA Corporate Occupier Conditions survey, this is our inaugural edition focused specifically on market conditions in the Middle East and North Africa. The report outlines the points of distinction for each market to provide a real sense of the current and future market dynamics. We aim to animate the data by focusing on the consequences of market conditions for you the corporate occupier. I hope that you find this report to be of interest and look forward to the opportunity to discuss the implications for your business. As always, we welcome any comments or suggestions as to how we can make this report of more value to you. The challenges facing Corporate Real Estate Securing more attractive space on more attractive terms remains the over arching objective of corporate real estate teams. There were four key trends identified in Jones Lang LaSalle s survey of 500 global CRE leaders, the first ever Global Corporate Real Estate Survey for MENA. Robin Pugh Head of Agency, MENA

3 4 On Point MENA Corporate Occupier Conditions Q June 2011 Middle East and Africa: Corporate Occupier Conditions Sparking in Tunisia and rapidly sweeping across the Middle East and North Africa, the seven month unprecedented phenomenon, now collectively referred to as the Arab Spring, lingers as political turbulence continues in pockets across the region. While business operations have since returned to normal across North Africa, these recent events did place the brakes on corporate activity notably expansion plans and it will take more time before plans are revisited. Across the UAE, fundamentals remain generally strong and demand has been supported by an active Government sector. Although UAE s real estate markets remain over-supplied, this also creates opportunities for occupiers. Within the broader GCC, unrest in Bahrain has led some occupiers to actively consider intra-regional relocations with Dubai, Abu Dhabi, and Doha all vying for this relocation demand. Across the region, the real estate options available to occupiers vary widely. Dubai continues to be heavily over-supplied with an average vacancy rate above 40%, which is followed by Doha with a quarter of all stock currently vacant. Despite these averages, high quality international standard supply available remains relatively light, particularly when considering both the location and the ownership structures of the underlying asset. Outside of the UAE, choice is constrained by a widespread lack of high quality space solutions. In North Africa, recent political unrest may have impacted growth, but it also led to adjustments in the development pipeline. In Cairo, for example, recent events reduced pace of delivery to and total anticipated supply in market. In 2011, UAE s GDP growth is forecast to accelerate to 4.9% due MENA Office Occupier Clock to gains in the oil and non-oil sectors of the economy. GDP growth is forecast by IHS Global Insight to be in the range of 4-5% out to Elsewhere in the region, Tunisia is forecast to have -0.9% GDP growth during 2011, primarily because political unrest impacted the tourism sector. From 2012 onwards, GDP is forecast to grow at 4.7%. In Algeria, growth has been more robust with 3.9% GDP growth forecast for 2011 but this is underpinned by large scale Government investment in projects to promote economic development and reduce already high unemployment rates. In Egypt, unrest and regime change impacted the economy with IHS Global Insight s forecasting GDP growth at 0.3% for 2011, increasing to 2.9% in 2012 on the Casablanca Algiers Rental Growth Slowing Rental Growth Accelerating Rents Falling Rents Bottoming Out Abu Dhabi, Cairo Dubai Doha back of gradual recovery in tourism and general business activity. The strongest performing economy in the area is likely to be Turkey, Tunis Jeddah, Riyadh which, despite decelerated economic growth, is predicted to achieve 5%+ GDP growth each year through Source: Jones Lang LaSalle In terms of rental conditions, 3 of the 9 markets monitored in this report are in the rental growth accelerating quadrant of the clock. This is attributed to the shortage of quality supply in the markets, rather than any significant or sustained boost in occupier demand. All other markets are in the rents bottoming out quadrant of the clock, but lingering supply overhangs are likely to maintain tenant favourable conditions and slow progress along the clock.

4 On Point MENA Corporate Occupier Conditions Q June Abu Dhabi Cairo Cost: US$ 536 / sq m Choice: 10.4% Cost: US$ 624 / sq m Choice: 5% The Abu Dhabi market continues to see high levels of supply though the correction in 2009 led to developers reassessing and rationalising projects. Overall supply in the market continues to outstrip demand while office space of international Grade A quality remains limited and though projects currently underway will address this, overall supply levels will escalate further. Demand in the market continues to be driven by government entities and stateowned enterprises though most of this demand is satisfied in government backed purpose-built developments. In the private sector demand is limited to occupiers already in the market looking to upgrade / consolidate. High levels of supply leave occupiers in a strong negotiating position. Rents for prime space have already fallen approximately 50% from the market peak and remain under pressure. Occupiers have postponed decision making and switched to a wait-and-see mode given the recent turmoil. The turmoil has also impacted choice. While only a few projects have been cancelled, many projects are likely to be delayed and this will reduce the 2011 pipeline by c25% further exacerbating the difficulty in finding larger lots of Grade A space. Occupier preference is for satellite areas New Cairo and 6 th of October (Smart Village) as they offer modern office stock, access to business services and amenities for staff, enhanced security and the opportunity to avoid the congestion and polluted downtown areas of Cairo. Grade A office rents for core & shell properties are in the area of US$ 26 per sq m per month. Prime rents commanded for the Nile view space in buildings such as the Nile City Tower of up to US$ 50 per sq m per month should be treated as an exception. With the overall supply pipeline being well stocked, average rental levels are expected to slightly soften. Algiers Casablanca Cost: US$ 660 / sq m Choice: 4% Cost: US$ 381 / sq m Choice: 10% Despite earlier unrest, business life is returning to normal, Algeria s economy continues to grow and there is increasing demand for currently scarce modern office space. Small scale local developers continue to dominate the supply side mostly via residential conversions in areas such as Hydra & Val de Hydra. The centre of Algiers suffers from poor accessibility, security threats and limited availability of space. Modern space is sporadic around the city although Bab Ezzouar is emerging as a financial and business hub benefiting from good infrastructure, modern office space and good accessibility. The construction of additional towers will add modern office stock that presents larger floor plates than the general average of sq m. Overall Grade A office space is available at rents of DZD 3,500 4,200 / sq m per month. Good Grade B space which continues to compete with Grade A space given its low availability remain at levels of DZD 2,500 3,000 / sq m per month. The market continues to see a lack international Grade A quality office stock although the development pipeline will bring some additional supply of A- or B+ quality over 2011 and Over Q1 general supply was low with only a handful of smaller schemes being delivered to the market. The current lack of modern Grade A stock continues to be a market constraint and it will remain difficult to for occupiers to find larger single floor plate solutions. Occupier demand remains high, but demand has toned down as an indirect result of the general decline in the business confidence in the Maghreb area. In the core areas rents for modern space are around MAD 210 / sq m per month. Rents for new Grade A new space in non-central areas increased marginally to MAD 150 / sq m per month. Grade A- and B+ buildings in the prime areas of the CBD remained available at around MAD180 / sq m per month.

5 6 On Point MENA Corporate Occupier Conditions Q June 2011 Doha Dubai Cost: US$ 763 / sq m Choice: 10% Cost: US$ 455 / sq m Choice: 44% Qatar is not expected to be drawn into the turmoil in the wider region and the country s economic fundamentals remain strong. The office market remains oversupplied. Recent increased demand has emerged from engineering / construction firms that are setting up local offices to support the massive infrastructure investments for the 2022 FIFA World Cup. Recent turmoil in nearby Bahrain has also led to speculation over some financial institutions relocating their operations to Qatar. This has yet to materialise and Qatar will face competition from other regional hubs such as Dubai and Abu Dhabi. The Qatari government indirectly helped support rental levels by taking up huge amounts of new space and there are signs that this might remain the case over the short to medium term. Rents for prime office space are in the region of QAR 225 / sq m per month and Grade A space is available at around QAR 175 / sq m per month but remains under downward pressure. New supply continues to enter the market despite many projects having been delayed or cancelled. c425,000 sq m of new space was completed in Q1. For 2011 total supply could reach 1.3 million sq m broadly in-line with 2010 although further postponements or cancellations could occur. Demand is focused on single ownership space within the CBD area and certain free zone areas. Given the choice on offer to tenants, developer mindsets are shifting with a stronger focus on satisfying requirements and specifications. City-wide vacancy rates increased to around 44% and are expected to exceed 50% over 2011 as new supply continues to be released. Declines in prime rent abated, with average prime rents in the CBD (excluding the DIFC) stable q-on-q at AED 150 / sq ft per month following a hefty 21% decline in Q Elsewhere office space can be secured at AED 110 per sq ft per annum. Further supply injections will apply further downward pressure on rents.

6 On Point MENA Corporate Occupier Conditions Q June Jeddah Riyadh Cost: US$ 235 / sq m Choice: 13% Cost: US$ 276 / sq m Choice: 12% The market remains oversupply. Despite reductions in the development pipeline there are 10 new office buildings under construction currently in Madinah Street, Sultan Street and Malik Street. No large scale projects will be announced over the medium term. Office vacancy is not expected to change dramatically in the short term. Government entities play an important role on the demand side, but far less than in Riyadh. It is expected however that Jeddah will benefit from increases in public spending and major infrastructure projects such as the expansion of the airport, the port and sewage projects. Demand for office space remains driven by local companies. While most wish to upgrade space, expansions remain limited and cost sensitivity remains high. Prime rents reduced by SAR 50 per sq m per annum q-on-q and will full further given the amount of supply in the market. Rental reductions will serve to support the ongoing flight to quality. Supply continues to outstrip demand and creates occupier favourable conditions. A number of recent large-scale office completions (Tamkeen Tower, Riyadh Business Gate, and Platinium-2) have increased choice outside the CBD. Supply will decrease over the short term, but will increase by the end of 2012 as 300,000 sq m of office completions place more stress on the market. Demand for office space is driven by the public sector with government departments and agencies taking up substantial amounts of space. Landlords are offering various incentives including rent free periods, fit out contributions, lower service charges or no-indexation agreements. This is especially true for larger requirements (2,000 sq m plus) and/or in secondary locations. Prime rents were stable q-on-q at SAR 1,000 / sq m per annum while Grade B office rents fell q-on-q to between SAR / sq m in the CBD, and lower outside the CBD.

7 8 On Point MENA Corporate Occupier Conditions Q June 2011 Tunis Cost: US$ 125 / sq m Choice: 12 15% After recent turmoil the country is now re-orientating politically and economically. Occupiers remained active although previously anticipated expansion plans have been put on hold. The majority of the existing stock in the market does not meet international standards and only a fraction of the market is available for lease. The main area for new construction of Grade A office space remains around the Lac de Tunis which is increasingly seen as a the new prime office area. Vacancy in the Lac de Tunis area has traditionally been considerably lower than in other parts of Tunis, and is anticipated to remain the same or decrease as business flee the city centre. Construction activity is slow with projects dependent upon imported materials and foreign expertise. For the short term, rents are expected to remain unchanged at around TND 160 / sq m per annum with current occupiers very carefully assessing the situation and their potential expansion plans. Middle East and North African Corporate Occupier Markets at a Glance Choice (% Vacancy Rate) Costs (Rents US$ / sq m / pa) Market Q month outlook Prime, Q month outlook MENA Abu Dhabi Algiers 660 Cairo Casablanca Doha Dubai Jeddah Riyadh Tunis Source: Jones Lang LaSalle

8 On Point MENA Corporate Occupier Conditions Q June Occupier Traffic Light: Stop, Slow, Go Market Abu Dhabi Algiers Cairo Casablanca Doha Dubai Jeddah Riyadh Tunis Stop: Landlord Favorable Market Slow: Neutral Market Go: Tenant Favorable Market Source: Jones Lang LaSalle

9 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in AED sq m annum Typical lease terms 1 3 years on small space / 5 10 years for large space (2,000 sq m+) Rents quoted gross or net basis (inclusive / exclusive of service charges) Mixed but most quoted gross (inclusive of service charges) Frequency of rental payments Annual in advance. Quarterly in advance becoming more common Typical rent deposit 5% 10% of annual rent Basis of rent reviews Negotaible subject to 5% rent cap Frequency of rent reviews Annual Agency fees payable by tenant Paid by landlord Rent free periods (months per year of lease) 1 2 months is current norm Other leasing incentives Landlord contribution to fit out Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Abu Dhabi Typically included in gross rent Metered and charged at tenancy level 1 space per 50 sq m included in rental 1 space per 50 sq m Depends on location Taxation Stamp duty level and who is responsible Property taxes level and who is responsible Tenant pays 5% of annual rent VAT / GST on rent level and who pays Disposal of Leases Ability to sub-lease Legally permitted but rare in practice Statutory right to renew for tenant Yes Early termination rights / break clauses Subject to negotiation Tenant reinstatement responsibilities Original condition Purchasing Property Common title system Leasehold (no freehold ownership in Abu Dhabi) Restrictions of foreign ownership Foreign investors can only purchase in designated investment areas Use of strata title Widespread many projects sold off plan to investors

10 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in DZD (Algerian Dinars), sq m / month Typical lease terms 3,6,9 year leases are the norm Rents quoted gross or net basis (inclusive / exclusive of service charges) Typically quoted net of service charges Frequency of rental payments Annual in advance Typical rent deposit 2 3 months Basis of rent reviews Fixed percentage (usually 5% pa) negotiated in lease Frequency of rent reviews Annual indexation Agency fees payable by tenant 10% 15% of annual net rent Rent free periods (months per year of lease) 1 3 months grace period Other leasing incentives Rental discounts on CapEx and contribution to fit out Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Algiers Tenant responsible for pro-rata share, payable monthly in addition to rent Charged separately from rent -level varies depending on quallity Metered and charged at tenancy level Yes usually included in rental Varies but usually 1 space per sq m Usually included within rent Taxation Stamp duty level and who is responsible Tenant responsible Property taxes level and who is responsible Landlord responsible but forms part of lease negotiations VAT / GST on rent level and who pays Tenant responsible (17% on both rent and service charge) Disposal of Leases Ability to sub-lease Yes subject to negotiation Statutory right to renew for tenant Yes subject to negotiation Early termination rights / break clauses Yes subject to negotiation Tenant reinstatement responsibilities Clean and in good repair Purchasing Property Common title system Freehold (for Algerian companies) Restrictions of foreign ownership Yes foreign companies not permitted to own Use of strata title Possible

11 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in Tenant responsible for pro-rata share in addition to rent payable monthly or quarterly based on estimates and not reconciled Typical lease terms Rents quoted gross or net basis (inclusive / exclusive of service charges) Electricity, HVAC and telecommunication consumption are separately metered and payable by each tenant; water consumption is included in the service charge Frequency of rental payments Charged in addition to rent Typical rent deposit 1 space per sq m Basis of rent reviews Typically $90 $150 per space per month Frequency of rent reviews Annual indexation Agency fees payable by tenant 8% 10% of annual rent Rent free periods (months per year of lease) Up to 3 months for tenant fit out Other leasing incentives Additional car parking spaces Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Cairo Tenant responsible for pro-rata share in addition to rent payable monthly or quarterly based on estimates and not reconciled Electricity, HVAC and telecommunication consumption are separately metered and payable by each tenant; water consumption is included in the service charge Charged in addition to rent 1 space per sq m Typically $90 $150 per space per month Taxation Stamp duty level and who is responsible Negotiable Property taxes level and who is responsible Tenant's responsibility but law is not strictly enforced VAT / GST on rent level and who pays Tenant responsible for sales tax on service charge payments Disposal of Leases Ability to sub-lease Subletting generally accepted subject to landlord's approval. Assignment generally prohibited Statutory right to renew for tenant Varies between old / new law Early termination rights / break clauses Through negotiation with landlord Tenant reinstatement responsibilities Good and clean condition Purchasing Property Common title system Freehold or leasehold Restrictions of foreign ownership Foreign ownership restricted Use of strata title Possible

12 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in Typical lease terms Rents quoted gross or net basis (inclusive / exclusive of service charges) Frequency of rental payments Typical rent deposit Basis of rent reviews Frequency of rent reviews Agency fees payable by tenant Rent free periods (months per year of lease) MAD (Moroccan Dirhams) / sq m / month 3.6 or 9 years (negotiable) Mixed but most quoted net (exclusive of service charges) Quarterly or 6 monthly in advance 1 3 months Max of 10% every 3 years Negotiable, generally every 3 years 10% 15% of annual net rent Generally 2 3 months Other leasing incentives Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Casablanca Separate service charge payable monthly based on estimates and reconciled annually Separate management fee paid monthly Utility consumption is separately metered and payable by each tenant Typically included within rent Typically 1 space per sq m leased Wide variation in charges for additional parking spaces Taxation Stamp duty level and who is responsible Tenant responsible where applicable Property taxes level and who is responsible 10.5% of rent landlord is reponsible but is charged back to tenant VAT / GST on rent level and who pays Not applicable on commercial leases; Tenant responsible on serviced office leases (20% of contract value) Disposal of Leases Ability to sub-lease Generally accepted subject to landlord's approval Statutory right to renew for tenant Yes Early termination rights / break clauses Yes negotiable, based on size and term of lease Tenant reinstatement responsibilities Clean and in good repair Purchasing Property Common title system Freehold Restrictions of foreign ownership Use of strata title

13 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in Typical lease terms Quoted in QAR / sq m / month 2 3 years Rents quoted gross or net basis (inclusive / exclusive of service charges) Frequency of rental payments Typical rent deposit Basis of rent reviews Frequency of rent reviews Quarterly 1 3 months Negotiable Annual indexation Agency fees payable by tenant Rent free periods (months per year of lease) Other leasing incentives Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Doha Tenant responsible for a service charge fee in addition to the rent payable annually and not reconciled Utility consumption is separately metered and payable by each tenant Taxation Stamp duty level and who is responsible Property taxes level and who is responsible Landlord responsible VAT / GST on rent level and who pays Disposal of Leases Ability to sub-lease Generally prohibited Statutory right to renew for tenant No unless negotiated for in original lease Early termination rights / break clauses Through negotiation with landlord (typical three month notice period) Tenant reinstatement responsibilities Original condition allowing for wear and tear Purchasing Property Common title system Freehold, leasehold and right of usufruct (99 years) Restrictions of foreign ownership Restricted to designated areas Use of strata title Possible

14 Unit of Measurement Unit of Measurement Square feet, moving to square meters in November 2011 Rental Payments Rents quoted in AED sq ft annum Typical lease terms 1 3 years on small space / 5 10 years for large space (+2,000 sq m) Rents quoted gross or net basis (inclusive / exclusive of service charges) Mixed but most quoted gross (inclusive of service charges) Frequency of rental payments Quarterly in advance becoming more common Typical rent deposit 5% 10% of annual rent Basis of rent reviews Negotaible subject to 5% rent cap Frequency of rent reviews Annual Agency fees payable by tenant Paid by landlord Rent free periods (months per year of lease) 1 2 months is current norm Other leasing incentives Landlord contribution to fit out Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Dubai Typically included in gross rent Metered and charged at tenancy level No charged extra 1 space per 50 sq m Depends on location Taxation Stamp duty level and who is responsible Property taxes level and who is responsible Tenant pays 5% of annual rent VAT / GST on rent level and who pays Disposal of Leases Ability to sub-lease Legally permitted but rare in practice Statutory right to renew for tenant Yes Early termination rights / break clauses Subject to negotiation Tenant reinstatement responsibilities Original condition Purchasing Property Common title system Leasehold and Freehold Restrictions of foreign ownership Foreign investors can only purchase in designated investment areas Use of strata title Widespread many projects sold off plan to investors

15 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in SAR / sq m / year Typical lease terms 1 3 years (small space) 3 5 years (large space) Rents quoted gross or net basis (inclusive / exclusive of service charges) Mixed but most commonly on net basis, plus separate service charge Frequency of rental payments Biannually / Annually Typical rent deposit 0 3 months Basis of rent reviews Negotiable Frequency of rent reviews Annual indexation Agency fees payable by tenant 5% 10% of annual rent Rent free periods (months per year of lease) Upto 3 months Other leasing incentives Minimal Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Jeddah 10% 20% of rent Utility consumption is separately metered and payable by each tenant Yes 1 space per sq m Included in rent Taxation Stamp duty level and who is responsible Property taxes level and who is responsible Landlord responsible, typically not charged back VAT / GST on rent level and who pays Disposal of Leases Ability to sub-lease Possible subject to landlord's approval Statutory right to renew for tenant No unless negotiated for in original lease Early termination rights / break clauses By break clause or through negotiation with landlord Tenant reinstatement responsibilities Original condition allowing for wear and tear Purchasing Property Common title system Freehold or leasehold (20 99 year leases) Restrictions of foreign ownership Foreign subsidiaries permitted to own corporate facilities Use of strata title Possible

16 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in SAR / sq m / year Typical lease terms 1 3 years (small space) 3 5 years (large space) Rents quoted gross or net basis (inclusive / exclusive of service charges) Mixed but most commonly on net basis, plus separate service charge Frequency of rental payments Biannually / Annually Typical rent deposit 0 3 months Basis of rent reviews Negotiable Frequency of rent reviews Annual indexation Agency fees payable by tenant 5% 10% of annual rent Rent free periods (months per year of lease) Upto 3 months Other leasing incentives Minimal Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Riyadh 10% 20% of rent Utility consumption is separately metered and payable by each tenant Yes 1 space per sq m Included in rent Taxation Stamp duty level and who is responsible Property taxes level and who is responsible Landlord responsible, typically not charged back VAT / GST on rent level and who pays Disposal of Leases Ability to sub-lease Possible subject to landlord's approval Statutory right to renew for tenant No unless negotiated for in original lease Early termination rights / break clauses By break clause or through negotiation with landlord Tenant reinstatement responsibilities Original condition allowing for wear and tear Purchasing Property Common title system Freehold or leasehold (20 99 year leases) Restrictions of foreign ownership Foreign subsidiaries permitted to own corporate facilities Use of strata title Possible

17 Unit of Measurement Unit of Measurement Square meters Rental Payments Rents quoted in TND (Tunisian Dinars) / sq m / month Typical lease terms 1 2 years (although some landlords have adopted the French system of 3,6,9 years) Rents quoted gross or net basis (inclusive / exclusive of service charges) Net (exclusive of service charges) Frequency of rental payments Monthly / Quarterly Typical rent deposit 2 3 months Basis of rent reviews Typically 5 8% pa on longer leases Frequency of rent reviews At end of lease term Agency fees payable by tenant Norm is 15% of annual net rental Rent free periods (months per year of lease) 1 3 months grace period for fit out Other leasing incentives Possible to negotioate landlord contribution to fit out Real Estate Standards MENA Service Charges & Operating Costs Level of service charges payable by tenant Level of management fee payable by tenant Utility charges payable by tenant Car parking any spaces included in rent? Car parking typical provision Car parking typical cost Tunis Tenant responsible for a small charge, known as Frais de Syndic, in addition to the rent payable monthly and not reconciled As with service charges Utility consumption is separately metered and payable by each tenant Negotiable no set pattern Negotiable no set standard Varies Taxation Stamp duty level and who is responsible Tenant responsible negotiable Property taxes level and who is responsible Landlord responsible but costs charged back to tenant via service charge VAT / GST on rent level and who pays Tenant responsible (18% on both rent and service charge) Disposal of Leases Ability to sub-lease Generally prohibited Statutory right to renew for tenant Yes Early termination rights / break clauses Can be negotiated Tenant reinstatement responsibilities Clean and in good repair Purchasing Property Common title system Freehold Restrictions of foreign ownership No restrictions, except agricultural land Use of strata title Possible but not widespread in office market

18 Jones Lang LaSalle MENA offices: Dubai Emaar Square Building 1, Office 403 Sheikh Zayed Road PO Box Dubai, UAE Tel: Fax: Jeddah Jameel Square Level 4 Suite 406 Tahliya and Andalus Streets PO Box 2091 Jeddah Saudi Arabia Tel: Fax: Abu Dhabi Al Niyadi Building 10 th Floor, Office 1003 Airport Road PO Box Abu Dhabi, UAE Tel: Fax: Cairo World Trade Centre 19 th Floor 1191 Corniche El Nil Street Cairo Egypt Tel: Fax: Riyadh Abraj Atta wuneya South Tower, 18 th Floor King Fahd Road PO Box Riyadh Saudi Arabia Tel: Fax: Business Contact: Robin Pugh Head of Agency, MENA robin.pugh@jll.com Dana Williamson Tenant Represenation, UAE dana.williamson@jll.com John Harris Co-Head of KSA, Riyadh Office john.harris@jll.com Ayman Sami Head of Egypt ayman.sami@jll.com Report Contact: Research Craig Plumb Head of MENA Research craig.plumb@jll.com Follows us youtube.com/joneslanglasalle linkedin.com/company/jones-lang-lasalle joneslanglasalleblog.com/emearesearch COPYRIGHT Jones Lang LaSalle IP, INC All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.