UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8 - K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

 

Date of Report:   July 9, 2015
     

  

Omagine, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware   0-17264   20-2876380  
(State or other jurisdiction Of incorporation)   (Commission File Number)   (IRS Employer Identification No.)  
           

 

 

350 Fifth Avenue, 48 th Floor, New York, N.Y.   10118
(Address of principal executive offices)  

(Zip Code)

 

 

 

Registrant's telephone number, including area code: (212) 563-4141

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of Registrant under any of the following provisions:

 

 

☐ Written communication pursuant to Rule 425 under the Securities Act;

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act;

☐ Pre-commencement communication pursuant to rule 14d-2(b) under the Exchange Act;

☐ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act.

 

 
 

 

Item 1.0 Entry into a Material Definitive Agreement .

On July 1, 2015, Omagine LLC (“Omagine”), a 60% owned subsidiary of Omagine, Inc. (OMAG”) signed a Usufruct Agreement (“UA”) with the Government of Oman (the “Government”) whereby the Government granted Omagine certain rights over one million square meters (approximately 245 acres) of beachfront land (the “Land”), which rights include the right to sell such Land on a freehold basis (the “Usufruct Rights”).

Omagine had previously signed a Development Agreement (“DA”) with the Government on October 2, 2014. The Land will be utilized by Omagine for the development in Oman by Omagine of a mixed use tourism and residential project (the “Omagine Project”).

On July 2, 2015 the Usufruct Agreement was registered with the Government, which registration perfected Omagine’s legal ownership of the Usufruct Rights. (See: Exhibit 10.4 and 10.5)

The DA specifies certain dates from which time periods for the execution by Omagine of various tasks are to be measured (the “Measurement Dates”). Pursuant to the DA, these Measurement Dates were the Execution Date of October 2, 2014 and the Effective Date of March 11, 2015.

On July 2, 2015, the Government confirmed in writing to Omagine its agreement that the aforementioned Measurement Dates are now changed. The single Measurement Date for the execution by Omagine of such various tasks enumerated in the DA is now July 1, 2015. (See: Exhibits 10.6 and 10.7)

The Omagine shareholders are:                

             
  i. Omagine, Inc. which owns 60%, and
   
  ii. Royal Court Affairs which owns 25%, and
     
  iii. Two subsidiaries of Consolidated Contractors International Company, SAL, which collectively own 15%.

Royal Court Affairs (“RCA”) is an Omani organization representing the interests of His Majesty, Sultan Qaboos bin Said, the ruler of Oman. Consolidated Contractors International Company, SAL (“CCC”) is a multi-national construction and engineering company with over $5 billion of annual revenue, 130,000 employees worldwide and operating subsidiaries in, among other places, every country in the Middle East and North Africa (the “MENA Region”).

OMAG and Omagine are sometimes referred to collectively in this report as the “Company”.

Item 3.02 – Unregistered Sales of Equity Securities

On June 24, 2014 OMAG issued to an investor 1,000,000 common stock purchase warrants, each of which are exercisable for the purchase of one restricted share of OMAG’s $0.001 par value common stock (“Common Shares”) at a per share exercise price equal to the greater of: (a) $1.00 per Common Share, or (b) 80% of the closing sale price for a Common Share on the trading day immediately preceding the relevant exercise date (the “Tempest Warrants”). The Tempest Warrants and the Common Shares issuable upon exercise of the Tempest Warrants are “restricted securities” as that term is defined in the Securities Act of 1933, as amended. The Tempest Warrants expire on June 23, 2016. 

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On August 15, 2014, 240,000 Tempest Warrants were exercised by an affiliate of the investor at an exercise price of $1.40 per Common Share for proceeds to OMAG of $336,000. On October 2, 2014 a further 250,000 Tempest Warrants were exercised by such affiliate at an exercise price of $1.31 per Common Share for proceeds to OMAG of $327,500.

On June 29, 2015 the investor exercised 158,228 Tempest Warrants at an exercise price of $1.58 per Common Share for proceeds of $250,000. In conjunction with this June 29, 2015 exercise, OMAG agreed with the investor to file a registration statement with the SEC to register all the aforementioned Common Shares presently owned by the investor and his affiliate as well as the remaining 351,772 Common Shares underlying the remaining 351,772 Tempest Warrants outstanding as of the date of this report.

Item 7.01 Regulation FD Disclosure .

On July 9, 2015 the Company issued a press release announcing the valuation of the Usufruct Rights owned by Omagine.

 A copy of the press release is attached hereto as Exhibit 10.3.

Item 8.01 Other Events .

Further to its continuing efforts to maximize clarity and transparency for its shareholders with respect to some inherently complex matters, the Company is providing the following information:

A.      The Usufruct Rights

Pursuant to a shareholder agreement (“SHA”), Royal Court Affairs made a non-cash capital contribution (the “Usufruct Rights”) into Omagine. The Land was previously owned by His Majesty Sultan Qaboos bin Said, the ruler of Oman, which His Majesty transferred to the Ministry of Tourism of Oman (“MOT”) on condition that the Land be used for the development of the Omagine Project. As a result, the registered owner of the Land is MOT but the registered owner of the Usufruct Rights over the Land is Omagine. The Usufruct Rights are therefore an intangible asset owned by Omagine.

From the Company’s perspective, the three most significant - but entirely different - questions to be resolved with respect to Omagine’s Usufruct Rights are:

1. What is the value of Omagine’s Usufruct Rights ?
2. How should Omagine’s Usufruct Rights be accounted for and recorded in Omagine’s financial statements and in the Company’s consolidated financial statements?
3. Are Omagine’s Usufruct Rights “bankable” ? --- (i.e. will their value be considered by the banks as collateral for bank debt for the Omagine Project ?)

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As detailed below, the Company’s management has formed an opinion on the answers to all three of these questions but investors are cautioned that, because of the inherently complex process required to determine such answers, management has also determined to rely, over and above management’s reliance on its own opinions as detailed below, on the opinions of professional advisors who are qualified specialists in each such matter. The opinions expressed by management below and herein therefore may not be representative of the actual eventual outcomes or answers to the above 3 questions, each of which will be definitively determined at a date subsequent to the date of this report.

1. Valuation of the Usufruct Rights

Since the Usufruct Rights are an intangible asset, they must be “valued” in a professionally recognized manner. In order to establish the value of the Usufruct Rights and properly record such value in its financial statements, Omagine contracted with three separate real-estate valuation firms, each of which are well known in Oman and Dubai and all of which have worldwide recognizable brands in the real-estate valuation business. These firms were tasked to provide Omagine with the value of its Usufruct Rights. All three valuations were conducted in accordance with the professional standards specified by the Royal Institution of Chartered Surveyors (“RICS”) and International Financial Reporting Standards (“IFRS”).

· In November 2014, Omagine engaged the Oman office of Savills (http://www.savills.com/ (“Savills”) operating as Arabian Real Estate LLC http://www.savills.om). Savills provides real estate services from over 600 offices worldwide, is listed on the London Stock Exchange, and is a FTSE 250 Index company.
· In December 2014, Omagine engaged a Dubai, UAE firm with extensive experience in Oman: DTZ International Ltd. (http://www.dtzglobal.com) (“DTZ”). DTZ is one of the top three global commercial real estate service companies, with more than 28,000 employees operating across more than 260 offices in 50 countries and $63 billion in transaction volume.
· In January 2015, Omagine engaged another Dubai, UAE firm: Jones Lang LaSalle, UAE Limited, Dubai Branch (http://www.jll-mena.com/mena/en-gb/locations/Our-locations-in-MENA/dubai) (“JLL”). JLL has 53,000 employees operating across more than 230 offices in 80 countries.

The Savills and DTZ final valuation reports were received by Omagine in January 2015. The JLL final valuation report was received by Omagine on July 7, 2015.

Omagine and the Company are of the opinion that JLL’s valuation is flawed and most likely represents a statistical outlier. In an abundance of caution however, management has nevertheless determined to include the JLL valuation in its calculation of the average value of Omagine’s Usufruct Rights.

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The Usufruct Rights valuations by the three aforementioned firms are summarized in the table below:

Usufruct Rights Valuation
Valuation Firm   Omani Rials     U.S. Dollars *  
Savills   OMR 295,000,000   $ 766,233,000  
DTZ   OMR 385,000,000   $ 999,999,000  
JLL   OMR 150,000,000   $ 389,610,000  
Average   OMR 276,666,667   $ 718,614,000  
* (based on July 7, 2015 XE Currency Converter exchange rate)

It is management’s considered judgment, that the reliability and accuracy of any valuation (such as that of Omagine’s Usufruct Rights) is a function of several elements. Certainly, the quality, history and reputation in the market of the “valuer” company is very important – and in the present instance, all three valuer firms engaged by Omagine (Savills, DTZ & JLL) are high quality firms with excellent reputations and well deserved brand recognition.

It is also management’s opinion however that although the engagement of a well regarded valuation firm is a necessary element to obtaining a quality outcome – it is not exclusively sufficient to the obtaining of such a quality outcome.

Assuming a well regarded firm is engaged, it is management’s view that the appointment by such firm of a qualified and experienced team with at least one member having substantial direct experience in the market being examined is of paramount importance. It is in this latter aspect (the direct Oman market experience of the actual team of valuers appointed within JLL for the Omagine engagement) on which we feel JLL fell short. We assume JLL would disagree with management’s assessment in this matter but our assessment is not meant to reflect negatively on JLL generally, or as a company, or even on the particular team members assigned to the Omagine engagement who are quite experienced in markets other than Oman. Our assessment is given merely to inform our shareholders of management’s considered opinion with respect to the relative weights of reliability with which management judges the three valuations.

In evaluating and judging the relative reliability of the three valuations received (admittedly, a subjective exercise), Omagine management has put greater emphasis and weight on the level and duration of direct Muscat, Oman area real-estate valuation experience held by the actual persons doing the valuation within such firm, rather than solely on the firm’s reputation or brand recognition.

Management believes that - assuming the appointment of an experienced valuer team in each instance - then the firm with the greatest amount of direct, on-the-ground experience in the particular market being examined is most likely to deliver the most reliable valuation number. We therefore believe that the Savills’ valuation is the most reliable; DTZ’s valuation is the second most reliable; and JLL’s valuation is the least reliable (and in management’s opinion, probably unreliable). Management based its reliability judgments on the following:

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a.      Savills is the only one of the three valuation firms located in Muscat, Oman. The Land which is the subject matter of the Omagine Usufruct Rights valuation is located in Muscat. Savills is the closest to the real-estate market being examined and is extremely well experienced in the Oman and Muscat real-estate market. Moreover the Managing Director of Savills in Muscat who personally performed the Usufruct Rights valuation for Omagine is a RICS fellow who has lived and worked in Muscat for over 20 years during which time he continuously worked exclusively in the real-estate and valuation business. During this 20+ year time span, he has performed many other such valuations for various Muscat properties and is well respected by local banks and market participants for his knowledge and understanding of the Muscat real-estate market.

b.      DTZ is a well regarded and worldwide known brand in the real-estate valuation business and their valuation for Omagine was handled out of their Dubai, UAE office. DTZ has performed valuations throughout the Middle East and they have a great deal of experience in Oman, having performed many real-estate valuations in Muscat for various properties and clients over the years. More importantly, the two man team DTZ assigned to the Omagine valuation consisted of the DTZ Director for the United Arab Emirates who was also DTZ’s Head of Valuation in the UAE and who also had direct prior experience in Oman and Muscat; and an Associate Director of Valuation who had primary responsibility for the valuation. This Associate Director, moreover had previously lived for many years in Muscat, Oman where he worked within the real-estate management, valuation and development consultancy sectors. In Oman he was Head of Real Estate Consultancy for a global real estate practice, providing development, feasibility and valuation advice to various clients including international and regional developers, banks, pension funds, hoteliers and investment/holding companies. While in Oman, he carried out large scale valuations, development appraisals and feasibility studies on large scale mixed use developments on plots ranging from 4,000 square meters to 2 million square meters. This DTZ Associate Director, who was primarily responsible for the Omagine valuation, also served on the Oman board of the Royal Institution of Chartered Surveyors (RICS).

c.       JLL also has a well regarded and worldwide known brand in the real-estate valuation business and their valuation for Omagine was also handled out of their Dubai, UAE office. JLL has also performed valuations throughout the Middle East, including in Oman but, to our best information and belief, JLL has less direct Oman experience then either DTZ or Savills. Importantly in our judgment also, the two man team assigned by JLL to perform the Omagine valuation consisted of a quite capable and experienced Chartered RICS Surveyor with several years of experience in London and more recently in the Middle East – but only very limited experience in Muscat or Oman, and a very junior person who is not RICS qualified and is quite inexperienced. JLL’s proposal also listed other more senior RICS qualified executives with greater Oman experience and we believe the outcome of JLL’s valuation for Omagine would have benefitted from the more direct, rather than supervisory, involvement of these executives. So, although we continue to have the highest regard for JLL, it is our admittedly subjective viewpoint, that they fell short in the Omagine valuation because, in this instance, their valuation team had limited exposure and understanding of the Muscat market and this, we believe, is reflected in their valuation. JLL would no doubt disagree with management’s assessment but we offer it here merely to transparently inform our shareholders of the internal subjective criteria we utilized to score the relative reliability management placed on the three valuations received. Although the Company believes that JLL’s valuation may be and probably is, a statistical outlier, in deference to JLL’s vast experience in the real-estate valuation business, we have nevertheless included it when calculating the average value of Omagine’s Usufruct Rights.

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Even after allowing for the relative opaqueness of the Oman real estate market, the Company believes that the average valuation number - $718,614,000 - which is very close to the valuation number from Savills which we regard as the most reliable valuation, is a reasonable and accurate assessment of the value of Omagine’s Usufruct Rights.

2. Accounting for the Usufruct Rights

Omagine is a limited liability company organized under the laws of the Sultanate of Oman and its financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). Omagine’s financial statements are audited by Deloitte & Touche (M.E.) & Co. LLC (“Deloitte”). In order to maintain its independence as Omagine’s outside independent auditor, Deloitte has advised us it will not render “internal accounting advice” on the accounting for the Usufruct Rights.

OMAG is a U.S. company which prepares its financial statements in accordance with accounting principles generally accepted in the United States (“USGAAP”) and the Company prepares its consolidated financial statements in accordance with USGAAP.

In the majority of cases, consolidating IFRS prepared financial statements with USGAAP prepared financial statements is a straightforward exercise without consequence but occasionally, as with determining the correct accounting treatment of an “intangible asset” such as Omagine’s Usufruct Rights it is not so straightforward, and the Company must follow the guidelines and sometimes complex interpretive guidance with respect to both IFRS and USGAAP in order to properly account for the acquisition of the Usufruct Rights in both Omagine’s and the Company’s consolidated financial statements.

The Shareholder Agreement (in relevant part, at Clause 4.1[d][iii]), states the following with respect to RCA’s subscription for Omagine Shares:

“the subscription by RCA for six hundred sixty three thousand seven hundred fifty (663,750) Shares at a purchase price equal to that amount of Omani Rials determined to be the value of the PIK”

The term “PIK” in the Shareholder Agreement refers to the Usufruct Rights.

Management’s present interpretation of the applicable IFRS regulations pertaining to the proper method of accounting for “intangible assets” such as the Usufruct Rights (PIK) is that the issue turns on the question of whether or not “consideration” was paid for the intangible asset in question. We have seen the issue of accounting for “usufruct rights” pursuant to IFRS handled in different ways on the books of two publicly held European companies whose financial statements were both prepared in accordance with IFRS. In those cases:

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a.

when consideration was paid for the usufruct rights, then the value of such consideration paid for the usufruct rights (as determined) was recorded as an intangible asset in the balance sheet of the company’s financial statements, and

b. when consideration for the usufruct rights was not paid (i.e. if they were acquired free of charge), then the value of the usufruct rights (as determined) was not recorded as an intangible asset in the balance sheet but was disclosed in the footnotes of the company’s financial statements.

In this regard, it is management’s opinion that Clause 4.1[d][iii] of the Shareholder Agreement (quoted above) resolves the question of consideration. Omagine has clearly paid 663,750 Omagine Shares for the Usufruct Rights.

This – the accounting question for Omagine – is an entirely different question than the “valuation” question addressed above. The consideration given for the 663,750 Omagine Shares is the Usufruct Rights. We believe, in any event, that the value of the Usufruct Rights is more readily determinable than the value of the 663,750 Omagine Shares. Therefore the value of the Usufruct Rights should, in management’s present opinion, be recorded as capital on Omagine’s financial records. If the consideration consists of a “payment-in-kind” as is the case with Usufruct Rights – then the value of that consideration –– whatever it turns out to be – must be determined in order to properly account for the correct number in the relevant financial statements. As indicated in the discussion above, Omagine and Company management presently believe that the correct number for the value of such consideration is $718,614,000.

Omagine management’s present opinion therefore is that Omagine should record the $718,614,000 average valuation of its Usufruct Rights as an intangible asset on its balance sheet as a capital contribution from RCA but management will not persist in this opinion absent the consent of its independent auditor Deloitte & Touche (M.E.) & Co. LLC. Deloitte will not opine on this matter until after it has reviewed Omagine’s theory and determination in the matter. It is Omagine’s obligation to first make such determination independent from its auditor, Deloitte.

Notwithstanding the foregoing present opinion of management, Omagine is presently consulting with its IFRS accounting consultant before definitively determining the correct method of reflecting the $718,614,000 average value of its Usufruct Rights in its IFRS compliant financial statements. We expect to arrive at a final conclusion on this matter shortly.

Only after the IFRS methodology is resolved will we address and resolve how the Usufruct Rights will be recorded in the Company’s consolidated financial statements in accordance with USGAAP.

In this regard, and since the value of the Usufruct Rights is substantial, Omagine has retained the services of PriceWaterhouseCoopers LLP (“PWC”) to provide Omagine with PWC’s opinion of the correct IFRS compliant accounting method to be utilized in recording the value of the Usufruct Rights on Omagine’s financial statements. Omagine expects to receive the PWC opinion within the next two weeks and the Company intends promptly thereafter to engage a U.S based expert accounting firm to similarly advise the Company of the correct accounting method to be followed in recording the value of the Usufruct Rights on the Company’s consolidated financial statements in accordance with USGAAP.

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The Company’s financial statements are prepared in accordance with USGAAP and Omagine’s financial statements are prepared in accordance with IFRS. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure thereof elsewhere in the notes to such financial statements. The policies discussed in this report with respect to valuing Omagine’s Usufruct Rights are considered by management to be critical to an understanding of our financial statements because their application places the most significant demands on management's judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

3. Bankability of the Usufruct Rights

The Company and CCC financial executives have held numerous meetings and discussions over the past several months with many major local and international banks, the purpose of which was to discuss the prospects for such banks providing “Project Financing” for the Omagine Project. Project Financing which is expected to be composed primarily of syndicated debt financing from banks is a crucial matter to address and accomplish in order to make the Omagine Project a reality. Based on present assumptions, we estimate that Omagine’s peak Project Financing requirements will be approximately $350 to $400 million during the development cycle of the Omagine Project.

The process of obtaining Project Financing is not a trivial exercise for any developer. In almost all cases, it is a time-consuming, complicated, drawn-out and expensive process. When successful, the process culminates in an event known as a “Financial Close” – usually several Financial Close events - as projects of the size and scope of the Omagine Project are almost always developed in “Phases” (which, among other things, reduces risk to the banks). The Omagine Project will be developed in Phases.

The process of arriving at a Financial Close involves some or all of the following: A Financial Adviser is appointed by Omagine to, among several other things, structure and organize the syndicated bank financing among several banks. The Financial Adviser may or may not be a participant in the bank financing syndicate so organized. Omagine also plans to appoint several other specialized consultants whose efforts are crucial to reaching a Financial Close. These consultants include, but are not limited to, a master planning company, a consulting engineering company, a real estate consultant and a hospitality consultant. Together, these consultants and advisers, along with CCC as the general contractor, all inform and contribute to the final design process for the project.

Exact sizes, shapes and placement of the various project elements (residential, hotels, entertainment, landscape, etc.) are determined and as the master plan evolves and takes shape, the various Phases of development and construction will also naturally evolve. Simultaneously with these processes, the Financial Adviser will be updating the Omagine Project’s financial model to reflect the precise and final constituent project elements along with their projected costs and associated projected revenue streams. Finally, all of the foregoing data, and other marketing, sales and strategic planning studies we have created, are assembled into a “Business Plan” for Omagine. With the Business Plan in hand and with the Financial Adviser in the lead, Omagine (along with CCC) and the Financial Adviser and other select consultants set about the business of making final presentations to the various banks, with which we are now and will continue to be in touch, with the objective of achieving a Financial Close.

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With respect to any proposed Project Financing requirements, the question of whether or not Omagine’s intangible asset – the Usufruct Rights – can or will be used by the various banks as collateral to support such Project Financing is therefore of considerable importance.

The Omagine DA (See: Exhibit 10.1) addresses this matter in considerable length and clearly contemplates that Omagine will be granting a security interest in its Usufruct Rights to Lenders to the project. The DA further obliges the Government – as the registered owner of the Land – to consent to any such grant of a security interest by Omagine. (See Clause 22 of the DA – Lenders Security Interests). Also See: Schedule 20 to the DA – Principles of Direct Agreement – which states in relevant part:

“… the Government shall enter into Direct Agreements with Lenders acknowledging their rights by way of Security Interests over certain assets of the Project Company including an assignment to the Lenders of the Development Agreement, the Usufruct Agreement, other related agreements, and the Project Assets …”

The many major local and international banks with which Omagine management and CCC have met – and with whom we continue to meet and update - have indicated that Omagine’s Usufruct Rights over the Land will be considered by the banks as collateral to support Project Financing debt facilities for the Omagine Project. Furthermore these banks have also indicated to us that, it is irrelevant to them whether or not the value of such Usufruct Rights appear on Omagine’s balance sheet or in the notes to its financial statements.

Omagine management is therefore presently confident that the $718,614,000 value of its Usufruct Rights will be considered by the banks as collateral for Project Financing bank debt for the Omagine Project. Notwithstanding the foregoing statement however, it is not possible at this time to predict with certainty what future events may alter Omagine’s present assessment of its ability to use its Usufruct Rights to collateralize Project Financing bank debt. The only definitive time this matter can be resolved is at the conclusion of a Financial Close.

Any reference in this report to a term or condition of the Development Agreement, the Usufruct Agreement and/or the Shareholders Agreement does not purport to be complete and is qualified in its entirety by reference to the full texts of such agreements. The full text of the Development Agreement is attached hereto as Exhibits 10.1 and 10.2. The full text of the Usufruct Agreement is attached hereto as Exhibits 10.4 and 10.5. The full text of the Shareholder Agreement is attached hereto as Exhibits 10.9.

B.      Other Matters

Since the October 2, 2014 signing of the DA with the Government, management has expended considerable effort and resources on many key matters to the Company’s advantage. The present status of some of the more important of those matters are summarized below.

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● The CCC Contract      Omagine has engaged the largest law firm in Europe to draft the construction contract (the “CCC Contract”) proposed to be executed between Omagine and CCC’s Omani operating subsidiary, Consolidated Contractors (Oman) Company LLC (“CCC-Oman”). The Company continues to enjoy a good working relationship with CCC and CCC-Oman and in this regard, since the UA is now registered with the Government, CCC-Oman will now begin several initial activities at the Omagine Site (surveying, fencing, etc.) - even before the formal conclusion and signing of the CCC Contract. The CCC-Contract is now presently expected to be formally executed and approved by the parties within the next 60 days.
     
  ● The DA Timelines     As noted above, on July 2, 2015, the Government confirmed that the single Measurement Date for the execution by Omagine of various tasks enumerated in the DA is now July 1, 2015. (See: Exhibits 10.6and 10.7)
     
  ● Other Important Consultants       We have conducted exhaustive interviews and have reviewed multiple iterations of proposals from key consultants. We now expect to be making several crucial consultant appointments in the coming several months, including: a financial adviser, hospitality adviser, real-estate adviser, master planner, engineering consultant, construction management consultant and program manager.
     
  ● Equity Financing for Omagine       There is enormous investor liquidity in Oman and the GCC. Over the past six months, we have conducted many investor presentations with sovereign funds, investment funds and high-net worth individuals in Oman, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates, who have indicated a high level of interest in becoming equity investors in Omagine. These investor discussions are ongoing.
     
  ● Project Financing for Omagine        There is also enormous banking liquidity in Oman and the GCC. Over the past six months, we have conducted, and will continue to conduct, numerous meetings with major local and international banks. We have witnessed a large appetite at such banks for providing project financing debt facilities for the Omagine Project’s development.
     
  ● Updated Studies      In addition to the three land valuation reports described above, during the past many months we have completed an independent third party update to our feasibility study and have had our internal financial model updated by specialist real-estate investment bankers and advisers.
     
  ●   The Omagine Strategic Plan     Since October 2014, Omagine’s Managing Director, Frank Drohan and its Deputy Managing Director, Sam Hamdan have devoted a large amount of time and effort to developing a robust Strategic Plan for Omagine and the Company. Mr. Hamdan, who is a well known strategic planning consultant for a wide variety of companies and government agencies was particularly crucial to this effort. The approximately 200 page Omagine Strategic Plan is now near completion.

 

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Forward Looking Statements

This report on Form 8-K may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements contained in this report that are not historical facts, may be deemed to be forward-looking statements. Words such as "expects", "intends", "plans", "may", "could", "should", "anticipates", "likely", "believes" and words of similar import also identify forward-looking statements.  These statements are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. Investors and readers are urged not to place undue reliance on the forward-looking statements, which speak only as of the date of this report on Form 8-K.  Except as may be required under applicable law, we assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report on Form 8-K.  Additional information on risks and other factors that may affect the business and financial results of Omagine, Inc. can be found in other filings (the “SEC Filings”) of Omagine, Inc. with the United States Securities and Exchange Commission (the “SEC”). Investors are urged to review the Company’s other SEC Filings.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable

(b) Not applicable

(c) Exhibit Number and Description:

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Exhibit No.   Description
     
Exhibit 10.1   The Development Agreement dated October 2, 2014 by and between Omagine LLC and the Government of the Sultanate of Oman represented by the Ministry of Tourism of Oman (1)
     
Exhibit 10.2   A PDF reference copy of Exhibit 10.1 (2)
     
Exhibit 10.3   The press release dated July 9, 2015
     
Exhibit 10.4   The Usufruct Agreement dated July 1, 2015 by and between Omagine LLC and the Government of the Sultanate of Oman represented by the Ministry of Tourism of Oman, as registered by the Ministry of Housing of Oman on July 2, 2015
     
Exhibit 10.5   A PDF reference copy of Exhibit 10.4
     
Exhibit 10.6   An English translation of the letter dated July 2, 2015 from the Ministry of Tourism to Omagine LLC (i) handing over the Omagine Site, and (ii) extending the effective commencement date of the Development Agreement to July 1, 2015.
     
Exhibit 10.7   A PDF reference copy of the original Arabic version of Exhibit 10.6
     
Exhibit 10.8.1   The Savills Final Valuation Report
     
Exhibit 10.8.2   The DTZ Final Valuation Report
     
Exhibit 10.8.3     The JLL Final Valuation Report
     
Exhibit 10.9   The Shareholder Agreement (3)
     
(1)   Previously filed with the SEC on October 2, 2014 as an exhibit to Omagine’s current Report on Form 8-K and incorporated herein by reference thereto.
     
(2)   Previously filed with the SEC on October 2, 2014 as a reference copy exhibit to Omagine’s current Report on Form 8-K.
     
(3)   Previously filed with the SEC on November 8, 2011 as an exhibit to Omagine’s quarterly Report on Form 10-Q for the period ended September 30, 2011 and incorporated herein by reference thereto and a reference copy was filed as an exhibit to Omagine’s current Report on Form 8-K filed with the SEC on May 31, 2011.

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 9, 2013

  Omagine, Inc.
  (Registrant)
   
  By:  /s/ Frank J. Drohan
    Frank J. Drohan
Chairman of the Board,
President and Chief
Executive Officer

 

 

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Exhibit 10.3

 

For Immediate Release

 

Omagine Completes Land Rights Registration Procedures

 

Average Value is $718,614,000

 

 

New York - July 9, 2015 - Omagine, Inc. [OTCQB: OMAG] today announced that its 60% owned subsidiary, Omagine LLC (“Omagine”), has signed and registered with the Government of Oman (the “Government”), a Usufruct Agreement (“UA”) which legally perfects Omagine’s ownership of the development rights (the “Usufruct Rights”) over 245 acres of beachfront land (the “Land”) in the Sultanate of Oman (“Oman”). Omagine, Inc. and Omagine are sometimes referred to collectively herein as the “Company”.

Omagine is developing a $2.5 billion tourism and real-estate project (the “Omagine Project”) on the Land. In October 2014, Omagine signed the Omagine Project Development Agreement (the “DA”) with the Government. The Omagine Project is planned to be an integration of cultural, entertainment and residential components. The Usufruct Rights include among other things, Omagine’s right pursuant to the DA, to sell the Land and/or properties developed on the Land to individual or corporate persons of any nationality worldwide.

To establish the value of its Usufruct Rights and properly record such value in its financial statements, Omagine contracted with three separate real-estate valuation firms, each of which is well known in Oman and Dubai and all of which have recognizable worldwide brands in the real-estate valuation business. These firms were tasked to provide Omagine with the value of its Usufruct Rights. All three valuations were conducted in accordance with the professional standards specified by the Royal Institution of Chartered Surveyors (“RICS”) and International Financial Reporting Standards (“IFRS”).

· In November 2014, Omagine engaged the Oman office of Savills (http://www.savills.com/ (“Savills”) operating as Arabian Real Estate LLC http://www.savills.om). Savills provides real estate services from over 600 offices worldwide, is listed on the London Stock Exchange, and is a FTSE 250 Index company.
· In December 2014, Omagine engaged a Dubai, UAE firm with extensive experience in Oman: DTZ International Ltd. (http://www.dtzglobal.com) (“DTZ”). DTZ is one of the top three global commercial real estate service companies, with more than 28,000 employees operating across more than 260 offices in 50 countries and $63 billion in transaction volume.
· In January 2015, Omagine engaged another Dubai, UAE firm: Jones Lang LaSalle, UAE Limited, Dubai Branch (http://www.jll-mena.com/mena/en-gb/locations/Our-locations-in-MENA/dubai) (“JLL”). JLL has 53,000 employees operating across more than 230 offices in 80 countries.

The Savills and DTZ final valuation reports were received by Omagine several months ago. The JLL final valuation report was received by Omagine on July 7, 2015.

Although the Company believes that JLL’s valuation may be, and probably is a statistical outlier, we have nevertheless included it when calculating the average value of Omagine’s Usufruct Rights.

The Usufruct Rights valuations by the three aforementioned firms are summarized in the table below:

 

 
 

 

Usufruct Rights Valuation
Valuation Firm   Omani Rials     U.S. Dollars *  
Savills   OMR 295,000,000   $ 766,233,000  
DTZ   OMR 385,000,000   $ 999,999,000  
JLL   OMR 150,000,000   $ 389,610,000  
Average   OMR 276,666,667   $ 718,614,000  
* (based on July 7, 2015 XE Currency Converter exchange rate)

Omagine is consulting with its IFRS accounting consultant, PriceWaterhouseCoopers LLP, and will soon determine the correct method in accordance with IFRS of accounting for the $718,614,000 average value of its Usufruct Rights in its financial statements. Omagine’s financial statements are prepared in accordance with IFRS and are audited by Deloitte & Touche (M.E.) & Co. LLC.

The shareholders of Omagine are:

i. Royal Court Affairs which owns 25%, and,  
     
  ii. Two subsidiaries of Consolidated Contractors International Company, SAL (“CCC”), which collectively own 15%, and
     
  iii. Omagine, Inc. which owns 60%.

Omagine’s Managing Director and the Company’s president, Frank Drohan commented: “The registration of the UA with the Government is a welcome milestone event. Now that we have unfettered access to the Land we are rapidly progressing the development of the Omagine Project and the finalization of the CCC contract. We are pleased that the valuation process for Omagine’s Usufruct Rights is now complete and with the UA now registered, the value of the Usufruct Rights will be accounted for in Omagine’s financial statements. Subsequently, the appropriate percentage of such value (presently 60%) will also be accounted for in the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States (USGAAP). We have expended considerable effort and resources during the past many months to the Company’s and the Omagine Project’s great advantage”.

Sam Hamdan, Omagine’s Deputy-Managing Director remarked: “There is enormous investor and banking liquidity in Oman and the GCC. With the Usufruct Agreement now registered and the imminent conclusion of our consultant reviews, we expect to be making several crucial consultant appointments in the coming months, including: a financial adviser, hospitality adviser, real-estate adviser, master planner, engineering consultant, construction management consultant and program manager.”

Agron Telaku, Omagine’s Vice-President of Finance remarked, “During the past months several important tasks were completed. We completed an independent third party update to our feasibility study and we also had our internal financial model updated by specialist real-estate investment bankers and advisers. The updated feasibility study, land valuation reports and financial model have been invaluable in the numerous discussions we have held with many investors and major local and international banks.”

Telaku continued: “We have witnessed a large appetite for both investing in Omagine’s equity and for providing project financing debt facilities for the Omagine Project’s development. The banks with which we and CCC have met have indicated that Omagine’s usufruct rights over the project land can and will be utilized as collateral to support project financing debt facilities. We have also met with several very high net-worth investors introduced by Mr. Drohan, Mr. Hamdan and CCC who have indicated a high level of interest in becoming Omagine equity investors. These investor discussions are ongoing”.

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About Royal Court Affairs .

Royal Court Affairs is an Omani organization representing the interests of His Majesty, Sultan Qaboos bin Said, the ruler of Oman.

About Consolidated Contractors .

Consolidated Contractors International Company, SAL is a multi-national construction and engineering company with over $5 billion of annual revenue, 130,000 employees worldwide and operating subsidiaries in, among other places, every country in the Middle East and North Africa (the “MENA Region”).

About Omagine, Inc .

Omagine, Inc. is a publicly traded U.S. company (Stock Symbol: OMAG) with 17,386,111 common shares presently outstanding. The Company is focused on real-estate, entertainment and hospitality opportunities in the MENA Region and on the design and development of unique tourism destinations that are thematically imbued with culturally aware, historically faithful, and scientifically accurate entertainment experiences. Governments in the MENA Region are seeking to diversify their economies and create employment for their citizens via the development of tourism destination projects. It is the Company’s opinion that this governmental strategic vision combined with the enormous financial resources in the MENA Region will continue to present superb development opportunities.

Investors or interested parties may visit Omagine’s website at www.omagine.com for more information about the Company or http://agoracom.com/ir/omagine which is the Company’s investor relations website.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not historical facts, may be deemed to be forward-looking statements. Words such as "expects", "intends", "plans", "may", "could", "should", "anticipates", "likely", “probably”, "believes" and words of similar import also identify forward-looking statements.  These statements are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. Readers are urged not to place undue reliance on the forward-looking statements, which speak only as of the date hereof.  Additional information on risks and other factors that may affect the business and financial results of Omagine, Inc. can be found in the filings (the “SEC Filings”) of Omagine, Inc. with the United States Securities and Exchange Commission (the “SEC”). Investors are urged to review the Company’s SEC Filings.

Contact :

Omagine, Inc.

Corporate Inquiries

Charles P. Kuczynski, Vice-President

Telephone: +1-212-563-4141 -- Ext. 208

Email: charles.kuczynski@omagine.com

 

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Exhibit 10.4

 

GRAPHIC

 

Sultanate of Oman

Ministry of Tourism

Muscat

 

Contract No.:
Name of Project: Omagine Project
    Governorate/State/District: Muscat
Name of Investment Company (Beneficiary): Omagine LLC
 
USUFRUCT CONTRACT
 
THIS USUFRUCT CONTRACT (“Contract”) is made and entered into on the __ day of         2015, BETWEEN
 

THE Government of the Sultanate of Oman, represented in this Contract by the MINISTRY OF TOURISM

Address: P.O. BOX 200, P.C. 115, Madinat Al-Sultan Qaboos, Sultanate

of Oman, referred to hereinafter as (the “First Party”); and

 
Omagine LLC, a limited liability company registered under the laws of Oman and having commercial registration number 1080151. Address: PO Box 708, Madinat Al Sultan Qaboos, PC 115, Sultanate of Oman, Referred to hereinafter as the “Second Party”
 
Preamble
 
Whereas, the First Party owns the plot of land No. (1) in Block No. (74SW) located in Al Hail North, Governorate/State/District of Al Seeb, with a total area of (1000000 square meters) shown in the attached drawing referred to hereinafter (the “Land”).
Whereas, the First Party has agreed to award the Second Party the rights of Usufruct over the Land in order to implement the works set out in (a) the master plan of the Project approved by the First Party pursuant to the Development Agreement and (b) the Development Agreement,
Whereas the First Party and the Second Party have signed a Development Agreement setting out in detail the terms and conditions governing the development, use and sale of the Land.
 
Therefore, the Parties agreed to conclude this Contract according to the following terms and conditions :
 
ARTICLE 1
 
1. The foregoing Preamble, the Laws and Regulations governing lands held in Usufruct in the Sultanate of Oman shall be part and parcel of this Contract, and shall be concurrently read and interpreted with them.  This Contract shall also be an integral part of the Development Agreement entered into between the Parties, together with the schedules thereto. In case of any conflict between this Usufruct Contract and the Development Agreement, the provisions of the Development Agreement shall prevail.
2. The Second Party acknowledges     to have lawfully inspected the Land held in Usufruct in a manner that excludes ignorance, and agrees to hold it in Usufruct, without any right of recourse on the First Party with respect to rights other than those provided for in the Development Agreement.
3. The Second Party shall be entitled to divide the Land into separate parcels, blocks, units or parts and to assign all or part of its rights hereunder to third parties pursuant to the Law promulgated by Royal Decree 12/2006 and its Executive Regulations on   ownership of real estate in integrated tourism complexes.

 

 
 

 

 

 
ARTICLE 2: TERM OF USUFRUCT
 
1. The First Party  shall, pursuant to this Contract, grant the Second Party,  the Usufruct rights over  the Land for a period of fifty years  (the “Usufruct Term”), renewable subject to  a written agreement between the Parties
2. The Usufruct Term shall commence from the date of registration of this Contract.
 
ARTICLE 3: OBLIGATIONS OF THE FIRST PARTY
 
1. The First Party shall deliver the Land free of any encumbrances or rights limiting the Usufruct and warrants that no government body or third party will obstruct the Second Party during the Term of Usufruct; failing which, the Second Party shall have the right to terminate this Contract without prejudice to his right to demand payment of damages as set out in the Development Agreement.
2 The First Party shall register this Contract with the Real Estate Registry at the Ministry of Housing, Sultanate of Oman on or immediately after ratification of the Development Agreement. The registration charges shall be at the expense of the Second Party.
3 The Second Party shall be granted exemption from payment of Usufruct rates and incentives and concessions in accordance with pertinent regulations as set out in the Development Agreement.

4. The Second Party shall be exempted from payment of the Annual Usufruct Rent during the first five (5) years of this Contract starting from the date of the registration of the Usufruct Rights in the name of the Second Party

 

ARTICLE 4: OBLIGATIONS OF THE SECOND PARTY
 
The Second Party commits to:
 
1. Pay an annual usufruct fee being(0.300 Omani Riyals multiplied by the Existing Land (in square meters) X 30%), provided that the Annual Usufruct Fee shall be reduced in proportion with any part of the Existing Land that the Government has received the Land Price for.
2. Pay to the First Party a delay penalty equivalent to six percent (6%) per annum of the unpaid balance of the Annual Usufruct Rent. This penalty shall apply from the due date through the date of settlement.
3. Pay all chargeable taxes and levies as they fall due, unless fully or partly exempted from them pursuant to the provisions of laws and regulations prevailing in the Sultanate.
4. Take all necessary measures to protect the boundaries of the Land from any trespassing and maintain the Land, buildings and installations constructed by the Second Party or over which the Second Party has usufruct rights pursuant to this Contract and which were constructed pursuant to the Development Agreement and strictly use it for the intended purpose only.
5. Comply with the terms and conditions of the Development Agreement and all applicable laws and regulations in the Sultanate of Oman.
6. The Second Party shall begin executing the Project according to the provisions of the Development Agreement.
7. The Second Party shall not take any legal or physical action in relation to the Land subject of Usufruct for a period beyond the expiry date of the Usufruct.
8. Insure the buildings and installations together with fixed and movable assets constructed pursuant to the Development Agreement and owned by the Second Party or over which the Second Party has usufruct rights pursuant to this Contract (collectively, “Installations”) during the Contract Term against any “Insurable Risk” with respect to losses or damages to such Installations regardless of how they are caused, subject always to the reasonable  exclusions of the insurance coverage in force as agreed, provided that the insurance covers the value of such Installations. In the event that such Installations are destroyed or damaged as a result of an Insurable Risk, the Second Party shall file an insurance claim with respect to such damage or destruction (an “Installation Claim”). Upon obtaining the necessary permits and approvals from the First Party, the Second Party shall apply the proceeds, if any, received from an insurer with respect to any such Installation Claim (“Proceeds”) to the reconstruction and restoration of the damaged or destroyed Installations that are the subject matter of such Installation Claim. The Second Party shall use its best efforts to repair such Installations such that they are returned to the state they were in immediately prior to the occurrence of such damage or destruction.

 

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ARTICLE 5: DISPOSAL OF THE USUFRUCT
 
1. Subject to Article 2 of the Royal Decree No. 12/2006, the Second Party, in order to finance the Project, shall have the right to assign all or part of the rights granted to it by virtue of this Contract to another party, or to mortgage the Usufruct right applicable to the Land and all the structures existing thereon as set out in the Development Agreement.
2. The deed of assignment or mortgage shall stipulate that the rights and obligations of the Second Party, as stipulated under this  Contract shall apply to the transferee or the mortgagee in lieu of the Second Party, even in the event that the Second Party ceases to exist as a legal entity.
3. In accordance with the provisions of the law promulgated by Royal Decree No. (12/2006) and its Executive Regulations, the Second Party shall be entitled to sell the Land pursuant to the terms and conditions stipulated in the referred to Law and its Executive Regulations as well as the provisions of the Development Agreement
 
ARTICLE 6: OBLIGATORY SUSPENSION OF THE PROJECT DUE TO A FORCE MAJEURE
 
In cases of Force Majeure that prevent any of the parties to perform their duties, the pertinent provisions in the Development Agreement shall apply.

  

ARTICLE 7: TERMINATION OF CONTRACT
 
In the event that the Second Party fails to complete the Minimum Build Obligations as set out in the Development Agreement, the First Party may terminate this Contract provided that the First Party also terminates the Development Agreement. Repossession and compensation shall be governed by the Development Agreement.
 
ARTICLE 8: General Provisions
 
1. Upon expiry of this Contract and unless it has been renewed or extended by the Parties, the buildings and structures on the Land which have not yet been duly transferred from Usufruct to freehold title (i.e. if transfer of title has not been duly registered with the government or for which the right to acquire freehold title has not been validly assigned), shall become the property of the First Party, all subject to the provisions of Development Agreement.
2. The termination of this Contract in line with Article seven shall be without prejudice to the registered rights of third parties in connection with the Usufruct, such as mortgage, or any other usufruct right accruing during the Usufruct Term.
 
ARTICLE 9: APPLICABLE LAW AND DISPUTE RESOLUTION
 
1. This Contract shall be governed by the Laws, Rules and regulations applicable in the Sultanate of Oman.
2. Any dispute arising between the Parties in connection with any of the terms of this Contract shall be settled in accordance with the dispute resolution mechanism and arbitration as set out in the Development Agreement.
3. The Parties agree that in case of any conflict between this Contract and the Development Agreement, the Development Agreement shall prevail.
4. All provisions of the Development Agreement shall survive the termination of the Development Agreement to the extent they are applicable to the Usufruct.
 
ARTICLE 10: NOTICES
 
1. Both Parties have designated the addresses shown in the Preamble of this Contract as their addresses. Each Party shall notify the other Party in case of a change in address and no correspondence shall be valid unless sent to this address.
2. This Contract has been drawn in five (5) original copies signed by the Parties, a copy of which is delivered to the Second Party, two copies to the First Party, and a copy to each of the Ministry of Finance and the Real Estate Registry within the Ministry of Housing.

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ARTICLE 11: CONTROLLING LANGUAGE
 
In the event that this Contract is read in a language other than the Arabic language, the Parties hereto acknowledge and agree that the Arabic language version hereof shall prevail in case of inconsistency or contradiction in interpretation or translation of this Contract. 

 

First Party(Ministry)

 

SIGNED for and on behalf of THE MINISTRY
OF TOURISM OF THE SULTANATE OF OMAN:

 

Signature: /s/ H.E. Ahmed bin Nasser bin Hamed Al Mahrizi  
  His Excellency Ahmed bin Nasser bin Hamed Al Mahrizi
Minister of Tourism
Stamp: (Ministry of Tourism Stamp Affixed)

 

SIGNED for and on behalf of Omagine LLC:

 

Signature: /s/ Frank J. Drohan  
  Frank J. Drohan
Managing Director
Stamp: (Omagine LLC Stamp Affixed)

 

SIGNED for and on behalf of THE MINISTRY OF

HOUSING OF THE SULTANATE OF OMAN:

 

Signature: /s/ Mohmood Khamis Al Khuzairi  
  Mohmood Khamis Al Khuzairi
Authorized Person, Ministry of Housing
Stamp: (Ministry of Housing Stamp Affixed)

 

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Exhibit 10.5

 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

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9
 

 

 

10

 

 

Exhibit 10.6

 

Sultanate of Oman

Ministry of Tourism

Muscat

 

Ref: FO/IP/4407/2015

Date: 2 July 2015

 

Mr. Drohen Francis Joseph

Managing Director

Omagine LLC

PO Box 708, RB: 115

 

Dear Sir,

 

Subject: Usufruct Agreement for Government Touristic Land No 1, 74SW quarter, Al Seib state

 

I am pleased to attach the following documents:

 

1. Original Usufruct Agreement for the Government Touristic Land No 1 in the 74SW quarter, located in Al Seib state, with a size of 1,000,000 sqm (one million square meters) after having been approved by the relevant authorities.

 

2. Minutes of receiving and handing over the abovementioned land.

 

We ask you to receive the land and begin procedures for executing the project as per the development agreement entered into with you, keeping in mind that the effective commencement date of the development agreement is 1 July 2015.

 

Kind regards,

 

(signed and stamped)

Hilal Bin Ghalib Bin Ali Al Hannai

Green Tourism Advisor

Delegated to oversee the tasks of the Director General of Planning, Follow up, and information

 
 

 

Sultanate of Oman

Ministry of Tourism

Muscat

 

Minutes of Receipt and Handover

 

Upon the approval of the Ministry of Tourism to lease the Government Touristic Land No 1 in the 74SW quarter, located in Al Seib state, Muscat, with a size of 1,000,000 sqm (one million square meters), to Omagine LLC, the above-mentioned land has been handed over to the Company on 1 July 2015, and the Usufruct Agreement has been executed with the Company on 1 July 2015.

 

No.

 

Name Signature and stamp
1.

On behalf of Ministry of Tourism

Director of PLaning and Development

(signed and stamped)
2.

On behalf of Omagine LLC

Mr. Drohen Francis Joseph

(signed and stamped)

 

This Minutes has been prepared in 2 copies, one copy to be handed over to the Ministry of Tourism and the second copy to Omagine LLC.

 

Date: 2 July 2015

 

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2

Exhibit 10.7

 

 
 

 

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Report and Valuation for

 

OMAGINE LLC

 

Land at Al Mawelah North

 

Sultanate of Oman

 

January 2015

 

 

Arabian Real Estate LLC
PO Box 947 PC 116

Sultanate of Oman

 

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Table of Contents

 

Ref   Item   page
         
1.   INSTRUCTION   3
         
2.   INTRODUCTION   4
         
3.   DOCUMENTATION   4
         
4.   PURPOSE OF VALUATION   5
         
5.   LOCATION   6
         
6.   DESCRIPTION   7
         
7.   SERVICES   9
         
8.   OCCUPANCY & TENURE   9
         
9.   PLANNING   10
         
10.   CONDITIONS OF VALUATION   10
         
11.   VALUATION   11
         
Appendix I   GENERAL PRINCIPLES   12
         
Appendix II   LIMITING CONDITIONS   27
         
Appendix III   PHOTOGRAPHS   28
         
Appendix IV   THE PROJECT – OMAGINE   31
         
Appendix V   INTEGRATED TOURISM DEVELOPMENTS   36
         
Appendix VI   DEVELOPMENT AGREEMENT AND LAND TITLE PAPERS   49

 

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1. INSTRUCTION

 

In accordance with our proposal to Omagine LLC dated November 6 th 2014 and your acceptance thereof on same date to provide you with a valuation of the property known as “Omagine” at Al Mawelah North, we are pleased to confirm that we, Arabian Real Estate LLC, Company registration number 1061295 and International Associate of Savills have now carried out our inspection and analysis and report below.

 

We have been advised that the valuation is required for loan security purposes in connection with filing for report with the United States of America Securities and Exchange Commission and we are to provide our opinion of the following:

 

■ A current day valuation of the Usufruct interest in the property assuming it is bare land, subject to no claims or disputes, financial or otherwise, with the benefit of the Development Agreement to allow future development as an Integrated Tourism Complex Development (ITC) and on the basis of Market Value reflecting the development model as proposed by Omagine LLC.

 

Definitions are contained in the General Principles at Appendix I.

 

We confirm that we have no conflict of interest with the subject property as defined in practice statement 1 of the Royal Institution of Chartered Surveyors (RICS) guidelines and we are acting as Independent Valuers. We confirm that the valuer is competent to value the interest in the above mentioned property and that this valuation has been prepared in accordance with the Professional Standards of the Royal Institution of Chartered Surveyors (RICS).

 

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2. INTRODUCTION

 

The property was inspected on three occasions between 13th November 2014 and January 5 th 2015 by Christopher J. Steel , Managing Partner of Arabian Real Estate LLC and the valuation has been undertaken by the aforementioned person, who is a Fellow of the Royal Institution of Chartered Surveyors.

 

The date of valuation is the date of this report.

 

Although we have undertaken an inspection of the property and its surrounding area, our inspection of the property was limited to parts thereof. Although access can be gained to most areas of the site, a four wheel drive vehicle is necessary owing to the sand terrain. In preparing our valuation, we have assumed that there are no visible matters affecting the property that would detrimentally affect our value reported herein.

 

The valuation has been undertaken in accordance with the practice statements in the RICS Appraisal and Valuation Manual dated January 2014. Our report is subject to the general Principles and Limiting Conditions as set out in Appendix I and II.

 

We have assumed that the property is free of encumbrances, restrictions or other outgoings of an onerous nature which would affect value, other than those which have been indicated to us. Regard is made to the Special Assumptions contained within Appendix IV.

 

3. DOCUMENTATION

 

In preparing our valuation, we have been supplied with copies of the following documents:

 

■ Land area identification plan annexed hereto

 

■ Krooki number 01-05-12-01-1

 

■ Master plan concept and development area schedule (only reviewed, not verified for valuation purposes)

 

■ Usufruct Agreement dated August 2014

 

■ Development agreement dated October 2 nd 2014 as archived below: https://www.sec.gov/Archives/edgar/data/820600/000101376214001138/exda.htm

 

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■ Construction costs as provided by Omagine LLC (only reviewed, not verified for valuation purposes)

 

Unless stated, we have not read any original documents of title and the valuation is totally dependent on the accuracy of the information supplied to us by the instructing party. Photocopies of documentation are assumed to be unaltered and any variant should be referred back to us as this may affect the valuation figures reported below.

 

4. PURPOSE OF VALUATION

 

We understand that this valuation is required for the loan security purposes of the instructing party in report filing with the United States of America Securities and Exchange Commission. We have not been supplied with information relating to the role of the instructing party or their financing intentions for the subject property and undertake this valuation on the basis that any dealings that result from this valuation are undertaken in good faith and within the limits of international laws.

 

The values reported herein reflect the market value of the land on the basis as stated above, assuming the land is ready for development with only normal costs associated with preparation works required to allow its onward development. It is noted that the valuation assumes there are no ongoing disputes, outstanding finance arrangements or loans associated with the land in any form whatsoever and it is free of all liens, mortgages or claims.

 

In accordance with the requirements of the RICS, we recommend that before any financial transaction is entered into based upon this valuation, independent verification of the information contained within this report and the validity of the assumptions adopted is obtained.

 

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5. LOCATION

 

SITUATION

 

The property is situated in Al Mawelah North which lies approximately 10 kilometers from Muscat International Airport and 39 kilometers from the port zone of Muttrah. The property is (via Route 1 and E 102) located approximately 428 kilometers drive from Dubai, United Arab Emirates.

 

The site lies in an important location, adjacent to (but separated by third party owned land plot) The Wave Muscat, Oman’s largest Integrated Tourism Complex to date. It lies in close proximity to major shopping malls and fast developing residential and commercial areas.

 

ACCESS

 

The property is approached from November 18 th Street, leading to (the presently) un named road which forms a continuation of the former, or alternatively from Route 1 via Al Ishraq the roundabout from its southern boundary. Ingress and egress from the subject site is not restricted in any way. It is foreseen that owing to the ongoing expansion of the area in general, that the roadway fronting the site is likely to be upgraded to accommodate additional lanes in the same manner as the approach road adjacent to The Wave Muscat in the short term and certainly within the proposed timescale development period.

 

The site is also intersected by a newly constructed link road which connects the main frontage road to the Seeb conriche via roundabout at its northern junction. For the sake of this valuation we are assuming that alteration or deviation of this roadway will be permitted in accordance with master plan design requirements.

 

SURROUNDING PROPERTIES

 

The property is surrounded by partly developed property, formerly agricultural in nature, large swathes of undeveloped land and sporadic housing developments. To its north eastern boundary it fronts the Gulf of Oman. The immediate area has undergone significant development over the last decade, evolving from a primarily farmland area into one of medium to high density housing.

 

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6. DESCRIPTION

 

GENERAL DESCRIPTION

 

The property comprises of a land plot of irregular shape comprising approximately 1,000,000 square meters (245 acres). The land has direct frontage to the Gulf of Oman to its north eastern aspect of approximately 1,050 meters, and fronts the main Seeb link road to its south western boundary.

 

The land is of generally flat nature although falls by approximately 2 meters from its southern aspects to the north/north east. It is of primarily sandy terrain and for the sake of this valuation is assumed as completely undeveloped. It is not apparent from our inspection whether there is any detrimental tide erosion to the site and for the sake of this valuation it is assumed there is none.

 

There is a ‘noor’, or wetland section to the site to its north western quadrant commencing just before the bisecting roadway which traverses the site. We are not aware if this land is restricted for development in any way and our valuation assumes full development potential is attainable without extraordinary costs with regard to land fill and drainage requirements .

 

Under the terms of development agreement, rights (with restrictions and limitations) to extended the land into the sea and effect reclamation works to create waterways are permitted with a generalized extension right of 130 meters from the present high to mid coastal tide mark.

 

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Note: Imagery for general identification purposes only and accuracy not to be relied upon.

 

There are no apparent visible detrimental factors that indicate there would be obstructions to development of the subject property area other than normally present with the development of coastal fronting landed property.

 

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7. SERVICES

 

We have seen only limited information in relation to the services provided to the site but the sake of this valuation, we are assuming in line with Schedule 8 of the Development Agreement and in accordance with normal practice, civic utilities including water, drainage and electricity in such quantities as required for the site upon full development and completion would be provided up to the boundaries of the site in such locations and distribution to allow economic user thereof. All distribution therein would be to the cost of the hypothetical developer in the usual manner.

 

We have not arranged for any investigation to be carried out to determine ground or soil conditions and we are therefore unable to report that the property is free from risk in this respect. For the purpose of this valuation we have assumed that such investigation would not disclose the presence of any adverse conditions. We recommend that full soil and ground condition surveys are undertaken before development proposals are taken further.

 

8. OCCUPANCY & TENURE

 

The site is assumed as a cleared and vacant site with no aspects affecting its future development thereon. For the sake of this valuation we are assuming that there are no rights to occupation of the land and that it is available with full vacant possession and it is cleared and vacant for development.

 

The site is held under the terms of an Usufruct agreement of term 50 years between The Government of Oman, Ministry of Tourism and Omagine LLC dated August 2014, transfer of which has been effected to Omagine LLC at an Usufruct fee of OMR. 90,000 per annum (less any land transferred to a third party on freehold basis). Under the terms of the Development Agreement dated October 2014, Schedule 14, the onward sale on a freehold basis from this is permitted subject to payment of a stipulated fee of OMR. 25 per square meter of onward transferred land (with provisions for upward revision over the course of the agreement). The valuation herein has regard to the terms and obligations of this.

 

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9. PLANNING AND DEVELOPMENT ASSUMPTIONS

 

The Krooki for the land classifies it as Tourism use with no predetermined height, density or other restrictions. For the purpose of this valuation we are assuming planning and development allowances will be as permitted under the Development Agreement dated October 2014 and as realistically altered over the development period. There are conditions contained within the Development Agreement in terms of requirement to build within stipulated time scales and this valuation assumes all such conditions will be met and no default from the terms therein is likely.

 

For the purpose of this valuation we are assuming land will be developed in accordance with the design and massing proposals as developed by Omagine LLC and our stated Market Value herein reflects the Project Related Site value derived from these development assumptions. Any variance in terms of usage, density or otherwise could materially affect the value as stated herein.

 

This valuation assumes continuing political, economic and social stability within the Sultanate and its surrounding countries. Any change in such matters could materially affect the value reported herein and we cannot be held liable for such variances in any regard.

 

10. CONDITIONS OF VALUATION

 

The valuation contained herein is given on the basis that the property is not subject to any unusual or especially onerous restrictions, encumbrances or outgoings and that good title can be shown; that the property and its value is unaffected by any matters which would be revealed by a local search and replies to usual enquiries, or by any statutory notice; and neither the property, nor its condition, nor its use, nor its intended use is, or will be, unlawful; and that the inspection of those parts which have not been inspected would neither reveal material defects nor cause the valuer to alter the calculation materially. The report is provided for the stated purpose and for the sole use of yourselves. It is confidential to yourselves and your client for the purpose to which it relates but may be disclosed to other professional advisors assisting yourselves in respect of that purpose only. The valuers accept responsibility to you alone that the report has been prepared with the skill, care and diligence reasonably to be expected of a competent surveyor, but accepts no responsibility whatsoever to any person other than the client. Any other person relies upon the report at his own risk. Neither the whole nor any part of this report or any references to it may be included in any published document, circular or statement nor published or reproduced in any way without our written approval of the form and the context in which it may appear.

 

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11. VALAUTION

 

It is advised that the valuation has been carried out utilizing the comparative and residual methods of valuation.

 

Our opinion of the Market Value of the Usufruct Interest of the subject property and subject to the observations made herein here as at the date of valuation is:-

 

 
OMR. 295,000,000.000
 
 
Omani Rials Two Hundred Ninety Five Million Only
 

 

Valuation hereby certified and signed

Date of valuation: January 10 2015

Christopher J. Steel FRICS

Arabian Real Estate LLC

 

Company Registration Number 1061295

 

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Appendix I

 

General Principles

 

Standard valuation assumptions

 

All valuations are carried out in accordance with the RICS Valuation - Professional Standards 2014 (Global Edition) (or as amended) .

 

Unless agreed otherwise in writing, or stated otherwise in our Valuation Report, the following Standard Conditions of Engagement shall apply:

 

1. INSPECTION

 

1.1 The Valuer will undertake a visual inspection of the exterior and interior of the property, to the extent which is accessible with safety and without undue difficulty, as can be seen whilst standing at ground level and within the boundaries of the site, and adjacent public/communal areas, and whilst standing at the various floor levels which the Valuer considers reasonable in order to provide the service having regard to its purpose. The Valuer will not carry out a building or structural survey or inspect those parts of the property which are covered, unexposed or inaccessible nor raise floor boards, move any fixed apparatus or arrange for a test of the electrical, heating or other services.

 

1.2 In preparing the report, unless otherwise stated by the Valuer, the following assumptions will be made which the Valuer is under no duty to verify:

 

a. That no deleterious or hazardous materials or techniques were used in the construction of the property nor have since been incorporated.
b. That inspections of those parts which have not been inspected would neither reveal material defects nor cause the Valuer to alter the valuation materially.

 

1.3 Our valuation assumes that all electronically operated or electronically controlled equipment at the property is not or will not be adversely affected by any computer virus or date related programming problems which may affect their operation.

 

2. ENVIRONMENTAL CONSIDERATIONS

 

2.1 The Valuer does not undertake any environmental testing as part of a normal valuation inspection and will therefore usually report that enquiries have not revealed any contamination affecting the property or neighbouring property, which would affect the valuation. However, should it be established subsequently that contamination exists at the property, or on any neighbouring land, or that the premises have been or are being put to any contaminative use, this might reduce the values reported. When valuing property where the Valuer suspects contamination may exist this will be reported. If an approved Environmental Consultant is employed their report should be referred to the Valuer. The Valuer will then refer to the Consultant’s report in the valuation identifying the nature of the contamination and adjust the valuation to have regard to the estimated cost and likely liability for treatment. However, should it be established subsequently that other contaminants exist at the property or on any other neighbouring land, or that the premises have been or are being put to any other contaminative uses this might reduce the value reported.

 

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2.2 Unless otherwise stated by the Valuer, the following assumptions will be made by the Valuer which he is under no duty to verify:

 

a. Investigations have not been undertaken on the site in the form of any geotechnical report to determine the suitability of ground conditions or services for any new developments.
b. In the case of agricultural land, the Valuer is not able to accept any responsibility as to the possible latent infestations in the soil or any disease which might affect crops or stock at any time in the future.

 

3. TENANTS

 

3.1 Although the Valuer reflects a general understanding of a tenant’s status in the valuations, the Valuer makes limited enquiries about the financial strength of tenants, and relies upon the client to advise if tenants are in default of rental payments, or where there appear grounds for concern. In the context of investment property, where covenant strength is significant, such assumptions that affect the valuation approach will be commented upon in the valuation section of the report. The Valuer will assume that appropriate enquiries were made when leases were originally exchanged, or when consent was granted to tenants to assign or underlet, and that tenants are therefore not in breach of covenant.

 

4. MEASUREMENTS

 

4.1 Unless otherwise stated, we have relied upon the Built up Area (BUA) of the premises derived from reference to the Krooki permission, which is akin to current market practices in the Sultanate of Oman. Should these areas differ from measurements carried out in accordance with the Code of Measuring Practice as issued by the Royal Institution of Chartered Surveyors, this would affect the reinstatement cost appraisal and we reserve the right to review accordingly.

 

5. TOWN PLANNING, HIGHWAYS AND OTHER STATUTORY REGULATIONS

 

5.1 The Valuer will carry out such inspections and investigations as are in the Valuer’s professional judgment appropriate and possible in the circumstances. It is an assumption that the property and its value are unaffected by any matters which would be revealed by replies to the usual enquiries or Statutory Notice and that neither the property nor its condition, nor its use, intended use, is or will be unlawful. It is recommended that verification is obtained from the client’s solicitors that:

 

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a. the position is correctly stated in the report;
b. the property is not adversely affected by any other decisions made or conditions prescribed by Local Authorities/ Municipality or other duly authorised governmental department; and
c. that there are no outstanding Statutory Notices.

 

5.2 The valuations are prepared on the basis that the premises comply with statutory regulations, including fire and building regulations.

 

5.3 Where it is apparent that access to the property is not direct from the public highway, or where there are published road proposals, the Valuer will make appropriate comments.

 

6. LEGAL ADVICE

 

6.1 The Valuer shall, unless otherwise expressly agreed, rely upon information provided by the client and / or the client’s legal or other professional advisors relating to tenure, leases and all other relevant matters. The Valuer will assume that good Title can be shown and that the property is not subject to any unusual or onerous restrictions, encumbrances or outgoings. It is understood, where relevant, that the client will be obtaining a report on Title which, if in conflict with the valuation report, should be referred to the Valuer for further consideration. No responsibility or liability is accepted for the true interpretation of the legal position of the client and other parties. Any interpretation of legal documents and legal assumptions should be checked by the client or suitably qualified person, if relied upon.

 

7. INSURANCE REINSTATEMENT COST (As Requested)

 

7.1 Our opinion is a broad estimate of reinstatement cost for insurance purposes and should be used as guidance only, subject to:

 

a. the buildings in their present form (unless otherwise stated);
b. buildings being constructed as proposed to be completed;
c. including the cost of clearance and professional fees but excluding:
i. Loss of rent: and / or
ii. Cost of alternative accommodation for the reinstatement period.
iii. Cost of decontamination of the land.

 

8. CONFIDENTIALITY

 

8.1 The report will be provided for the stated purpose and for the sole use of the client. The Valuer accepts responsibility to the client alone that the report will be prepared with the skill, care and diligent responsibility to be expected of a competent Valuer and accepts no responsibility whatsoever to any parties other than the client. Any third parties rely upon the report at their own risk. Neither the whole nor any part of the report nor any reference to it may be included in any published document, circular or statement nor published in any way without the Valuer’s written approval as to the form and context in which it may appear.

 

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9. GENERAL ASSUMPTIONS

 

9.1 Unless otherwise stated all items normally associated with the valuation of land and buildings are reflected in the valuation and reinstatement costs to the extent that they existed at the date of inspection, including:

 

Fixed air-conditioning; hot water system; lighting; mains services supplying sprinkler systems and associated equipment; water; electricity; gas and steam circuits not serving industrial or commercial processes; sub-station buildings; lifts and permanent structures including crane rails where forming an integral part of the building structure; drains; sewers and sewerage plants not primarily concerned with treating trade effluent; air conditioning/comfort cooling except where part of a computer installation or primarily serving plant and machinery; suspended ceilings; carpets, perimeter trunking; raised floors and fixed demountable partitions except where these are tenant’s fixtures.

 

9.2 Unless otherwise specified the following items are excluded:

 

All items of process plant and machinery, tooling and other equipment not primarily serving the building; cranes, hoists, conveyors, elevators, structures which are ancillary to, or form part of an item of process plant and machinery; sewerage plant primarily concerned with treating trade effluents; air conditioning/comfort cooling where part of a computer installation or primarily serving plant and machinery; and water, electricity, gas, steam and compressed air suppliers and circuits serving industrial and commercial processes.

 

9.3 Unless otherwise specified no allowance is made for the cost of repairing any damage caused by the removal from the premises of items of plant, machinery, fixtures and fittings.

 

9.4 No deductions are made for taxation or costs of realization.

 

9.5 Our valuation assumes that all electronically operated or electronically controlled equipment at the property is not or will not be adversely affected by any computer virus or date related programming problems.

 

10. BASES OF VALUATION

 

The definitions of the various valuation bases are set out within VPS 4 of the RICS Valuation - Professional Standards 2014 (Global Edition) (or as amended), which in turn refers to the International Valuation Standards (IVS) and are reproduced in part below:

 

In accordance with the IVS definition, a basis of value is a statement of the fundamental measurement assumptions of a valuation.

 

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The following bases of value are recognised by the RICS Standards:

· market value
· market rent
· investment value (worth)
· fair value – International Financial Reporting Standards definition
· fair value – International Valuation Standards definition.

 

The IVS also include definitions on special value and synergistic value .

 

10.1 MARKET VALUE

 

10.1.1 The definition of market value as defined in IVS Framework paragraph 29 is:

 

“the estimated amount for which a property should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

 

10.1.1 Market value is the basis of value that is most commonly required, being an internationally recognised definition. It describes an exchange between parties that are unconnected and are operating freely in the marketplace and represents the figure that would appear in a hypothetical contract of sale, or equivalent legal document, at the valuation date , reflecting all those factors that would be taken into account in framing their bids by market participants at large and reflecting the highest and best use of the asset. The highest and best use of an asset is the use of an asset that maximises its productivity and that is possible, legally permissible and financially feasible.

 

10.1.2 It ignores any price distortions caused by special value or synergistic value . It represents the price that would most likely be achievable for an asset across a wide range of circumstances. Market rent applies similar criteria for estimating a recurring payment rather than a capital sum.

 

10.1.3 In applying market value , regard must also be had to the conceptual framework set out in IVS Framework paragraphs 30-34 Market Value (see below), which includes the requirement that the valuation amount reflects the actual market state and circumstances as of the effective valuation date .

 

10.1.4 Paragraphs 30 to 35 of the International Valuation Standards (IVS) Framework produced by the IVSC state:

 

“The definition of market value shall be applied in accordance with the following conceptual framework:

 

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(a) “the estimated amount” refers to a price expressed in terms of money payable for the asset in an arm’s length market transaction. Market value is the most probable price reasonably obtainable in the market on the valuation date in keeping with the market value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value ;

 

(b) “an asset should exchange” refers to the fact that the value of an asset is an estimated amount rather than a predetermined amount or actual sale price. It is the price in a transaction that meets all other elements of the market value definition at the valuation date ;

 

(c) “on the valuation date” requires that the value is time-specific as of a given date. Because markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the actual market state and circumstances as at the valuation date , not those at any other date;

 

(d) “between a willing buyer” refers to one who is motivated, but not compelled to buy. This buyer is neither over eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than in relation to an imaginary or hypothetical market that cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present owner is included among those who constitute “the market”;

 

(e) “and a willing seller” is neither an over eager nor a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the asset at market terms for the best price attainable in the open market after proper marketing, whatever that price may be. The factual circumstances of the actual owner are not a part of this consideration because the willing seller is a hypothetical owner;

 

(f) “in an arm’s length transaction” is one between parties who do not have a particular or special relationship, eg parent and subsidiary companies or landlord and tenant, that may make the price level uncharacteristic of the market or inflated because of an element of special value . The market value transaction is presumed to be between unrelated parties, each acting independently;

 

(g) “after proper marketing” means that the asset would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably obtainable in accordance with the market value definition. The method of sale is deemed to be the most appropriate to obtain the best price in the market to which the seller has access. The length of exposure time is not a fixed period but will vary according to the type of asset and market conditions. The only criterion is that there must have been sufficient time to allow the asset to be brought to the attention of an adequate number of market participants. The exposure period occurs prior to the valuation date ;

 

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(h) “where the parties had each acted knowledgeably, prudently” presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the asset, its actual and potential uses and the state of the market as of the valuation date . Each is further presumed to use that knowledge prudently to seek the price that is most favourable for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the valuation date , not with benefit of hindsight at some later date. For example, it is not necessarily imprudent for a seller to sell assets in a market with falling prices at a price that is lower than previous market levels. In such cases, as is true for other exchanges in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time;

 

(i) “and without compulsion” establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it.

 

10.1.5 “The concept of market value presumes a price negotiated in an open and competitive market where the participants are acting freely. The market for an asset could be an international market or a local market. The market could consist of numerous buyers and sellers, or could be one characterised by a limited number of market participants. The market in which the asset is exposed for sale is the one in which the asset being exchanged is normally exchanged.

 

10.1.6 “The market value of an asset will reflect its highest and best use. The highest and best use is the use of an asset that maximises its potential and that is possible, legally permissible and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid.

 

10.1.7 “The highest and best use of an asset valued on a stand-alone basis may be different from its highest and best use as part of a group, when its contribution to the overall value of the group must be considered.

 

10.1.8 “The determination of the highest and best use involves consideration of the following:

 

(a) to establish whether a use is possible, regard will be had to what would be considered reasonable by market participants,
(b) to reflect the requirement to be legally permissible, any legal restrictions on the use of the asset, eg zoning designations, need to be taken into account,
(c) the requirement that the use be financially feasible takes into account whether an alternative use that is physically possible and legally permissible will generate sufficient return to a typical market participant, after taking into account the costs of conversion to that use, over and above the return on the existing use.

 

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TRANSACTION COSTS

 

10.1.9 “ Market value is the estimated exchange price of an asset without regard to the seller’s costs of sale or the buyer’s costs of purchase and without adjustment for any taxes payable by either party as a direct result of the transaction.”

 

10.2 MARKET RENT

 

10.2.1 Market rent as defined in IVS 230 Real Property Interests paragraph C9 is:

 

“the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

 

10.2.2 Paragraphs C10 and C11 of the International Valuation Standards (IVS) 230 Real Property Interests produced by the IVSC state:

 

“The commentary given for the similar definition of market value in the IVS Framework can be applied to assist in the interpretation of market rent . In particular, the estimated amount excludes a rent inflated or deflated by special terms, considerations of concessions. The “appropriate lease terms” are terms that would typically be agreed in the market for the type of property on the valuation date between market participants. A valuation of market rent should only be provided in conjunction with an indication of the principal lease terms that have been assumed.

 

“The contract rent is the rent payable under the terms of an actual lease. It may be fixed for the duration of the lease or variable. The frequency and basis of calculating variations in the rent will be set out in the lease and must be identified and understood in order to establish the total benefits accruing to the lessor and the liability of the lessee.”

 

10.2.3 Paragraphs 1.3.3 to 1.3.5 of the commentary within VPS 4 of the RICS Valuation – Professional Standards 2014 (Global edition) state:

 

“ Market rent will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms will normally reflect current practice in the market in which the property is situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency of rent reviews and the responsibilities of the parties for maintenance and outgoings will all impact the market rent . In certain countries or states, statutory factors may either restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be taken into account where appropriate.

 

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“ Market rent will normally be used to indicate the amount for which a vacant property may be let, or for which a let property may re-let when the existing lease terminates. Market rent is not a suitable basis for settling the amount of rent payable under a rent review provision in a lease, where the actual definitions and assumptions have to be used.

 

“Valuers must therefore take care to set out clearly the principal lease terms that are assumed when providing an opinion of market rent . If it is the market norm for lettings to include a payment or concession by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of rents agreed, the market rent should also be expressed on this basis. The nature of the incentive assumed must be stated by the valuer, along with the assumed lease terms.

 

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INVESTMENT VALUE ( Investment Value may also be known as Worth )

 

10.2.4 Investment value as defined in IVS Framework paragraph 36 is:

 

“the value of an asset to the owner or a prospective owner for individual investment or operational objectives.”

 

10.2.5 Investment value may also be known as worth . IVS Framework paragraph 37 provides further commentary on this definition:

 

“This is an entity-specific basis of value. Although the value of an asset to the owner may be the same as the amount that could be realised from its sale to another party, this basis of value reflects the benefits received by an entity from holding the asset and, therefore, does not necessarily involve a hypothetical exchange. Investment value reflects the circumstances and financial objectives of the entity for which the valuation is being produced. It is often used for measuring investment performance. Differences between the investment value of an asset and its market value provide the motivation for buyers or sellers to enter the marketplace.”

 

10.3 FAIR VALUE

 

10.3.1 There are two recognised definitions of fair value:

 

(a) the definition adopted by the International Accounting Standards Board (IASB) in IFRS 13:

 

“The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

 

(b) The definition settled by the IVSC in IVS Framework paragraph 38 :

 

“The estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those two parties.”

 

10.3.2 It is important to recognise that the two definitions of fair value are not the same

 

10.3.3 The guidance in IFRS 13 includes:

 

“ Overview of fair value measurement approach

 

The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. A fair value measurement requires an entity to determine all of the following:

 

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· the particular asset or liability that is the subject of the measurement (consistently with its unit of account)
· for a non-financial asset, the valuation premise that is appropriate for the measurement (consistently its highest and best use)
· the principal (or most advantageous) market for the asset or liability
· the valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorised.”

 

10.3.4 The references in IFRS 13 to market participants and a sale make it clear that for most practical purposes the concept of fair value is consistent with that of market value , and so there would be no difference between them in terms of the valuation figure reported.

 

10.3.5 Paragraphs 40 to 42 of the IVS Framework state:

 

“For purposes other than use in financial statements, fair value can be distinguished from market value . Fair value requires the assessment of the price that is fair between two identified parties taking into account the respective advantages or disadvantages that each will gain from the transaction. It is commonly applied in judicial contexts. In contrast, market value requires any advantages that would not be available to market participants generally to be disregarded.

 

“ Fair value is a broader concept than market value. Although in many cases the price that is fair between two parties will equate to that obtainable in the market, there will be cases where the assessment of fair value will involve taking into account matters that have to be disregarded in the assessment of market value, such as any element of special value arising because of the combination of the interests.

 

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“Examples of the use of fair value include:

 

      a.

 

b. determination of a price that is fair for a shareholding in a non-quoted business, where the holdings of two specific parties may mean that the price that is fair between them is different from the price that might be obtainable in the market,

 

c. Determination of a price that would be fair between a lessor and a lessee for either the permanent transfer of the leased asset or the cancellation of the lease liability.”

 

10.4 SPECIAL VALUE

 

10.4.1 The IVS Framework provides a definition and commentary for special value . It must be noted that this is not a basis of value that is recognised by the RICS . Paragraphs 43 to 46 of the IVS Framework state:

 

“ Special value is an amount that reflects particular attributes of an asset that are only of value to a special purchaser.

 

“A Special purchaser is a particular buyer for whom a particular asset has a special value because of advantages arising from its ownership that would not be available to other buyers in the market.

 

“ Special value can arise where an asset has attributes that make it more attractive to a particular buyer than to any other buyers in a market. These attributes can include the physical, geographic, economic or legal characteristics of an asset. Market value requires the disregard of any element of special value because at any given date it is only assumed that there is a willing buyer, not a particular willing buyer.

 

“When special value is identified, it should be reported and clearly distinguished from market value .”

 

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10.5 SYNERGISTIC VALUE

 

10.5.1 The IVS Framework provides a definition and commentary for synergistic value . It must be noted that this is not a basis of value that is recognised by the RICS . Paragraph 47 of 66the IVS Framework states:

 

“ Synergistic value is an additional element of value created by the combination of two or more assets or interests where the combined value is more than the sum of the separate values. If the synergies are only available to one specific buyer then it is an example of special value .”

 

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11. ASSUMPTIONS AND SPECIAL ASSUMPTIONS

 

11.1 Paragraph 2 of VPS 4 of the RICS Valuation – Professional Standards 2014 (Global Edition) states:

 

“An assumption – as defined in the IVS – is made where it is reasonable for the valuer to accept that something is true without the need for specific investigation or verification.”

 

Paragraphs 48 to 51 of the IVS Framework state:

 

“In addition to stating the basis of value, it is often necessary to make an assumption or multiple assumptions to clarify either the state of the asset in the hypothetical exchange or the circumstances under which the asset is assumed to be exchanged. Such assumptions can have a significant impact on value.

 

“Examples of additional assumptions in common use include, without limitation:

 

· an assumption that a business is transferred as a complete operational entity,

· an assumption that assets employed in a business are transferred without the business, either individually or as a group,

· an assumption that an individually valued asset is transferred together with other complementary assets,

· an assumption that a holding of shares is transferred wither as a block or individually,

· an assumption that a property that is owner-occupied is vacant in the hypothetical transfer.

 

“Where an assumption is made that assumes facts that differ from those existing at the date of valuation, it becomes a special assumption. Special assumptions are often used to illustrate the effect of possible changes on the value of an asset. They are designated as “special” so as to highlight to a valuation user that the valuation conclusion is contingent upon a change in the current circumstances or that it reflects a view that would not be taken by market participants generally on the valuation date.

 

“Assumptions and special assumptions must be reasonable and relevant having regard to the purpose for which the valuation is required.”

 

12 FORCED SALES AND MARKETING CONSTRAINTS

 

12.1 Paragraph 52 of the IVS Framework provides the following commentary on forced sales:

 

“The term “forced sale” is often used in circumstances where a seller is under compulsion to sell and that, as a consequence, a proper marketing period is not possible. The price that could be obtained in these circumstances will depend upon the nature of the pressure on the seller and the reasons why proper marketing cannot be undertaken. It may also reflect the consequences for the seller of failing to sell within the period available. Unless the nature of and the reason for the constraints on the seller are known, the price obtainable in a forced sale cannot be realistically estimated. The price that a seller will accept in a forced sale will reflect its particular circumstances rather than those of the hypothetical willing seller in the market value definition. The price obtainable in a forced sale has only a coincidental relationship to market value or any of the other bases defined in this standard. A “forced sale” is a description of the situation under which the exchange takes place, not a distinct basis of value .”

 

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12.2 Where we have been instructed to give our opinion on the estimated price at which a property would exchange in a forced sale, we refer to the RICS Valuation – Professional Standards 2014 (Global edition). These standards confirm that “Forced Sale Value” is no longer recognised and must not be used.

 

12.3 If we have been instructed to provide an assessment on this basis we are able to provide the same opinion based upon investment value or worth , which reflects a diminution in market value to reflect a special assumption that the sale period is unreasonable. In this circumstance we have assumed that the vendor is willing to accept a price below the market value to achieve a quicker sale due to the need to raise money or extinguish a liability by a given date. We have no responsibility for giving any guarantee as to the accuracy of the opinion of worth .

 

12.4 By its nature, any opinion of the price at which a property would transact in a forced sale is an estimate of the above mentioned reduction from market value . In our reports, we adopt an arbitrary figure based upon 70% of the market value for agricultural property, 75% of the market value for residential property and 80% of the market value for commercial and industrial property, unless stated otherwise within our report.

 

13 COMPLAINTS PROCEDURE

 

Arabian Real Estate L.L.C. has a written complaints procedure. A copy is available on request.

 

14 RICS MONITORING

 

The Valuation and Report may be subject to monitoring under the conduct and disciplinary regulations of the Royal Institution of Chartered Surveyors.

 

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APPENDIX II Limiting Conditions

 

This property valuation and report is subject to the following conditions:

 

■ Neither the whole nor any part of this valuation and report or any reference to it may be included in any published document, circular or statement nor published in any way without our prior written approval of the form and context in which it may appear.

 

■ Unless stated otherwise information on which this valuation has been based has been supplied to Arabian Real Estate LLC by Omagine LLC, this information is believed to be reliable but the we accept no responsibility if this should prove not to be so. In case of information that has been obtained by our search of the records and examination of documents or by inquiry from the Government or other appropriate departments, it has been so mentioned.

 

■ The valuer’s responsibility in connection with this valuation report is limited to the client to whom it is addressed and to that client only. The valuer disclaims all responsibility and will accept no liability to any other party.

 

■ Our aggregate liability amount in undertaking the valuation shall in no event exceed the amount of the fee paid under this agreement whether arising from negligence, breach of contract or any other matter.

 

■ None of the valuer’s personal employees or related companies can be personally held liable for any claims in the event of dispute of the valuation and it is specifically noted that Arabian Real Estate LLC is entering this agreement for valuation as an unrelated corporate entity with no relationship with Savills or any Savills Group related company for valuation assignments to whom the instructing party agrees expressly that it has no recourse in the event of dispute.

 

■ The values assessed in this report for the subject property and any allocation of values between parts of the property applies only in the terms of and for the purpose of this report. The values assessed should not be used in conjunction with any other assessment, as they may prove incorrect if so used.

 

■ Where the values are assessed, they reflect the full contract value and no account is taken of any liability to taxation on sale or of costs involved in effecting sale.

 

■ Any sketch, plan or map in this report is included to assist reader while visualizing the property and assume no responsibility in connection with such matters.

 

■ The valuer is not required to give testimony or to appear in court by reason of this valuation report, with reference to the property in question, unless arrangement has been made thereof.

 

■ The valuation reflects current master plan development options drawn up for the project. It represents an option of value taking into account these development assumptions. The Residual method of valuation as used is extremely sensitive to small changes in variables such as construction costs, sales rates, expected rates of return, timing and associated development costs. If any of these assumptions proves incorrect the value could be materially different to what is reported herein.

 

27
 

 

APPENDIX III

Photographs

(For location identification purpose only)

 

  

 

28
 

 

 

 

29
 

 

 

 

 

30
 

 

APPENDIX IV

 

The Project

 

The proposed development represents one of the largest integrated tourism developments proposed to be launched in Oman since the economic ‘correction’ in 2008. It is located in a strategically very important location, one which is central to the core commercial areas but has unique leisure offering potential owing to its ocean front aspect.

 

The concept is to develop the key infrastructure for the site together with the main tourism attraction of the Pearls, which will provide a land area of approximately 60,000 square meters, together with hospitality and retail zones of circa 300,000 square meters land coverage. Two main hotels will front the water together with planned chalet/serviced apartment accommodation.

 

The ‘non tourism’ elements of the development will include land zoned for a variety of residential and commercial operations, incorporating beach and waterfront villa plots, townhouse zones, apartment locations and commercial complex sites. The total non tourism land coverage will be circa 660,000 square meters.

 

Support retail, recreational and residential components fringe the development which upon completion should provide a fully integrated and self sustaining real estate micro market.

 

In general, the design of the master plan appears well crafted and maximizes the best use of the available and reclaimable land. The zoning appears to be sensitive, correct in approach and it is assumed utilizes the height allowances of the site to maximum effect.

 

The development is proposed to be rolled out in a series of phases, spread over 7 years in total. Land components as advised to us include:

 

            Land  
Entertainment   Brief Description   Landmark Zone   Area  
Oman Pearl   Over Oman (Flight Simulation)   Pearl 1     314  
Oman Exhibit   Oman Attractions and Pre-Show   Exhibition 1     800  
Culture Pearl   Seven Continents & World Stage   Pearl 2     314  
Culture Exhibit   Culture Attractions and Pre-Show   Exhibition 2     625  
Innovation Pearl   To Be Determined   Pearl 3     314  
Innovation Exhibit   Innovation Attractions and Pre-Show   Exhibition 3     800  
Energy Pearl   IMAX Type Energy Show   Pearl 4     314  

 

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Energy Exhibit   Energy Attractions and Pre-Show   Exhibition 4     800  
Sea Pearl   Aquarium   Pearl 5     314  
Sea Exhibit (Aquarium)   Sea Attractions and Pre-Show   Exhibition 5     500  
Earth Pearl   Wonders of the World   Pearl 6     314  
Earth Exhibit (Hydroponic Garden)   Hydroponic Garden and Pre-Show   Exhibition 6     625  
Sky Pearl   Sky Runners Performance Art   Pearl 7     314  
Sky Exhibit (Aviary)   Aviary and Pre-Show   Exhibition 7     1,600  
Tower 1 - Torre Arabia   Light Tower   Amphitheater     200  
Tower 2 - Torre Piazza Omani   Light Tower   Piazza     200  
Tower 3 - Torre Marina   Stone Light Tower & Water Storage   Al Bandara Marina     300  
Movie & Performance Theater   Integrated Into Entertainment Zone   Piazza     2,500  
Amphitheater   Open Air Greek Style Theater   Amphitheater     1,282  
Green Room & Backstage Area   Green Room, Backstage, VIP Lounge   Amphitheater     700  
Technical Production Studio   Technical Production, Media Broadcast   Amphitheater     500  
Park Waterwerx - (Included in Site Works)   Fibonacci Weir System   Amphitheater     TBD  
Piazza Centro Citta   Piazza Centro Citta   Piazza     13,652  
Child Play Area   Piazza Centro Citta   Piazza     100  
Boardwalk (Above Concourse)   Five Star Hotel To Sky Pearl   Boardwalk     22,400  
Pearl Retail Units   Boardwalk / Concourse Retail   Boardwalk / Concourse     4,305  
Retail Units   Boardwalk / Concourse Retail   Boardwalk / Concourse     2,500  
Pearl Food Kiosks   Boardwalk / Concourse Food Service   Boardwalk / Concourse     945  
Pearl Restaurants   Boardwalk / Concourse Food Service   Boardwalk / Concourse     2,325  
Omagine Guide Service (Kiosks)   Ticketing Machines, Information   Boardwalk     200  
Public Restrooms   Integrated into Exhibition Buildings   Boardwalk     600  
Concourse (Below Boardwalk)   Lower Level Promenade   Concourse     NA  
Service Corridor   Lower Level Service Access   Concourse     NA  
Personal Rapid Transit Way   Above Grade to Lower Level   Concourse     NA  
Public Restrooms   Integrated into Exhibition Buildings   Concourse     NA  
Back of House Support   Lower Level Service Access   Concourse     NA  
              60,657  
        Hospitality Zone        
Five Star Hotel - Balcon de Arabia   Balcon de Arabia   Amphitheater     70,000  
Serviced Chalets - 2 Bedroom   Integrated into Hotel Site & Gardens   Balcon de Arabia     24,900  
Serviced Chalets - 1 Bedroom   Integrated into Hotel Site & Gardens   Balcon de Arabia     21,900  
Four Star Hotel - Albergo Teatro Historico   Key Location on Boardwalk   Boardwalk & Marina     56,000  
Serviced Apartments - 2 Bedroom (3 Floors, above Retail Base)   Overlooking Fibonnaci Pool & Canal   Boardwalk & Marina       28,469  
Serviced Apartments - 1 Bedroom (3 Floors, above Retail Base)   Overlooking Fibonnaci Pool & Canal   Boardwalk & Marina       24,900  
Serviced Apartments - Studio (3 Floors, above Retail Base)   Overlooking Fibonnaci Pool & Canal   Boardwalk & Marina       6,723  
Four Star Hotel - Al Bandara Marina Hotel   Al Bandara Marina   Al Bandara Marina     56,000  
              288,892  
        Canal Walk        
Souq - High End Retail Mall   Canal Walk   Canal Walk / Marina     13,437  
Marketplace   Marketplace Building / Café   Al Bandara Marina     160  
Marina Operations Building   Al Bandara (Village) Marina   Al Bandara Marina     670  
Marina Services Building   Al Bandara (Village) Marina   Al Bandara Marina     670  
        Residential Community        
Boaters' House   Restrooms, Laundry & Storage   Centre     174  
              15,111  

 

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        Residential Freehold        
Villa - 12 Bedroom   Single Family Oceanfront Complex   Beachfront     16,000  
Villa - 8 Bedroom   Single Family Oceanfront Complex   Beachfront     18,000  
Villa - 7 Bedroom   Single Family Oceanview Complex   Waterview     16,800  
Villa - 6 Bedroom   Single Family Oceanview Complex   Waterview     27,792  
Villa - 5 Bedroom   Single Family Ocean Access   Water Access     121,200  
Villa - 4 Bedroom   Single Family Wadi Park   Wadi Park     102,480  
        Waterview, Water Access,        
Townhouse - 2 & 3 Bedroom   Attached Wadi Park   Wadi Park     93,600  
Apartments - 4 Bedroom (5 Floors, above Retail Base)   Multi-Story Apartment Building   Beachfront/Waterview/Wadi Canal/Marina     31,540  
Apartments - 3 Bedroom (5 Floors, above Retail Base)   Multi-Story Apartment Building   Waterview/Wadi Canal/Marina     41,500  
Apartments - 2 Bedroom (5 Floors, above Retail Base)   Multi-Story Apartment Building   Beachfront/Waterview/Wadi Canal/Marina     49,800  
Apartments - 1 Bedroom (5 Floors, above Retail)   Multi-Story Apartment Building   Waterview/Wadi Canal/Marina     14,940  
Retail First Floor - Apartment Buildings   Multi-Story Apartment Building   Wadi Canal/Marina     31,804  
              533,652  
                 
        Residential Community        
Gatehouse / Welcome   Security, Information, Site Access   Entrance     125  
        Residential Community        
Mosque   Integrated Into Community   Centre     2,000  
        Residential Community        
Clubhouse   Multi-function Community Facility   Centre     1,652  
              3,777  
                 
Airport Welcome Centre   Omagine Information Center   Muscat International Airport     NA  
Welcome Office   Omagine Information Center   Commercial District     556  
Operations & Maintenance, Security, Telecommunications   Operations, Security & Maintenance   Omagine Service Compound     2,905  
Shipping, Receiving & Storage (Break Bulk Distribution / Storage Facility)   Operations, Security & Maintenance   Omagine Service Compound     2,179  
Incoming Services Facility   Services Headhouse   Omagine Service Compound     0  
District Cooling Plant   Disctict Cooling and Storage Facility   Omagine Service Compound     0  
Waste Water Pumping Station   Untreated Water Pumping Station   Omagine Service Compound     0  
              5,640  
        Commercial        
Office Building 1   Commercial Office Space   Commercial District     33,399  
Office Building 2   Commercial Office Space   Commercial District     33,399  
Office Building 3   Commercial Office Space   Commercial District     33,399  
Office Building 4   Commercial Office Space   Commercial District     33,399  
              133,596  
Total Land Area (Note includes reclaimed land area)             1,064,683  

 

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The Omagine project will be the first in kind to offer such an integration of tourism, entertainment and support amenities and there will likely be a high demand for residential and commercial accommodation within the development.

 

The concept for the development appears sound – supplementing the already present coastal position with a reclaimed area, extending both tourism and residential appeal to a large proportion of the site.

 

The Sultanate’s drive for tourism growth will likely gather momentum over the proposed development period, coinciding with the opening of the new International Airport and general diversification of the economy. Securing key known names from the hospitality industry for the hotel and serviced apartment components will likely add greatly to the marketability of the residential components. Quality resort property worldwide is undergoing significant value growth at present and there is no reason why Oman, assuming political and economic sustained stability should not follow this global trend.

 

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There will likely be a high regional investor demand for specific land elements within the project once core infrastructure and hospitality elements are in situ. Accordingly, projected future land values as stated herein are likely to be achievable.

 

To assess the viability of the proposed development, it is pertinent to review the status of past and potential future projects of similar nature in Oman, these being limited to the Integrated Tourism Complexes. Below is presented a brief synopsis of the ITC market, its current state and outlook.

 

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APPENDIX V

 

INTEGRATED TOURIST DEVELOPMENTS

 

The ITC’s were an attempt to drive tourism growth into the Sultanate through hotel development, freehold property rights and employment creation. Their success has to date been limited, with many of the projects damaged by the global economic downturn in 2008. The “Arab Spring” also had a dampening effect on Oman’s real estate from a wider global perspective and as such significant upward movement of values in the short term is unlikely. However high demand from rental tenants now underpins the investment appeal of property within the ITC’s with rental growth driving capital values and a resurgence of regional buyer demand is likely to underpin the medium and longer term success of the ventures.

 

ITC SUMMARY

 

As part of the Sultanate’s economic diversification plan, the opening up of specific areas for focused tourism development were permitted in 2007. In such zones, now known as Integrated Tourism Complexes, the laws allowing freehold ownership of land and property were extended to allow all Nationalities to so own.

 

Under the Ministerial and Royal Decrees passed in 2007, the precedents for ownership were laid down and in summary, all Nationalities can own land and property within designated Integrated Tourist Developments with unrestricted rights of use and transfer. The mode of ownership may be by whatever means the developer allows, whether freehold or leasehold.

 

The results of these laws brought about a foray of development activity and the Ministry of Tourism from 2007 onwards actively encouraged the promotion and investment into the ITC’s. The granting of licenses for such developments reached a peak in early 2008 when over 14 licenses had been issued. Work commenced on a select number of these developments but the economic slowdown in summer 2008 and the subsequent worldwide economic crises brought the progress of the majority of these developments to an abrupt halt. Of the intended schemes, only 6 actually commenced construction and sales.

 

The worldwide events of that time curtailed the ambitious development plans that at one stage were seen as threatening an oversupply of residential properties onto the market. The credit crunch, with its associated tightening of availability of funds for such speculative development has effectively acted as a brake for the runaway speculative driven growth of these developments.

 

36
 

 

Oman is now faced with the reality of a number of semi completed “boom time projects.” These projects, whilst appearing to meet the demands of the market at the time really only catered to a very small element of end users. Over ambitious master planning will likely lead to ongoing management and maintenance issues at these developments which will ultimately act as a barrier to excessive capital growth.

 

The remaining developments that have as yet not commenced need to carefully analyse their target markets and build to the end user and investor requirements. This will ultimately lead to a slower delivery of product and ensure that demand and supply remains more in balance than in the peak boom years.

 

Project Name   Status   Timing of sales
Planned and Ongoing        
Muscat Golf and Country Club   Phase 1 sold and occupied   Phase 2 released early 2013. 98 Villas
The Wave   7 Launches to date   Releases 1-4 sold. Reehan Gardens /
        Residences and Marina apartments latest
        release mid 2014
Shangri La Bar al Jissa   Phase 1 partly sold and occupied   Phase 2 Apartment release on hold
Salalah Beach   Under construction   Ongoing releases
Jebel Sifa   Handover commenced late 2012   No new launches announced
Al Madina A Zarqa   Construction on hold   Cancelled – being restructured as Al
        Madina al Noor
Advanced Planning        
Omagine   DA agreed – due for commencement   2015 onwards
    2015    
Naseem a’Sabba   Master planning underway   Postponed owing to market conditions
Saraya Bander Jissah   Infrastructure works commenced   Launched 2014 Q3
Barka Resort   Design complete   Proposed launch 2015
Postponed/Cancelled /Scaled down        
Hayoot Beach m - Musandum   Cancelled   Limited to hotel only
Ras Al Hadd Resort – Sur   Only Hotel to be developed   Limited release in Q3 2014
Khasab Resort   Cancelled   Limited to hotel only
Salam Resort Spa - Shinas   Indefinitely postponed   Restructured
Salam Resort Spa – Yiti Beach   Indefinitely postponed   Restructured
Castle Yenkit   Postponed 3 years   On hold indefinitely
PDO redevelopment – Muscat   Cancelled - restructured   Now being undertaken directly by PDO

 

It is estimated that values have now stabilized at approximately 80% from their peak levels and have bottomed at circa RO. 900 per square meter for normal, not luxury ITC product and maximizing at RO. 1,500 per square meter for luxury property such as Bar al Jissah Development.

 

Although there is no direct evidence of further downward value pressure occurring, this is purely as a result of the very low number of sale transactions concluded over the last 12 months.

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Market confidence remains wary and with an absence of overseas investors for off plan property, the market is relying on domestic and GCC buyers. The latter two parties are continuingly conservative in their outlook at present, owing largely to their over exposure in regional real estate over the boom period. Product offerings that do not suit the taste and aspirations of this target market can also be held accountable for low transaction levels and it is foreseen that better designed, lower density projects could rejuvenate interest levels.

 

Projects that did commence , sell and develop prior to the market slowdown include:

 

Project Name   Location   Status
         
Muscat Hills Golf & Country Club   Airport Heights   Phase 1 complete and occupied. Golf Course complete.
        Phase 2 now launched. Reported sale of +50% of released stock (unverified).
         
The Wave   Azaiba/Seeb   Releases 1-4 handed over. Ongoing releases of apartments and scaled down villas.
         
Bar al Jissah Residences   Bander Jissa   Construction defects and affected approximately 25% of the units and proportional handover delayed. Dusk sector fully handed over the habited. 80% of larger villas remain unsold.
         
Jebel Sifa (Muriya)   Sifa   Delayed construction – hotel and marina now open and handover of apartments underway. Limited villa handovers with low demand and lack of facilities cited as reason.
         
Salalah Beach (Muriya)   Salalah   Delayed construction – hotel and 60% of property now handed over but continuing legal disputes ongoing
         
Al Madina a’Zarqa   Sawadi   Project has been abandoned and Restructuring underway with government buy back complete. To be re launched as Al Madina al Noor

 

Projects that failed to commence prior to the economic collapse but are proceeding (assumed)

 

Project   Location   Comments
         
Saraya Bander Jissah   Bander Jissa   With a management team in place and ongoing sponsorship of local events, limited sales were released in Q3 2014 at values circa RO 1,000 psm. Main releases planned over 2015
         
Barka Resort   Barka   Launch uncertain but still planned 2015
         
Naseem a’Zaba   Seeb   Late entrant – probable launch late 2016. Master plan design well underway
         
Omagine (Journey of Light)   Seeb   Development Agreement signed Q4 2014

 

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Projects that failed to commence prior to the market slowdown and are not proceeding (or have been substantially down sized or delayed)

 

Project Name   Location   Status
         
Yiti Beach - Sama Dubai   Yiti   Original project cancelled and re structuring of ownership and master plan now underway.
         
Castel Yenkit   Yenkit   Indefinitely postponed
         
Qatari Diar RAH   Ras al Had   Significantly cut back to hotel element only
         
Khasab World   Musandam   Indefinitely postponed
         
The Malkai   Barka   Indefinitely postponed

 

Summary of ITC’s

 

At present, the average sizes of apartments offered for sale in Oman ITC developments to date is:

 

Apartment   Average Unit Size   Largest   Smallest
             
1 Bedroom   95   137   75
             
2 Bedroom   140   170   121
             
3 Bedroom   220   285   166
             
4 Bedroom   250   n/a   n/a

 

The average sale price for each unit type in Integrated Tourist Areas including latest Wave release is recorded as follows:

 

    Average Sale Price per   Highest price psm   Lowest Price psm
Apartment   square meter   RO   RO
             
1 Bedroom   RO. 1,019   1,197   615
             
2 Bedroom   RO. 1,1,37   1,353   604
             
3 Bedroom   RO. 1,042   1,335   606
             
4 Bedroom   RO. 923   n/a   n/a

 

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Current Villa sizes offered for sale within ITC developments in Oman to date are recorded as follows:

 

Villa   Average Unit Size   Largest   Smallest
             
3 Bedroom   280   325   255
             
4 Bedroom   449   530   292
             
5 Bedroom   458   589   345

 

Average sale rates are as follows:

 

    Average Sale Price per   Highest price psm   Lowest Price psm
Villa   square meter   RO   RO
             
3 Bedroom   RO. 1,085   1,335   615
             
4 Bedroom   RO. 1,190   1,404   709
             
5 Bedroom   RO. 1,333   2,462   986

 

The ongoing developments :

 

Muscat Hills Golf and Country Club

 

Location: Seeb, Muscat (located inland from Seeb Airport)
Developer: Muscat Golf Projects L.L.C.
Land size: 2 million square meters
Properties: Phase 1& 2 - 147 villas & 125 apartments
  Commercial Zone (sub developed) – up to 600 apartments from 2015
Project Investment: RO. 30 million Phase 1 RO. 60 million
Ownership type: Absolute freehold
Features: Golf course, 5 star hotel, spa, health club, three restaurants.
Status: Under construction
Projected completion date: Phase 1 - Mid 2010 (completed). Phase 2 commencement 2013

 

Description

 

The project, centrally located in Capital Area Muscat, was the first Integrated Tourist Complex development in Oman. Spearheaded by the late HH Sayeed Kais bin Tariq Al Said the project was conceived to provide the first and most challenging green golf course in Oman.

 

To support the cost of the golf amenities, villas and apartments were developed throughout the course. Sales commenced early in 2004. The project can be considered to have sold out within 12 months of phase 1 launch. Buyer demographics have shown that 30% of the properties were purchased by GCC nationals and 70% by non GCC, predominantly European (96% UK, 4% Dutch). The project has achieved an average 150% value increase since commencement of sales in 2004.

 

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Since the original sales of this project, a small resale market has evolved and changed slightly the owner demographics. Phase 2 (148 units) was launched in January 2013 and although sales performance is not confirmed it is believed to have sold up to 70% of its off plan offering to date.

 

 

Product Phase 1

 

Pricing

 

Product   No Units    

Initial sales

launch price

(average) 2004

 

Current resale

value Q 4 2014

 

Current RO.

Per square

meter

   

Current $

per square

meter

 
2 Bed Apartments     100     RO. 85,000   RO. 135,000     931       2,420  
3 Bed Penthouses     25     RO. 180,000   RO. 300,000     1,052       2,735  
3 Bed Villas     30     RO. 150,000   RO. 350,000     1,077       2,800  
4 Bed Villas     25     RO. 175,000   RO. 400,000     1,142       2,971  
5 Bed Villas     25     RO. 190,000   RO. 525,000     1,400       3,465  

 

Phase 2

 

Product   Bedrooms    

Offering Price

2/2013 to present

  Area    

RO. Per

square meter

   

Current $

per square

meter

 
Acacia     5     RO. 590,000     565       1,044       2,714  
Rivea     5     RO. 495,000     505       980       2,548  
Palm Vista     4     RO. 445,000     480       927       2,410  
Freana     4     RO.380,000     460       826       2,147  
Lake Terrace     4     RO.380,000     405       938       2,438  
Carteri     4     RO. 325,000     420       773       2,009  
Sacra     4     RO. 275,000     350       785       2,041  

Note: Price excludes extras such as swimming pool

  

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In addition, a release of 20 linked villas was undertaken in late 2012 by a third party developer at Muscat Hills. The units compromise modern style townhouses with almost 100% built up area to land plot but each home has a small plunge pool. Competitively priced, 100% sell out was achieved by early 2013.

 

 

        Sale Price end       RO. Per     Current $ per  
Product   Bedrooms   2013   Area     square meter     square meter  
Hilai   3   RO. 195,000     273       715       1,859  
Qamar   4   RO. 225,000     328       686       1,783  
Samaar   5   RO. 250,000     327       688       1,788  
Toos   5   RO .270,000     290       862       2,241  

 

In 2014, a zone of land fronting the project, with ITC status but without the benefit of being within the community was sub divided into plots of circa 7,500 square meters. These plots have been onward sold to independent investors with the benefit of commercial/residential planning consent. It is understood that values approaching RO 600 per square meter have been achieved for these lands.

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Rental Values

 

There is a high demand for rental space at the development and this has lead to a strengthening of values over the last 12 months. There is currently 100% occupancy.

 

    Estimated Current Market   Achieved Rental     Initial yield on     Current  
Product   Value RO   Value RO     original value     yield  
2 Bed Apartments   RO. 135,000     9,600       8.85 %     7.11 %
3 Bed Penthouses   RO. 300,000     15,000       8.33 %     5.0 %
3 Bed Villas   RO. 350,000     19,200       12.8 %     5.48 %
4 Bed Villas   RO. 400,000     19,800       11.31 %     4.95 %
5 Bed Villas   RO. 525,000     21,600       11.37 %     4.11 %

 

Comments

 

This development was the first and can be regarded as the most “troubled” development. Financing issues caused considerable delays and phase 2 has been significantly delayed. However, at time of reporting it can be stated that Muscat Hills is the most sought after ITC development from both a rental and purchase perspective. Irrespective of this, re-sales activity has been low reflecting the attractive yields shown on original purchase price and the lack of sellers as a result.

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The Wave

 

Development details

 

Location : Seeb, Muscat (on coast close to Seeb Airport)
Developer: Majjid Al Futaim
Land size : 2.5 million square meters
Properties: 1,630 villas / townhouses & 2,770 apartments
Project Investment: RO 310 million
Ownership type: Absolute freehold
Features: Beachfront location, golf course, 300 berth marina, 15,300 square meters of retail space, 40,000 square meters of office space, four 5 & 4 star hotels.
Status: Under construction
Projected completion date: 2017 (phased development with regular releases of properties)

 

The Wave Muscat was the first joint venture development between Oman Business (Pension Funds and Government) and an overseas investor/developer – Majid al Futtaim. The site covers an area of approximately 2.5 million square meters and is master planned to accommodate four 5 star hotels, a golf course, marina, commercial area and up to 4,000 residential units.

 

Since the first release of properties in mid 2006, nearly 2,000 properties have so far been handed over. Sales commenced at the boom time when secondary trading was abundant and this resulted in significant price enhancement. However by release 4 in 2008, the pricing had breached buyer tolerance levels and the sales momentum slowed considerably.

 

Buyers in releases 4 and 5 (in some instances) began to walk away from their purchase contracts, sacrificing the 10% down payment, comfortable in the knowledge that they could buy a completed property in the earlier releases and still profit from the situation. Later releases of scaled down product ensured sales continued within buyer tolerance levels.

 

The latest’s release of villas known as Reehan Residences consisted of 3 and 5 bedroom townhouses and villas, of which it is understood approximately 70% has been sold since launch in summer 2014. Significantly smaller plot sizes and denser development characterize this release.

 

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Product (Releases to date)

 

        Initial sales launch   Current sales   Current RO.        
    Gross internal   price (average)   price (average)   Per square     Current $ Per  
Product   area   2006   Q4 2014   meter     Square meter  
1 Bed Apartment   82 sqm   RO. 89,000   RO. 100,000     1,220       3,171  
2 Bed Apartment   101 sqm   RO. 129,000   RO. 150,000     1,485       3,861  
3 Bed Apartment   166 sqm   RO. 179,000   RO. 210,000     1,265       3,289  
2 Bed T/H   151 sqm   RO. 85,000   RO. 180,000     1,192       3,099  
3 Bed T/h   235 sqm   RO. 110,000   RO. 200,000     851       2,213  
3 Bed Villas   239 sqm   RO. 181,000   RO. 280,000     1,171       3,044  
4 Bed Villas   270 sqm   RO. 206,000   RO. 300,000     1,111       2,888  
5 Bed Villas   345 sqm   RO 268,000   RO. 450,000     1,304       3,391  
Reehan Residences 2014                            
5 Bed Villa   441 sqm       RO. 440,000     998       2,595  
3 Bed Townhouse   265 sqm       RO. 252,000     950       2,470  

 

Of interest was the launch of ocean front properties in 2007, the only such release to date. A formal auction of the lots was held and buyer activity was frenetic. The chart below represents the actual sale value bid , later reduced by the developer as buyer enthusiasm was clearly out of control at the event. However it demonstrates the high demand base for waterfront, quality property.

 

Auction - Beach Front Properties 1/12/2007

 

Plot No       Land Area     Built Up     Sale Price RO.     $ PSM     RO PSM  
                                   
411   Beach Front     851       715       2,350,000       8,545       3,287  
370   Beach Front     794       555       2,250,000       10,541       4,054  
400   Beach Front     788       447       2,550,000       14,832       5,705  
404   Beach Front     840       715       2,150,000       7,818       3,007  
408   Beach Front     841       555       1,850,000       8,667       3,333  
412   Beach Front     756       450       1,800,000       10,400       4,000  
406   Beach Front     800       515       1,850,000       9,340       3,592  
402   Beach Front     756       540       1,800,000       8,667       3,333  
373   Beach Front     763       515       1,800,000       9,087       3,495  
375   Beach Front     765       447       1,750,000       10,179       3,915  
407   Beach Front     929       715       2,050,000       7,455       2,867  
413   Beach Front     840       555       2,000,000       9,369       3,604  
409   Beach Front     770       540       1,800,000       8,667       3,333  
410   Beach Front     847       555       2,000,000       9,369       3,604  
Average Price per square meter     9,310       3,581  

 

45
 

 

The previous glut of re sales has reduced and values appear firm in the secondary market. As the development matures, the marina and retail is completed, it is becoming a highly demanded place to live and as such rental values are firming. On average, yield returns from completed properties are amounting to sub 5% per annum.

 

46
 

 

Shangri La Barr Al Jissah Resort & Spa

 

Location: Barr Al Jissah Beach (15 minutes drive to the SE of the Central Business District)
Developer: Zubair Corporation
Land size: 500,000 square meters
Properties: 11 villas, 56 townhouses
Project Investment: RO 150 million
Ownership type: Absolute freehold
Features: Beachfront location, marina, souk, retail space, three luxury hotels.
Status : Hotel resorts completed with residential component under construction.
Actual completion date: January 2010

 

Situated at the Barr Al Jissah bay the Shangri La hotel development was developed as a joint venture between the Oman Government and the Zubair Corporation. The site covers an area of approximately 500,000 square meters with a choice of three 5 star resort hotels and spa facilities. Following the success of the hotel development, residential units were created directly by Zubair Group and were released for sale in 2007 end. The properties were sold in a fast manner with price enhancement of 30% achieved on a square meter basis over the week long selling period.

 

Product

 

Product   Gross internal area   No. Units   % of Product Offering  
4 Bed Townhouses   292 sqm   56     79 %
4 Bed Villas   530 sqm   4     5.5 %
5 Bed Villas   589 sqm   11     15.5 %

 

Pricing

    Gross              
    internal   Initial sales launch price   Current asking sales price   Current RO. Per square  
Product   area   (average) 2007   (average) Q4 2014   meter  
4 Bed T/H   292 sqm   RO. 300,000 +   RO. 450,000     1,541  
4 Bed T/H Cliff edge   292 sqm   RO. 400,000 +   RO. 650,000     2,226  
Luxury Villas   530 sqm   RO. 1,000,000   RO. 1,200,000     2,264  
Superior Villas   589 sqm   RO. 1,250,000   RO. 1,600,000     2,716  

 

Note: For Superior Villas this is asking price with no sale evidence at this level

 

Ongoing structural defects at the property in zone Dawn have lead to investor concerns and this has effectively halted the re-sale market at this area. Phase 2, 65 luxury apartments is due for release by 2015.

 

47
 

 

Rental Rates

 

There remains limited letting activity at the development to date. On account of the time travel distance from the business district areas of Muscat, demand has been low for all property types and this reflects in the lower than originally expected rental levels.

 

    Current sales price (average)   Current rental value        
Product   Q4 2014   RO     Initial Yield  
4 Bed T/H   RO. 450,000 +     19,200       4.26 %
Luxury Villas   RO. 1,000,000     30,000       3.0 %
Superior Villas   RO. 1,600,000     54,000       3.375 %

 

This development saw significant capital growth with RO. 2,570 per square meter being achieved for the townhouses at the peak (early 2008). However, ongoing delivery delays and questionable quality standards have damaged the project’s reputation and few sales are being achieved even at the current (considered too low) values. It is anticipated that when the ongoing buyer/management concerns are finalized that the development will show higher rates overall.

 

 

48
 

 

APPENDIX VI

 

Development Agreement (Linkage) & Land Title Papers

 

Schedule 1

 

Krooki; Mulkiya; Sea Area; Layout

 

Notwithstanding anything to the contrary contained anywhere else in this Development Agreement or in the Schedules to this Development Agreement, the Parties hereby agree that:

 

I. the Krooki dated June 16, 2014 as defined in Clause 1 and shown below as Part A of this Schedule 1 is the Krooki for the Existing Land, and

 

II. any diagrams, drawings, photographs or the like contained in any Schedule to this Development Agreement showing boundaries of the Existing Land different from the boundaries shown in the Krooki are indicative only and are hereby amended to represent and mean the boundaries of the Existing Land as definitively shown in the June 16, 2014 Krooki.

 

49
 

 

Part A

 

Krooki dated June 16, 2014

 

 

50
 

 

Part C

The Sea Area

 

The Parties hereby agree as follows:

 

The area constituting the Sea Area, in respect of which an Environmental Impact Assessment has beeneffected, will evolve and change shape as the Project is Developed and Reclaimed Land and Created Waterways come into existence.

 

The dimensions and location of the Sea Area are indicatively shown in the drawing below and the Ministry of Tourism (“MOT”) hereby agrees and consents to the final dimensions and location of the Sea Area, provided that, the Project Company receives the prior written Approval for such final dimensions and location from the Ministry of Environment and Climate Affairs within 12 Months after the Effective Date.

 

Subject always to this Development Agreement and the Law the Project Company shall have no claim or right of action against the MOT in the event that the Ministry of Environment and Climate Affairs does not Approve the dimensions and location of the Sea Area as contemplated by this Development Agreement as stated below in this Part C of Schedule 1.

 

The Sea Area at any time is never Reclaimed Land or Created Waterways and it will be that rectangular area of the Gulf of Oman indicatively shown below and which rectangle:

 

(i) has a side (the “First Side”) that is co-existent with that line in the Gulf of Oman which is the high high water mark (“HHWM”) adjacent to theKrooki boundary line facing the Sea Area (the “Outer Boundary”), and

 

(ii) has an opposite and parallel side (the “Second Side”) the coordinates of which are perpendicular to the First Side and subject to the approval of the Ministry of Environment and Climate Affairs, is one hundred thirty (130) meters in a north-easterly direction from the First Side, and

 

(iii) is bounded on its other two sides by:

 

a) a side (the “Third Side”) which is that line originating at the point that is the north-western boundary point of the Krooki and running perpendicular to and through the First Side up to that point where it intersects the Second Side, and

 

b) a side (the “Fourth Side”) which is parallel to the Third Side and which Fourth Side is that line originating at the point that is the south-eastern boundary point of the Krooki and running perpendicular to and through the First Side up to that point where it intersects the Second Side.

 

The Sea Area on the Execution Date is indicated by the drawing below in Part C of this Schedule 1 and the Parties hereby agree that the “Sea Bed” means that part of the Project Area that at any time has the same coordinates as the Sea Area andwhich is under the Sea Area.

51
 

 

  

(All dimensions shown are indicative only)

52
 

 

Part D

 

Layout Plan :

 

Aerial Photograph and

Contour survey map

 

[Note: The Parties agree that this is an indicative Layout Plan only and shall at all times be subject to any Approvals which the Law requires from the relevant Government Authorities.]

 

 

 

53
 

 

 

 

54
 

 

 

 

55
 

 

 

 

56
 

 

 

 

57
 

 

 

 

58
 

 

 

 

59
 

 

 

 

60
 

 

 

 

61
 

 

 

 

62

 

Exhibit 10.8.2 

 

PRIVATE & CONFIDENTIAL

 

www.dtz.com

 

 

Report and Valuation

 

Prepared on behalf of

 

OMAGINE LLC

 

In respect of

 

SITE OF THE OMAGINE PROJECT
AL MAWALEH NORTH
AL SEEB
SULTANATE OF OMAN

 

Valuation Date: 15 January 2015

 

Report Date: 15 January 2015

 

Contract Ref No: AEVA2438

 

 

 
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

15 JANUARY 2015  
   
CONTENTS  
   
EXECUTIVE SUMMARY 4
   
1.       TERMS OF INSTRUCTION 7
   
  1.1. Valuation Instruction 7
       
  1.2. Our Appointment and Valuation Date 7
       
  1.3. Compliance with RICS Valuation Standards 7
       
  1.4. Status of Valuer and Conflicts of Interest 7
       
  1.5. Valuation Summary 7
       
  1.6. DTZ Terms of Business 7
       
  1.7. Valuation Terms and Conditions 8
       
2.       BASIS OF VALUATION 9
   
  2.1. Observations and Assumptions 9
       
3.       EXTENT OF DUE DILIGENCE AND INFORMATION SOURCES 10
   
  3.1. Inspection 10
       
  3.2. Valuers 10
       
  3.3. Information 10
       
  3.4. Tenure and Title 11
       
  3.5. Development Agreement 12
       
4.        VALUATION ASSUMPTIONS 13
   
5.       PROPERTY DESCRIPTION 14
   
  5.1. Location and Situation 14
       
  5.2. Description 15
       
  5.2.1. Proposed Development 16
       
6.       OMAN SOCIO-ECONOMIC OVERVIEW 18
   
  6.1. Introduction 18
       
  6.2. Overview 18
       
  6.3. GENERAL ECONOMIC OVERVIEW 19
       
  6.4. Economic Forecasts 21
       
  6.5. Demographics 22
       
7.       OMAN REAL ESTATE MARKET COMMENTARY 24
   
  7.1. Residential Overview 24
       
  7.2. Residential - Integrated Tourism Complexes (ITCs) 24
       
  7.2.1. The Wave Muscat 25
       
  7.2.2. Muscat Hills Golf and Country Club 27
       
  7.2.3. Shangri La Barr Al Jissah Resort & Spa 28
       
  7.2.4. Jebel Sifah 29
       
  7.2.5. Saraya Bandar Jissah 30
       
  7.2.6. ITC Outlook 30
       
  7.3. Tourism Market Overview 31
       
  7.3.1. Hotel Market Overview 33
       
  7.3.2. Retail Market Overview 35

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
2
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

8.       INVESTIGATIONS AND ENQUIRIES 39
   
  8.1. Transparency 39
       
8.2. Environmental Matters 39
       
  8.3. Ground Conditions 40
       
  8.4. Planning 40
       
  8.5. Services 40
       
  8.6. Highways and Infrastructure 40
       
  8.7. Tenure 41
       
9.       VALUATION APPROACH, METHODOLOGY AND ASSUMPTIONS 42
   
  9.1. Construction Costs 43
       
  9.2. Residential Sales Prices 44
       
  9.3. Timing 45
       
  9.4. Commercial Property 46
       
  9.5. Target Internal Rate of Return (IRR) 47
       
  9.6. Financial Model Findings 47
       
10.       VALUATION CERTIFICATION 48
   
11.       DISCLOSURE AND CONFIDENTIALITY 49
   
APPENDIX 1 - DEFINITIONS OF THE BASES OF VALUATION 50
   
APPENDIX 2 - VALUATION TERMS CONDITIONS AND ASSUMPTIONS 53
   
APPENDIX 3 – TITLE DOCUMENTS (KROOKI) 55
   
APPENDIX 4 – USUFRUCT AGREEMENT 61
   
APPENDIX 5 – CONSTRUCTION COSTS 69
   
APPENDIX 6 – ITC LOCATION MAP 70
   
APPENDIX 7 – APPRAISAL SUMMARY 71

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
3
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

EXECUTIVE SUMMARY  
   
Client: Omagine LLC
   
Property Address: Site of the Omagine Project (plot no. 01-05-012-01-1), Al Mawaleah North, Al Seeb, Sultanate of Oman
   
Type of Property: Development land
   
Use: Integrated Tourism Complex (ITC)
   
Proposed Use: Mixed use
   
Purpose of Valuation: For loan security purposes and for inclusion in report filing with the United States of America Securities and Exchange Commission (the ‘SEC’)
   
Date of Instruction: 6 December 2014
   
Date of Inspection: N/A – Desktop study
   
Date of Valuation: 15 January 2015
   
COI No: AEVA2438
   
Basis of Valuation: Market Value
   
Valued Interest: Usufruct / Freehold
   
Valuation Assumptions: In providing our assessment of value for the Subject Property detailed herein we have made the following assumptions:
   
  ·       The Usufruct interest is unencumbered and can be transferred without restriction in accordance with Royal Decree No. 12/2006 and the Development Agreement
   
  ·       The subject property is clear of any improvements
   
  ·       The completed units within the development will be transferred to third parties under Royal Decree 12/2006 with international freehold status
   
  ·       Sold units are on an individual unit basis
   
  ·       Adequate parking is provided in accordance with municipality guidelines
   
  ·       All pre-sales payments are deposited into an ESCROW account and drawn down for development works

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
4
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

  ·        Construction costs provided by Omagine LLC have been adopted
   
  ·        Utility services will be provided to the boundary of the subject property and will be sufficient for the proposed development
   
  ·        Access roads connecting the subject property will be sufficient for proposed use
   
  ·        The hotels within the scheme will be managed by high profile global operators
   
  ·        The hotels will be granted alcohol licences
   
  ·        The serviced chalets and apartments will be managed by the hotel operators
   
  ·        Market value of the subject property is based upon the proposed scheme/massing present as “Project related site value”
   
  ·        All information provided and relied upon is accurate as at the date of valuation
   
Sources of Information: For the purpose of this valuation we have relied upon the following information provided by the Client:
   
  ·        Usufruct Agreement (dated August 2014)
   
  ·        Krooki (dated 16 June 2014)
   
  ·        Proposed scheme design and specification
   
  ·        Construction costs provided by Majan Engineering Consultants and Consolidated Contractors Company
   
  ·        Master plan with gross and net areas in accordance with the Development Agreement
   
  ·        Development Agreement (dated 2 October 2014)
   
Standards: The report has been prepared in accordance with the RICS Valuation – Professional Standards 2014
   
Independence and Objectivity: We confirm that we have had no material involvement with the property or the client(s), that we act objectively and that this report represents our independent opinion of value where DTZ does not consider that any conflict arises in preparing the advice requested.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
5
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

  We confirm that we have the knowledge, skills and understanding to undertake the valuation competently and that we would undertake the valuation acting independently as an external valuer, qualified for the purpose of the valuation
   
  DTZ does not consider that any conflict arises in preparing the advice requested.
   
Market Value: OMR 385,000,000
   
  (Three Hundred and Eighty Five Million Omani Rials)
   
Valuer Details: Rashpal Heer BSc. (Hons) MRICS
  Associate Director - Valuation
   
  Antony Schober AAPI CRV
  Director and Head of Valuation UAE

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
6
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

1. TERMS OF INSTRUCTION

 

1.1. Valuation Instruction

 

In accordance with your instructions dated 6 December 2014 between Omagine LLC ("the Client") and DTZ International Ltd - Dubai (the “Consultant”), the Client requires a report and valuation (the "Valuation Report") to assess the current market value of the land comprising the ‘Omagine Project’, Plot No. 01-05-012-01-1 Al Mawaleah North, Al Seeb, Sultanate of Oman (“Subject Property”).

 

We understand the valuation report is required for loan security purposes and report filing with the United States Securities and Exchange Commission (the ‘SEC’).

 

A copy of our Terms and Conditions of Engagement for Valuations and our Assumptions are attached as Appendix II.

 

1.2. Our Appointment and Valuation Date

 

In accordance with your instructions, DTZ have valued the Usufruct interest in the Subject Property in accordance with Usufruct Agreement and Royal Decree No. 12/2006 as at 30 December 2014.

 

1.3. Compliance with RICS Valuation Standards

 

We confirm that the valuation report has been prepared in accordance with the appropriate sections of the Professional Standards (“PS”), RICS Global Valuation Practice Statements (“VPS”), RICS Global Valuation Practice Guidance – Applications (“VPGAs”) contained within the RICS Valuation – Professional Standards 2014 (the “Red Book”). It follows that the valuation is compliant with International Valuation Standards.

 

1.4. Status of Valuer and Conflicts of Interest

 

We further confirm that we have no current, anticipated or previous recent involvement with the property and therefore do not consider that any conflict arises in preparing the advice requested under PS 2.4.

 

We confirm that we have the knowledge, skills and understanding to undertake the valuation competently and that we have undertaken the valuation acting independently as an external valuer, qualified for the purpose of the valuation as set out in PS 2.3.

 

1.5. Valuation Summary

 

The Subject Property is described within this Valuation Report which also includes our market analysis and valuation approach in the assessment of current market value. The valuation referred to below must be read in conjunction with the other sections of this Valuation Report.

 

1.6. DTZ Terms of Business

 

The valuation instruction has been prepared in accordance with the agreed terms of business stipulated in the agreed and executed engagement letter and DTZ terms of business detailed herein.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
7
 
 
 

Report and Valuation | Omagine LLC
  		 
 

   

1.7. Valuation Terms and Conditions

 

These are the general terms, conditions and assumptions (Refer to Appendix 2) upon which our valuation and report has been prepared. They apply to the valuation contained in this Report unless we have specifically mentioned otherwise elsewhere in this Report.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
8
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

2. BASIS OF VALUATION

 

In accordance with our instructions we have valued the property on the basis of Market Value.

 

Market Value is an internationally recognised basis of valuation and is defined as;

 

“the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

 

The Market Value is our estimate of price that would be agreed, with no adjustment made for the costs that would be incurred by the parties in any transaction. It is also gross of any mortgage, similar financial encumbrances and without offset of any associated taxes.

 

We have set out the full definition of the above bases of valuation in Appendix 1 of this Valuation Report.

 

Our report findings are subject to our standard Valuation Conditions and Assumptions which are included in Appendix 2 of this report. In the event that any of our Assumptions prove to be incorrect, then our valuations should be reviewed.

 

2.1. Observations and Assumptions

 

The Subject Property forms part of a mixed use area and is subject to planning restrictions. Consistent with normal valuation practice, we have taken account of the planning and other constraints and reflected demand for this type of property, in accordance with the Red Book.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
9
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

3. EXTENT OF DUE DILIGENCE AND INFORMATION SOURCES

 

3.1. Inspection

 

The property has not been inspected where we have undertaken a desktop assessment of Market Value with reference to the information provided.

 

Where our analysis takes the form of a Desktop Overview we would draw your attention to the fact that we have not inspected the subject property nor have we undertaken full verification or research. The opinions detailed herein are totally dependent on the adequacy and accuracy of the information supplied and the assumptions made. It should be noted that should these prove to be incorrect, the accuracy of this opinion will be affected.

 

3.2. Valuers

 

The property has been valued by Rashpal Heer BSc (Hons) MRICS, Associate Director – Valuation and Antony Schober AAPI CPV, Director and Head of Valuation UAE, within the requirements as to the competences under PS 2.3 of the RICS Valuation – Professional Standards Incorporating the International Valuation Standards January 2014 issued by the Royal Institute of Chartered Surveyors (RICS).

 

3.3. Information

 

The Client has provided specific details in respect of the subject property. DTZ has relied upon this information provided and assumed it to be correct.

 

In preparing the Valuation Report we have had regard to the following information:

 

· Krooki dated 16 June 2014 (title document) (Appendix 3)

 

· Usufruct Agreement dated August 2014(Appendix 4)

 

· Construction costs provided by Omagine LLC (comprising costs from Majan Engineering Consultants and Consolidated Contractors Company) undated (Mean summary attached as Appendix 5)

 

· Development built up areas (included within construction costs)

 

· Development Agreement dated 2 October 2014

 

We have relied upon the accuracy of the above information in preparing the Valuation Report, and our report is subject to the accuracy of this information. It should be noted that we have not had sight of the Development Agreement.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
10
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

3.4. Tenure and Title

 

We have been provided with the Krooki and Usufruct for the subject property. The salient details are as

follows:

 

Krooki

 

   
Date: 16 June 2014
   
Location: Al Mawaleah North, Al Seeb, Sultanate of Oman
   
Krooki No: 01-05-12-01-1
   
Plot Area: 1,000,000 sq m
   
Tenure: Usufruct
   
Use: Tourism ( Integrated Tourism Complex)

 

Usufruct Agreement

 

   
Property: Plot No. 1, Block No. 74SW, Al Hail North, Al Seeb
   
Date: August 2014
   
Beneficiary: Omagine LLC
   
Governorate: Muscat
   
Owner: Government of Oman represented by the Ministry of Tourism
   
Plot Area: 1,000,000 sq m
   
Tenure: 50 year Usufruct, renewable subject to written agreement between the parties
   
Start date: Date of registration of the Usufruct
   
Usufruct Fee: OMR 90,000 per annum, less any land transferred freehold to a third party
   
Grace Period: 5 years
   
Land Purchase Price: OMR 25 per square metre
   

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
11
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

Usufruct Agreement

 

Use: Tourism ( Integrated Tourism Complex)

 

Please refer to Appendix 3 and 4 for provided documents

 

We have assumed that good title could be shown with no unusual or onerous covenants or restrictions, which might adversely affect value. We are not aware of any other outgoings, easements or rights’ of way affecting the property and our valuation assumes that none exist.

 

The commentary provided in this report is based on our understanding of the title situation. This may need to be verified by a solicitor and/or the Ministry of Tourism, Oman.

 

For the purpose of this assignment we have assumed the property to be an unencumbered Usufruct interest, with ITC designation and with freehold sales permitted in accordance with Royal Decree No. 12/2006, the Usufruct Agreement and the Development Agreement without any undue restrictions.

 

3.5. Development Agreement

 

We have not been provided with a copy of the Development Agreement between the Government of Oman and Omagine LLC. However, we have been provided with the following extract regarding the Minimum Build Obligation:

 

Minimum Build Obligations or MBO means all acts as specified in SCHEDULE 6 to be performed by the Project Company for the Substantial Completion of the Project, within a specified period of time, in order to commence commercial operation of the tourism and other elements of the Project and in order for the Project to constitute an Integrated Tourism Complex.

 

Substantial Completion means, that in respect of the Minimum Build Obligations, Specific MBO, Project Company Infrastructure and Utilities, Buildings, Units or Works that all necessary work has taken place, Completion Certificates have been issued, permits and licenses have been granted, the subject matter is both fit for use and is either able to commence commercial operation or is habitable for its intended purpose without hindrance, and that only immaterial outstanding or remedial work remains to be completed.

 

The Minimum Build Obligation is comprised of and constitutes the Substantial Completion in accordance with the DCP and the requirements of this Development Agreement of the construction of (a) the seven (7) Pearls, and (b) one (1) of the Hotels.

 

It is our understanding that the elements within the Minimum Build Obligation are to be completed within 5 years of the Ratification Date (the date the agreement was ratified by the Ministry of Finance expected to be January 2015)

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
12
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

4. VALUATION ASSUMPTIONS

 

We have been provided with information pertaining to the physical location and development consents which have been utilised and relied upon in our assessment of market value.

 

For the purpose of this valuation assignment, we have made the following assumptions:

 

· The Usufruct interest is unencumbered and can be transferred without restriction in accordance with Royal Decree No. 12/2006 and the Development Agreement

 

· The subject property is clear of any improvements

 

· The completed units within the development will be transferred to third parties under Royal Decree 12/2006 with international freehold status

 

· Sold units are on an individual unit basis

 

· Adequate parking is provided in accordance with municipality guidelines

 

· All pre-sales payments are deposited into an ESCROW account and drawn down for development works

 

· Construction costs provided by Omagine LLC have been adopted

 

· Utility services will be provided to the boundary of the subject property and will be sufficient for the proposed development

 

· Access roads connecting the subject property will be sufficient for proposed use

 

· The hotels within the scheme will be managed by high profile global operators

 

· The hotels will be granted alcohol licences

 

· The serviced chalets and apartments will be managed by the hotel operators

 

· Market value of the subject property is based upon the proposed scheme/massing present as “Project related site value”

 

· All information as provided and relied upon is accurate as at the valuation date

 

The report has been prepared assuming an environment of social, economic and political stability on a macro and micro scale. We are therefore not responsible for any variations in value should this environment alter other than that set out in our report.

 

Our valuation has been assessed based on information provided to us by the client. This information is set out in the body of this report. DTZ has not verified all of this information and our valuation is on the basis that the information provided to us is correct. If any of the information provided is altered or incorrect, DTZ reserve the right to amend our valuation accordingly.

 

Should further investigations reveal variances to that as relied upon and those documented within the contents of this report, we reserve the right of comment and/or reappraisal.

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
13
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

5. PROPERTY DESCRIPTION

 

5.1. Location and Situation

 

The subject property is located immediately fronting the beach on the north eastern coast of the Sultanate of Oman some 1.7 kilometres from the A’Seeb Street Highway, a dual carriageway which runs from the border of Oman with the UAE emirate of Fujairah 254 kilometres to the north west and the centre of Muscat, the capital of the Sultanate of Oman, some 29 kilometres to the east. The property lies approximately 6 kilometres from Seeb International Airport to the south east and 20 kilometres from Shatti Al Qurum to the west.

 

The image below from Google Earth shows the subject location from a macro perspective within the wider Sultanate of Oman:

 

 

The image from Google Earth on the following page shows the location of the property within the Governorate of Muscat from a mirco perspective.

 

The property is accessed from 18 th November Street which runs parallel with southern boundary of the subject property. The main entrance to the Wave ITC is situated approximately 700 metres to the east.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
14
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

 

Whilst the immediate area of the subject property is mostly undeveloped, the wider area, particularly to the west of the subject property, is largely developed, comprising primarily of low rise residential units.

 

The local topography is generally flat, being part of the coastal plain between the Al Hajar Mountains and the Gulf of Oman.

 

The area has witnessed a large increase in residential development in recent years, including development within The Wave ITC and the wider area in line with the general increase in residential development in the Governorate of Muscat and Al Batinah.

 

5.2. Description

 

Plot: 01-05-012-01-1
   
Type: Development land
   
Use: Integrated Tourism Complex
   
Plot Area: 1,000,000 sq m
   
Beach Frontage: 6 kilometres (approximate)

 

We understand the property is completely undeveloped and has no infrastructure in place.

 

The property includes beach and sea area along the northern boundary extending out 130 metres – please refer to the Krooki Schedule 1 Part C included as Appendix 3.

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Neighbouring plots to the east and west are undeveloped but are likely to be developed in the medium to long term.

 

5.2.1. Proposed Development

 

We have been provided with the proposed master plan, included below:

 

 

We have also been provided with a detailed breakdown of the proposed development, the main elements are as follows:

 

        Gross Area per   Gross Area  
        unit   Total  
Element   No. of Units   (sq m)   (sq m)  
Oceanfront Villas   8   1000     8,000  
Oceanfront Villas   10   840     8,400  
Ocean View Villas   12   700     8,400  
Ocean View Villas   24   580     13,920  
Wadi Park Villas   120   525     63,000  
Wadi Park Villas   120   476     57,120  
Ocean View Townhouse   50   300     15,000  
Wadi Park Townhouse   160   300     48,000  
4BR Oceanfront Apartment   80   250     20,000  
4BR Ocean View Apartment   100   250     25,000  
4BR Wadi Park Apartment   200   250     50,000  
3BR Ocean View Apartment   250   230     57,500  

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

        Gross Area per   Gross Area  
        unit   Total  
Element   No. of Units   (sq m)   (sq m)  
3BR Wadi Park Apartment   250   230     57,500  
2BR Oceanfront Apartment   200   200     46,000  
2BR Ocean View Apartment   200   200     40,000  
2BR Wadi Park Apartment   200   200     40,000  
1BR Ocean View Apartment   90   170     18,000  
1BR Wadi Park Apartment   90   170     15,300  
Amphitheatre   1   700     700  
Movie theatre   1   2,500     2,500  
Pearl Retail   TBA   TBA     5,250  
Retail (general)   TBA   TBA     4,985  
Retail Mall   1   2,500     6,620  
Office Space   TBA   TBA     46,468  
Hotel 1 – 5 star   280 keys   96.02     26,885  
Hotel 2 – 4 star   280 keys   89.18     24,970  
Hotel 3 – 4 star   280 keys   89.18     24,970  
2-bed Serviced Chalets   300   115     34,500  
1-bed Serviced Chalets   300   85     25,500  
2-bed Serviced Apartments   343   125     42,875  
1-bed Serviced Apartments   300   110     33,000  
Studio Serviced Apartment   81   40     3,240  
Pearls (landmarks)   7   314.16     2,199.12  
                 
Total             875,102.12  

 

Additional ancillary items such as children’s play areas, mosque, beach area, boardwalk etc are included within the master plan but have not been included in the list above.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
17
 
 
 
Report and Valuation | Omagine LLC
  		 
 

    

6. OMAN SOCIO-ECONOMIC OVERVIEW

 

6.1. Introduction

 

This section of the report provides an overview of the socio-economic drivers of the Sultanate of Oman assessing key economic, population and demographic trends. Data from this section has been taken from a number of sources, including the National Centre for Statistics and Information (Oman), Oxford Business Group, Oxford Economics, Economist Intelligence Unit, the World Bank, the World Economic Forum, Oman Economic Review, IMF and government ministries.

 

6.2. Overview

 

The Sultanate of Oman is the second largest country in the GCC and has a coastline of over 3,000 km bordering the Gulf of Oman and Arabian Sea. The land area of the Sultanate is 309,500 sq km with an overall average population density, based on November 2014 population figures, of 13.21 residents per square kilometre (source: DTZ/Royal Oman Police).

 

Principal topographic features of Oman are plains, wadis and mountains. A key area is the plain overlooking the Gulf of Oman, where much of the development of the country has arisen, and is approximately 3% of the total land area. Mountain ranges occupy 15% of the total, principally the Hajr mountains, extending in an arc formation from Ras Musandam in the north to Ras Al-Had and Al Qara in the south western corner of Oman. The remaining area is largely sand and desert which includes part of Ar Rub Al-Khali.

 

Oman shares borders with Saudi Arabia, the United Arab Emirates and Yemen.

 

 

  

Muscat, the capital city, is situated on the coast of the Gulf of Oman, to the north of the country. It is home to the government and the centre of economic activity in Oman, which has led to an influx of residents from other governorates and regions of Oman.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Muscat’s population experienced rapid growth over the past decade against the backdrop of increased economic activity and a period of high oil prices. The official population figures show that the size of the population has almost doubled in the past decade; 632,000 residents in 2003 and 1,245,183 residents in November 2014 (Source: Royal Oman Poilce).

 

Muscat Governorate has the highest population density of all the governorates at approximately 345 residents per square kilometre whilst also being one of the smallest governorates by land mass.

 

Oman is split into 11 Governorates, of which Muscat Governorate, the region the subject property is situated in, lies in the north of the country on the Gulf of Oman; It is shown on the map below marked as number 9.

 

 

 

6.3. GENERAL ECONOMIC OVERVIEW

 

Oman’s economy has been relatively resilient over the past few years and has seen good levels of growth since the global economic crisis. GDP for 2013, at current prices, was 30.63 billion OMR (source: NCSI), an increase of 2.8% from 2012; GDP increased by over 11% in 2012. Figures for 2014 are currently unavailable.

 

Oman’s main industry is hydrocarbons, primarily oil, although the government and private companies are investing heavily in gas. In 2013 hydrocarbons amounted to OMR 15.22 billion of GDP, approximately 49.69% of total activity.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
19
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Oman is dependent on oil and produced approximately 945,600 barrels of crude oil a day over the first seven months of 2014. Much of the GDP growth recorded in recent years was down to an increase in oil production and rising global prices. Oil extraction is estimated to become uneconomical in many of the existing fields by the year 2020 which the government is trying to address by investing heavily in infrastructure with the intention of expanding numerous sectors including tourism, industry and logistics.

 

Oman's fiscal breakeven price for oil in 2013 was approximately US$104 per barrel, according to a 2012 government announcement, meaning that Oman's government needed the export price of oil to remain at or above that level to secure sufficient revenues. For 2014 the International Monetary Fund estimated the Oman government required an average price of US$102 per barrel to breakeven. The budget for 2015 of OMR 14.1 billion is based on an average oil price of US$75 per barrel.

 

The continued viability of developing Oman's oil and natural gas resources relies heavily on extraction technologies. Several enhanced oil recovery (EOR) techniques are already used in Oman, including polymer, miscible, and steam-injection techniques. Due to the relatively high cost of production in the country, Oman's government offers incentives to international oil companies for exploration and development activities in the country's difficult-to-recover hydrocarbon fields.

 

A report published by the U.S. Geological Survey in 2012 stated that the estimated mean undiscovered energy resources in the South Oman Salt Basin—located in the southern part of the country—totalled more than 370 million barrels of oil, 315 billion cubic feet (Bcf) of natural gas, and over 40 million barrels of natural gas liquids (NGLs). With rising domestic consumption, a growing petrochemical sector—which relies on liquefied petroleum gases (LPG) and NGLs—and additional potential resources, the country is unlikely to significantly alter its dependence on hydrocarbons in the short term. For context, in 2011 oil accounted for 71% of Oman's total primary energy consumption, while natural gas made up the remaining 29% (source: US Energy Information Administration).

 

    Oman summary energy statistics    
    Oil (million barrels)    
        Total petroleum   Reserves-to-production
Proven reserves, 2013   Total oil supply, 2012   consumption, 2012   ratio
             
5,500   338   53   16

 

    Natural Gas (billion cubic feet)    
  Dry natural gas   Dry natural gas   Reserves-to-production
Proved reserves, 2013   production, 2011   consumption, 2011   ratio
             
30,000   937   619   32

 

The industrial sector is seeing the benefit of the large investment in infrastructure, particularly the deepwater ports in Sohar and Duqm. A number of international industrial giants have recently begun operations in Oman, including Vale, the Brazilian mining giant, who opened their Middle Eastern headquarters in Sohar in April 2011 and are already looking to expand capacity at their 524 million OMR iron ore plant from 9 million metric tonnes to 12 million metric tonnes per year by 2015.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Additional investment in the oil industry is also proposed, including a new 2.3 billion OMR oil refinery in Duqm, a joint venture between Abu Dhabi’s international Petroleum Investment Company (IPIC) and the state backed Oman Oil Company.

 

Additional state spending is also expected over the next 4 years. The budget for the 8 th five-year plan (2011-2015) was increased from its initial sum by 26% to 54 billion OMR in a bid to create additional jobs and improve living conditions. A breakdown of the 2013 GDP figures is shown in the chart below:

 

Break Down of Gross Domestic Product 2013 (listed clockwise)

 

 

 

6.4. Economic Forecasts

 

Oman's GDP will grow by 3.4 per cent in 2014, according to the International Monetary Fund (IMF) in its World Economic Outlook, slowing from 5.1 per cent in 2013 (Oman’s NCSI state growth of 2.8% for 2013). The slowdown is likely to be led by lower growth in the hydrocarbon sector and an external environment that remains rather cool. Nonetheless, growth should remain fairly robust. Indeed, the government is more optimistic about the outlook, forecasting 5 per cent GDP expansion in its 2014 budget. Moody's Investors Service, the ratings agency, said that it expected a rate of 4.1 per cent in a report on Oman published in August. The report confirmed Oman's sovereign rating as A1 – upper-medium investment grade – with stable outlook, thanks to the progress in diversification (non-hydrocarbon sectors have grown more quickly than the oil and gas industry in recent years), strong fiscal buffers thanks to years of running a surplus, a stable financial sector, and – importantly – Oman's open stance on trade and investment.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
21
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

The 2015 budget foresees expenditure of RO14.1bn, up 4.5 per cent on 2014. The increase in spending against slower revenue growth will create a budget deficit forecast at RO2.5bn. This will mean that the government will be less likely to be able to channel resources into the State General Reserve Fund (SGRF), the country's sovereign wealth fund (SWF), which has grown an average 8 per cent per year to RO14bn and will undoubtedly play a central role in Oman's diversification drive, as well as building up the country's assets internationally with an eye on providing long-term revenues (source: Oman Economic Review).

 

6.5. Demographics

 

The National Centre for Statistics and Information (NCSI) puts the population of Oman at 4,088,201 as at the end of November 2014, an increase of 96,245 inhabitants (approx 2.4%) since the end of March 2014. The numbers are based on registration with the Directorate General of Civil Status – Royal Oman Police.

 

The total expatriate community has been put at 1,793,669, an increase of 27,746 (approx 1.57%) over the same period. The overall population comprises 56.1% Omani and 43.8% expatriate residents.

 

As with many developing countries, Oman has a relatively young populous, particularly when compared to many developed countries in regions such as Europe. In Oman 45.3% of the population was below 25 years of age at the 2010 census; an overall breakdown is provided in the table below.

 

 

Oman Census 2010 

 

Muscat Governorate is the most populated region in the Sultanate with a total population of 1,208,114, of which 464,236 (approx 38.43%) are Omani nationals and 743,878 (61.57%) are expatriate (source: DTZ/ROP November 2014).

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Muscat Governorate and the Batinah region (north and south combined) account for over 50% of the population. Al Batinah (south and north combined) has a population of 1,032,604, equating to a population density of approximately 81 residents per square kilometre. The least densely populated region is Al Wusta with an overall population of 41,201.

 

The population of the sultanate has steadily grown over the past decade and this is expected to continue into the future, although at a slower pace than experienced in recent years due to tighter Omanisation rules restricting the number of expatriates working in the private sector. There could potentially be a fall in the expatriate community over the medium to long term; the government approved restricting the number of expatriate workers to 33% of the country’s total population but have not given a timescale for implementation. Recent government initiatives have included 6 month suspensions on the registration of new domestic employees and labourers – it was extended for a further 6 months with effect from 4 May 2014 – and restrictions on expatriates moving company within two years of joining.

 

The Public Authority for Social Insurance (PASI) reports the average income for Omani males to be 402 OMR per month, and 356 OMR per month for Omani women, as at the end of March 2014. However, 61% of all Omanis earn less than 300 OMR per month and only 5.7% of Omanis earn more than 900 OMR per month. A breakdown for expatriate income is not currently available.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
23
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

7. OMAN REAL ESTATE MARKET COMMENTARY

 

7.1. Residential Overview

 

The residential letting market is seeing consistent levels of activity from its traditional requirement base of expatriate new arrivals and relocating residents. As with most MENA real estate markets, values depreciated substantially in the years subsequent to 2008, however the market has recovered in recent years with many areas experiencing good levels of growth.

 

The supply / demand ratio for quality units has not changed significantly in recent years but is likely to do so over the next 12 to 18 months as supply of quality and well located apartments and villas increases. This new supply should also address the shortage of compound housing, which is popular with expatriate families due to the facilities provided and security. Most good compound housing developments such Hatat House and Dolphin Village enjoy near 100% occupancy rates.

 

Central areas such as Shatti Al Qurum, Qurum and Madinat Al Sultan Qaboos have seen steady growth in both rental and capital values in recent years due to their locations and popularity with the general populous, in particular Shatti Al Qurum and Madinat Al Sultan Qaboos which are very popular with western expatriates. Other popular areas such as The Wave, Muscat Hills, Azaiba and parts of Al Khuwair have also experienced good levels of growth over the past 12-18 months.

 

New property, well designed and correctly priced units continues to sell and let at levels at the higher end of market expectations. Units within compounds providing additional facilities attract a higher level of interest and continue to demand premium values.

 

7.2. Residential - Integrated Tourism Complexes (ITCs)

 

Non Omani and GCC residents are permitted to purchase real estate in Oman within ITCs following the implementation of Royal Decree No. 12/2006.

 

Since the implementation of the Royal Decree a number of ITCs have been developed, some more successfully than others.

 

Many ITC schemes were conceived at the height of the market, but few have made it off the drawing boards, and many others have been delayed or put on hold indefinitely due to financial viability concerns and poor sales. The proposed developments that have actually produced finished units within the Muscat area are listed below:

 

· The Wave

 

· Muscat Hills

 

· Barr Al Jisah

 

· Jebel Sifah

 

Recent activity in the market has included the following:

 

· Release of Marsa 1 and 2 at The Wave (121 water front flats)

 

· Launch of Marsa 3 apartments at The Wave

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

· Release of Reehan Gardens at The Wave (107 villas)

 

· New Badr Muscat Hills development (20 town houses – situated within the Muscat Hills scheme but developed by a third party)

 

· Release of Muscat Hills Phase 2 (79 villas)

 

· Launch of 3 residential phases at Saraya Bandar Jissah (the hotel element is currently also being developed)

 

To date the most popular ITC schemes have been Muscat Hills and The Wave. Both enjoy good occupancy rates and reasonable levels of demand for new units. Both benefit from being situated within reasonable distance of central Muscat and benefit from a good road network.

 

Muscat Hills and The Wave are approximately 16km and 19km west of central Muscat respectively. Jebel Sifah is the furthest of all developed ITC schemes at circa 41 km east of central Muscat. Barr Al Jissah is approximately 22 km to the east (see Appendix 6 for ITC location map).

 

Whilst Barr Al Jissah is a similar distance to The Wave the road network serving both Barr Al Jissah and Jebel Sifah are not practical for commuting to central Muscat due to the routes passing through the heavily congested Ruwi and CBD areas.

 

All developed ITC schemes are generally designed to a high specification when compared to the general housing stock. The Wave has better facilities than the other ITC schemes. It includes a beach, marina, golf course, communal swimming pools, restaurants and convenience stores. Muscat Hills’ facilities are limited to a golf course and a temporary club house; a new club house is expected to be situated within the grounds of the new 250 key Intercontinental Hotel expected to be completed in 2015.

 

A brief overview of the individual developed schemes is provided on the following pages. A location map of the ITC schemes of note is included as Appendix 7.

 

7.2.1. The Wave Muscat

 

Development details

 

Location: Seeb, Muscat
   
Developer: Majid Al Futtaim (UAE), Waterfront Investments SAOC (representing the government of Oman) and National Investment Funds Company (Omani Pension Funds)
   
Land size: 2.5 million square metres
   
Product mix: 1,630 villas/townhouses and 2,770 apartments (4,400 units)
   
Features: Beachfront location, golf course, 400 berth marina (120 completed to date), retail including Waitrose, Pizza Express, Shang Thai, Costa Coffee and Al Fair

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Status:

According to the developer 1,123 units have been completed. First batch of units were handed over in October 2008 and the recent launches of Reehan Gardens (villas), Siraj (flats) and Marsa 1 (flats) have seen a reasonable level of interest.

 

A 12,000 sq m retail and commercial element was completed June 2014 – we understand approximately 60% was pre-leased

   
Projected Completion Date: 2018 (projected by the developer, but very doubtful)

 

The Wave is prominently located close to the existing and new airport and approximately 20 kilometres west of central Muscat. Whilst The Wave is in close proximity to the airport it is not under any flight paths and is not unduly affected by aircraft noise. However, this may change as the new airport comes on line.

 

The Wave has a semi-private beach for the residents but it can also be accessed by the general public relatively easily via the development.

 

The development is a joint venture between Oman’s Waterfront Investments (representing the Government of the Sultanate of Oman), Majid Al Futtaim Properties from Dubai and the National Investment Funds Company (representing the Omani pension funds).

 

The site covers an approximate area of 2.5 million square metres and originally comprised four 5 star hotels, a golf course, marina, commercial zone and 4400 luxury residential units – to date only two hotels have been confirmed; a 5 star Kempinski and a 4 star hotel. Currently neither hotel has been built but works on the Kempinski started in 2013 and it is due to be completed in 2015.

 

The Wave is the mostly densely developed of all the ITC schemes, but is also the most successful, and offers a greater variety of villas, townhouses and apartments with varying sizes, specifications, locations and facilities. At the top of the scale are the large luxury beach front villas.

 

The development is popular with both the expatriate and Omani communities. Omanis initially acquired units within the scheme for investment purposes, but in recent years an increasing number of young affluent Omani families have relocated to The Wave from more traditional areas within the city.

 

The first release of units in ‘The Wave’ took place in mid 2006 when 221 villas and apartments were sold on a lottery basis and numerous releases and auctions have followed. The early market enthusiasm enjoyed by The Wave, peaking in late 2008 / early 2009, has since subsided.

 

The historic average sales rate has been circa 190 units per year, but this has been surpassed in recent years. The developer is targeting 336 sales in 2014, 405 in 2015, rising to 497 by the year 2020.

 

Average apartment sales are in the region of 1,100-1,200 OMR sq m, and townhouses/villa sales are in the region of 850-1,200 OMR per sq ft, dependent on location. Beach fronting 5 bedroom villas are available for circa OMR 1.5 million (OMR 3,363 per sq m).

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Reehan Garden units sold off-plan in 2012, and still under construction, are currently being offered for sale on the secondary market; a 5 bed unit (B02) purchased for 279,000 OMR is currently available for 335,000 OMR (OMR 750 per sq m).

 

Subsequent to the market collapsing in late 2008 / early 2009 the scheme was remodelled to provide a wider range of units rather than just at the luxury end. There are currently no plans to reduce the number of units, although completion is likely to be significantly later than 2018. However, The Wave is likely to continue to be popular and we envisage demand for its products to remain strong.

 

7.2.2. Muscat Hills Golf and Country Club

 

Development details  
   
Location: Seeb, Muscat
   
Developer: Muscat Golf Projects L.L.C
   
Land size: 2 million square metres
   
Product mix: 148 villas and 135 apartments
   
Features: Golf course
   
Status: Second phase of 79 villas has been released and is currently under construction
   
Projected Completion Date: 2015/2016

 

The project, which is situated in the foothills of Seeb Heights, was the first ‘tourism zoned’ development in Oman. The project was conceived to provide the most challenging PGA championship golf course in the Middle East. The residential element was included within the scheme to support the cost of the golf amenities and is currently one of the least densely developed ITC schemes in Muscat.

 

The project encountered a number of issues in the early stages with time delays and increased costs, primarily because it was a ground breaking development and some regulatory reform was required. However, the delays resulted in the scheme also being affected by the downturn. The units were sold on the basis of costs calculated 3 years prior to commencement and the sharp rise in costs resulted in the developer going back to purchasers to revise the purchase price upwards. The first completed unit was handed over in 2010; a full 6 years after the release date.

 

Phase 1, which has been completed, comprised 88 villas and 135 apartments, all of which have been sold. Phase 2 was launched October 2012 and comprises 79 four and five bedroom villas ranging in size from 350 sq m to 565 sq m. The prices range from 285,000 OMR to 575,000 OMR, dependent on size of plot and location within the development. The 4 and 5 bedroom detached villas range in price from 950 OMR per sq m to 1,350 OMR per sq m. The 4 bedroom semi-detached villas range in price from 814 OMR per sq m to 957 OMR per sq m.

 

The owners entered into a joint venture with WJ Towell Group to develop Phase 2, and it is expected to be completed late 2015. Phase 2 also includes a new 5 star hotel to be managed by the Intercontinental Hotels Group. A completion date for construction has not been given.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
27
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

The development is popular with both the expatriate and Omani communities. Omanis initially acquired units within the scheme for investment purposes, but in recent years an increasing number of young affluent Omani families have relocated from more traditional areas within the city.

 

Whilst the scheme is popular it lacks amenities such as retail outlets and is sparsely developed. It lacks the community element that has evolved at The Wave and is generally regarded as secondary to The Wave. However, given the limited level of stock we envisage Phase 2 units to sell, although many potential purchasers are likely to consider The Wave as an alternative, and given the price points of Phase 2, The Wave offers better value for money.

 

Badr Muscat Hills, a small development of 20 townhouses, was undertaken by a third party within the grounds of Muscat Hills. The first units were completed in early 2013. The units ranged from 292 sq m to 380 sq m and were priced at 195,000 OMR to 250,000 OMR.

 

7.2.3. Shangri La Barr Al Jissah Resort & Spa

 

Development details  
   
Location: Barr Al Jissah Beach
   
Developer: Zubair Corporation
   
Land Size: 500,000 square metres
   
Product Mix: 15 villas and 56 townhouses
   
Features: Beachfront location, marina, souk, retail space, three luxury hotels, including the 6 star Al Husn hotel
   
Status: Original project is completed. However the developers are looking at building apartment units

 

Situated at the Barr Jissah the Shangri La development is directly on the beachfront, and is a joint venture between the Oman government and Zubair Corporation. The site covers an area of approximately 500,000 square metres with a choice of three 5 star hotels.

 

The development comprises 71 luxury villas and townhouses that were released for sale in 2007. We understand the developers are looking at building apartments within the scheme and are in the process of finalising plans, costs and sale prices – nothing has been released to date.

 

There have been numerous reports about poor workmanship and quality of materials, having a negative impact on the secondary market.

 

The scheme was marketed and developed as a luxury tourist and residential destination. It is impractical for residents working in the central Muscat area to live here due to the poor road network connecting the development to central Muscat. Both the resort and residential element have a low occupancy rate.

 

Transactions within this scheme are limited, although the number of units available on the market has been high in recent years. The lack of sales is primarily down to a disconnect between the potential sellers and buyers; generally sellers are unwilling to accept a price significantly lower than what they paid for the properties. Prices currently range in the region of 1,100 OMR to 2,300 OMR per sq m.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

    

7.2.4. Jebel Sifah

 

Development Details

 

Location: Sifah Beach (45km south of Muscat)
   
Developer: Muriya Tourism (joint venture between Omani government and Orascom Hotels & Resorts of Egypt)
   
Land size: 6.2 million square metres
   
Product mix: Stated as 500 Apartments and 450 Villas – we believe this has been scaled back significantly but details are currently unavailable
   
Features: Beach restaurant, 94 wet berth and 100 dry berth marina, boutique hotel, Four Seasons Hotel, Banyan Hotel and Missoni Hotel
   
Status: Construction is on hold
   
Projected Completion Date: 2020

 

Muriya was established in Oman in March 2006, as a joint venture between Egypt’s Orascom Hotels & Development (70 per cent) and Omran, the Omani government tourism development company (30 per cent). The development has a long rocky beach frontage and comprises a mix of residential units and hotels.

 

The scheme was launched with a residential mix of 450 villas and 500 apartments. However, we believe this has been reduced significantly due to poor sales. The apartments were to be housed over 18 blocks and range in size from 118 square metres (1-bed) to 344 square metres (4-bed). The villa plot sizes range from 1,000 square metres to 2,075 square metres and the units themselves range from 234 square metres (3-bed) to 896 square metres (6-bed).

 

Construction ceased shortly after the global financial crisis when many purchasers failed to continue making staged payments. Activity has been limited to completion of a few of these units over the past 12 months where the developer and purchaser have come to an agreement.

 

At present only the boutique hotel has been completed, but we are advised the Missoni hotel will be completed within the next 3 years.

 

This scheme is the least practical for residents working in the central Muscat area due to the poor road network and distance from central Muscat. However, recent improvements to the highway through the Ruwi area will improve journey times.

 

Occupancy of the residential element is very low, as is demand.

 

We do not envisage many units being sold in the near future.

   

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
29
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

7.2.5. Saraya Bandar Jissah

 

Development Details

 

Location: Qantab Beach
   
Developer: Saraya Oman Holdings Co. SAOC (joint venture between Saraya and Omran)
   
Land size: 2.5 million square metres
   
Product mix: 398 townhouses and villas
   
Features: Two 5 star Jumeirah hotels, spa, dive centre and a number of food and beverage outlets
   
Status: The hotels and phases 1-3 of the residential units are currently under construction
   
Projected Completion Date: 2017

 

Saraya Bandar Jissah is situated in a remote cove and has a private beach. The beach, prior to being sold for private development, was one of the most popular in the Muscat area.

 

This is the first ITC to be launched since 2007. The residential element is targeting the high-end market and was launched late 2014. Sales are likely to be impacted by the same issues affecting Barr Al Jissah and Jebel Siffah, i.e. the travel time to central Muscat.

 

The product mix includes villas, twin villas and apartments. Prices range from OMR 950-1,045 per sq m for the villas, OMR 920-1,005 per sq m for the twin villas and OMR 710-1,130 per sq m for the apartments.

 

We understand take-up has been reasonable; however, the scheme may be hampered if a percentage of off-plan sales are required to warrant development.

 

7.2.6. ITC Outlook

 

Demand for ITC residential units within the central ITC schemes, Muscat Hills and The Wave, is substantially greater than demand for units in any of the other ITC schemes. Both have recently released additional phases. Recent releases in both have been more market-facing, i.e. greater selection of units including smaller more affordable villas, townhouses and flats. We envisage reasonable demand in both schemes to continue for the foreseeable future. Both have seen an increase in demand due to increased infrastructure works in the area, such as the construction of the new airport, and the general migration of commercial uses west towards the airport.

 

Secondary sales at all ITC schemes are limited as sellers are unwilling to reduce prices below those paid at the height of the market and buyers are unwilling to meet these unrealistic prices. In some cases secondary sales are affected by additional sales costs imposed on the seller by the developer, i.e. at The Wave the developer has imposed a fee of 2% of the original sales price to register a transfer of ownership.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
30
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

In general, off-plan sales are not as prevalent as they were 4-5 years ago due to the number of cancelled and delayed schemes in recent years. For off-plan sales to be successful a less onerous staged payment plan is required. Off-plan sales are likely to be substantially lower for a new scheme than for an additional phase at an existing development.

 

Numerous other ITC schemes are in the medium term development pipeline, the most notable is Alargan Towell’s 500,000 sq m Barka scheme. The development of this scheme is expected to have a nominal impact on the Omagine scheme. The main competition for the Omagine scheme is The Wave and Muscat Hills.

 

Sales prices at a new scheme will need to be competitive in the early phases to compete with The Wave and Muscat Hills, with prices increasing once the development is established.

 

We are of the opinion that for an ITC scheme to be successful it will need to be located within the central Muscat area, have good access, have all or most of the facilities available in the early phase of development and be affordable.

 

Analysis from ITC sales suggest Omanis are the greatest buyers of units, followed by other GCC nationals and Europeans, and Indians. The following table gives a full breakdown of sales at The Wave.

 

Nationality   Percentage of Total  
    Buyers  
       
Omani     42 %
GCC & Region     19 %
UK & European     19 %
Indian     11 %
Other     9 %

 

Omanis traditionally have purchased in ITC developments for investment purposes but there has been a shift in recent years with more Omanis opting to reside within the ITCs.

 

7.3. Tourism Market Overview

 

Oman has benefitted from a number of recent government initiatives to increase the number of tourist visitors to the country. Other than improvements to the general infrastructure such as airports and roads, the initiatives have included road shows to both developed and developing countries and advertising campaigns on global television channels such as BBC World News.

 

Oman has also benefitted from prolonged instability in other regional markets such as Egypt and Tunisia, and is regarded as a safer more stable option. Furthermore, Muscat has been recognised by a number of international travel organisations in recent years; Lonely Planet guide ranked Muscat as the second “must visit” place for 2012, second only to London, Muscat was named Capital of Arab Tourism for 2012 and National Geographic Magazine ranked Oman in its top 20 tourist destinations of 2012.

 

Oman Ministry of Tourism has also opened representative offices in key markets to showcase Oman and Omani events and tourism. A recent addition has been the opening of an office in Riyadh.

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
31
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

The initiatives are part of the drive to increase the number of visitors to Oman to 12 million by 2020 from the 1,394,851 tourists in 2011 (Ministry of Tourism). The number of tourists in Oman for 2013 has been reported as 2,121,229 by the Ministry of Tourism, an increase of 2.8% on 2012 – the figures for 2014 are currently not available.

 

The National Centre for Statistics and Information (NCSI)) has stated the number of international passenger arrivals at Muscat International Airport at a record 3,789,716 for 2013, an increase of 9.4% on 2012 figures. Total passenger numbers including international and domestic arrivals and departures was 8,308,878 for 2013.

 

As can be seen from the graph below, the number of hotel guests recorded by the Ministry of National Economy – Directorate General of Economic Statistics has increased year-on-year over the last three years. It is likely this pattern will continue into the foreseeable future as more initiatives are implemented and more hotel accommodation comes on line. The latest recorded statistic for 2013 shows a total of 161,685 guests in 2013 up to the end of May, an increase of 8.1% on comparative figure of 149,539 guests in 2012.

 

 

Source: NCSI

 

Another key growth area has been the cruise ship sector. Muscat’s cruise ship arrivals increased to 230,000 in 2011, up from 44,000 in 2007. It is expected this number will exceed 300,000 by 2015.

 

As can be seen from the table on the following page, hotel revenue has also been rising. The increase in 2011 compared to 2010 was fairly nominal, this was due to the adverse publicity the wider Gulf region experienced from the Arab springs in neighbouring countries. Some hotels experienced significant falls in occupancy in the early part of 2011 which led many to reduce prices to attract guests.

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 

Source: NCSI

 

The World Economic Forum in their Travel and Competitiveness report (2013) ranked Oman 57 th globally and 5 th regionally with an estimated revenue of 812 million OMR (US$ 2.12 bn in 2012). They also predicted average annual growth of 5.2% over 2013-2022. Oman was ranked 68 in 2009 and 61 in 2011.

 

It is expected that the tourism industry will become one of the largest contributors to GDP by 2020. In 2011 tourism accounted for 2.6% (Oman Ministry of Tourism) of GDP and the World Travel & Tourism Council (WTTC) expects the direct contribution of the industry to grow by 5.4% per annum to 3.3% of GDP by 2021, assuming constant prices and exchange rates. The overall contribution to the economy by tourism-related activity is expected to increase from 6.8% of GDP in 2011 to 7.7% of GDP by 2021.

 

7.3.1. Hotel Market Overview

 

The Muscat hotel market is dominated by a handful of international four and five star operators; the Intercontinental, Crowne Plaza, Grand Hyatt, Radisson Blu and Park Inn. The total four and five star offering within the wider Muscat region is included within the table on the following page.

 

HOTEL   STAR RATING   ROOMS & SUITES  
The Chedi (resort)   5   158  
Ritz Carlton (resort)   5   250  
Shangri La (resort) – Al Waha   5   262  
Shangri La (resort) – Al Bandar   5   198  
Shangri La (resort) – Al Husn   5   170  
Intercontinental   5   258  
Grand Hyatt   5   280  
Radisson Blu   4   153  
Park Inn   4   119  
Crowne Plaza   4   205  

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

HOTEL   STAR RATING   ROOMS & SUITES  
Al Falaj Hotel   4     140  
Al Maha International Hotel   4     70  
Golden Tulip Seeb   4     177  
Hotel Al Madinah Holiday   4     107  
Hotel Muscat Holiday   4     123  
Majan Continental Hotel   4     159  
Qurum Beach Resort   4     7  
Ramada   4     86  
Ramee Guestline   4     90  
Sifawy Hotel   4     55  
City Seasons   4     269  
Best Western   4     206  
Holiday Inn   4     185  
    TOTALS        
    Total Five Star     1,576  
    Total Four Star     2,151  

 

There have been a number of recent additions to the Omani hotel market, the most recent being the 185 key Holiday Inn in Al Seeb (February 2014). There are numerous proposed hotels in the development pipeline, many of which were conceived at the height of the market and have not yet commenced. Many are unlikely to be built within the next 3 years, if at all.

 

Hotels reported to be completed within the next 2-3 years include the following:

 

· The new 300 key Millennium Group hotel, Tilal Complex, Al Khuwair (5 star)

 

· The refurbished 230 key Sheraton hotel in Ruwi (5 star)

 

· The new 300 key Kempinski hotel at The Wave (5 star)

 

· The new 190 key Village Plaza Hotel, The Wave (4 star)

 

· The new 240 key Aziaba Hotel, Airport Heights (expected to be 4 star)

 

· The new 245 key Sundus Rotana, Airport Heights (4 star)

 

· The new 318 key Jumeirah hotels at Saraya Bandar Jisah (2 x 5 star)

 

The Sheraton Hotel is expected to be open within the near future following a protracted refurbishment programme and a recent tie up with UAE based Tawasel International Trading Company. However, it’s star rating is yet to be confirmed as the standard room sizes no longer meet the requirements for a five star hotel, although the facilities do.

 

Work on the Kempinski has been delayed but started late 2013 and is due to be completed by late 2015.

 

The five star market is limited to international operators whilst the four star market is primarily international with a number of regional operators such as City Seasons.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

At present the number of international 4 and 5 star rated hotels without beach frontage is limited to the Park Inn, Radisson Blu, Best Western, Holiday Inn and Golden Tulip, all of which are 4 star. The only 5 star rated hotel inland is the Sheraton in Ruwi which is currently being refurbished, although as previously mentioned there is a question mark over the hotel’s rating due to room sizes.

 

Occupancy rates for internationally branded hotels vary but generally average over 60%. NCSI state the overall occupancy of the 4 star market for 2013 to be 56.7%, and 60.6% for the 5 star market. However, the better branded and located hotels achieve occupancy rates in excess of 75%.

 

Average daily room rates (ADR) vary, depending on the type of hotel. The weighted ADRs of some of the key hotels in the Muscat area are included in the table on the following page:

 

HOTEL   RATING   WEIGHTED ADR
Park Inn   4 star   83 OMR
Best Western   4 star   68 OMR
City Seasons   4 star   56 OMR
Radisson Blu   4 Star   89 OMR
Crowne Plaza   4 Star   93 OMR
Grand Hyatt   5 star   110 OMR
Intercontinental   5 star   113 OMR
Source: Tripadvisor / DTZ        

 

The weighted ADRs of some comparable hotels / resorts in the wider Muscat area are included in the table below:

 

HOTEL   RATING   WEIGHTED ADR
Al Bustan Palace (Ritz Carlton)   5 star   193 OMR
Al Waha, Shangri-La   5 Star   145 OMR
Al Bandar, Shangri-La   5 Star   181 OMR
The Chedi   5 star   250 OMR
Source: Tripadvisor / DTZ        

 

Alcohol is a key driver in the hotel industry in Muscat and many of the large hotels derive a high level of income from food and beverage sales. Hotels that do not sell alcohol such as the Ramada and the Platinum experience lower occupancy rates and revenue. Furthermore, an international operator is unlikely to consider the proposed development without the ability to sell alcohol.

 

There is a large drive to increase the number of hotel rooms within Oman to accommodate the government’s target of 12 million tourists by 2020 – at present the number of hotel rooms is significantly below that required.

 

We envisage demand for hotel accommodation increasing for the foreseeable future. However, we are of the opinion that an international operator should be secured prior to starting work on the development.

 

7.3.2. Retail Market Overview

 

The Omani retail landscape is relatively undeveloped in comparison to neighbouring GCC countries with few modern large retail malls. The main reason being the small population and the low population to land ratio, i.e. 13 people per square kilometre. This is much lower than those found in neighbouring established markets in states such as the UAE. However, the Omani population is growing and becoming increasingly affluent resulting in one of the most rapidly evolving retail markets in the Gulf. 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Oman has been on the international retail brand radar for a few years and the number of brands debuting in Oman has increased in recent years. Global and regional brands such as Matalan, Redtag, Tim Hortons, Sharaf DG and Gymboree have opened stores in the Sultanate in the past 12-24 months. Many of these new brands have taken space in the recently completed Muscat Grand Mall.

 

The existing established malls such as Qurum City Centre, Muscat City Centre, Markaz Al Bahja and Muscat Grand Mall are popular with both Omani nationals and the expatriate community. Demand for units within these malls is good, in particular the two City Centre schemes both of which are practically 100% occupied.

 

Other malls within the wider area include Sabco Centre (Qurum), Al Araimi (Qurum), Zakher Mall (Al Khuwair), Al Masa Mall (Shatti Al Qurum), Bareeq Al Shatti (Shatti Al Qurum), Jawaharat Al Shatti (Shatti Al Qurum) and Oasis by the Sea (Shatti Al Qurum). Despite some of these being quite dated they still have some global brands and are popular. Oasis by the Sea and Jawaharat Al Shatti are generally food and beverage malls comprising both local and global brands.

 

The most recent large scale addition to the retail mall landscape has been the 36,000 sq m (net) Muscat Grand Mall at the Tilal Complex in Bausher, situated opposite the subject mall. It was partially opened the 1 st of March 2012 with Carrefour Convenience being the only anchor tenant of note. Occupancy at the time of the formal opening in mid 2012, we understand, was in the region of 36%. We now understand it is practically 100% let. We are advised a significant number of the units have been let on a turnover basis.

 

We understand Muscat Grand Mall signed a franchise agreement with Azadea Group Holding to franchise their brands in Oman. Azadea Group Holding has various franchises in the MENA region including Mango, Gap, Zara and Gymboree, some of which made their Oman debut in Muscat Grand Mall. We understand plans are in place for an extension to the mall.

 

Opera Galleria (6,500 sq m gross), situated at the Royal Opera House Muscat, Shatti Al Qurum, is another recently completed mall, opened on 26 November 2012, but it is not comparable to the larger malls. It is a high end retail boutique mall with approximately 50 outlets. We understand about 70% of the units have been let. Tenants include Patek Philippe, Bulgari, Jean D’Arcel, and Richoux.

 

The 77,828 sq m (gross floor area) mall adjacent to the Lulu Hypermarket in Bausher is expected to be completed this year. Details of tenants have not yet been released but it encompasses the existing Lulu hypermarket.

 

There are also a number of retail mall schemes in the development pipeline. The ones that will most likely be completed are:

 

· Majid Al Futtaim’s Mall of Oman (Bausher)

 

· Al-Futtaim’s Oman Convention and Exhibition Centre Mall (anchored by Ikea)(Airport Heights)

 

· Al Jarwani Group’s Downtown Muscat Mall (Mabella (South Batinah)

 

Supply is expected to exceed demand should the various malls within the development pipeline be constructed. However, well designed, managed and located malls with good anchors will continue to attract both shoppers and tenants. The older developments, that are poorly laid out and lack major anchor tenants, such as Sabco Centre, will see a reduction in both footfall and tenant demand, negatively impacting rental revenue. New poorly designed malls and malls being developed by companies without good international retail brands within their portfolio to take space will face similar challenges as older style developments. In the current market it is essential for a mall developer to have attractive in-house retail brands to occupy space or have a major anchor, such as a hypermarket or a large global brand new to Muscat, such as Ikea. 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
36
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Over the medium to long term, demand for retail space should expand through both population growth and increasing affluence; the population has grown significantly since the year 2000 and Oman has averaged a GDP growth of 4.9% per annum over the years 2000 to 2012 (source: World Bank).

 

Rental levels vary within malls, dependent on size of unit, location and operator, i.e. McDonald’s would typically pay less than a local food retailer as it creates footfall. Many are also now agreed on a turnover basis. General market rents for good modern malls are in the region of the following:

 

· Anchor tenant such as a hypermarket operator – 3.5-5 OMR per sq m per month

 

· Junior anchor tenants - 10-15 OMR per sq m per month

 

· General units - 18-25 OMR per sq m per month.

 

Overall average rent for the key malls in Oman is approximately 15 OMR per sq m per month. Rents at the Opera Galleria are in the region of OMR 30-40 per sq m per month.

 

The key shopping malls situated within the wider Muscat region include the following:

 

Muscat City Centre

 

Location As Sultan Qaboos Street, Seeb
Opened October 2001, expanded in 2007
Floors 2
Gross Area 155,400 sq m
Net Area 60,484 sq m (initially 33,036 sq m but expanded early 2007)
No. of Outlets 147
Parking 2,250 spaces
Major Outlets Carrefour Hypermarket (13,936 sq m)
  Home Centre (5,791 sq m)
  Centrepoint (4,599 sq m)
  Marks and Spencer (1,900 sq m)
  E-max (2,789 sq m)
  Max (2,775 sq m)
  Zara & Zara Home (2,014 sq m)
  Magic Planet (1,561 sq m)
  Toys R Us (1,368 sq m)
Dining 18 cafes and restaurants

 

Qurum City Centre

 

Location Qurum
Opened October 2008
Floors 2 (ground floor is limited)
Gross Area 42,000 sq m
Net Area 20,600 sq m
No. of Outlets 75
Parking 1,100 spaces
Major Outlets Carrefour Hypermarket (12,552 sq m)
  H&M (771 sq m)
  Mango (408 sq m)
  Borders (242 sq m)
Dining 11 cafes and restaurants

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Muscat Grand Mall

 

Location Al Khuwair / Bausher
Opened March 2012
Floors 2
Gross Area 62,000 sq m
Net Area 36,000 sq m
No. of Outlets 148
Parking 2,000 spaces (71,379 sq m)
Major Outlets Carrefour Convenience
  Sharaf DG
  Homes R Us
  Daiso
  City Cinema
Dining Current offering is limited but a number of international brands are present including Tim Hortons and McDonalds

 

Markaz Al Bahja

 

Location Seeb
Opened November 2002
Floors 3
Gross Area 34,396 sq m
Net Area 20,000 sq m
No. of Outlets 80
Parking 1,200 spaces
Major Outlets ID Design (3,000 sq m)
  Al Fair (2,000 sq m)
  Matalan (2,200 sq m)
  Redtag (1,700 sq m)
Dining Various

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
38
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

8. INVESTIGATIONS AND ENQUIRIES

 

8.1. Transparency

 

The Middle East and North Africa (MENA) region incorporates 14 regional real estate markets including Oman. While markets around the World are improving their real estate transparency the average score across the MENA region remains lower than in other regions including Asia Pacific, Americas, and Europe in the Global Real Estate Transparency Index (GRETI) 2014.

 

Oman is ranked 80 th out of 102 and is classified as within the ‘low transparency tier’ (Tier 4) of the MENA real estate market, which is fourth least transparent market out of five. It has fallen by 6 places since 2012 but this is partly mitigated by the expansion of entrants to 102 from 97.

 

For comparison purposes Dubai, Abu Dhabi and Bahrain are classified as ‘semi-transparent tier’ (Tier 3) and Sudan, Syria and Algeria are classified as ‘opaque (incomprehensible) tier’ (Tier 5). There are no MENA real estate markets classified as ‘transparent tier’ (Tier 2) or ‘highly transparent tier’ (Tier 1), which contains the United States and the United Kingdom. Markets benefitting from improved transparency and greater openness of transactional information tend to be those easier to conduct business within.

 

Less transparent markets tend to be characterised by increased risk and greater uncertainty, lower sales activity, lower foreign participation and higher volatility of market cycles. The financial markets have seen significant turbulence over the last year or so resulting in severe liquidity shortages. The turmoil in the credit markets had an immediate effect on the real estate market resulting in some transactions failing and/or prices being renegotiated downwards. This has caused a reduction in the volume of transactions with activity below the levels of recent years. There is greater volatility in the evidence generated by comparable transactions and in these circumstances there is a greater degree of uncertainty than that which exists in a more active and stronger market in forming an opinion of the realisation prices of property assets.

 

8.2. Environmental Matters

 

We have not made any investigations in relation to the presence or potential presence of contamination in land forming the subject property. We have considered the information provided and made an assumption that if investigations were made to an appropriate extent, then nothing would be discovered sufficient to affect value. We have not carried out any investigation into past use, either of the properties or any adjacent lands, to establish whether there is any potential for contamination from such uses or sites and have, therefore, made an assumption that none exist. Based on the foregoing assumption, we have not made any allowance in the valuation for any effect in respect of actual or potential contamination of land.

 

In practice, purchasers in the property market do not typically make assumptions about contamination and a purchaser of the property may require appropriate investigations to be made so as to assess any risk before completing a transaction.

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

   

8.3. Ground Conditions

 

We have made the assumption that ground conditions are suitable for any proposed future development of the property.

 

Since our normal enquiries did not suggest there are likely to be archaeological remains present in or on the property, we have assumed no abnormal constraints or costs would be imposed by the need to investigate or preserve historic features.

 

8.4. Planning

 

The property is designated for ITC use and we assume the required planning consents are in place in accordance with the Development Agreement.

 

8.5. Services

 

We assume all utility services are available at the boundary of the property and are sufficient for the proposed use.

 

8.6. Highways and Infrastructure

 

From our knowledge of the area, we are not aware of any proposed road schemes which might adversely affect the property although we have not made any specific enquiries in this regard.

 

The proposed Al Batinah Expressway (extension of the existing expressway) should benefit the general area and reduce travel time to the UAE border.

 

Additionally we understand there are plans to widen 18 th November Street which will benefit the property, however an implementation date has not been released.

 

The new Muscat International Airport development project is the largest project to have ever been undertaken in Oman. The design is based on an initial capacity of 12 million annual passengers and has a net floor area of 340,000 sq m.

 

The existing airport which was designed back in 1973 has reached its maximum capacity and the design of the new airport aims to meet the nation's passenger growth numbers targeted by the Ministry of Tourism.

 

The new facilities and features of the airport include:

 

· a state of the art Passenger Terminal Building

 

· 28 contact gates

 

· two runways capable of accommodation the A380 aeroplane

 

· a 97 meter high Air Traffic Control Tower

 

· more than 7,000 parking spaces

 

· dual 3 lanes access road and impressive landscaping along the access and at the entrance to the airport and new Passenger Terminal Building

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

· 70 ancillary buildings including workshops, a fuel farm and data centres

 

· 30 remote stands, multi-level parking facilities and a highway to the airport

 

The airport has been designed with expansion in mind. The expansion has been phased out to accommodate 24 million passengers annually, followed by 36 million and at the final stage, the capacity will reach 48 million passengers a year.

 

We are not aware of the subject property being under a flight path but this should be confirmed with the airport authority.

 

8.7. Tenure

 

Where Certificate of Titles have been made available, we have reflected its contents in our valuation(s). Save as disclosed either in any such Certificate of Title or as referred to in our Valuation Report, we have made the assumption that there is good and marketable title and the property is free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We have also made the assumption that the property is free from mortgages, charges or other encumbrances.

 

Where a Valuation Report contains site plans these are based on extracts of the Ordnance Survey or other maps showing, for identification purposes only, our understanding of the extent of title based on site inspections or copy title plans supplied to us. If verification of the accuracy of these plans is required the matter must be referred by you to your solicitors.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

9. VALUATION APPROACH, METHODOLOGY AND ASSUMPTIONS

 

In our assessment of market value, we have had consideration of the various recognised valuation methodologies appropriate for the assessment of a substantial vacant parcel of land with Integrated Tourism Complex consent including the residual and Market Approach (also known as the direct comparison method) methods of valuation.

 

The Market Approach method involves the analysis of transactions relating to direct comparables where available and is deemed an appropriate approach to adopt in making an assessment of market value of vacant land. The residual approach relies on assumptions made regarding the different variables of costs, revenues, finance and timeframe particularly when the land has an outline scheme and development agreement in place.

 

With limited sales of large parcels of land with ITC consent, we consider the residual method of valuation based upon the proposed development scheme as detail herein to be the most appropriate.

 

The residual method of valuation considers the market value from a developer’s/investor’s or market participant’s perspective and allows for the individual elements of a development to be explicitly modelled so as to reflect for example, sales price growth which, in a major principally residential development such as this, would expect to grow at a higher level than standard price growth in the early years as the development gains traction and popularity in the market.

 

The residual method reflects the expectations of market participants of the value of the property when complete also referred to as the Gross Development Value (GDV), derived through the use of direct comparison approach, less deductions for the costs required to complete the project and appropriate adjustments for profit and risk. The resultant figure is the residual land value as at the date of valuation, reflecting the price a purchaser would theoretically be willing to pay in order to build out the proposed scheme and take their required return / profit margin. The residual valuation reflects all key assumptions and market conditions as at date of valuation and has been based upon development guidelines as provided and detailed herein supplied by the client.

 

The GDV reflects the proposed specification for the schemes, and reflects location and assumed high standard of construction. We have conducted our own research and analysis in order to find comparable evidence to benchmark the subject schemes against, which takes into account market conditions as at date of valuation.

 

The associated costs of development are deducted from the GDV; these include:

 

· Construction costs to complete
· Professional fees
· Contingency
· Finance costs
· Developer's profit / return requirements
· Promotion and marketing

 

The developers profit and risk is reflected through an assessed Internal Rate of Return (IRR) and represents a potential investor’s target rate of return or profit margin for developing the proposed scheme. We have had reference to market investigations, discussions with real estate investors and further DTZ assignments of similar opportunities throughout the region when adopting an appropriate IRR.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

We have assumed in arriving at our opinion of value that the proposed development is completed in accordance with the master plan to a high specification.

 

It should be noted that this valuation method is extremely sensitive to small changes in the variables such as sales prices, build costs, rates of return, timing of costs and revenues. If any of these assumptions proves incorrect, it could impact on the value reported.

 

9.1. Construction Costs

 

Our build cost data has been provided by Omagine LLC. The cost adopted is the mean of the two costs provided by Majan Engineering Consultants and Consolidated Contractors Company – see Appendix 5. We believe these costs to be reasonable and reflective of the market.

 

In addition to the build costs we have allowed for professional fees of 14%, construction contingency of 5%, sales agency fees of 0.5%, letting agency fees of 8%, marketing costs of OMR 900,000 and land purchase cost of OMR 25 per square metre at disposal.

 

A breakdown of the construction cost is included in the table below:

 

Element   Cost (OMR) (exchange rate of US$ = OMR 0.385)
     
Residential Units   613 per sq m
     
Retail Space   719.89 per sq m
     
Office Space   530.19 per sq m
     
Hotels   1,157.32 per sq m
     
Serviced Chalets   663.60 per sq m
     
Serviced Apartments   663.60 per sq m
     
Movie Theatre   719.89 per sq m
     
Amphitheatre   719.89 per sq m
     
Pearls   43,034,364
     
Attractions/Exhibition Space   2,718.74 per sq m
     
Parking   2,850,132
     
Infrastructure   13,513,772
     
Marine Works   19,077,771
     
Landscaping   5,974,883

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
43
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Note: it should be noted that we assumed the build cost provided for the leisure element to retail, movie theatre and amphitheatre.

 

9.2. Residential Sales Prices

 

Sales prices have been taken from sales achieved at other ITC developments in Oman and adjusted to reflect both the location of the subject property, the higher specification and the status of the development (i.e. not yet commenced). Sales prices would tend to be discounted for the initial release of properties in order to get the construction going with growth in these prices being achieved once construction is well under way. Generally, once a development is underway and potential buyers can see the finished product, demand will increase thereby allowing prices to be inflated provided of course that the entry pricing is correct.

 

The pricing adopted for the residential elements is set out in the table below. The prices adopted reflect the assumption that these units will be finished to a significantly higher specification than units within comparable ITC schemes.

 

    Gross Unit Size     Gross Unit Size           Price Per  
Unit Type   (sq m)     (sq m)     Price per sq m (OMR)     Unit (OMR)  
Oceanfront Villas     1,000       1,000       1,500       1,500,000  
Oceanfront Villas     840       840       1,500       1,260,000  
Ocean View Villas     700       700       1,200       840,000  
Ocean View Villas     580       580       1,300       754,000  
Wadi Park Villas     525       525       1,000       525,000  
Wadi Park Villas     476       476       1,000       476,000  
Ocean View Townhouse     300       300       1,200       360,000  
Wadi Park Townhouse     300       300       1,000       300,000  
4BR Oceanfront Apartment     250       250       1,300       260,000  
4BR Ocean View Apartment     250       250       1,200       240,000  
4BR Wadi Park Apartment     250       250       1,050       210,000  
3BR Ocean View Apartment     230       230       1,250       230,000  
3BR Wadi Park Apartment     230       230       1,100       202,400  
2BR Oceanfront Apartment     200       160       1,350       216,000  
2BR Ocean View Apartment     200       160       1,250       200,000  
2BR Wadi Park Apartment     200       160       1,100       176,000  
1BR Ocean View Apartment     170       136       1,250       170,000  
1BR Wadi Park Apartment     170       136       1,150       156,400  

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
44
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Our assumptions on sales price growth are set out below:

 

Year   Growth Rate  
2015     4 %
2016     4 %
2017     4 %
2018     8 %

 

Year   Growth Rate  
2019     14 %
2020     8 %
2021     8 %
2022-into perpetuity     4 %

 

The base data has been sourced from Oxford Economics.

 

9.3. Timing

 

We have allowed a period of 18 months for the finalisation of plans/permits and contractor selection/mobilisation. We have then allowed a period of 24 months for the development of each residential phase, staggered by 12 months, i.e. each phase starts 12 months from the start of the preceding phase. Post construction sales periods vary between 10 and 12 months.

 

All commercial elements are assumed to be developed in phase 1 with the exception of the Pearls and the Pearl retail element, which is assumed to be developed in year 4 to be completed by year 5 in accordance with the Development Agreement.

 

A holding period of 3 years is assumed for the commercial element for the hospitality elements to achieve stabilisation prior to exit.

 

We have based the timing of the residential development on the quantum of sales being achieved at other ITC schemes in Oman. Over the past few years, development at competing schemes has been fairly subdued but we have based our opinions on sales achieved at The Wave. Over the period 2012 and 2013, sales at The Wave averaged around 250 units per annum. Sales are anticipated to pick up going forwards, projected at over 300 for 2014 and then around 400 units per annum from 2015 onwards. We have adopted an average sales rate of approximately 211 units per annum over a 123 month development period (7 phases).

 

Our calculations allow for varying percentages of off-plan sales for the different unit types, varying from 0 to 11% in phase one and ramping up to as high as 27% for some of the multi unit elements in phase 7.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

   

9.4. Commercial Property

 

The development includes elements of retail/restaurants, a shopping mall as well as local community facilities including children’s play areas, mosque, etc.

 

The development also includes three Hotels providing a total of 840 keys; 1 x 5 star and 2 x 4 star. It also includes 600 one and two bedroom serviced chalets and 724 studio, one and two bedroom serviced apartments. Our main assumptions for the commercial elements are set out in the table below:

 

          Initial Rent                                
          Free     Market Rent                          
    Net Area     Period     per sq m per     Stabilisation     Void Costs     % non     Capitalisation  
    (sq m)     (months)     annum (OMR)     Occupancy     (OMR per sq m)     recoverables     Yield  
Office Space     39,497.8       3       144       83 %     15       10 %     10 %
                                                         
Retail Mall     4,303       6       480       95 %     20       20 %     8.5 %
                                                         
General Retail     4,985       6       300       95 %     20       20 %     9.00 %
                                                         
Amphitheatre     700       n/a       36       n/a       20       n/a       11 %
                                                         
Movie Theatre     2500       n/a       36       n/a       20       n/a       9 %
                                                         
Pearl Retail     5,250       6       300       95 %     20       20 %     9 %

  

Our main assumptions for the hospitality element are set out in the table below:

 

                      Additional                        
                F&B Revenue     Revenue as %         Room     All Other        
          ADR     as % of Room     of Room     Stabilisation   Revenue     Revenue     Capitalisation  
    Keys       (OMR)     Revenue     Revenue     Occupancy   Costs     Costs     Yield  
Hotel 1     280       185       50 %     20 %   75% (year 3)     65 %     65 %     7 %
Hotel 2     280       125       40 %     20 %   75% (year 3)     65 %     65 %     7 %
Hotel 3     280       125       40 %     20 %   75% (year 3)     65 %     65 %     7 %
1 Bed Serviced Chalets     300       135       50 %     15 %   75% (year 3)     30 %     50 %     7 %
2 Bed Serviced Chalets     300       150       50 %     15 %   75% (year 3)     30 %     50 %     7 %
Studio Serviced Apartments     81       50       n/a       n/a     80% (year 3)     20 %     n/a       8 %
1 Bed Serviced Apartments     300       60       n/a       n/a     80% (year 3)     20 %     n/a       8 %
2 Bed Serviced Apartments     343       80       n/a       n/a     80% (year 3)     20 %     n/a       8 %

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
46
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Our assumptions on rental / revenue growth are set out below. Inflation has been adopted at a rate of 2% into perpetuity:

 

Element   Growth Rate
     
Hospitality   3% into perpetuity
     
Office   2% into perpetuity
     
Retail   2% into perpetuity

 

9.5. Target Internal Rate of Return (IRR)

 

The IRR reflects the optimism or pessimism applied to all of the other inputs and has to be sufficient to allow for unforeseen delays, changes in construction costs, sales prices which fall short of projected figures, units sold not achieving sales figures projected or a combination of these. The IRR also has to cover the risk inherent within the commercial element of the development including room rates and projected occupancy not being achieved, the covenant of the operator/tenant not being considered prime and the shopping centre not getting the anticipated tenant line up or projected rental levels.

 

The IRR adopted is an ungeared return over the life of the development. For the purposes of our calculations we have adopted an IRR of 15% which we consider fairly reflects the risk inherent within this residual appraisal.

 

Additional assumptions are included in the table below:

 

Item   Assumption
Project start date   January 2015
Finance Rate   7% per annum
Debt:equity Ratio   60:40% (Draw down preference for debt to equity is 1 for equity and 2 for debt)
Total GDV   OMR 2,062,609,863
Revenue Over Holding Period   OMR 23,090,691
Total Construction Cost   OMR 840,567,659
Professional Fees   OMR 98,143,712
Letting Agency Fees   OMR 804,328
Sales Agency Costs   OMR 10,241,141
Finance Costs   OMR 48,944,348
Total Development Costs   OMR1,445,199,204
Developer’s Profit   OMR 841,691,275 (58.24% of costs)

 

9.6. Financial Model Findings

 

From reference to the provided information, assumptions, independent opinion as to revenue generation and market conditions, we have drawn the following conclusion from the residual valuation model:

 

Key Findings from Financial Model

 

Assessed Market Value   OMR 385,546,000 say OMR 385,000,000
     
Assessed rate   OMR 385 per sq m over land area

 

Please refer to Appendix 8 for financial model summary

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
47
 
 
 
Report and Valuation | Omagine LLC
  		 
 

   

10. VALUATION CERTIFICATION

 

We are of the opinion that the total Market Value of the Usufruct interest of the subject property as described herein based upon the residual method, as at 15 January 2015, subject to the assumptions and comments in this Valuation Report and the Appendices is:-

 

Market Value

 

OMR 385,000,000

 

(Three Hundred and Eighty Five Million Omani Rials)

 

/s/ Rashpal Heer

Rashpal Heer

Associate Director - Valuation

  

/s/ Antony Schober

Antony Schober AAPI CPV

Director

Head of Valuation UAE

 

Please note – Our valuation has been based on information provided to us by the client and relevant valuation assumptions. This information is set out in the body of this report. DTZ has not verified all of this information and our valuation is on the basis that the information provided to us is correct. If any of the information provided is altered or incorrect, DTZ reserve the right to amend our valuation accordingly.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

   

11. DISCLOSURE AND CONFIDENTIALITY

 

The contents of this Valuation Report and Appendices are confidential to the party to whom they are addressed for the specific purpose to which they refer and are for their use only. Consequently, and in accordance with current practice, no responsibility is accepted to any other party in respect of the whole or any part of their contents. Before this Valuation Report, or any part thereof, is reproduced or referred to, in any document, circular or statement, and before its contents, or any part thereof, are disclosed orally or otherwise to a third party, except by the party to whom this is addressed, the valuer's written approval as to the form and context of such publication or disclosure must first be obtained. Such publication or disclosure will not be permitted unless, where relevant, it incorporates adequate reference to the Special Assumptions and/or Departures from the RICS Valuation Standards referred to herein. For the avoidance of doubt, such approval is required whether or not DTZ International Limited is referred to by name and whether or not the contents of our Report are combined with others.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Appendix 1 - Definitions of the bases of valuation

 

The Property has been valued in accordance with the relevant parts of the current RICS Professional Standards January 2014 (the “Red Book”). In particular, the bases of valuation are as follows:

 

Market Value

 

We have assessed Market Value in accordance with International Valuation Standards 29 Under these provisions, the term “Market Value” means “ t he estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

 

In undertaking our valuation on the basis of Market Value we have applied the conceptual framework which has been settled by the International Valuation Standards Committee (IVSC). The conceptual framework is included in IVS 30 and is reproduced below:-

 

(a) “the estimated amount” refers to a price expressed in terms of money payable for the asset in an arm’s length market transaction. Market value is the most probable price reasonably obtainable in the market on the valuation date in keeping with the market value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value ;

 

(b) 'an asset should exchange ...' Refers to the fact an asset should exchange” refers to the fact that the value of an asset is an estimated amount rather than a predetermined amount or actual sale price. It is the price in a transaction that meets all the elements of the market value definition at the valuation date ;

 

(c) “ on the valuation date” requires that the value is time-specific as of a given date. Because markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the market state and circumstances as at the valuation date , not those at any other date;

 

(d) '”between a willing buyer” refers to one who is motivated, but not compelled to buy. This buyer is neither over eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than in relation to an imaginary or hypothetical market that cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present owner is included among those who constitute “the market”;

 

(e) “ a willing seller “ Is neither an is neither an over eager nor a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the asset at market terms for the best price attainable in the open market after proper marketing, whatever that price may be. The factual circumstances of the actual owner are not a part of this consideration because the willing seller is a hypothetical owner;

 

(f) “ in an arm's-length transaction” ' Is one between parties who do not have a particular or special relationship, eg parent and subsidiary companies or landlord and tenant, that may make the price level uncharacteristic of the market or inflated because of an element of s pecial value . The market value transaction is presumed to be between unrelated parties, each acting independently;

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

(g) “ after proper marketing” means that the asset would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably obtainable in accordance with the market value definition. The method of sale is deemed to be that most appropriate to obtain the best price in the market to which the seller has access. The length of exposure time is not a fixed period but will vary according to the type of asset and market conditions. The only criterion is that there must have been sufficient time to allow the asset to be brought to the attention of an adequate number of market participants. The exposure period occurs prior to the valuation date ;

 

(h) where the parties had each acted knowledgeably, prudently ...' Presumes presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the asset, its actual and potential uses and the state of the market as of the valuation date . Each is further presumed to use that knowledge prudently to seek the price that is most favourable for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the valuation date , not with benefit of hindsight at some later date. For example, it is not necessarily imprudent for a seller to sell assets in a market with falling prices at a price that is lower than previous market levels. In such cases, as is true for other exchanges in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time;

 

(i) and without compulsion' establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it.

 

35.            Market Value is the estimated exchange price of an asset without regard to the seller’s costs of sale or the buyer’s costs of purchase and without adjustment for any taxes payable by either party as a direct result of the transaction.

 

Market Rent

 

We have assessed Market Rent in accordance with International Valuation Standards 230. Under these provisions the term “Market Rent” is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

 

The commentary given for the similar definition of market value in the IVS Framework can be applied to assist in the interpretation of market rent . In particular, the estimated amount excludes a rent inflated or deflated by special terms, considerations or concessions. The “appropriate lease terms” are terms that would typically be agreed in the market for the type of property on the valuation date b etween market participants. A valuation of market rent should only be provided in conjunction with an indication of the principal lease terms that have been assumed.

 

The contract rent is the rent payable under the terms of an actual lease. It may be fixed for the duration of the lease or variable. The frequency and basis of calculating variations in the rent will be setout in the lease and must be identified and understood in order to establish the total benefits accruing to the lessor and the liability of the lessee.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

   

Taxation and costs

 

In no case have we made any adjustment to reflect any liability to taxation that may arise on disposal, nor for any costs associated with disposal incurred by the owner.

 

No allowance has been made to reflect any liability to repay any government or other grants, taxation allowance or lottery funding that may arise on disposal.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Appendix 2 - Valuation terms conditions and assumptions

 

These are the terms, conditions and assumptions upon which our valuations and reports are normally prepared. They apply to the valuation(s) that are the subject of this instruction unless we have specifically mentioned otherwise in this Valuation Report. We have made certain Assumptions in relation to facts, conditions or situations affecting the subject of, or approach to, our valuations that we have not verified as part of the valuation process. In the event that any of these Assumptions prove to be incorrect then our valuation(s) should be reviewed.

 

1. Title

 

We have not had access to the title deeds of the property. Where a Certificate of Title has been made available, we have reflected its contents in our valuation. Save as disclosed either in any such Certificate of Title or as referred to in our Report, we have made an Assumption that there is good and marketable title and that the property is free from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We have also made an Assumption that the property is free from mortgages, charges or other encumbrances.

 

2. Condition of structure and services, deleterious materials, plant and machinery and goodwill

 

Due regard has been paid to the apparent state of repair and condition of the property, but a condition survey has not been undertaken, nor have woodwork or other parts of the structure which are covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the property is structurally sound or is free from any defects. We have made an Assumption the property is free from any rot, infestation, adverse toxic chemical treatments, and structural or design defects other than such as may be mentioned in the body of our Report and the appendices.

 

We have not arranged for investigations to be made to determine whether high alumina cement concrete, calcium chloride additive or any other deleterious material have been used in the construction or any alterations, and therefore we cannot confirm that the property is free from risk in this regard. For the purposes of this valuation, we have made an Assumption that any such investigation would not reveal the presence of such materials in any adverse condition.

 

No mining, geological or other investigations have been undertaken to certify that the site is free from any defect as to foundations. Where relevant, we have made an Assumption that the load bearing qualities of the site of the property are sufficient to support the buildings constructed, or to be constructed thereon. We have also made an Assumption that there are no abnormal ground conditions, nor archaeological remains present, which might adversely affect the present or future occupation, development or value of the property.

 

No tests have been carried out as to electrical, electronic, heating, plant and machinery equipment or any other services nor have the drains been tested. However, we have made an Assumption that all services are functioning satisfactorily.

 

No allowance has been made in this valuation for any items of plant or machinery not forming part of the service installations of the building. We have specifically excluded all items of plant, machinery and equipment installed wholly or primarily in connection with any of the occupants’ businesses. We have also excluded furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools. Further, no account has been taken in our valuation of any goodwill that may arise from the present occupation of the property.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

It is a condition of DTZ International Ltd Abu Dhabi or any related company, or any qualified employee, providing advice and opinions as to value, that the client and/or third parties (whether notified to us or not) accept that the valuation report will in no way relate to, or give warranties as to, the condition of the structure, foundations, soil and services.

 

3. Statutory requirements and planning

 

Verbal or written enquiries have been made of the relevant planning authority in whose area the property lies as to the possibility of highway proposals, comprehensive development schemes and other ancillary planning matters that could affect property values. The results of our enquiries have been included within our Report where relevant.

 

Save as disclosed in a Certificate of Title or unless otherwise advised, we have made an Assumption that the building has been constructed in full compliance with valid town planning and building regulations approvals, that where necessary it has the benefit of a current Fire Certificate and that the property is not subject to any outstanding statutory notices as to its construction, use or occupation. Unless our enquiries have revealed to the contrary, we have made a further Assumption that the existing use of the property is duly authorised or established and that no adverse planning conditions or restrictions apply.

 

4. Information

 

We have made an Assumption that the information that you and the applicant, and your/their respective professional advisers have supplied to us in respect of the property is both full and correct.

 

It follows that we have made an Assumption that details of all matters likely to affect value within your/their collective knowledge have been made available to us and that the information is up to date.

 

5. Legal Issues  

 

Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant bearing on the value of an interest in property. Where we have expressed an opinion upon legal issues affecting the valuation, then such opinion should be subject to verification by the client with a suitable qualified lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of the legal position of the client or other parties in respect of the valuation of the property.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

  

Appendix 3 – Title Documents (Krooki)

 

Schedule 1

 

Krooki; Mulkiya; Sea Area; Layout

 

Notwithstanding anything to the contrary contained anywhere else in this Development Agreement or in the Schedules to this Development Agreement, the Parties hereby agree that:

 

I. the Krooki dated June 16, 2014 as defined in Clause 1 and shown below as Part A of this Schedule 1 is the Krooki for the Existing Land, and

 

II. any diagrams, drawings, photographs or the like contained in any Schedule to this Development Agreement showing boundaries of the Existing Land different from the boundaries shown in the Krooki are indicative only and are hereby amended to represent and mean the boundaries of the Existing Land as definitively shown in the June 16, 2014 Krooki.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

   

Part A

 

Krooki dated June 16, 2014

 

 

 

 
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Valuation Date | 15 January 2015 		 
 
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Part C  

The Sea Area

 

The Parties hereby agree as follows:

 

The area constituting the Sea Area, in respect of which an Environmental Impact Assessment has beeneffected, will evolve and change shape as the Project is Developed and Reclaimed Land and Created Waterways come into existence.

 

The dimensions and location of the Sea Area are indicatively shown in the drawing below and the Ministry of Tourism (“MOT”) hereby agrees and consents to the final dimensions and location of the Sea Area, provided that, the Project Company receives the prior written Approval for such final dimensions and location from the Ministry of Environment and Climate Affairs within 12 Months after the Effective Date.

 

Subject always to this Development Agreement and the Law the Project Company shall have no claim or right of action against the MOT in the event that the Ministry of Environment and Climate Affairs does not Approve the dimensions and location of the Sea Area as contemplated by this Development Agreement as stated below in this Part C of Schedule 1.

 

The Sea Area at any time is never Reclaimed Land or Created Waterways and it will be that rectangular area of the Gulf of Oman indicatively shown below and which rectangle:

 

(i) has a side (the “First Side”) that is co-existent with that line in the Gulf of Oman which is the high high water mark (“HHWM”) adjacent to theKrooki boundary line facing the Sea Area (the “Outer Boundary”), and

 

(ii) has an opposite and parallel side (the “Second Side”) the coordinates of which are perpendicular to the First Side and subject to the approval of the Ministry of Environment and Climate Affairs, is one hundred thirty (130) meters in a north-easterly direction from the First Side, and

 

(iii) is bounded on its other two sides by:

 

a) a side (the “Third Side”) which is that line originating at the point that is the north-western boundary point of the Krooki and running perpendicular to and through the First Side up to that point where it intersects the Second Side, and

 

b) a side (the “Fourth Side”) which is parallel to the Third Side and which Fourth Side is that line originating at the point that is the south-eastern boundary point of the Krooki and running perpendicular to and through the First Side up to that point where it intersects the Second Side.

 

The Sea Area on the Execution Date is indicated by the drawing below in Part C of this Schedule 1 and the Parties hereby agree that the “Sea Bed” means that part of the Project Area that at any time has the same coordinates as the Sea Area andwhich is under the Sea Area.

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
57
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

 

 

The Sea Area

 

(All dimensions show are indicate only)

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
58
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

Part D

 

Layout Plan :

 

Aerial Photograph and

Contour survey map

 

[Note: The Parties agree that this is an indicative Layout Plan only and shall at all times be subject to any Approvals which the Law requires from the relevant Government Authorities.]

 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
59
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
60
 
 
 
Report and Valuation | Omagine LLC
  		 
 

 

 

Appendix 4 – Usufruct Agreement

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

  

 
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Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
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Report and Valuation | Omagine LLC
  		 
 

 

Appendix 5 – CONSTRUCTION COSTS

 

        MEAN ESTIMATE SUMMARY     MEAN  
                    CURRENCY:US$     CURRENCY:US$  
        CONSTRUCTION     FIT OUT     TOTAL     TOTAL  
                          OMR (US$)  
1   Off-Site Developments                                
1.1   Airport Welcome           $ 111,201     $ 111,201     $ 111,201  
    Off-Site Developments Total           $ 111,201     $ 111,201     $ 111,201  
                                     
2   Landmark Zone                                
2.1   Oman Pearl   $ 3,779,048     $ 12,000,000     $ 15,779,048     $ 15,779,048  
2.2   Culture Pearl   $ 3,907,220     $ 12,000,000     $ 15,907,220     $ 15,907,220  
2.3   I nnovation Pearl   $ 3,862,220     $ 12,000,000     $ 15,862,220     $ 15,862,220  
2.4   Energy Pearl   $ 3,777,040     $ 12,000,000     $ 15,777,040     $ 15,777,040  
2.5   Sea Pearl   $ 3,750,680     $ 12,000,000     $ 15,750,680     $ 15,750,680  
2.6   Earth Pearl   $ 3,750,680     $ 12,000,000     $ 15,750,680     $ 15,750,680  
2.7   Sky Pearl   $ 4,950,680     $ 12,000,000     $ 16,950,680     $ 15,950,680  
2.8   Attraction/Exhibition Space   $ 16,568,374     $ 39,925,000     $ 56,493,374     $ 56,493,374  
2.9   Infrastructure   $ 4,616,736             $ 4,616,736     $ 4,616,736  
2.10   Marine Works   $ 8,532,926             $ 8,532,926     $ 8,532,926  
2.11   Landscaping   $ 2,672,389             $ 2,672,389     $ 2,672,389  
    Landmark Total   $ 60,167,993     $ 123,925,000     $ 184,092,992     $ 184,092,992  
                                     
3   Tourist and Cultural Zone                                
3.1   Resorts   $ 199,933,310     $ 31,004,784     $ 230,938,094     $ 230,938,094  
3.2   Serviced Accommodations   $ 226,433,622     $ 13,351,517     $ 239,785,139     $ 239,785,139  
3.3   Leisure Areas   $ 37,143,473             $ 37,143,473     $ 37,143,473  
3.4   Office Tenant Space   $ 63,991,828             $ 63,991,828     $ 63,991,828  
3.5   Lighting   $ 9,846,220             $ 9,846,220     $ 9,846,220  
3.6   Parking   $ 95,335,582             $ 95,335,582     $ 95,335,582  
3.7   Back of House Facilities   $ 6,468,102             $ 6,468,102     $ 6,468,102  
3.8   Infrastructure   $ 63,484,245             $ 63,484,245     $ 63,484,245  
3.9   Marine works   $ 44,720,754             $ 44,720,754     $ 44,720,754  
3.10   Landscaping   $ 19,192,084             $ 19,192,084     $ 19,192,084  
    Tourist and Cultural Total   $ 766,549,219     $ 44,356,301     $ 810,905,520     $ 810,905,520  
                                     
4   Residential Zone                                
4.1   Residential   $ 923,933,823             $ 923,933,823     $ 923,933,823  
4.2   Parting   $ 7,402,941             $ 7,402,941     $ 7,402,941  
4.3   Infrastructure   $ 35,100,706             $ 35,100,706     $ 35,100,706  
4.4   Marine works   $ 49,552,652             $ 49,552,652     $ 49,552,652  
4.5   Landscaping   $ 15,519,177             $ 15,519,177     $ 15,519,177  
    Residential Total   $ 1,031,509,299     $ -     $ 1,031,509,299     $ 1,031,509,299  
                                     
    Development Total   $ 1,858,226,510     $ 168,392,501     $ 2,026,619,012     $ 2,026,619,012  

 

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
69
 
 
 
Report and Valuation | Omagine LLC
  		 
 

  

Appendix 6 – ITC Location Map

 

 

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
70
 
 
 
Report and Valuation | KPMG LLP
  		 
 

    

Appendix 7 – Appraisal Summary

  

 
DTZ COI No | AEVA2438
Valuation Date | 15 January 2015 		 
 
71
   

  

DTZ

 

Development Appraisal

 

Muscat

 

Report Date: January 12, 2015

 

Prepared by RH

 

 
   

 

APPRAISAL SUMMARY DTZ

 

Summary Appraisal for Merged Phases 1 2 3 4 5 6 7 8 9

 

Currency in OMR

 

REVENUE                                        
Sales Valuation   Units   m²     Rate m²     Unit Price     Gross Sales     Adjustment     Net Sales  
‡ Villa - Oceanfront   2     2,000.00       1,500.00       1,500,000       3,000,000       245,424       3,245,424  
‡ Villa - Oceanfront   2     1,680.00       1,500.00       1,260,000       2,520,000       206,156       2,726,156  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       137,437       1,817,437  
‡ Villa - Ocean View   4     2,320.00       1,300.00       754,000       3,016,000       378,208       3,394,208  
‡ Villa - Wadi Park   18     9,450.00       1,000.00       525,000       9,450,000       1,251,330       10,701,330  
‡ Villa - Wadi Park   18     8,568.00       1,000.00       476,000       8,568,000       1,134,540       9,702,540  
‡ Townhouse - Ocean View   8     2,400.00       1,200.00       360,000       2,880,000       209,746       3,089,746  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       874,255       7,774,255  
‡ Apartment - 4br Oceanfront   14     2,800.00       1,300.00       260,000       3,640,000       543,457       4,183,457  
‡ Apartment - 4br Ocean View   16     3,200.00       1,200.00       240,000       3,840,000       556,754       4,396,754  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       890,617       6,980,617  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       1,184,109       9,464,109  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       1,247,787       8,534,187  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       843,795       7,107,795  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       781,292       6,581,292  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       687,537       5,791,537  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       326,608       2,536,608  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       274,316       2,307,516  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       154,530       1,654,530  
‡ Villa - Oceanfront   2     1,680.00       1,500.00       1,260,000       2,520,000       504,161       3,024,161  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       176,107       1,856,107  
‡ Villa - Ocean View   4     2,320.00       1,300.00       754,000       3,016,000       327,080       3,343,080  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       2,002,901       10,927,901  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       1,815,964       9,907,964  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       287,059       2,807,059  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       1,501,166       8,401,166  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       617,462       3,477,462  
‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       346,147       3,706,147  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       627,391       6,717,391  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       853,005       9,133,005  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       1,850,425       9,136,825  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       1,298,859       7,562,859  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       1,202,647       7,002,647  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       1,058,329       6,162,329  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       504,742       2,714,742  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       415,711       2,448,911  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       253,489       1,753,489  

  

 
   

  

APPRAISAL SUMMARY DTZ

 

‡ Villa - Oceanfront   2     1,680.00       1,500.00       1,260,000       2,520,000       766,404       3,286,404  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       290,226       1,970,226  
‡ Villa - Ocean View   4     2,320.00       1,300.00       754,000       3,016,000       543,855       3,559,855  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       3,050,551       11,975,551  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       2,765,833       10,857,833  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       483,337       3,003,337  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       2,367,142       9,267,142  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       943,911       3,803,911  
‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       567,816       3,927,816  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       1,029,167       7,119,167  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       1,399,262       9,679,262  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       2,618,361       9,904,761  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       2,005,366       8,269,366  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       1,856,820       7,656,820  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       1,634,002       6,738,002  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       766,522       2,976,522  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       644,101       2,677,301  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       445,662       1,945,662  
‡ Villa - Oceanfront   1     840.00       1,500.00       1,260,000       1,260,000       374,356       1,634,356  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       511,104       2,191,104  
‡ Villa - Ocean View   3     1,740.00       1,300.00       754,000       2,262,000       704,389       2,966,389  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       4,159,866       13,084,866  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       3,771,612       11,863,612  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       858,365       3,378,365  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       3,245,300       10,145,300  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       1,294,184       4,154,184  
‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       998,283       4,358,283  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       1,809,389       7,899,389  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       2,460,056       10,740,056  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       3,513,365       10,799,765  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       2,782,280       9,046,280  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       2,576,185       8,376,185  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       2,267,043       7,371,043  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       1,034,695       3,244,695  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       897,345       2,930,545  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       658,896       2,158,896  
‡ Villa - Oceanfront   1     840.00       1,500.00       1,260,000       1,260,000       553,473       1,813,473  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       745,742       2,425,742  
‡ Villa - Ocean View   3     1,740.00       1,300.00       754,000       2,262,000       1,014,607       3,276,607  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       5,132,444       14,057,444  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       4,653,416       12,745,416  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       1,177,709       3,697,709  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       3,998,842       10,898,842  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       1,615,895       4,475,895  

 

 
   

 

APPRAISAL SUMMARY DTZ

 

‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       1,475,927       4,835,927  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       2,675,119       8,765,119  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       3,637,107       11,917,107  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       4,251,007       11,537,407  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       3,497,005       9,761,005  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       3,237,968       9,037,968  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       2,849,412       7,953,412  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       1,276,655       3,486,655  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       1,130,445       3,163,645  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       831,608       2,331,608  
‡ Villa - Oceanfront   1     840.00       1,500.00       1,260,000       1,260,000       698,551       1,958,551  
‡ Villa - Ocean View   2     1,400.00       1,200.00       840,000       1,680,000       939,802       2,619,802  
‡ Villa - Ocean View   3     1,740.00       1,300.00       754,000       2,262,000       1,276,736       3,538,736  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       5,887,062       14,812,062  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       5,337,603       13,429,603  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       1,473,526       3,993,526  
‡ Townhouse - Wadi Park   23     6,900.00       1,000.00       300,000       6,900,000       4,577,079       11,477,079  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       1,861,605       4,721,605  
‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       1,862,802       5,222,802  
‡ Apartment - 4br Wadi Park   29     5,800.00       1,050.00       210,000       6,090,000       3,376,328       9,466,328  
‡ Apartment - 3br Ocean View   36     6,624.00       1,250.00       230,000       8,280,000       4,590,476       12,870,476  
‡ Apartment - 3br Wadi Park   36     6,624.00       1,100.00       202,400       7,286,400       4,873,508       12,159,908  
‡ Apartment - 2br Oceanfront   29     4,640.00       1,350.00       216,000       6,264,000       4,046,833       10,310,833  
‡ Apartment - 2br Ocean View   29     4,640.00       1,250.00       200,000       5,800,000       3,747,068       9,547,068  
‡ Apartment - 2br Wadi Park   29     4,640.00       1,100.00       176,000       5,104,000       3,297,420       8,401,420  
‡ Apartment - 1br Ocean View   13     1,768.00       1,250.00       170,000       2,210,000       1,459,716       3,669,716  
‡ Apartment - 1br Wadi Park   13     1,768.00       1,150.00       156,400       2,033,200       1,310,193       3,343,393  
‡ Villa - Oceanfront   1     1,000.00       1,500.00       1,500,000       1,500,000       971,064       2,471,064  
‡ Villa - Oceanfront   1     840.00       1,500.00       1,260,000       1,260,000       815,694       2,075,694  
‡ Villa - Ocean View   1     700.00       1,200.00       840,000       840,000       543,796       1,383,796  
‡ Villa - Ocean View   3     1,740.00       1,300.00       754,000       2,262,000       1,476,578       3,738,578  
‡ Villa - Wadi Park   17     8,925.00       1,000.00       525,000       8,925,000       6,552,493       15,477,493  
‡ Villa - Wadi Park   17     8,092.00       1,000.00       476,000       8,092,000       5,940,927       14,032,927  
‡ Townhouse - Ocean View   7     2,100.00       1,200.00       360,000       2,520,000       1,672,383       4,192,383  
‡ Townhouse - Wadi Park   22     6,600.00       1,000.00       300,000       6,600,000       4,834,098       11,434,098  
‡ Apartment - 4br Oceanfront   11     2,200.00       1,300.00       260,000       2,860,000       2,081,194       4,941,194  
‡ Apartment - 4br Ocean View   14     2,800.00       1,200.00       240,000       3,360,000       2,175,184       5,535,184  
‡ Apartment - 4br Wadi Park   26     5,200.00       1,050.00       210,000       5,460,000       3,534,674       8,994,674  
‡ Apartment - 3br Ocean View   34     6,256.00       1,250.00       230,000       7,820,000       5,062,482       12,882,482  
‡ Apartment - 3br Wadi Park   34     6,256.00       1,100.00       202,400       6,881,600       5,092,639       11,974,239  
‡ Apartment - 2br Oceanfront   26     4,160.00       1,350.00       216,000       5,616,000       4,021,500       9,637,500  
‡ Apartment - 2br Ocean View   26     4,160.00       1,250.00       200,000       5,200,000       3,723,611       8,923,611  
‡ Apartment - 2br Wadi Park   26     4,160.00       1,100.00       176,000       4,576,000       3,276,778       7,852,778  
‡ Apartment - 1br Ocean View   12     1,632.00       1,250.00       170,000       2,040,000       1,493,687       3,533,687  

  

 
   

  

APPRAISAL SUMMARY DTZ

 

‡ Apartment - 1br Wadi Park   12     1,632.00       1,150.00       156,400       1,876,800       1,344,170       3,220,970  
Totals   2,165     511,020.00                       582,412,000       234,649,229       817,061,229  

 

Rental Area Summary                   Initial     Net Rent     Initial     Net MRV  
    Units   m²     Rate m²     MRV/Unit     at Sale     MRV     at Sale  
Attractions/Exhibition Space   1     8,000.00               0       0                  
‡ Pearl Retail   1     5,250.00       300.00       1,575,000       1,391,142       1,575,000       1,391,142  
2 Bed Serviced Chalets   300     34,500.00               0       0                  
1 Bed Serviced Chalets   300     25,500.00               0       0                  
2 Bed Serviced Apartments   343     42,875.00               0       0                  
1 Bed Serviced Apartments   300     33,000.00               0       0                  
Studio Serviced Apartments   81     3,240.00               0       0                  
Hotel 1- 5 star   280     18,600.00               0       0                  
Hotel 2 - 4 star   280     18,600.00               0       0                  
Hotel 3 - 4 star   280     18,600.00               0       0                  
‡ Office Space   1     39,497.80       144.00       5,687,683       5,822,091       5,687,683       5,822,091  
‡ Mall   1     4,303.00       480.00       2,065,440       1,770,937       2,065,440       1,879,333  
‡ Movie Theatre   1     2,500.00       36.00       90,000       96,459       90,000       102,363  
‡ Amphitheatre   1     700.00       36.00       25,200       27,009       25,200       28,662  
‡ General Retail   1     4,985.00       300.00       1,495,500       1,282,263       1,495,500       1,360,747  
Totals   2,171     260,150.80                       10,389,901       10,938,823       10,584,338  
                                                     
Investment Valuation                                                    
Pearl Retail                                                    
Market Rent   1,391,142     YP  @       9.0000 %     11.1111                          
(0yrs 6mths Rent Free)         PV 0yrs 6mths  @       9.0000 %     0.9578       14,805,247                  
Re-Letting Void   (1,391,142 )    YP 0yrs 6mths  @       9.0000 %     0.4686                          
          PV 5yrs  @       9.0000 %     0.6499       (423,680 )                
                                  14,381,566                  
2 Bed Serviced Chalets                                                    
Revenue                                                    
Room Revenue   15,131,542     YP  @       7.0000 %     14.2857       216,164,886                  
F&B Revenue   9,293,970     YP  @       7.0000 %     14.2857       132,771,005                  
Additional Revenue   2,788,191     YP  @       7.0000 %     14.2857       39,831,302                  
                                  388,767,193                  
Running Costs                                                    
Room Running Costs   (5,210,253 )   YP  @       7.0000 %     14.2857       (74,432,188 )                
Additional Revenue Costs   (8,683,755 )    YP  @       7.0000 %     14.2857       (124,053,647 )                
                                  (198,485,835 )                
                                  190,281,358                  
1 Bed Serviced Chalets                                                    
Revenue                                                    
Room Revenue   13,618,388     YP  @       7.0000 %     14.2857       194,548,398                  
F&B Revenue   8,364,573     YP  @       7.0000 %     14.2857       119,493,905                  

  

 
   

  

APPRAISAL SUMMARY DTZ

 

Additional Revenue   2,509,372     YP  @       7.0000 %     14.2857       35,848,171              
                                  349,890,474                  
Running Costs                                                    
Room Running Costs   (4,689,228 )    YP  @       7.0000 %     14.2857       (66,988,969 )                
Additional Revenue Costs   (7,815,380  )   YP  @       7.0000 %     14.2857       (111,648,282 )                
                                  (178,637,251 )                
                                  171,253,223                  
2 Bed Serviced Apartments                                                    
Revenue                                                    
Revenue   9,842,003     YP  @       8.0000 %     12.5000       123,025,041                  
                                                     
Running Costs                                                    
Item 1   (2,259,269 )    YP  @       8.0000 %     12.5000       (28,240,859 )                
                                                     
                                  94,784,183                  
1 Bed Serviced Apartments                                                    
Revenue                                                    
Item 1   6,456,125     YP  @       8.0000 %     12.5000       80,701,558                  
                                                     
Running Costs                                                    
Running Costs   (1,482,028 )   YP  @       8.0000 %     12.5000       (18,525,345 )                
                                                     
                                  62,176,213                  
Studio Serviced Apartments                                                    
Revenue                                                    
Item 1   1,452,628     YP  @       8.0000 %     12.5000       18,157,850                  
                                                     
Running Costs                                                    
Item 1   (333,456 )    YP  @       8.0000 %     12.5000       (4,168,203 )                
                                                     
                                  13,989,648                  
Hotel 1- 5 star                                                    
Revenue                                                    
Room Revenue   17,418,086     YP  @       7.0000 %     14.2857       248,829,803                  
F&B   10,698,393     YP  @       7.0000 %     14.2857       152,834,179                  
Other Revenue   4,279,357     YP  @       7.0000 %     14.2857       61,133,672                  
                                  462,797,654                  
Running Costs                                                    
Item 1   (12,994,757 )   YP  @       7.0000 %     14.2857       (185,639,391 )                
                                                     
                                  277,158,263                  
Hotel 2 - 4 star                                                    
Revenue                                                    
Room Revenue   11,768,977     YP  @       7.0000 %     14.2857       168,128,245                  

  

 
   

  

APPRAISAL SUMMARY DTZ

 

F&B   5,782,915     YP  @       7.0000 %     14.2857       82,613,070              
Other Revenue   2,891,457     YP  @       7.0000 %     14.2857       41,306,535                  
                                  292,047,850                  
Running Costs                                                    
Item 1   (8,780,241 )    YP  @       7.0000 %     14.2857       (125,432,021 )                
                                                     
                                  166,615,829                  
Hotel 3 - 4 star                                                    
Revenue                                                    
Room Revenue   11,768,977     YP  @       7.0000 %     14.2857       168,128,245                  
F&B   5,782,915     YP  @       7.0000 %     14.2857       82,613,070                  
Other Revenue   2,891,457     YP  @       7.0000 %     14.2857       41,306,535                  
                                  292,047,850                  
Running Costs                                                    
Item 1   (8,780,241 )   YP  @       7.0000 %     14.2857       (125,432,021 )                
                                                     
                                  166,615,829                  
Office Space                                                    
Market Rent   5,822,091     YP  @       10.0000 %     10.0000                          
          PV 0yrs 9mths  @       10.0000 %     0.9310       54,204,396                  
Re-Letting Void & Rent Free   (5,822,091 )   YP 0yrs 9mths  @       10.0000 %     0.6899                          
          PV 3yrs 6mths  @       10.0000 %     0.7164       (2,877,235 )                
                                  51,327,161                  
Mall                                                    
Current Rent   1,770,937     YP  @       8.5000 %     11.7647       20,834,556                  
Re-Letting Void & Rent Free   (1,770,937 )   YP 0yrs 6mths  @       8.5000 %     0.4702                          
          PV 2yrs  @       8.5000 %     0.8495       (707,377 )                
Reversion   108,396     YP  @       8.5000 %     11.7647                          
          PV 2yrs 6mths  @       8.5000 %     0.8155       1,039,963                  
                                  21,167,142                  
Movie Theatre                                                    
Current Rent   96,459     YP  @       9.0000 %     11.1111       1,071,768                  
Re-Letting Void   (96,459 )   YP 0yrs 3mths  @       9.0000 %     0.2368                          
          PV 2yrs  @       9.0000 %     0.8417       (19,227 )                
Reversion   5,904     YP  @       9.0000 %     11.1111                          
          PV 2yrs 3mths  @       9.0000 %     0.8237       54,038                  
                                  1,106,578                  
Amphitheatre                                                    
Current Rent   27,009     YP  @       11.0000 %     9.0909       245,532                  
Re-Letting Void   (27,009 )   YP 0yrs 6mths  @       11.0000 %     0.4622                          
          PV 2yrs  @       11.0000 %     0.8116       (10,132 )                
Reversion   1,653     YP  @       11.0000 %     9.0909                          
          PV 2yrs 6mths  @       11.0000 %     0.7704       11,577                  
                                  246,978                  

  

 
   

  

APPRAISAL SUMMARY DTZ

 

General Retail                                                    
Current Rent   1,282,263     YP @       9.0000 %     11.1111       14,247,363              
Re-Letting Void & Rent Free   (1,282,263 )    YP 0yrs 6mths @       9.0000 %     0.4686                          
          PV 2yrs @       9.0000 %     0.8417       (505,735 )                
Reversion   78,485     YP @       9.0000 %     11.1111                          
          PV 2yrs 6mths @       9.0000 %     0.8062       703,034                  
                                  14,444,662                  
                                  1,245,548,634                  
                                                     
Operated Assets                                                    
2 Bed Serviced Chalets                                                    
Revenue                                                    
Room Revenue                 37,240,852                                  
F&B Revenue                 21,644,712                                  
Additional Revenue                 6,493,414                                  
                          65,378,978                          
Running Costs                                                    
Room Running Costs                 (12,356,596 )                                
Additional Revenue Costs                 (20,594,327 )                                
                          (32,950,924 )                        
                                  32,428,054                  
1 Bed Serviced Chalets                                                    
Revenue                                                    
Room Revenue                 33,516,767                                  
F&B Revenue                 19,480,241                                  
Additional Revenue                 5,844,072                                  
                          58,841,081                          
Running Costs                                                    
Room Running Costs                 (11,120,937 )                                
Additional Revenue Costs                 (18,534,895 )                                
                          (29,655,832 )                        
                                  29,185,249                  
2 Bed Serviced Apartments                                                    
Revenue                                                    
Revenue                 25,594,524                                  
                          25,594,524                          
Running Costs                                                    
Item 1                 (5,657,692 )                                
                          (5,657,692 )                        
                                  19,936,832                  
1 Bed Serviced Apartments                                                    
Revenue                                                    
Item 1                 16,789,411                                  
                          16,789,411                          

  

 
   

  

APPRAISAL SUMMARY DTZ

 

Running Costs                                      
Running Costs                 (3,711,314 )                                
                          (3,711,314 )                        
                                  13,078,097                  
Studio Serviced Apartments                                                    
Revenue                                                    
Item 1                 3,777,617                                  
                          3,777,617                          
Running Costs                                                    
Item 1                 (835,046 )                                
                          (835,046 )                        
                                  2,942,572                  
Hotel 1- 5 star                                                    
Revenue                                                    
Room Revenue                 42,868,359                                  
F&B                 24,915,469                                  
Other Revenue                 9,966,188                                  
                          77,750,015                          
Running Costs                                                    
Item 1                 (30,818,267 )                                
                          (30,818,267 )                        
                                  46,931,748                  
Hotel 2 - 4 star                                                    
Revenue                                                    
Room Revenue                 28,965,107                                  
F&B                 13,467,821                                  
Other Revenue                 6,733,911                                  
                          49,166,839                          
Running Costs                                                    
Item 1                 (20,823,153 )                                
                          (20,823,153 )                        
                                  28,343,686                  
Hotel 3 - 4 star                                                    
Revenue                                                    
Room Revenue                 28,965,107                                  
F&B                 13,467,821                                  
Other Revenue                 6,733,911                                  
                          49,166,839                          
Running Costs                                                    
Item 1                 (20,823,153 )                                
                          (20,823,153 )                        
                                  28,343,686                  
                                                     
GROSS DEVELOPMENT VALUE                     2,062,609,863                          

  

 
   

  

APPRAISAL SUMMARY DTZ

 

Income from Tenants                                    
Office Space                         15,087,289                          
Mall                         4,427,343                          
Movie Theatre                         289,377                          
Amphitheatre                         81,026                          
General Retail                         3,205,657                          
                                  23,090,691                  
                                                     
NET REALISATION                                 2,286,890,479                  
                                                     
OUTLAY                                                    
                                                     
ACQUISITION COSTS                                                    
Residualised Price (1,000,000.00 m² 385.55 pm²)                         385,546,690                          
                                  385,546,690                  

 

CONSTRUCTION COSTS                    
Construction   Units   Unit Amount   Cost        
‡ Oman Pearl   1 un   6,074,933     6,638,994        
‡ Culture Pearl   1 un   6,124,280     6,692,923          
‡ Innovation Pearl   1 un   6,106,955     6,673,989          
‡ Energy Pearl   1 un   6,074,160     6,638,149          
‡ Sea Pearl   1 un   6,064,012     6,627,059          
‡ Earth Pearl   1 un   6,064,012     6,627,059          
‡ Sky Pearl   1 un   6,526,012     7,131,956          
Totals             47,030,128          

 

    m²   Rate m²   Cost        
‡ Attractions/Exhibition Space   8,000.00 m²   2,718.74 pm²     23,769,444          
‡ Pearl Retail   5,250.00 m²   719.89 pm²     4,130,344          
‡ 2 Bed Serviced Chalets   34,500.00 m²   663.60 pm²     24,061,132          
‡ 1 Bed Serviced Chalets   25,500.00 m²   663.60 pm²     17,784,315          
‡ 2 Bed Serviced Apartments   42,875.00 m²   663.61 pm²     29,902,510          
‡ 1 Bed Serviced Apartments   33,000.00 m²   663.60 pm²     23,014,996          
‡ Studio Serviced Apartments   3,240.00 m²   663.64 pm²     2,259,790          
‡ Hotel 1- 5 star   26,885.00 m²   1,157.32 pm²     32,700,477          
‡ Hotel 2 - 4 star   24,970.00 m²   1,157.32 pm²     30,371,244          
‡ Hotel 3 - 4 star   24,970.00 m²   1,157.32 pm²     30,371,244          
‡ Office Space   46,468.00 m²   530.19 pm²     25,892,610          
‡ Mall   6,620.00 m²   719.89 pm²     5,008,581          
‡ Movie Theatre   2,500.00 m²   719.89 pm²     1,891,458          
‡ Amphitheatre   700.00 m²   719.89 pm²     529,608          
‡ General Retail   4,985.00 m²   719.89 pm²     3,771,568          
‡ Villa - Oceanfront   2,000.00 m²   613.00 pm²     1,288,490          

  

 
   

  

APPRAISAL SUMMARY DTZ

 

‡ Villa - Oceanfront   1,680.00 m²   613.00 pm²     1,082,332        
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     901,943          
‡ Villa - Ocean View   2,320.00 m²   613.00 pm²     1,494,648          
‡ Villa - Wadi Park   9,450.00 m²   613.00 pm²     6,088,115          
‡ Villa - Wadi Park   8,568.00 m²   613.00 pm²     5,519,891          
‡ Townhouse - Ocean View   2,400.00 m²   613.00 pm²     1,546,188          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,445,291          
‡ Apartment - 4br Oceanfront   3,500.00 m²   613.00 pm²     2,254,858          
‡ Apartment - 4br Ocean View   4,000.00 m²   613.00 pm²     2,576,980          
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     4,670,776          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,334,349          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,334,349          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     3,736,621          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     3,736,621          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     3,736,621          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,423,781          
‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,423,781          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     657,130          
‡ Villa - Oceanfront   1,680.00 m²   613.00 pm²     1,103,978          
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     919,982          
‡ Villa - Ocean View   2,320.00 m²   613.00 pm²     1,524,541          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     5,864,884          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,317,495          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,379,973          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,534,196          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,807,107          
‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,299,955          
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     4,764,192          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,441,036          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,441,036          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     3,811,353          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     3,811,353          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     3,811,353          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,452,257          
‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,452,257          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     670,273          
‡ Villa - Oceanfront   1,680.00 m²   613.00 pm²     1,126,058          
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     938,382          
‡ Villa - Ocean View   2,320.00 m²   613.00 pm²     1,555,032          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     5,982,182          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,423,845          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,407,572          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,624,880          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,843,249          

  

 
   

 

APPRAISAL SUMMARY DTZ

 

‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,345,954        
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     4,859,476          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,549,856          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,549,856          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     3,887,581          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     3,887,581          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     3,887,581          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,481,302          
‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,481,302          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     683,678          
‡ Villa - Oceanfront   840.00 m²   613.00 pm²     574,289          
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     957,149          
‡ Villa - Ocean View   1,740.00 m²   613.00 pm²     1,189,600          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     6,101,826          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,532,322          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,435,724          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,717,378          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,880,114          
‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,392,873          
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     4,956,665          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,660,853          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,660,853          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     3,965,332          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     3,965,332          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     3,965,332          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,510,928          
‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,510,928          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     697,352          
‡ Villa - Oceanfront   840.00 m²   613.00 pm²     585,775          
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     976,292          
‡ Villa - Ocean View   1,740.00 m²   613.00 pm²     1,213,392          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     6,223,862          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,642,968          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,464,438          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,811,725          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,917,717          
‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,440,730          
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     5,055,798          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,774,071          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,774,071          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     4,044,639          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     4,044,639          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     4,044,639          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,541,147          

  

 
   

 

APPRAISAL SUMMARY DTZ

 

‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,541,147          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     711,299          
‡ Villa - Oceanfront   840.00 m²   613.00 pm²     597,491          
‡ Villa - Ocean View   1,400.00 m²   613.00 pm²     995,818          
‡ Villa - Ocean View   1,740.00 m²   613.00 pm²     1,237,659          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     6,348,339          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,755,828          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,493,727          
‡ Townhouse - Wadi Park   6,900.00 m²   613.00 pm²     4,907,960          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,956,071          
‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,489,545          
‡ Apartment - 4br Wadi Park   7,250.00 m²   613.00 pm²     5,156,914          
‡ Apartment - 3br Ocean View   8,280.00 m²   613.00 pm²     5,889,552          
‡ Apartment - 3br Wadi Park   8,280.00 m²   613.00 pm²     5,889,552          
‡ Apartment - 2br Oceanfront   5,800.00 m²   613.00 pm²     4,125,532          
‡ Apartment - 2br Ocean View   5,800.00 m²   613.00 pm²     4,125,532          
‡ Apartment - 2br Wadi Park   5,800.00 m²   613.00 pm²     4,125,532          
‡ Apartment - 1br Ocean View   2,210.00 m²   613.00 pm²     1,571,970          
‡ Apartment - 1br Wadi Park   2,210.00 m²   613.00 pm²     1,571,970          
‡ Villa - Oceanfront   1,000.00 m²   613.00 pm²     725,525          
‡ Villa - Oceanfront   840.00 m²   613.00 pm²     609,441          
‡ Villa - Ocean View   700.00 m²   613.00 pm²     507,867          
‡ Villa - Ocean View   1,740.00 m²   613.00 pm²     1,262,413          
‡ Villa - Wadi Park   8,925.00 m²   613.00 pm²     6,475,306          
‡ Villa - Wadi Park   8,092.00 m²   613.00 pm²     5,870,944          
‡ Townhouse - Ocean View   2,100.00 m²   613.00 pm²     1,523,601          
‡ Townhouse - Wadi Park   6,600.00 m²   613.00 pm²     4,788,462          
‡ Apartment - 4br Oceanfront   2,750.00 m²   613.00 pm²     1,995,192          
‡ Apartment - 4br Ocean View   3,500.00 m²   613.00 pm²     2,539,336          
‡ Apartment - 4br Wadi Park   6,500.00 m²   613.00 pm²     4,715,909          
‡ Apartment - 3br Ocean View   7,820.00 m²   613.00 pm²     5,673,602          
‡ Apartment - 3br Wadi Park   7,820.00 m²   613.00 pm²     5,673,602          
‡ Apartment - 2br Oceanfront   5,200.00 m²   613.00 pm²     3,772,727          
‡ Apartment - 2br Ocean View   5,200.00 m²   613.00 pm²     3,772,727          
‡ Apartment - 2br Wadi Park   5,200.00 m²   613.00 pm²     3,772,727          
‡ Apartment - 1br Ocean View   2,040.00 m²   613.00 pm²     1,480,070          
‡ Apartment - 1br Wadi Park   2,040.00 m²   613.00 pm²     1,480,070          
Totals   873,603.00 m²       653,996,389       701,026,517  
                         
Contingency       5.00%     35,051,326          
Infrastructure             39,732,650          
Parking             39,554,333          
Marine Works             39,580,438          
Landscaping             14,392,707          

  

 
   

 

APPRAISAL SUMMARY DTZ

 

Lighting         3,790,795        
Back of House Facilities             2,490,219          
                      174,592,468  
                         
PROFESSIONAL FEES                        
Professional Fees       14.00%     98,143,712          
                      98,143,712  
MARKETING & LETTING                        
Marketing             900,000          
Letting Agent Fee       8.00%     804,328          
                      1,704,328  
DISPOSAL FEES                        
Sales Agency Fees       0.50%     501,675          
Land Purchase   772,000.00 m²   25.00 pm²     19,300,000          
Sales Agency Fee       0.50%     1,042,055          
Ageny Fee       0.50%     580,650          
Sales Costs       0.50%     8,116,761          
Land Payment   228,000.00 m²   25.00 pm²     5,700,000          
                      35,241,141  
                         
Interest and Fees                        
Interest paid to Debt Sources:                        
Debt (7.000%)       48,944,348                
Total Interest paid to Debt Sources:             48,944,348          
                         
Total Interest Paid                     48,944,348  
                         
TOTAL COSTS                     1,445,199,204  
                         
PROFIT                        
Balancing Account             841,691,275          
                      841,691,275  
                         
Performance Measures                        
Profit on Cost%       58.24%                
Profit on GDV%       40.81%                
                         
Ungeared IRR%       15.00%                
Geared IRR% (without Interest)       15.00%                
                         
Cost per Gross m²       1,654.30 pm²                
Cost per Net m²       1,874.03 pm²                
Land Cost pm²       385.55 pm²                
                         
                         

  

 
   

 

APPRAISAL SUMMARY DTZ

 

‡ Inflation/Growth applied

 

Growth on Sales       Ungrown     Growth     Total  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     3,000,000       245,424       3,245,424  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     2,520,000       206,156       2,726,156  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       137,437       1,817,437  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     3,016,000       378,208       3,394,208  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     9,450,000       1,251,330       10,701,330  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,568,000       1,134,540       9,702,540  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,880,000       209,746       3,089,746  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       874,255       7,774,255  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     3,640,000       543,457       4,183,457  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,840,000       556,754       4,396,754  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       890,617       6,980,617  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       1,184,109       9,464,109  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       1,247,787       8,534,187  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       843,795       7,107,795  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       781,292       6,581,292  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       687,537       5,791,537  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       326,608       2,536,608  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       274,316       2,307,516  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       154,530       1,654,530  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     2,520,000       504,161       3,024,161  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       176,107       1,856,107  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     3,016,000       327,080       3,343,080  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       2,002,901       10,927,901  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       1,815,964       9,907,964  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       287,059       2,807,059  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       1,501,166       8,401,166  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       617,462       3,477,462  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       346,147       3,706,147  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       627,391       6,717,391  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       853,005       9,133,005  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       1,850,425       9,136,825  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       1,298,859       7,562,859  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       1,202,647       7,002,647  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       1,058,329       6,162,329  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       504,742       2,714,742  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       415,711       2,448,911  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       253,489       1,753,489  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     2,520,000       766,404       3,286,404  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       290,226       1,970,226  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     3,016,000       543,855       3,559,855  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       3,050,551       11,975,551  

  

 
   

 

APPRAISAL SUMMARY DTZ

 

Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       2,765,833       10,857,833  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       483,337       3,003,337  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       2,367,142       9,267,142  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       943,911       3,803,911  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       567,816       3,927,816  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       1,029,167       7,119,167  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       1,399,262       9,679,262  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       2,618,361       9,904,761  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       2,005,366       8,269,366  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       1,856,820       7,656,820  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       1,634,002       6,738,002  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       766,522       2,976,522  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       644,101       2,677,301  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       445,662       1,945,662  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,260,000       374,356       1,634,356  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       511,104       2,191,104  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     2,262,000       704,389       2,966,389  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       4,159,866       13,084,866  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       3,771,612       11,863,612  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       858,365       3,378,365  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       3,245,300       10,145,300  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       1,294,184       4,154,184  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       998,283       4,358,283  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       1,809,389       7,899,389  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       2,460,056       10,740,056  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       3,513,365       10,799,765  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       2,782,280       9,046,280  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       2,576,185       8,376,185  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       2,267,043       7,371,043  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       1,034,695       3,244,695  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       897,345       2,930,545  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       658,896       2,158,896  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,260,000       553,473       1,813,473  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       745,742       2,425,742  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     2,262,000       1,014,607       3,276,607  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       5,132,444       14,057,444  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       4,653,416       12,745,416  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       1,177,709       3,697,709  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       3,998,842       10,898,842  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       1,615,895       4,475,895  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       1,475,927       4,835,927  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       2,675,119       8,765,119  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       3,637,107       11,917,107  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       4,251,007       11,537,407  

  

 
   

 

APPRAISAL SUMMARY DTZ

 

Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       3,497,005       9,761,005  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       3,237,968       9,037,968  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       2,849,412       7,953,412  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       1,276,655       3,486,655  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       1,130,445       3,163,645  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       831,608       2,331,608  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,260,000       698,551       1,958,551  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     1,680,000       939,802       2,619,802  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     2,262,000       1,276,736       3,538,736  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       5,887,062       14,812,062  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       5,337,603       13,429,603  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       1,473,526       3,993,526  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,900,000       4,577,079       11,477,079  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       1,861,605       4,721,605  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       1,862,802       5,222,802  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     6,090,000       3,376,328       9,466,328  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     8,280,000       4,590,476       12,870,476  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     7,286,400       4,873,508       12,159,908  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     6,264,000       4,046,833       10,310,833  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,800,000       3,747,068       9,547,068  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     5,104,000       3,297,420       8,401,420  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,210,000       1,459,716       3,669,716  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     2,033,200       1,310,193       3,343,393  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,500,000       971,064       2,471,064  
Villa - Oceanfront   Residential Sales Growth at 4.000% var.     1,260,000       815,694       2,075,694  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     840,000       543,796       1,383,796  
Villa - Ocean View   Residential Sales Growth at 4.000% var.     2,262,000       1,476,578       3,738,578  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,925,000       6,552,493       15,477,493  
Villa - Wadi Park   Residential Sales Growth at 4.000% var.     8,092,000       5,940,927       14,032,927  
Townhouse - Ocean View   Residential Sales Growth at 4.000% var.     2,520,000       1,672,383       4,192,383  
Townhouse - Wadi Park   Residential Sales Growth at 4.000% var.     6,600,000       4,834,098       11,434,098  
Apartment - 4br Oceanfront   Residential Sales Growth at 4.000% var.     2,860,000       2,081,194       4,941,194  
Apartment - 4br Ocean View   Residential Sales Growth at 4.000% var.     3,360,000       2,175,184       5,535,184  
Apartment - 4br Wadi Park   Residential Sales Growth at 4.000% var.     5,460,000       3,534,674       8,994,674  
Apartment - 3br Ocean View   Residential Sales Growth at 4.000% var.     7,820,000       5,062,482       12,882,482  
Apartment - 3br Wadi Park   Residential Sales Growth at 4.000% var.     6,881,600       5,092,639       11,974,239  
Apartment - 2br Oceanfront   Residential Sales Growth at 4.000% var.     5,616,000       4,021,500       9,637,500  
Apartment - 2br Ocean View   Residential Sales Growth at 4.000% var.     5,200,000       3,723,611       8,923,611  
Apartment - 2br Wadi Park   Residential Sales Growth at 4.000% var.     4,576,000       3,276,778       7,852,778  
Apartment - 1br Ocean View   Residential Sales Growth at 4.000% var.     2,040,000       1,493,687       3,533,687  
Apartment - 1br Wadi Park   Residential Sales Growth at 4.000% var.     1,876,800       1,344,170       3,220,970  

 

Growth on Capitalised Rent         Ungrown       Growth       Total  
Pearl Retail   Office/ Retail at 2.000%     13,025,828       1,355,739       14,381,566  

  

 
   

 

APPRAISAL SUMMARY DTZ

 

Office Space   Office/ Retail at 2.000%     45,128,004       6,199,157       51,327,161  
Mall   Office/ Retail at 2.000%     18,779,425       2,387,717       21,167,142  
Movie Theatre   Office/ Retail at 2.000%     982,060       124,518       1,106,578  
Amphitheatre   Office/ Retail at 2.000%     219,638       27,340       246,978  
General Retail   Office/ Retail at 2.000%     12,821,463       1,623,199       14,444,662  

 

Inflation on Construction Costs       Uninflated     Inflation     Total  
Villa - Oceanfront   Inflation Set 1 at 2.000%     1,226,000       62,490       1,288,490  
Villa - Oceanfront   Inflation Set 1 at 2.000%     1,029,840       52,492       1,082,332  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       43,743       901,943  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,422,160       72,488       1,494,648  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,792,850       295,265       6,088,115  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,252,184       267,707       5,519,891  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,471,200       74,988       1,546,188  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       215,591       4,445,291  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     2,145,500       109,358       2,254,858  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,452,000       124,980       2,576,980  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       226,526       4,670,776  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       258,709       5,334,349  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       258,709       5,334,349  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       181,221       3,736,621  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       181,221       3,736,621  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       181,221       3,736,621  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       69,051       1,423,781  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       69,051       1,423,781  
Villa - Oceanfront   Inflation Set 1 at 2.000%     613,000       44,130       657,130  
Villa - Oceanfront   Inflation Set 1 at 2.000%     1,029,840       74,138       1,103,978  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       61,782       919,982  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,422,160       102,381       1,524,541  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       393,859       5,864,884  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       357,099       5,317,495  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       92,673       1,379,973  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       304,496       4,534,196  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       121,357       1,807,107  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       154,455       2,299,955  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       319,942       4,764,192  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       365,396       5,441,036  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       365,396       5,441,036  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       255,953       3,811,353  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       255,953       3,811,353  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       255,953       3,811,353  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       97,527       1,452,257  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       97,527       1,452,257  
Villa - Oceanfront   Inflation Set 1 at 2.000%     613,000       57,273       670,273  

  

 
   

 

APPRAISAL SUMMARY DTZ

 

Villa – Oceanfront   Inflation Set 1 at 2.000%     1,029,840       96,218       1,126,058  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       80,182       938,382  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,422,160       132,872       1,555,032  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       511,157       5,982,182  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       463,449       5,423,845  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       120,272       1,407,572  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       395,180       4,624,880  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       157,499       1,843,249  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       200,454       2,345,954  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       415,226       4,859,476  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       474,216       5,549,856  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       474,216       5,549,856  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       332,181       3,887,581  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       332,181       3,887,581  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       332,181       3,887,581  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       126,572       1,481,302  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       126,572       1,481,302  
Villa - Oceanfront   Inflation Set 1 at 2.000%     613,000       70,678       683,678  
Villa - Oceanfront   Inflation Set 1 at 2.000%     514,920       59,369       574,289  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       98,949       957,149  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,066,620       122,980       1,189,600  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       630,801       6,101,826  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       571,926       5,532,322  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       148,424       1,435,724  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       487,678       4,717,378  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       194,364       1,880,114  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       247,373       2,392,873  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       512,415       4,956,665  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       585,213       5,660,853  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       585,213       5,660,853  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       409,932       3,965,332  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       409,932       3,965,332  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       409,932       3,965,332  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       156,198       1,510,928  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       156,198       1,510,928  
Villa - Oceanfront   Inflation Set 1 at 2.000%     613,000       84,352       697,352  
Villa - Oceanfront   Inflation Set 1 at 2.000%     514,920       70,855       585,775  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       118,092       976,292  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,066,620       146,772       1,213,392  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       752,837       6,223,862  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       682,572       5,642,968  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       177,138       1,464,438  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       582,025       4,811,725  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       231,967       1,917,717  

  

 
   

 

   

APPRAISAL SUMMARY DTZ

 

Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       295,230       2,440,730  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       611,548       5,055,798  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       698,431       5,774,071  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       698,431       5,774,071  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       489,239       4,044,639  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       489,239       4,044,639  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       489,239       4,044,639  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       186,417       1,541,147  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       186,417       1,541,147  
Villa – Oceanfront   Inflation Set 1 at 2.000%     613,000       98,299       711,299  
Villa – Oceanfront   Inflation Set 1 at 2.000%     514,920       82,571       597,491  
Villa - Ocean View   Inflation Set 1 at 2.000%     858,200       137,618       995,818  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,066,620       171,039       1,237,659  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       877,314       6,348,339  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       795,432       5,755,828  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       206,427       1,493,727  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,229,700       678,260       4,907,960  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       270,321       1,956,071  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       344,045       2,489,545  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     4,444,250       712,664       5,156,914  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     5,075,640       813,912       5,889,552  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     5,075,640       813,912       5,889,552  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,555,400       570,132       4,125,532  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,555,400       570,132       4,125,532  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,555,400       570,132       4,125,532  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,354,730       217,240       1,571,970  
Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,354,730       217,240       1,571,970  
Villa - Oceanfront   Inflation Set 1 at 2.000%     613,000       112,525       725,525  
Villa - Oceanfront   Inflation Set 1 at 2.000%     514,920       94,521       609,441  
Villa - Ocean View   Inflation Set 1 at 2.000%     429,100       78,767       507,867  
Villa - Ocean View   Inflation Set 1 at 2.000%     1,066,620       195,793       1,262,413  
Villa - Wadi Park   Inflation Set 1 at 2.000%     5,471,025       1,004,281       6,475,306  
Villa - Wadi Park   Inflation Set 1 at 2.000%     4,960,396       910,548       5,870,944  
Townhouse - Ocean View   Inflation Set 1 at 2.000%     1,287,300       236,301       1,523,601  
Townhouse - Wadi Park   Inflation Set 1 at 2.000%     4,045,800       742,662       4,788,462  
Apartment - 4br Oceanfront   Inflation Set 1 at 2.000%     1,685,750       309,442       1,995,192  
Apartment - 4br Ocean View   Inflation Set 1 at 2.000%     2,145,500       393,836       2,539,336  
Apartment - 4br Wadi Park   Inflation Set 1 at 2.000%     3,984,500       731,409       4,715,909  
Apartment - 3br Ocean View   Inflation Set 1 at 2.000%     4,793,660       879,942       5,673,602  
Apartment - 3br Wadi Park   Inflation Set 1 at 2.000%     4,793,660       879,942       5,673,602  
Apartment - 2br Oceanfront   Inflation Set 1 at 2.000%     3,187,600       585,127       3,772,727  
Apartment - 2br Ocean View   Inflation Set 1 at 2.000%     3,187,600       585,127       3,772,727  
Apartment - 2br Wadi Park   Inflation Set 1 at 2.000%     3,187,600       585,127       3,772,727  
Apartment - 1br Ocean View   Inflation Set 1 at 2.000%     1,250,520       229,550       1,480,070  

 

 
   

 

APPRAISAL SUMMARY DTZ

 

Apartment - 1br Wadi Park   Inflation Set 1 at 2.000%     1,250,520       229,550       1,480,070  
Oman Pearl   Inflation Set 1 at 2.000%     6,074,933       564,061       6,638,994  
Culture Pearl   Inflation Set 1 at 2.000%     6,124,280       568,643       6,692,923  
Innovation Pearl   Inflation Set 1 at 2.000%     6,106,955       567,034       6,673,989  
Energy Pearl   Inflation Set 1 at 2.000%     6,074,160       563,989       6,638,149  
Sea Pearl   Inflation Set 1 at 2.000%     6,064,012       563,047       6,627,059  
Earth Pearl   Inflation Set 1 at 2.000%     6,064,012       563,047       6,627,059  
Sky Pearl   Inflation Set 1 at 2.000%     6,526,012       605,944       7,131,956  
Attractions/Exhibition Space   Inflation Set 1 at 2.000%     21,749,949       2,019,495       23,769,444  
Pearl Retail   Inflation Set 1 at 2.000%     3,779,422       350,921       4,130,344  
2 Bed Serviced Chalets   Inflation Set 1 at 2.000%     22,894,200       1,166,932       24,061,132  
1 Bed Serviced Chalets   Inflation Set 1 at 2.000%     16,921,800       862,515       17,784,315  
2 Bed Serviced Apartments   Inflation Set 1 at 2.000%     28,452,279       1,450,231       29,902,510  
1 Bed Serviced Apartments   Inflation Set 1 at 2.000%     21,898,800       1,116,196       23,014,996  
Studio Serviced Apartments   Inflation Set 1 at 2.000%     2,150,194       109,597       2,259,790  
Hotel 1- 5 star   Inflation Set 1 at 2.000%     31,114,548       1,585,929       32,700,477  
Hotel 2 - 4 star   Inflation Set 1 at 2.000%     28,898,280       1,472,964       30,371,244  
Hotel 3 - 4 star   Inflation Set 1 at 2.000%     28,898,280       1,472,964       30,371,244  
Office Space   Inflation Set 1 at 2.000%     24,636,854       1,255,756       25,892,610  
Mall   Inflation Set 1 at 2.000%     4,765,672       242,909       5,008,581  
Movie Theatre   Inflation Set 1 at 2.000%     1,799,725       91,733       1,891,458  
Amphitheatre   Inflation Set 1 at 2.000%     503,923       25,685       529,608  
General Retail   Inflation Set 1 at 2.000%     3,588,652       182,916       3,771,568  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Table of Land Cost and Profit on Cost%

 

Construction: Gross Cost
Sales: Gross Sales   -20.000%   -10.000%     0.000%   +10.000%   +20.000%
-20.000%   (OMR408,378,191) 62.097%   (OMR361,710,102) 58.461%   (OMR315,043,708) 54.763%   (OMR268,376,892) 51.274%   (OMR221,708,802)  47.555%
-10.000%   (OMR443,630,040) 63.573%   (OMR396,963,066) 60.104%   (OMR350,295,298)   56.594%   (OMR303,628,682) 53.116%   (OMR256,961,774) 49.540%
0.000%   (OMR478,881,852) 64.952%   (OMR432,214,939) 61.722%   (OMR385,546,690)   58.241%   (OMR338,880,374) 54.844%   (OMR292,213,608) 51.589%
+10.000%   (OMR514,133,612) 66.256%   (OMR467,466,786) 63.214%   (OMR420,799,816) 59.878%   (OMR374,131,923) 56.570%   (OMR327,465,372) 53.299%
+20.000%   (OMR549,385,304) 67.491%   (OMR502,718,596) 64.505%   (OMR456,051,687) 61.313%   (OMR409,383,268)  58.105%   (OMR362,717,032) 54.911%

 

Sensitivity Analysis : Assumptions for Calculation

 

Construction: Gross Cost

Original Values are varied by Steps of 10.000%.

 

Heading   Phase     Amount     No. of Steps  
Villa - Oceanfront     1     OMR 1,226,000       2 Up & Down  
Villa - Oceanfront     1     OMR 1,029,840       2 Up & Down  
Villa - Ocean View     1     OMR 858,200       2 Up & Down  
Villa - Ocean View     1     OMR 1,422,160       2 Up & Down  
Villa - Wadi Park     1     OMR 5,792,850       2 Up & Down  
Villa - Wadi Park     1     OMR 5,252,184       2 Up & Down  
Townhouse - Ocean View     1     OMR 1,471,200       2 Up & Down  
Townhouse - Wadi Park     1     OMR 4,229,700       2 Up & Down  
Apartment - 4br Oceanfront     1     OMR 2,145,500       2 Up & Down  
Apartment - 4br Ocean View     1     OMR 2,452,000       2 Up & Down  
Apartment - 4br Wadi Park     1     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     1     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     1     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     1     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     1     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     1     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     1     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     1     OMR 1,354,730       2 Up & Down  
Villa - Oceanfront     2     OMR 613,000       2 Up & Down  
Villa - Oceanfront     2     OMR 1,029,840       2 Up & Down  
Villa - Ocean View     2     OMR 858,200       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Villa - Ocean View     2     OMR 1,422,160       2 Up & Down  
Villa - Wadi Park     2     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     2     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     2     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     2     OMR 4,229,700       2 Up & Down  
Apartment - 4br Oceanfront     2     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     2     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     2     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     2     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     2     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     2     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     2     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     2     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     2     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     2     OMR 1,354,730       2 Up & Down  
Villa - Oceanfront     3     OMR 613,000       2 Up & Down  
Villa - Oceanfront     3     OMR 1,029,840       2 Up & Down  
Villa - Ocean View     3     OMR 858,200       2 Up & Down  
Villa - Ocean View     3     OMR 1,422,160       2 Up & Down  
Villa - Wadi Park     3     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     3     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     3     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     3     OMR 4,229,700       2 Up & Down  
Apartment - 4br Oceanfront     3     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     3     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     3     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     3     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     3     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     3     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     3     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     3     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     3     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     3     OMR 1,354,730       2 Up & Down  
Villa - Oceanfront     4     OMR 613,000       2 Up & Down  
Villa - Oceanfront     4     OMR 514,920       2 Up & Down  
Villa - Ocean View     4     OMR 858,200       2 Up & Down  
Villa - Ocean View     4     OMR 1,066,620       2 Up & Down  
Villa - Wadi Park     4     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     4     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     4     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     4     OMR 4,229,700       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Apartment - 4br Oceanfront     4     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     4     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     4     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     4     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     4     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     4     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     4     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     4     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     4     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     4     OMR 1,354,730       2 Up & Down  
Villa - Oceanfront     5     OMR 613,000       2 Up & Down  
Villa - Oceanfront     5     OMR 514,920       2 Up & Down  
Villa - Ocean View     5     OMR 858,200       2 Up & Down  
Villa - Ocean View     5     OMR 1,066,620       2 Up & Down  
Villa - Wadi Park     5     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     5     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     5     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     5     OMR 4,229,700       2 Up & Down  
Apartment - 4br Oceanfront     5     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     5     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     5     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     5     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     5     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     5     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     5     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     5     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     5     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     5     OMR 1,354,730       2 Up & Down  
Oman Pearl     6     OMR 6,074,933       2 Up & Down  
Culture Pearl     6     OMR 6,124,280       2 Up & Down  
Innovation Pearl     6     OMR 6,106,955       2 Up & Down  
Energy Pearl     6     OMR 6,074,160       2 Up & Down  
Sea Pearl     6     OMR 6,064,012       2 Up & Down  
Earth Pearl     6     OMR 6,064,012       2 Up & Down  
Sky Pearl     6     OMR 6,526,012       2 Up & Down  
Attractions/Exhibition Space     6     OMR 21,749,949       2 Up & Down  
Pearl Retail     6     OMR 3,779,423       2 Up & Down  
2 Bed Serviced Chalets     7     OMR 22,894,200       2 Up & Down  
1 Bed Serviced Chalets     7     OMR 16,921,800       2 Up & Down  
2 Bed Serviced Apartments     7     OMR 28,452,279       2 Up & Down  
1 Bed Serviced Apartments     7     OMR 21,898,800       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Studio Serviced Apartments     7     OMR 2,150,194       2 Up & Down  
Hotel 1- 5 star     7     OMR 31,114,548       2 Up & Down  
Hotel 2 - 4 star     7     OMR 28,898,280       2 Up & Down  
Hotel 3 - 4 star     7     OMR 28,898,280       2 Up & Down  
Office Space     7     OMR 24,636,854       2 Up & Down  
Mall     7     OMR 4,765,672       2 Up & Down  
Movie Theatre     7     OMR 1,799,725       2 Up & Down  
Amphitheatre     7     OMR 503,923       2 Up & Down  
General Retail     7     OMR 3,588,652       2 Up & Down  
Villa - Oceanfront     8     OMR 613,000       2 Up & Down  
Villa - Oceanfront     8     OMR 514,920       2 Up & Down  
Villa - Ocean View     8     OMR 858,200       2 Up & Down  
Villa - Ocean View     8     OMR 1,066,620       2 Up & Down  
Villa - Wadi Park     8     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     8     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     8     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     8     OMR 4,229,700       2 Up & Down  
Apartment - 4br Oceanfront     8     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     8     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     8     OMR 4,444,250       2 Up & Down  
Apartment - 3br Ocean View     8     OMR 5,075,640       2 Up & Down  
Apartment - 3br Wadi Park     8     OMR 5,075,640       2 Up & Down  
Apartment - 2br Oceanfront     8     OMR 3,555,400       2 Up & Down  
Apartment - 2br Ocean View     8     OMR 3,555,400       2 Up & Down  
Apartment - 2br Wadi Park     8     OMR 3,555,400       2 Up & Down  
Apartment - 1br Ocean View     8     OMR 1,354,730       2 Up & Down  
Apartment - 1br Wadi Park     8     OMR 1,354,730       2 Up & Down  
Villa - Oceanfront     9     OMR 613,000       2 Up & Down  
Villa - Oceanfront     9     OMR 514,920       2 Up & Down  
Villa - Ocean View     9     OMR 429,100       2 Up & Down  
Villa - Ocean View     9     OMR 1,066,620       2 Up & Down  
Villa - Wadi Park     9     OMR 5,471,025       2 Up & Down  
Villa - Wadi Park     9     OMR 4,960,396       2 Up & Down  
Townhouse - Ocean View     9     OMR 1,287,300       2 Up & Down  
Townhouse - Wadi Park     9     OMR 4,045,800       2 Up & Down  
Apartment - 4br Oceanfront     9     OMR 1,685,750       2 Up & Down  
Apartment - 4br Ocean View     9     OMR 2,145,500       2 Up & Down  
Apartment - 4br Wadi Park     9     OMR 3,984,500       2 Up & Down  
Apartment - 3br Ocean View     9     OMR 4,793,660       2 Up & Down  
Apartment - 3br Wadi Park     9     OMR 4,793,660       2 Up & Down  
Apartment - 2br Oceanfront     9     OMR 3,187,600       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Apartment - 2br Ocean View     9     OMR 3,187,600       2 Up & Down  
Apartment - 2br Wadi Park     9     OMR 3,187,600       2 Up & Down  
Apartment - 1br Ocean View     9     OMR 1,250,520       2 Up & Down  
Apartment - 1br Wadi Park     9     OMR 1,250,520       2 Up & Down  

 

Sales: Gross Sales

Original Values are varied by Steps of 10.000%.

 

Heading   Phase     Amount     No. of Steps  
Villa - Oceanfront     1     OMR 3,000,000       2 Up & Down  
Villa - Oceanfront     1     OMR 2,520,000       2 Up & Down  
Villa - Ocean View     1     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     1     OMR 3,016,000       2 Up & Down  
Villa - Wadi Park     1     OMR 9,450,000       2 Up & Down  
Villa - Wadi Park     1     OMR 8,568,000       2 Up & Down  
Townhouse - Ocean View     1     OMR 2,880,000       2 Up & Down  
Townhouse - Wadi Park     1     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     1     OMR 3,640,000       2 Up & Down  
Apartment - 4br Ocean View     1     OMR 3,840,000       2 Up & Down  
Apartment - 4br Wadi Park     1     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     1     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     1     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     1     OMR 6,264,000       2 Up & Down  
Apartment - 2br Ocean View     1     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     1     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     1     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     1     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     2     OMR 1,500,000       2 Up & Down  
Villa - Oceanfront     2     OMR 2,520,000       2 Up & Down  
Villa - Ocean View     2     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     2     OMR 3,016,000       2 Up & Down  
Villa - Wadi Park     2     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     2     OMR 8,092,000       2 Up & Down  
Townhouse - Ocean View     2     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     2     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     2     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     2     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     2     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     2     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     2     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     2     OMR 6,264,000       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Apartment - 2br Ocean View     2     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     2     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     2     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     2     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     3     OMR 1,500,000       2 Up & Down  
Villa - Oceanfront     3     OMR 2,520,000       2 Up & Down  
Villa - Ocean View     3     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     3     OMR 3,016,000       2 Up & Down  
Villa - Wadi Park     3     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     3     OMR 8,092,000       2 Up & Down  
Townhouse - Ocean View     3     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     3     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     3     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     3     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     3     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     3     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     3     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     3     OMR 6,264,000       2 Up & Down  
Apartment - 2br Ocean View     3     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     3     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     3     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     3     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     4     OMR 1,500,000       2 Up & Down  
Villa - Oceanfront     4     OMR 1,260,000       2 Up & Down  
Villa - Ocean View     4     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     4     OMR 2,262,000       2 Up & Down  
Villa - Wadi Park     4     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     4     OMR 8,092,000       2 Up & Down  
Townhouse - Ocean View     4     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     4     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     4     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     4     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     4     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     4     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     4     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     4     OMR 6,264,000       2 Up & Down  
Apartment - 2br Ocean View     4     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     4     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     4     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     4     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     5     OMR 1,500,000       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Villa - Oceanfront     5     OMR 1,260,000       2 Up & Down  
Villa - Ocean View     5     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     5     OMR 2,262,000       2 Up & Down  
Villa - Wadi Park     5     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     5     OMR 8,092,000       2 Up & Down  
Townhouse - Ocean View     5     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     5     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     5     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     5     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     5     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     5     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     5     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     5     OMR 6,264,000       2 Up & Down  
Apartment - 2br Ocean View     5     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     5     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     5     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     5     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     8     OMR 1,500,000       2 Up & Down  
Villa - Oceanfront     8     OMR 1,260,000       2 Up & Down  
Villa - Ocean View     8     OMR 1,680,000       2 Up & Down  
Villa - Ocean View     8     OMR 2,262,000       2 Up & Down  
Villa - Wadi Park     8     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     8     OMR 8,092,000       2 Up & Down  
Townhouse - Ocean View     8     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     8     OMR 6,900,000       2 Up & Down  
Apartment - 4br Oceanfront     8     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     8     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     8     OMR 6,090,000       2 Up & Down  
Apartment - 3br Ocean View     8     OMR 8,280,000       2 Up & Down  
Apartment - 3br Wadi Park     8     OMR 7,286,400       2 Up & Down  
Apartment - 2br Oceanfront     8     OMR 6,264,000       2 Up & Down  
Apartment - 2br Ocean View     8     OMR 5,800,000       2 Up & Down  
Apartment - 2br Wadi Park     8     OMR 5,104,000       2 Up & Down  
Apartment - 1br Ocean View     8     OMR 2,210,000       2 Up & Down  
Apartment - 1br Wadi Park     8     OMR 2,033,200       2 Up & Down  
Villa - Oceanfront     9     OMR 1,500,000       2 Up & Down  
Villa - Oceanfront     9     OMR 1,260,000       2 Up & Down  
Villa - Ocean View     9     OMR 840,000       2 Up & Down  
Villa - Ocean View     9     OMR 2,262,000       2 Up & Down  
Villa - Wadi Park     9     OMR 8,925,000       2 Up & Down  
Villa - Wadi Park     9     OMR 8,092,000       2 Up & Down  

 

 
   

 

SENSITIVITY ANALYSIS REPORT DTZ

 

Townhouse - Ocean View     9     OMR 2,520,000       2 Up & Down  
Townhouse - Wadi Park     9     OMR 6,600,000       2 Up & Down  
Apartment - 4br Oceanfront     9     OMR 2,860,000       2 Up & Down  
Apartment - 4br Ocean View     9     OMR 3,360,000       2 Up & Down  
Apartment - 4br Wadi Park     9     OMR 5,460,000       2 Up & Down  
Apartment - 3br Ocean View     9     OMR 7,820,000       2 Up & Down  
Apartment - 3br Wadi Park     9     OMR 6,881,600       2 Up & Down  
Apartment - 2br Oceanfront     9     OMR 5,616,000       2 Up & Down  
Apartment - 2br Ocean View     9     OMR 5,200,000       2 Up & Down  
Apartment - 2br Wadi Park     9     OMR 4,576,000       2 Up & Down  
Apartment - 1br Ocean View     9     OMR 2,040,000       2 Up & Down  
Apartment - 1br Wadi Park     9     OMR 1,876,800       2 Up & Down  

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 1

 

    001:Jan 2015     002:Feb 2015     003:Mar 2015     004:Apr 2015     005:May 2015     006:Jun 2015     007:Jul 2015     008:Aug 2015     009:Sep 2015  
MonthlyB/F     0       (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )
                                                                         
Land Purchase                                                                        
Residualised Price     (385,546,690 )     0       0       0       0       0       0       0       0  
Construction Costs                                                                        
Construction Cost     0       0       0       0       0       0       0       0       0  
Contingency     0       0       0       0       0       0       0       0       0  
Infrastructure     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
Professional Fees                                                                        
Professional Fees     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
Other Cost                                                                        
Sales Costs     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
Marketing/Letting                                                                        
Marketing     0       0       0       0       0       0       0       0       0  
Letting Agent Fee     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
Capitalisation                                                                        
Unit Sales     0       0       0       0       0       0       0       0       0  
Capitalised Rent     0       0       0       0       0       0       0       0       0  
Other Revenue                                                                        
Tenant Rent Flow     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
Operated Assets                                                                        
Op. Asset Rev/Expense     0       0       0       0       0       0       0       0       0  
      0       0       0       0       0       0       0       0       0  
                                                                         
Period Total Before Finance     (385,546,690 )     0       0       0       0       0       0       0       0  
Finance Costs (All Loans)     0       0       0       0       0       0       0       0       0  
Period Total After Finance     (385,546,690 )     0       0       0       0       0       0       0       0  
Cumulative Total C/f Monthly     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 2

 

010:Oct 2015     011:Nov 2015     012:Dec 2015     013:Jan 2016     014:Feb 2016     015:Mar 2016     016:Apr 2016     017:May 2016     018:Jun 2016     019:Jul 2016     020:Aug 2016  
  (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (484,422,606 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       (1,888,396 )     (4,139,919 )
  0       0       0       0       0       0       0       0       0       (94,420 )     (206,996 )
  0       0       0       0       0       0       0       0       0       (97,949,741 )     0  
  0       0       0       0       0       0       0       0       0       (99,932,557 )     (4,346,915 )
                                                                                     
  0       0       0       0       0       0       0       0       0       (264,375 )     (579,589 )
  0       0       0       0       0       0       0       0       0       (264,375 )     (579,589 )
                                                                                     
  0       0       0       0       0       0       0       0       0       (6,638 )     (4,753 )
  0       0       0       0       0       0       0       0       0       (6,638 )     (4,753 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       1,327,654       950,575  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       (98,875,916 )     (3,980,682 )
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       (98,875,916 )     (3,980,682 )
  (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (385,546,690 )     (484,422,606 )     (488,403,288 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 3

 

021:Sep 2016     022:Oct 2016     023:Nov 2016     024:Dec 2016     025:Jan 2017     026:Feb 2017     027:Mar 2017     028:Apr 2017     029:May 2017     030:Jun 2017     031:Jul 2017  
  (488,403,288 )     (495,751,816 )     (503,082,594 )     (514,653,754 )     (527,958,795 )     (540,534,418 )     (556,693,086 )     (574,211,114 )     (590,171,551 )     (609,448,285 )     (629,150,952 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (6,207,368 )     (8,089,811 )     (9,786,316 )     (11,295,946 )     (12,617,760 )     (13,750,817 )     (14,694,169 )     (15,446,869 )     (16,007,963 )     (16,376,496 )     (16,919,640 )
  (310,368 )     (404,491 )     (489,316 )     (564,797 )     (630,888 )     (687,541 )     (734,708 )     (772,343 )     (800,398 )     (818,825 )     (845,982 )
  0       0       0       0       0       0       0       0       0       0       (5,916,652 )
  (6,517,736 )     (8,494,302 )     (10,275,632 )     (11,860,743 )     (13,248,648 )     (14,438,358 )     (15,428,878 )     (16,219,212 )     (16,808,361 )     (17,195,321 )     (23,682,274 )
                                                                                     
  (869,031 )     (1,132,574 )     (1,370,084 )     (1,581,432 )     (1,766,486 )     (1,925,114 )     (2,057,184 )     (2,162,562 )     (2,241,115 )     (2,292,710 )     (2,368,750 )
  (869,031 )     (1,132,574 )     (1,370,084 )     (1,581,432 )     (1,766,486 )     (1,925,114 )     (2,057,184 )     (2,162,562 )     (2,241,115 )     (2,292,710 )     (2,368,750 )
                                                                                     
  (192 )     (11,538 )     (375 )     (689 )     (12,259 )     (1,029 )     0       (12,842 )     0       (628 )     (41,888 )
  (192 )     (11,538 )     (375 )     (689 )     (12,259 )     (1,029 )     0       (12,842 )     0       (628 )     (41,888 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  38,432       2,307,636       74,931       137,823       2,451,770       205,834       0       2,568,333       0       125,697       8,377,673  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (7,348,528 )     (7,330,778 )     (11,571,160 )     (13,305,042 )     (12,575,623 )     (16,158,667 )     (17,486,062 )     (15,826,283 )     (19,049,476 )     (19,362,962 )     (17,715,239 )
  0       0       0       0       0       0       (31,966 )     (134,155 )     (227,258 )     (339,705 )     (454,637 )
  (7,348,528 )     (7,330,778 )     (11,571,160 )     (13,305,042 )     (12,575,623 )     (16,158,667 )     (17,518,028 )     (15,960,437 )     (19,276,734 )     (19,702,668 )     (18,169,876 )
  (495,751,816 )     (503,082,594 )     (514,653,754 )     (527,958,795 )     (540,534,418 )     (556,693,086 )     (574,211,114 )     (590,171,551 )     (609,448,285 )     (629,150,952 )     (647,320,829 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 4

 

032:Aug 2017     033:Sep 2017     034:Oct 2017     035:Nov 2017     036:Dec 2017     037:Jan 2018     038:Feb 2018     039:Mar 2018     040:Apr 2018     041:May 2018     042:Jun 2018  
  (647,320,829 )     (663,022,270 )     (684,408,810 )     (697,257,473 )     (718,505,647 )     (739,012,179 )     (750,408,243 )     (769,048,668 )     (786,662,078 )     (793,589,938 )     (807,576,804 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (17,339,091 )     (17,527,213 )     (17,482,854 )     (17,204,862 )     (16,692,080 )     (15,943,347 )     (14,957,498 )     (13,733,364 )     (12,269,772 )     (10,565,547 )     (8,619,509 )
  (866,955 )     (876,361 )     (874,143 )     (860,243 )     (834,604 )     (797,167 )     (747,875 )     (686,668 )     (613,489 )     (528,277 )     (430,975 )
  0       0       0       0       0       0       0       0       0       0       0  
  (18,206,046 )     (18,403,573 )     (18,356,997 )     (18,065,105 )     (17,526,684 )     (16,740,514 )     (15,705,373 )     (14,420,032 )     (12,883,261 )     (11,093,825 )     (9,050,484 )
                                                                                     
  (2,427,473 )     (2,453,810 )     (2,447,600 )     (2,408,681 )     (2,336,891 )     (2,232,069 )     (2,094,050 )     (1,922,671 )     (1,717,768 )     (1,479,177 )     (1,206,731 )
  (2,427,473 )     (2,453,810 )     (2,447,600 )     (2,408,681 )     (2,336,891 )     (2,232,069 )     (2,094,050 )     (1,922,671 )     (1,717,768 )     (1,479,177 )     (1,206,731 )
                                                                                     
  (27,602 )     (618 )     (43,884 )     (390 )     (1,673 )     (43,578 )     (1,613 )     0       (45,460 )     0       (1,981 )
  (27,602 )     (618 )     (43,884 )     (390 )     (1,673 )     (43,578 )     (1,613 )     0       (45,460 )     0       (1,981 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  5,520,307       123,682       8,776,792       77,928       334,589       8,715,592       322,581       0       9,092,082       0       396,299  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (15,140,814 )     (20,734,319 )     (12,071,689 )     (20,396,248 )     (19,530,660 )     (10,300,569 )     (17,478,454 )     (16,342,703 )     (5,554,407 )     (12,573,001 )     (9,862,898 )
  (560,628 )     (652,220 )     (776,975 )     (851,925 )     (975,873 )     (1,095,495 )     (1,161,972 )     (1,270,707 )     (1,373,452 )     (1,413,865 )     (1,495,455 )
  (15,701,442 )     (21,386,539 )     (12,848,664 )     (21,248,173 )     (20,506,533 )     (11,396,063 )     (18,640,426 )     (17,613,410 )     (6,927,860 )     (13,986,866 )     (11,358,353 )
  (663,022,270 )     (684,408,810 )     (697,257,473 )     (718,505,647 )     (739,012,179 )     (750,408,243 )     (769,048,668 )     (786,662,078 )     (793,589,938 )     (807,576,804 )     (818,935,156 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 5

 

043:Jul 2018     044:Aug 2018     045:Sep 2018     046:Oct 2018     047:Nov 2018     048:Dec 2018     049:Jan 2019     050:Feb 2019     051:Mar 2019     052:Apr 2019     053:May 2019  
  (818,935,156 )     (766,566,947 )     (756,893,214 )     (755,899,231 )     (745,368,293 )     (747,292,585 )     (748,956,436 )     (746,146,480 )     (752,822,620 )     (761,444,583 )     (758,394,249 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (3,602,094 )     (4,045,997 )     (4,415,196 )     (4,709,319 )     (4,927,991 )     (5,070,835 )     (6,741,953 )     (8,927,308 )     (10,634,717 )     (11,861,795 )     (12,606,148 )
  (180,105 )     (202,300 )     (220,760 )     (235,466 )     (246,400 )     (253,542 )     (337,098 )     (446,365 )     (531,736 )     (593,090 )     (630,307 )
  (5,916,652 )     0       0       0       0       0       (6,091,489 )     0       0       0       0  
  (9,698,851 )     (4,248,296 )     (4,635,956 )     (4,944,785 )     (5,174,391 )     (5,324,377 )     (13,170,539 )     (9,373,673 )     (11,166,453 )     (12,454,885 )     (13,236,455 )
                                                                                     
  (504,293 )     (566,440 )     (618,127 )     (659,305 )     (689,919 )     (709,917 )     (943,873 )     (1,249,823 )     (1,488,860 )     (1,660,651 )     (1,764,861 )
  (504,293 )     (566,440 )     (618,127 )     (659,305 )     (689,919 )     (709,917 )     (943,873 )     (1,249,823 )     (1,488,860 )     (1,660,651 )     (1,764,861 )
                                                                                     
  (2,855,877 )     (55,916 )     (14,909 )     (56,699 )     (2,846 )     (4,244 )     (56,429 )     (4,236 )     (2,513 )     (58,574 )     (2,569 )
  (2,855,877 )     (55,916 )     (14,909 )     (56,699 )     (2,846 )     (4,244 )     (56,429 )     (4,236 )     (2,513 )     (58,574 )     (2,569 )
                                                                                     
  (200,000 )     0       0       0       0       0       0       0       0       0       0  
  (693,036 )     0       0       0       0       0       0       0       0       0       0  
  (893,036 )     0       0       0       0       0       0       0       0       0       0  
                                                                                     
  63,246,674       11,183,227       2,981,760       11,339,869       569,139       848,850       11,285,755       847,132       502,630       11,714,800       513,727  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  30,867       0       0       1,402,439       0       0       2,165,739       0       0       2,165,739       0  
  30,867       0       0       1,402,439       0       0       2,165,739       0       0       2,165,739       0  
                                                                                     
  4,604,438       4,617,388       4,481,016       4,643,422       4,506,296       4,669,634       4,682,807       4,241,571       4,709,289       4,570,256       4,735,953  
  4,604,438       4,617,388       4,481,016       4,643,422       4,506,296       4,669,634       4,682,807       4,241,571       4,709,289       4,570,256       4,735,953  
                                                                                     
  53,929,921       10,929,963       2,193,784       11,724,940       (791,720 )     (520,055 )     3,963,459       (5,539,028 )     (7,445,908 )     4,276,685       (9,754,205 )
  (1,561,712 )     (1,256,231 )     (1,199,801 )     (1,194,002 )     (1,132,572 )     (1,143,797 )     (1,153,503 )     (1,137,111 )     (1,176,055 )     (1,226,350 )     (1,208,557 )
  52,368,209       9,673,733       993,983       10,530,938       (1,924,292 )     (1,663,852 )     2,809,956       (6,676,140 )     (8,621,963 )     3,050,334       (10,962,761 )
  (766,566,947 )     (756,893,214 )     (755,899,231 )     (745,368,293 )     (747,292,585 )     (748,956,436 )     (746,146,480 )     (752,822,620 )     (761,444,583 )     (758,394,249 )     (769,357,010 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 6

 

054:Jun 2019     055:Jul 2019     056:Aug 2019     057:Sep 2019     058:Oct 2019     059:Nov 2019     060:Dec 2019     061:Jan 2020     062:Feb 2020     063:Mar 2020     064:Apr 2020  
  (769,357,010 )     (780,390,825 )     (748,397,773 )     (745,737,749 )     (754,064,840 )     (749,185,382 )     (756,430,174 )     (761,099,204 )     (735,973,694 )     (736,915,260 )     (737,759,478 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (12,865,374 )     (12,389,040 )     (12,593,333 )     (12,308,948 )     (11,533,463 )     (10,264,445 )     (8,499,457 )     (5,197,115 )     (5,183,100 )     (5,091,231 )     (4,921,121 )
  (643,269 )     (619,452 )     (629,667 )     (615,447 )     (576,673 )     (513,222 )     (424,973 )     (259,856 )     (259,155 )     (254,562 )     (246,056 )
  0       (5,916,652 )     0       0       0       0       0       0       0       0       0  
  (13,508,642 )     (18,925,144 )     (13,223,000 )     (12,924,396 )     (12,110,136 )     (10,777,668 )     (8,924,430 )     (5,456,971 )     (5,442,255 )     (5,345,792 )     (5,167,177 )
                                                                                     
  (1,801,152 )     (1,734,466 )     (1,763,067 )     (1,723,253 )     (1,614,685 )     (1,437,022 )     (1,189,924 )     (727,596 )     (725,634 )     (712,772 )     (688,957 )
  (1,801,152 )     (1,734,466 )     (1,763,067 )     (1,723,253 )     (1,614,685 )     (1,437,022 )     (1,189,924 )     (727,596 )     (725,634 )     (712,772 )     (688,957 )
                                                                                     
  (4,786 )     (2,785,168 )     (66,214 )     (10,057 )     (60,151 )     (3,215 )     (4,817 )     (1,582,906 )     (4,807 )     (2,839 )     (62,778 )
  (4,786 )     (2,785,168 )     (66,214 )     (10,057 )     (60,151 )     (3,215 )     (4,817 )     (1,582,906 )     (4,807 )     (2,839 )     (62,778 )
                                                                                     
  0       (100,000 )     0       0       0       0       0       (100,000 )     0       0       0  
  0       0       0       0       0       0       0       (111,291 )     0       0       0  
  0       (100,000 )     0       0       0       0       0       (211,291 )     0       0       0  
                                                                                     
  957,122       49,105,094       13,242,784       2,011,422       12,030,271       642,999       963,339       12,081,229       961,389       567,858       12,555,654  
  0       0       0       0       0       0       0       14,381,566       0       0       0  
                                                                                     
  0       2,165,739       0       0       2,165,739       0       0       2,165,739       0       0       2,165,739  
  0       2,165,739       0       0       2,165,739       0       0       2,165,739       0       0       2,165,739  
                                                                                     
  4,596,149       5,603,868       5,619,765       5,453,919       5,651,723       5,484,953       5,683,902       5,700,076       5,347,511       5,732,591       5,563,483  
  4,596,149       5,603,868       5,619,765       5,453,919       5,651,723       5,484,953       5,683,902       5,700,076       5,347,511       5,732,591       5,563,483  
                                                                                     
  (9,761,310 )     33,329,922       3,810,268       (7,192,365 )     6,062,760       (6,089,954 )     (3,471,930 )     26,349,845       136,204       239,045       14,365,964  
  (1,272,506 )     (1,336,870 )     (1,150,244 )     (1,134,727 )     (1,183,302 )     (1,154,838 )     (1,197,099 )     (1,224,335 )     (1,077,770 )     (1,083,262 )     (1,088,187 )
  (11,033,816 )     31,993,052       2,660,025       (8,327,092 )     4,879,458       (7,244,792 )     (4,669,030 )     25,125,509       (941,566 )     (844,218 )     13,277,777  
  (780,390,825 )     (748,397,773 )     (745,737,749 )     (754,064,840 )     (749,185,382 )     (756,430,174 )     (761,099,204 )     (735,973,694 )     (736,915,260 )     (737,759,478 )     (724,481,701 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 7

 

065:May 2020     066:Jun 2020     067:Jul 2020     068:Aug 2020     069:Sep 2020     070:Oct 2020     071:Nov 2020     072:Dec 2020     073:Jan 2021     074:Feb 2021     075:Mar 2021  
  (724,481,701 )     (725,287,239 )     (725,392,019 )     (676,991,695 )     (661,474,009 )     (658,868,178 )     (643,214,025 )     (642,592,447 )     (641,563,937 )     (626,228,605 )     (625,793,350 )
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (4,672,383 )     (4,344,630 )     (3,684,490 )     (4,138,546 )     (4,516,190 )     (4,817,041 )     (5,040,715 )     (5,186,827 )     (5,254,990 )     (5,244,818 )     (5,155,922 )
  (233,619 )     (217,232 )     (184,224 )     (206,927 )     (225,810 )     (240,852 )     (252,036 )     (259,341 )     (262,750 )     (262,241 )     (257,796 )
  0       0       (5,916,652 )     0       0       0       0       0       0       0       0  
  (4,906,002 )     (4,561,862 )     (9,785,366 )     (4,345,473 )     (4,742,000 )     (5,057,894 )     (5,292,751 )     (5,446,168 )     (5,517,740 )     (5,507,059 )     (5,413,718 )
                                                                                     
  (654,134 )     (608,248 )     (515,829 )     (579,396 )     (632,267 )     (674,386 )     (705,700 )     (726,156 )     (735,699 )     (734,275 )     (721,829 )
  (654,134 )     (608,248 )     (515,829 )     (579,396 )     (632,267 )     (674,386 )     (705,700 )     (726,156 )     (735,699 )     (734,275 )     (721,829 )
                                                                                     
  0       (2,440 )     (2,808,953 )     (73,159 )     (11,059 )     (66,297 )     (3,504 )     (5,226 )     (66,517 )     (5,192 )     (3,066 )
  0       (2,440 )     (2,808,953 )     (73,159 )     (11,059 )     (66,297 )     (3,504 )     (5,226 )     (66,517 )     (5,192 )     (3,066 )
                                                                                     
  0       0       (100,000 )     0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       (100,000 )     0       0       0       0       0       0       0       0  
                                                                                     
  0       487,923       53,862,131       14,631,839       2,211,841       13,259,320       700,724       1,045,104       13,303,322       1,038,301       613,287  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       2,165,739       0       0       2,165,739       0       0       2,165,739       0       0  
  0       0       2,165,739       0       0       2,165,739       0       0       2,165,739       0       0  
                                                                                     
  5,765,332       5,595,278       6,598,646       6,617,584       6,422,504       6,655,659       6,459,480       6,694,001       6,713,273       6,081,070       6,752,022  
  5,765,332       5,595,278       6,598,646       6,617,584       6,422,504       6,655,659       6,459,480       6,694,001       6,713,273       6,081,070       6,752,022  
                                                                                     
  205,196       910,652       49,416,368       16,251,394       3,249,020       16,282,141       1,158,250       1,561,555       15,862,379       872,846       1,226,695  
  (1,010,733 )     (1,015,432 )     (1,016,044 )     (733,708 )     (643,189 )     (627,988 )     (536,672 )     (533,046 )     (527,046 )     (437,590 )     (435,051 )
  (805,538 )     (104,780 )     48,400,324       15,517,686       2,605,831       15,654,153       621,578       1,028,509       15,335,333       435,255       791,644  
  (725,287,239 )     (725,392,019 )     (676,991,695 )     (661,474,009 )     (658,868,178 )     (643,214,025 )     (642,592,447 )     (641,563,937 )     (626,228,605 )     (625,793,350 )     (625,001,706 )

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 8

 

076:Apr 2021     077:May 2021     078:Jun 2021     079:Jul 2021     080:Aug 2021     081:Sep 2021     082:Oct 2021     083:Nov 2021     084:Dec 2021     085:Jan 2022     086:Feb 2022  
  (625,001,706 )     (608,902,329 )     (608,088,876 )     (606,556,816 )     659,213,986       667,820,398       664,715,491       673,412,757       668,047,336       662,843,336       671,012,762  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (4,987,911 )     (4,740,395 )     (4,412,981 )     (3,758,179 )     (4,221,317 )     (4,606,514 )     (4,913,382 )     (5,141,530 )     (5,290,563 )     (5,360,090 )     (5,349,715 )
  (249,396 )     (237,020 )     (220,649 )     (187,909 )     (211,066 )     (230,326 )     (245,669 )     (257,076 )     (264,528 )     (268,005 )     (267,486 )
  0       0       0       (5,916,652 )     0       0       0       0       0       0       0  
  (5,237,307 )     (4,977,415 )     (4,633,630 )     (9,862,740 )     (4,432,383 )     (4,836,840 )     (5,159,051 )     (5,398,606 )     (5,555,092 )     (5,628,095 )     (5,617,200 )
                                                                                     
  (698,308 )     (663,655 )     (617,817 )     (526,145 )     (590,984 )     (644,912 )     (687,874 )     (719,814 )     (740,679 )     (750,413 )     (748,960 )
  (698,308 )     (663,655 )     (617,817 )     (526,145 )     (590,984 )     (644,912 )     (687,874 )     (719,814 )     (740,679 )     (750,413 )     (748,960 )
                                                                                     
  (69,079 )     0       (2,635 )     (14,696,036 )     (68,491 )     (11,944 )     (73,177 )     (3,784 )     (5,644 )     (73,415 )     (5,589 )
  (69,079 )     0       (2,635 )     (14,696,036 )     (68,491 )     (11,944 )     (73,177 )     (3,784 )     (5,644 )     (73,415 )     (5,589 )
                                                                                     
  0       0       0       (100,000 )     0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       (100,000 )     0       0       0       0       0       0       0  
                                                                                     
  13,815,702       0       526,957       60,111,494       13,698,271       2,388,789       14,635,480       756,782       1,128,712       14,683,003       1,117,843  
  0       0       0       1,231,167,068       0       0       0       0       0       0       0  
                                                                                     
  2,165,739       0       0       0       0       0       0       0       0       0       0  
  2,165,739       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  6,553,063       6,791,044       6,590,960       0       0       0       0       0       0       0       0  
  6,553,063       6,791,044       6,590,960       0       0       0       0       0       0       0       0  
                                                                                     
  16,529,810       1,149,974       1,863,834       1,266,093,640       8,606,413       (3,104,907 )     8,715,378       (5,365,422 )     (5,172,702 )     8,231,081       (5,253,906 )
  (430,433 )     (336,520 )     (331,775 )     (322,838 )     0       0       (18,112 )     0       (31,298 )     (61,655 )     (14,000 )
  16,099,377       813,453       1,532,059       1,265,770,802       8,606,413       (3,104,907 )     8,697,266       (5,365,422 )     (5,204,000 )     8,169,426       (5,267,906 )
  (608,902,329 )     (608,088,876 )     (606,556,816 )     659,213,986       667,820,398       664,715,491       673,412,757       668,047,336       662,843,336       671,012,762       665,744,856  

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 9

 

087:Mar 2022     088:Apr 2022     089:May 2022     090:Jun 2022     091:Jul 2022     092:Aug 2022     093:Sep 2022     094:Oct 2022     095:Nov 2022     096:Dec 2022     097:Jan 2023  
  665,744,856       660,096,774       669,113,197       663,334,225       658,476,390       708,067,843       717,266,010       714,268,553       723,645,197       718,335,492       713,219,590  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (5,259,040 )     (5,087,669 )     (4,835,203 )     (4,501,241 )     (3,810,151 )     (4,254,900 )     (4,622,410 )     (4,912,297 )     (5,124,172 )     (5,257,647 )     (5,312,330 )
  (262,952 )     (254,383 )     (241,760 )     (225,062 )     (190,508 )     (212,745 )     (231,121 )     (245,615 )     (256,209 )     (262,882 )     (265,617 )
  0       0       0       0       (5,916,652 )     0       0       0       0       0       0  
  (5,521,992 )     (5,342,053 )     (5,076,963 )     (4,726,303 )     (9,917,311 )     (4,467,645 )     (4,853,531 )     (5,157,912 )     (5,380,381 )     (5,520,529 )     (5,577,947 )
                                                                                     
  (736,266 )     (712,274 )     (676,928 )     (630,174 )     (533,421 )     (595,686 )     (647,137 )     (687,722 )     (717,384 )     (736,071 )     (743,726 )
  (736,266 )     (712,274 )     (676,928 )     (630,174 )     (533,421 )     (595,686 )     (647,137 )     (687,722 )     (717,384 )     (736,071 )     (743,726 )
                                                                                     
  (3,291 )     (76,123 )     0       (2,801 )     (2,855,065 )     (71,666 )     (12,579 )     (76,582 )     (3,960 )     (5,888 )     (76,785 )
  (3,291 )     (76,123 )     0       (2,801 )     (2,855,065 )     (71,666 )     (12,579 )     (76,582 )     (3,960 )     (5,888 )     (76,785 )
                                                                                     
  0       0       0       0       (100,000 )     0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       (100,000 )     0       0       0       0       0       0  
                                                                                     
  658,196       15,224,550       0       560,234       63,084,378       14,333,163       2,515,791       15,316,345       792,020       1,177,558       15,357,014  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (5,603,352 )     9,094,100       (5,753,892 )     (4,799,043 )     49,678,581       9,198,167       (2,997,457 )     9,394,129       (5,309,705 )     (5,084,929 )     8,958,556  
  (44,729 )     (77,677 )     (25,081 )     (58,791 )     (87,129 )     0       0       (17,485 )     0       (30,973 )     (60,816 )
  (5,648,082 )     9,016,424       (5,778,972 )     (4,857,835 )     49,591,452       9,198,167       (2,997,457 )     9,376,644       (5,309,705 )     (5,115,902 )     8,897,740  
  660,096,774       669,113,197       663,334,225       658,476,390       708,067,843       717,266,010       714,268,553       723,645,197       718,335,492       713,219,590       722,117,330  

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 10

 

098:Feb 2023     099:Mar 2023     100:Apr 2023     101:May 2023     102:Jun 2023     103:Jul 2023     104:Aug 2023     105:Sep 2023     106:Oct 2023     107:Nov 2023     108:Dec 2023  
  722,117,330       716,972,641       711,446,147       721,265,945       715,617,047       710,925,677       764,707,453       774,192,110       772,733,910       777,860,897       774,931,604  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (5,287,832 )     (5,183,759 )     (4,999,716 )     (4,735,310 )     (4,390,142 )     (3,299,147 )     (3,295,267 )     (3,252,429 )     (3,170,440 )     (3,049,108 )     (2,888,237 )
  (264,392 )     (259,188 )     (249,986 )     (236,765 )     (219,507 )     (164,957 )     (164,763 )     (162,621 )     (158,522 )     (152,455 )     (144,412 )
  0       0       0       0       0       0       0       0       0       0       0  
  (5,552,224 )     (5,442,947 )     (5,249,702 )     (4,972,075 )     (4,609,649 )     (3,464,104 )     (3,460,030 )     (3,415,050 )     (3,328,962 )     (3,201,563 )     (3,032,649 )
                                                                                     
  (740,296 )     (725,726 )     (699,960 )     (662,943 )     (614,620 )     (461,881 )     (461,337 )     (455,340 )     (443,862 )     (426,875 )     (404,353 )
  (740,296 )     (725,726 )     (699,960 )     (662,943 )     (614,620 )     (461,881 )     (461,337 )     (455,340 )     (443,862 )     (426,875 )     (404,353 )
                                                                                     
  (5,813 )     (3,423 )     (79,601 )     0       (2,913 )     (2,843,269 )     (67,367 )     (12,122 )     (44,765 )     (3,513 )     (5,010 )
  (5,813 )     (3,423 )     (79,601 )     0       (2,913 )     (2,843,269 )     (67,367 )     (12,122 )     (44,765 )     (3,513 )     (5,010 )
                                                                                     
  0       0       0       0       0       (100,000 )     0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       (100,000 )     0       0       0       0       0  
                                                                                     
  1,162,557       684,524       15,920,222       0       582,644       60,725,226       13,473,391       2,424,312       8,953,083       702,659       1,002,024  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (5,135,776 )     (5,487,571 )     9,890,959       (5,635,019 )     (4,644,539 )     53,855,973       9,484,657       (1,458,199 )     5,135,493       (2,929,293 )     (2,439,988 )
  (8,913 )     (38,923 )     (71,161 )     (13,879 )     (46,831 )     (74,197 )     0       0       (8,506 )     0       (17,088 )
  (5,144,688 )     (5,526,494 )     9,819,798       (5,648,898 )     (4,691,370 )     53,781,776       9,484,657       (1,458,199 )     5,126,987       (2,929,293 )     (2,457,076 )
  716,972,641       711,446,147       721,265,945       715,617,047       710,925,677       764,707,453       774,192,110       772,733,910       777,860,897       774,931,604       772,474,529  

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 11

 

109:Jan 2024     110:Feb 2024     111:Mar 2024     112:Apr 2024     113:May 2024     114:Jun 2024     115:Jul 2024     116:Aug 2024     117:Sep 2024     118:Oct 2024     119:Nov 2024  
  772,474,529       777,963,559       776,104,143       774,223,576       781,178,681       779,412,765       778,516,070       826,956,500       834,798,420       837,307,098       838,031,837  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  (2,687,633 )     (2,447,100 )     (2,166,442 )     (1,845,463 )     (1,483,964 )     (1,081,747 )     0       0       0       0       0  
  (134,382 )     (122,355 )     (108,322 )     (92,273 )     (74,198 )     (54,087 )     0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  (2,822,015 )     (2,569,455 )     (2,274,764 )     (1,937,736 )     (1,558,162 )     (1,135,835 )     0       0       0       0       0  
                                                                                     
  (376,269 )     (342,594 )     (303,302 )     (258,365 )     (207,755 )     (151,445 )     0       0       0       0       0  
  (376,269 )     (342,594 )     (303,302 )     (258,365 )     (207,755 )     (151,445 )     0       0       0       0       0  
                                                                                     
  (43,813 )     (5,290 )     (3,560 )     (46,096 )     0       (2,015 )     (2,796,405 )     (39,407 )     (12,606 )     (3,642 )     (3,654 )
  (43,813 )     (5,290 )     (3,560 )     (46,096 )     0       (2,015 )     (2,796,405 )     (39,407 )     (12,606 )     (3,642 )     (3,654 )
                                                                                     
  0       0       0       0       0       0       (100,000 )     0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       (100,000 )     0       0       0       0  
                                                                                     
  8,762,546       1,057,923       711,905       9,219,118       0       402,901       51,352,366       7,881,327       2,521,285       728,381       730,765  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  0       0       0       0       0       0       0       0       0       0       0  
  0       0       0       0       0       0       0       0       0       0       0  
                                                                                     
  5,520,450       (1,859,416 )     (1,869,720 )     6,976,922       (1,765,917 )     (886,393 )     48,455,961       7,841,920       2,508,678       724,739       727,111  
  (31,420 )     0       (10,847 )     (21,817 )     0       (10,301 )     (15,532 )     0       0       0       0  
  5,489,030       (1,859,416 )     (1,880,567 )     6,955,106       (1,765,917 )     (896,694 )     48,440,429       7,841,920       2,508,678       724,739       727,111  
  777,963,559       776,104,143       774,223,576       781,178,681       779,412,765       778,516,070       826,956,500       834,798,420       837,307,098       838,031,837       838,758,948  

 

 
   

 

GROUPED CASH FLOW DTZ

 

Grouped Cash Flow (Merged Phases) Page A 12

 

120:Dec 2024     121:Jan 2025     122:Feb 2025     123:Mar 2025                                            
  838,758,948       839,488,440       840,220,320       840,954,595                                                          
                                                                                     
  0       0       0       0                                                          
                                                                                     
  0       0       0       0                                                          
  0       0       0       0                                                          
  0       0       0       0                                                          
  0       0       0       0                                                          
                                                                                     
  0       0       0       0                                                          
  0       0       0       0                                                          
                                                                                     
  (3,666 )     (3,678 )     (3,690 )     (3,702 )                                                        
  (3,666 )     (3,678 )     (3,690 )     (3,702 )                                                        
                                                                                     
  0       0       0       0                                                          
  0       0       0       0                                                          
  0       0       0       0                                                          
                                                                                     
  733,157       735,558       737,966       740,381                                                          
  0       0       0       0                                                          
                                                                                     
  0       0       0       0                                                          
  0       0       0       0                                                          
                                                                                     
  0       0       0       0                                                          
  0       0       0       0                                                          
                                                                                     
  729,492       731,880       734,276       736,680                                                          
  0       0       0       0                                                          
  729,492       731,880       734,276       736,680                                                          
  839,488,440       840,220,320       840,954,595       841,691,275                                                          

 

 

 

Exhibit 10.8.3

 

23 June 2015

 

Omagine Plot, Muscat, Oman

 

Valuation Report

 

 

 

 
 

 

 

Jones Lang LaSalle UAE Limited, Dubai Branch

Emaar Square, Bldg 1, Office 403

Sheikh Zayed Road, Dubai UAE

tel +971 4 426 6999 fax +971 4 365 3260

 

www.jll-mena.com
   
Omagine LLC Your ref Signed proposal 15 Jan 2014
P.O Box 708

Our ref

V6815

Madinat Sultan Qaboos

Direct line  

+971 4 436 2438

Postal Code 115
Muscat 		Email

youcef.elhachemi@jll.com

simon.brand@jll.com

Sultanate of Oman

Date  

23 June 2015

 

For the attention of Agron Telaku sent by email to: agron.telaku@omagine.com

 

Dear Sirs,

 

EXECUTIVE SUMMARY – VALUATION OF DEVELOPMENT LAND PLOT KNOWN AS OMAGINE, MUSCAT, OMAN

 

In accordance with your instructions we have carried out a Fair Value assessment for the Usufruct Right over the development land plot known as the Omagine site, Muscat, Oman.

 

Instruction

 

  We refer to the instructions received from Omagine LLC requesting Jones Lang LaSalle UAE Limited (Dubai Branch) to provide our opinion of the value of the Usufruct Right, subject to the Development Agreement, in the Subject Property.
     

Subject Property:

 

Mixed use development site of 1,000,000 sq m in Muscat, Oman.

     

Tenure:  

 

Usufruct Right.

     

Date of Valuation:  

 

31 December 2014

     

Purpose of Valuation:

 

 

As per your instructions, agreed in our proposal dated 15 January 2015, we have provided our opinion of the Fair Value of the Property for financial reporting purposes only. You have informed us that your financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

     
Valuation Approach:

Income Approach (Residual Land Valuation based on a Discounted Cash flow).

     

Basis of Valuation:

 

 

Our valuation has been prepared on the basis of Fair Value, defined by the International Accounting Standards Board (IASB) in IFRS 13 as: 

     
   

“ The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date .”

     

Inspection:

 

 

The Subject Property was inspected by Youcef Elhachemi MRICS and Miles Walby on 09 February 2015. The inspection was conducted on a visual basis only.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved  
 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Sources of Information:   We have inspected the premises and carried out all the necessary enquiries. We have relied on information provided by the Client, including Initial Master Plan, Development Agreement and Usufruct Agreement.
     

Market Condition:

 

 

Whilst we have undertaken all reasonable efforts to understand the prevailing real estate market and to analyse relevant sale transactions as is usual for property valuation professionals acting in accordance with the RICS Valuation – Professional Standards, we draw the reader’s attention to the following:

       
    ●

the lack of liquidity in MENA real estate markets combined with low levels of transparency and the consequent difficulty of verifying reported transactions;

       
    ●

the rapidly evolving real estate laws, regulations and planning controls relating to property and property dealings; 

       
    ●

the volatility of real estate investment and development markets; and

       
    ●

the restricted investor base together with the significant influence of state sponsored developers and operators, in relatively small markets.

 

   

These factors result in our assessments being reliant on generally less complete and less reliable information and consequently being subject to a greater level of uncertainty than is usual in more mature markets. As such, this greater level of uncertainty must be taken into account by any parties seeking to rely or base decisions upon valuations undertaken in these circumstances.

     

IFRS 13 Commentary:

 

  IFRS 13 also requires a commentary to be made on the hierarchy of the inputs used in measuring Fair Value. Due to the opaque nature of the market and there being a lack of recent, directly comparable evidence, our valuation has also been prepared using the Income Approach based on a discounted cash flow model. We have based our inputs on the most appropriate market based information available to us. However, our model contains a number of ‘unobservable inputs’ and should therefore be categorised within Level 3 of the fair value hierarchy.
     
    The significant unobservable inputs adopted in our model are as follows:

 

    ●

Project phasing;

       
    ●

Construction costs;

       
    ●

Project discount rate.

 

   

Our model is sensitive to isolated changes in the inputs, particularly those highlighted above. Any significant increase (delay) in the project phasing, construction costs and project discount rate will result in a significant decrease in Fair Value. However, an increase in the project phasing may also, if it is associated with an increased risk of receiving the forecasted net cash flow, be accompanied by an increase in the project discount rate.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved  
 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Disclosure:

 

 

We have not previously valued the Subject Property and are not aware of any existing or potential conflicts of interest, either on the part of JLL or the individual members of the Valuation team to be assigned to this project, which would prevent us from providing an independent and objective opinion of value of the Subject Property.

     

Special Assumption:

 

 

We have been instructed to provide our opinion of Fair Value based on a Special Assumption as detailed below:

 

    ●

We are informed that although the Usufruct Agreement has been agreed as an attachment to the Development Agreement, the Usufruct Agreement is yet to be separately officially signed by the Omani Government. We have been informed by the Client that communication has been received from the Minister of Tourism that the official signature will be provided in the short term. We have therefore provided our opinion of Fair Value based on the Special Assumption that this agreement is officially signed.

     

Fair Value:

 

We are of the opinion that the Fair Value of the Usufruct Right of the Property as at 31 December 2014 is:

     
OMR 150,000,000  
     
   

(ONE HUNDRED AND FIFTY MILLION OMANI RIYALS)

 

   

USD 389,610,000*

     
   

(THREE HUNDRED AND EIGHTY NINE MILLION SIX HUNDRED AND
TEN THOUSAND UNITED STATES DOLLARS)*

 

   

*(based on 24/06/2015 XE Currency Converter exchange rate)

 

   

No allowance has been made for any expenses of realisation or for taxation which might arise in the event of a disposal or for a purchaser’s cost of acquisition.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved  
 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Contents

 

1   Terms of Engagement     3  
1.1   Instruction     3  
1.2   Purpose of Valuation     3  
1.3   Liability     3  
1.4   Confidentiality and Publication     3  
1.5   Information Relied Upon     3  
1.6   Valuation Standards     3  
1.7   Basis of Valuation     4  
1.8   Special Assumption     4  
1.9   Conflict of Interest     4  
1.10   Previous Involvement     4  
1.11   Status of Valuer     4  
1.12   Date of Valuation     5  
1.13   Inspection     5  
             
2   Property Description     6  
2.1   Location     6  
2.2   Property Description     7  
2.3   Master Plan Description     8  
2.4   Surrounding Context and Attributes     13  
2.5   Accessibility and Visibility     14  
2.6   Proximity to Demand Generators     14  
2.7   Site SWOT Analysis     14  
             
3   Legal Commentary     15  
3.1   Nature and Sources of Information Relied Upon     15  
3.2   Title and Tenure     15  
3.3   Development Agreement     16  
3.4   Infrastructure Timeframe and Obligations     17  
3.5   Private Sector Public Infrastructure and Utilities (PSPIU)     23  
3.6   Freehold Acquisition Plan     25  
3.7   Time Chart of Key Milestone within the Development Agreement     28  
3.8   Client Timetable for Project Implementation     29  
             
4   Country and City Overview     30  
4.1   Country Overview     30  
4.2   Muscat Real Estate Market Overview     40  
             
5   Valuation Methodology     50  
5.1   Master Plans and Development Plans     50  
5.2   Valuation Method     50  
             
6   Income Approach     51  
6.1   Valuation Rationale - Revenue     51  
6.2   Development Phasing     51  
6.3   Landmark Plot No.1 - Revenue     53  
6.4   Hotel Revenue Assumptions     55  
6.5   Marina Revenue     57  

 

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Omagine Plot, Muscat, Oman 23 June 2015

  

6.6   Residential Component     57  
6.7   Office Component     60  
6.8   Retail Component     61  
6.9   Sales Escalation     62  
6.10   Sales Revenue Collection Profile     62  
6.11   Gross Project Revenue     62  
6.12   Administration and Legal, Marketing and Sales Commission     62  
6.13   Usufruct Land Purchase Cost     63  
6.14   Net Project Revenue     63  
6.15   Development Costs     63  
6.16   Usufruct Rent     65  
6.17   Project Discount Rate/Target Project IRR     65  
6.18   Residual Land Valuation Summary     65  
             
7   Land Market Commentary     67  
7.1   Comparable Land Transactions     67  
7.2   Large Comparable Asking Prices in Oman     68  
7.3   Conclusion     69  
             
8   Fair Value Commentary     70  
             
9   Fair Value     71  
9.1   Opinion of Fair Value     71  
9.2   Principal Risks     71  
9.3   Saleability of the Asset     72  
9.4   Confidentiality and Publication     72  
             
10   Assumptions and Caveats Relative to Valuation     74  
10.1   General     74  
10.2   Title and Ownership     74  
10.3   Condition and Compliance of Land     74  
             
Appendix A: General Principles Adopted in the Preparations of Valuations and Reports     76  
         
Appendix B: Interpretative Commentary of Fair Value     78  
         
Appendix C: Photographs     79  
         
Appendix D: Initial Master Plan with Phasing     81  
         
Appendix E: Integrated Tourism Complex Licence     82  
         
Appendix F: Omagine Marina Configuration     83  
         
Appendix G: Krooki     84  
         
Appendix H: Estate Master DF Summary Sheet     85  

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

1 Terms of Engagement

 

1.1 Instruction

 

We refer to the instructions received from Omagine LLC (“Omagine”/“Client”/“you”) requesting Jones Lang LaSalle UAE Limited (Dubai Branch) (“JLL”/“we”/“our”) to provide our opinion of the Fair Value of the Usufruct Right over development land known as: 

 

  ● Omagine Project, Muscat, Oman.

 

Hereinafter referred to as the “Subject Property”. 

 

1.2 Purpose of Valuation

 

Our valuation is provided for internal financial reporting purposes only. You have informed us that your financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

 

1.3 Liability

 

Our liability is to our Client only and limited in aggregate to the fee for this assignment. This liability proviso does not apply with respect to ‘Clients Information’ as such information is considered the responsibility of the Client.

 

1.4 Confidentiality and Publication

 

This report is confidential to Omagine LLC only, for the specific purpose to which it refers. No responsibility whatsoever is accepted to any third party and neither the whole of the report, nor any part, nor references thereto, may be published in any document, statement or circular, nor in any communication with third parties without our prior written approval of the form and context in which it will appear.

 

RICS Valuation Standards require us to draw your attention to the possibility that this valuation may be investigated by the RICS for the purposes of ensuring compliance with the Standards. Should this occur it will be done with strict confidentiality by the RICS.

 

1.5 Information Relied Upon

 

We have relied extensively on information provided during discussions and in hardcopy by Omagine LLC which include master plan details, the Development Agreement dated 02 October 2014 (including an unsigned copy of the Usufruct Agreement), areas, project status and construction costs. Whilst we believe that the data collected is accurate and reliable, JLL has not, as part of the valuation, performed an independent audit or review of the information gathered and does not express an opinion or any other form of assurance on the accuracy of such information. No responsibility is assumed for errors or omissions, or for information not disclosed which might otherwise affect the valuation.

 

1.6 Valuation Standards

 

Our valuation has been undertaken in accordance with the RICS Valuation – Professional Standards (January 2014) (“Standards”) which comply with the International Valuation Standards.

 

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Omagine Plot, Muscat, Oman 23 June 2015

  

1.7 Basis of Valuation

 

In accordance with IFRS 13 we have reported our opinion of the Fair Value of the Subject Property, defined as follows:

 

“The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

 

The references in IFRS 13 to market participants and a sale make it clear that for most practical purposes the concept of Fair Value is consistent with that of Market Value, and so there would be no difference between them in terms of the valuation figure reported.

 

No allowance has been made in our valuation for expenses relating to realising the value of the Subject Property or for taxation which might arise in the event of its disposal.

 

1.8 Special Assumption

 

We have been instructed to provide our opinion of Fair Value based on a Special Assumption as detailed below:  

 

  ●  We are informed that although the Usufruct Agreement has been agreed as an attachment to the Development Agreement, the Usufruct Agreement is yet to be separately officially signed by the Omani Government. We have been informed by the Client that communication has been received from the Minister of Tourism that the official signature will be provided in the short term. We have therefore provided our opinion of Fair Value based on the Special Assumption that this agreement is officially signed.

 

1.9 Conflict of Interest

 

We are not aware of a conflict of interest that would prevent us from reporting our honest and objective opinion of the value of the Subject Property.

 

1.10 Previous Involvement

 

We have not previously valued the Subject Property and are not aware of any existing or potential conflicts of interest, either on the part of JLL or the individual members of the Valuation team to be assigned to this project, which would prevent us from providing an independent and objective opinion of value of the Subject Property.

 

1.11 Status of Valuer

 

We have acted as an External Valuer, defined by the Standards as:

 

“ A valuer who, together with any associates, has no material links with the client, an agent acting on behalf of the client or the subject of the assignment .”

 

This report has been prepared by Youcef Elhachemi MRICS, Associate and Miles Walby, Assistant Valuer and Faizan Ahmed, Assistant Valuer under the supervision of Simon Brand FRICS, Head of Valuation Advisory MENA. A review has been conducted by Alan Robertson FRICS CEO, JLL MENA. We have the knowledge, skills and understanding required to undertake the valuation competently.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

1.12 Date of Valuation

 

The date of our valuation is 31 December 2014.

 

1.13 Inspection

 

The Subject Property was inspected on 09 February 2015 by Youcef Elhachemi MRICS and Miles Walby. Our inspection was conducted on a visual basis only.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

2 Property Description

 

2.1 Location

 

The Property is situated in North Hail Awamer within the Al Seeb area of Muscat, Oman. The Property borders The Wave development to the East, vacant land to the West, the Gulf of Oman Sea to the North and the “Seeb Coastal Road”/”Main Road” to the South, which separates the Property from the Al Mawallih North residential area.

 

Macro Location 

Source: Google Earth

 

Micro Location

 Source: Google Earth 

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

2.2 Property Description

 

The Subject Property consists of a 1,000,000 sq m land plot. The plot is irregular in shape and has a flat gradient but uneven topography. There has been excavation around the site boundary which has created a raised mound along most of the site’s perimeter. The site is covered in indigenous succulent groundcover with native trees and was inhabited by camels at the date of inspection. The Property also has several fishing buildings with boats moored on the beach in front of them on the northern boundary. There is a minor road that intersects the west of the Property that is known as the “Cornish Road”. This area is known to flood regularly.

 

Photographs of the Property

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

2.3 Master Plan Description

 

2.3.1 Overview

 

Introduction

 

The Government of the Sultanate of Oman has created, and is progressively implementing, Vision 2020. This is an integrated strategy for economic diversification, aimed at securing sustainable future economic growth for the Sultanate of Oman. This growth is to be achieved by leveraging current revenues from finite oil and gas reserves, to drive investment in essential infrastructure. In turn, this will support the development of value added, service based industries in Oman. A key focus is the development of the tourism and hospitality industry sector.

 

Large scale developments like the Omagine Project are being designed and implemented in support of this government imperative. We have been provided with Omagine’s Initial Master Plan for the Subject Property as agreed under the Development Agreement (Section 3.3).

 

The Pearls

 

Omagine‘s Master Plan is centred around the “Pearls” which are to be placed along the boardwalk surrounding the marina. Omagine‘s Pearls will be iconic architectural forms housing entertaining tourism visitor experiences. The visitor experiences must align with Omagine’s strategic vision of:

 

  ● Providing entertainment with a purpose as a part of a uniquely spectacular tourist experience;

  

  ● Inspiring all visitors, especially youth to let their imaginations soar;

 

  ● Transferring accurate knowledge and information in a subtle and entertaining fashion;

 

  ● Sparking the visitors imagination and confidence in their own personal potential;

 

  ● Aligning with the Sultanate’s objectives for promoting human capacity building in support of ongoing Government economic and industrial planning efforts;

 

  ● Maintaining the Sultanate’s culture and rich biodiversity;

 

  ● Enjoying the entertainment experience.

 

The entertainment content and visitor experiences of the Pearls will be specifically designed to provide “entertainment with a purpose”. The focus is on “high culture”, science, history and the arts not just “pop culture” although popular culture will not be held in disdain. The journey through, around and among the Pearls tells the stories of Oman, Culture, Innovation, Energy, Sea, Earth and Sky. The stories will be told in inspiring, illuminating and exhilarating ways by means of the Pearl entertainment content and visitor experiences. The primary focus of the visitor experiences is entertainment but no visitor experience is to be designed unless it is in alignment with the several objectives stated above.

 

The seven pearls will provide the following experiences:

 

  1. Oman Pearl

 

  ● Using the latest high definition projection and IMAX technologies Oman’s coastline, mountains, seas and changing topography is revealed.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  ● An interactive sports and activity centre will provide young and old with the opportunity to take part in “virtual” extreme sports in perfect safety.

 

  ● An Omani heritage centre providing music, dance, historical data and stories via cinema, exhibits and interactive media from around Oman.

 

  ● A musically guided adventure journey up close and personal (possibly with indigenous animals including the Arabian Oryx, the turtles of Ras AlHad and the famous Arabian Horses of Oman).

 

  2. Culture Pearl

 

  ● Visitors take a ride-based journey that explores the origins of civilization in Mesopotamia, the flowering of Arabian culture and the transmission to the West by great Arab scholars of the ancient wisdom of Greece.

 

  ● Around a central stage used for international music performances, fashion shows and other diverting entertainment, visitors relax while enjoying a variety of foods from around the world.

 

  ● A multipurpose gallery space provides changing exhibitions of works. An adjacent space provides virtual access to the great museums and galleries of the world.

 

  ● A media resource centre provides a space for visitors to explore their own creative abilities in a relaxed and entertaining way.

 

  ● A centre of modern Arabian Culture provides music, dance and cinema from around the Arabian world.

 

  3. Innovation Pearl

 

  ● Visitors enter a ‘time machine’ which is a large motion simulator with projection windows looking out on the places it visits.

 

  ● On leaving the time machine visitors then enter an interactive demonstration area where “Omagineers” assist them to explore the latest innovations and access information about scientific activity today. The area will include demonstrations and exhibits relevant to school curricula.

 

  ● Using actors, interactive media, computer generated graphics and simulator technology, visitors to Omagine’s Innovation Pearl have the opportunity to see, meet and talk with a number people of the past.

 

  ● The Innovation Pearl will personalise the experiences for visitors by allowing them to access a range of animations, simulations, games and tests via smart cards.

 

  4. Energy Pearl

 

  ● Visitors will be slowly spun in their seats as they revolve around a stage viewing unique shows projected onto the inner shell of the Energy Pearl.

 

  ● Visitors may interact with the Energy Pearls’ “Omagineers” (or virtually with cutting edge engineers and scientists).

 

  ● An entertaining sports and health café provides a nonthreatening atmosphere to transmit the most current scientific nutrition advice and best practices.

 

  ● Futuristic movement based and virtual experiences will allow visitors to explore space.

 

  5. Sea Pearl

 

  ● In a unique experience with 4D seating fitted with aquatic tubes, visitors revolve around and/or through a semi darkened aquarium as barracuda, colourful fish and sea life swim through the audience via the lighted aquatic tubes.

 

  ● Visitors will partake in experiences – both live and via interactive multimedia technology.

 

  ● Seated in a motion based dhow in the centre of a 360 degree projection theatre, visitors will explore the oceans as some of the great Arabian and other maritime explorers narrate the journey.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  ● An entertaining and interactive centre offering fun packed water rides and experiences (possibly swimming with the dolphins).

 

  ● Using simulators visitors pass through a “virtual” ocean of marine wonders, navigate the Gulf of Oman or steer a ship to the ports of Muscat, Sohar or Salalah.

 

  ● From viewing platforms visitors may explore the origin and evolution of life in the sea and the societal and economic benefits mankind derives from the seas.

 

  6. Earth Pearl

 

  ● Visitors to the Earth Pearl will experience motion based theatre.

 

  ● Up-close encounters with some of the strangest animals and most beautiful plants from around the world will delight visitors.

 

  ● Selecting from an interactive database visitors can choose virtual visits to any of the world’s landmarks.

 

  ● Amusing multimedia display presentations will invite visitors to interact with the world’s weather systems, population shifts and topographical features.

 

  ● Engaging exhibitions and interactive activities demonstrate for visitors:

 

  7. Sky Pearl

 

  ● Visitors will experience a seated planetarium.

 

  ● Using simulation technology visitors will walk on the moon with Farouk El Baz (an Egyptian space scientist who worked with NASA) and fly to the stars with Al Adrisi.

 

  ● As their seats ascend through the retracting roof, visitors get a unique view of the Gulf of Oman. After the “flight” arrives an “Omagineer” receptionist takes them on a tour of the hotel during which, through a huge observation window in the Space Hotel’s reception area, visitors enjoy a stunning view of earth from space. They visit high-tech luxury rooms, dining areas, space gyms, leisure areas and shops. Each room has windows looking out into space. Visitors might also be taken to a Space Port where simulator pods take them on short rides into space.

 

  ● In another area of the Sky Pearl, accessible either through the Space Hotel or separately, visitors may design their own space cities of the future.

 

  ● Nearby at the Sky Pearl’s live bird sanctuary, a variety of live performers, multimedia experiences and “Omagineers” are available to guide visitors as they interact with various birds.

 

  ● Simulated flights, powerful interactive technologies and space telescopes allow visitors to explore the universe’s lights, radio waves and radiations.

 

The image below provides an impression of the boardwalk area with the Pearls on completion:

 

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The Initial Master Plan Design

 

The Initial Master Plan, which has been granted with an Integrated Tourism Complex Licence allowing for unrestricted freehold land and built property sales, includes the following:

 

  ● Hotels and Chalets:
         
      ■ One 5 Star Hotel - 280 keys;
         
      ■ Two 4 Star Hotels – 280 keys each;
         
      ■ Serviced Chalets – 600 units.
         
  ● Rental Property:
         
      ■ Office space – 46,468 sq m of Leasable Area;
         
      ■ High end retail – 6,620 sq m of Leasable Area;
         
      ■ Serviced Apartments – 79,115 sq m of Leasable Area.
         
  ● Landmark (Plot 1):
         
      ■ Theme park 19,800 sq m of Gross Floor Area;
         
      ■ Retail – 40,849 sq m of Leasable Area;
         
      ■ Cafes – 2,035 sq m of Leasable Area;
         
      ■ Movie Theatre – 3,895 sq m of Leasable Area.
         
  ● Residential:
     
      ■ Villas – 294 units;
         
      ■ Townhouses – 210 units;
         
      ■ Apartments – 1,660 units.

 

The land areas for the foregoing can be found in the table below:

 

  Parcel No.   Item   Parcel Area (Sq M)   Permissible BUA (Sq M)   FAR
  1   Landmark   88,918   123,133   1.38
  2   5 Star Hotel - Balcon   116,800   86,885   0.74
  3   4 Star Hotel - Theatre   8,054   24,970   3.10
  4   Serviced Apartments   17,937   79,115   4.41
  5   4 Star Hotel - Marina   33,717   24,970   0.74
  6   Apartments   24,369   75,049   3.08
  7   Apartments   4,071   13,503   3.32
  8   Apartments   5,910   28,020   4.74
  9   Apartments   6,499   34,836   5.36
  10   High End Souk   13,859   6,620   0.48
  11   Tower 3 - Marina   3,623   300   0.08
  12   Marina Operations   11,807   1,179   0.10
  13   Apartments   13,700   42,685   3.12
  14   Apartments   13,884   40,607   2.92
  15   Apartments   8,946   18,519   2.07
  16   Market   4,350   1,318   0.30
  17   Parking Structure   11,115   69,781   6.28
  18   Omagine Operations   21,193   4,385   0.21
  19   Apartments   7,494   31,278   4.17
  20   Apartments   15,268   44,877   2.94
  21   Welcome Centre   4,175   100   0.02
  22   Apartments   12,875   29,892   2.32

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  Parcel No.   Item   Parcel Area (Sq M)   Permissible BUA (Sq M)   FAR
  23   Apartments   13,585   32,970   2.43
  24   Apartments   4,798   12,414   2.59
  25   Mosque   1,890   2,000   1.06
  26   Townhouses   26,890   29,892   2.32
  27   Townhouses   14,879   32,970   2.43
  28   Townhouses   9,501   12,414   2.59
  29   Office   10,988   11,617   1.06
  30   Office   11,098   11,617   1.05
  31   Office   10,993   11,617   1.06
  32   Office   14,098   11,617   0.82
  33   Clubhouse   18,865   278   0.01
  34   Residential Freehold   235,986   222,920   0.94
  Total (including community areas)   1,105,483   1,148,163   1.04

 

Coverage of the development on the site is not to exceed 30% of the Existing Land, of which a maximum of 50% of the Development shall be for non-tourism purposes and the balance of the Development is to be for Tourism purposes. The design and layout is shown in the map below (which correlates with the table above):

 

Source: Omagine LLC

 

We have been informed that the additional strip of land on the North West boundary of the site, as added under the revised krooki attached at Appendix G, is undevelopable.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Land Areas

 

The Initial Master Plan design incorporates reclaimed land from the sea bed as well as existing land used for the Marina and Lagoon. The adjusted land area has been calculated below:

 

  Item   Area (Sq M)  
  Existing Land Area (Krooki)     1,000,000  
  Additional Reclaimed Land and Sea Bed     277,427  
  Proposed Land and Sea Bed Area     1,277,427  
  Existing Land Used for the Canals and Waterways     (171,944 )
  Net Land Area     1,105,483  

   

The additional reclaimed land is expected to extend 130m out from the shoreline at its furthest point. The existing land area which currently exists but is proposed to be excavated and created into a canal is 171,994 sq m.

 

2.3.2 Community Development Plan

Community Facilities

 

The Development Agreement emphasises the construction of community facilities in the Master Plan, which are as listed below:

 

  1. Retail outlets; stores and marketplace
  2. Restaurants; kiosks
  3. Entertainment venues; amphitheatre
  4. Marina
  5. Pearl buildings and exhibitions
  6. Open areas
  7. Beaches
  8. Boardwalk
  9. Roads and pathways within the Initial Master Plan
  10. Perimeter Landscaped Area
  11. Marine structures
  12. Created waterways
  13. Parks and gardens
  14. Utility services and drainage
  15. Parking areas

 

Infrastructure

 

All infrastructure, including roadways, sewage, water, telephone and electricity, within the Inner Boundary (refer to Section 3.4) will be provided at the expense of the Client. The Government of Oman has agreed to connect current off-site infrastructure to the relevant connection points along the Inner Boundary within a timeframe agreed in the Development Agreement and this will be at the expense of the Government.

 

2.4 Surrounding Context and Attributes

 

The Property is situated in the North Hail Awamer area of Al Seeb. This area, which is a mainly zoned for residential villas, is to the West of Muscat and approximately 9.3 km from Muscat International Airport. The largest developments in the area include The Wave and Muscat International Airport Expansion. We understand that land within this is area is mainly owned by the Government of Oman.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

2.5 Accessibility and Visibility

 

The Property is accessible via Seeb Coastal Road known as “The Main Road” bearing off west from 18 th of November Street. The Property is clearly visible from The Main Road. There are two further service roads, one at the western boundary known as the Cornish Road and the other at the eastern boundary, an unnamed road.

 

2.6 Proximity to Demand Generators

 

The main demand generators close to the Property can be seen in the table below:

 

  Demand Generator   Proximity to the Property (km)   Direction
  The Wave Development   0.8   West
  Markaz Al Baja Mall   1.7   Southwest
  Muscat City Centre Mall   3.3   Southwest
  Muscat International Airport (Old and New)   9.3   Southeast
  Al Sahwa Park   4.1   Southwest
  Muscat Hills   7.9   Southeast

   

2.7 Site SWOT Analysis

 

  Strength   Weakness
  ● The Development Agreement provides the “Client” with an income tax free period until 2019; with the option to renew for another 5 years;   ● The Property is subject to a Usufruct Agreement which on expiry reverts all land and unsold assets related to the land back to the Government on Oman;
           
  ● Unrestricted freehold title for internal land plots once servicing has been provided and for built property;   ● The Property is subject to a Development Agreement (DA) which has a construction time limit and minimum build obligations;
           
  ● The freehold title of completed developments on the Property can be sold to international purchasers which grants them a residence visa for the duration of their ownership (see Section 4.1.7);   ● As part of the DA, a fee is payable by the potential purchaser of OMR 25/sq m of land area within the development with a 6% price escalation per annum.
           
  ● Location adjacent to large scale new developments such as The Wave and Airport.     This is to be paid to the Ministry of Tourism on transfer of title to a third party.

 

  Opportunity   Threat
  ● Large plot to create iconic development along the sea front;   ● Competition from other ITCs;
           
  ● Emerging area of Muscat;   ● Reliant on an economy that is heavily dependent on oil prices;
     
  ● Changes to Omani Law is likely to have a positive effect on investor sentiment in Oman;   ● Delays of the Minimum Build Obligations over the deadline will incur a weekly delay penalty charge of OMR 30,000.
           
  ● Government promotion of Tourism as part of their overall plan to diversify the Omani economy.    

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

3 Legal Commentary

 

3.1 Nature and Sources of Information Relied Upon

 

We have been provided with the following documentation by the Client which we have relied upon as being accurate:

 

  ● Development Agreement, including:

 

  ● Usufruct Agreement;
     
  ● Initial Master Plan details;
     
  ● Integrated Tourism Complex Licence;
     
  ● Krooki, Layout Plan and Project Boundary;
     
  ● Site plan including reclamation area;
     
  ● Marina Configuration Plan.

 

  ● Project construction costs;
     
  ● Operational costs and forecast income from proposed property operations.

 

3.2 Title and Tenure

 

We have been provided with a copy of the Development Agreement signed by the Client (Omagine LLC) and The Government of the Sultanate of Oman as represented by the Ministry of Tourism on 2 October 2014. Within this document reference is made to a Usufruct Agreement which grants Omagine LLC the right and obligation to develop the Omagine Project. We are informed that although the Usufruct Agreement has been agreed as an attachment to the Development Agreement the Usufruct Agreement is yet to be officially signed by the Omani Government. We have been informed by the Client that communication has been received from the Minister of Tourism that the official signature will be provided in the following couple of weeks. We have therefore provided our opinion of Fair Value based on the Special Assumption that this agreement is officially signed.

 

A copy of the title deed included in the Development Agreement provided to us states that the freehold title is held by the Government of the Sultanate of Oman. We have not been provided the actual title deed and have assumed that the Omani Government has the right to grant Omagine LLC with a Usufruct Right over the Subject Property and on commencement of the development project the Government of the Sultanate of Oman will grant Omagine LLC the freehold title of any sub-divided land parcels and or units proposed for development. The Development Agreement states that the Subject Property will be provided to Omagine LLC free of any third party interests.

 

Further details regarding the Usufruct Agreement that forms part of the Development Agreement are summarised in the table below:

 

  Usufruct Agreement (UA) Summary
   
  Dated August 2014 but yet to be signed by The Government of the Sultanate of Oman.
     
  First Party The Government Of The Sultanate Of Oman as represented by the Ministry of Tourism (“Government”)
     
  Second Party Omagine LLC
     
  Term 50 Years (renewable subject to a written agreement between the parties)

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  Usufruct Agreement (UA) Summary
   
  Rent Free 5 Years
     
  Usufruct
Rent/Fee 		The fee shall be equal to three hundred Baisa (RO 0.300) per square meter. This fee shall be multiplied by the total number of square meters of Reclaimed Land and Existing Land that is in existence and constituting Rentable area. This will be calculated on 31 st December of each year after the Effective Date. Omagine will incur 5 years of rent free after the Effective Date, after which the Usufruct Fee will be due annually until expiry of the agreement.

 

  Usufruct   ● On the Effective Date (date on which clause 2 has been satisfied) the parties shall enter into the Usufruct Agreement;
  Agreement   ● Upon expiry of the Usufruct Agreement, all rights to and over the land shall revert to the Government;
  (UA)   ●

The DA shall prevail should there be any inconsistency between the DA and UA;

The UA shall survive the Term.

         
  Rights of UA   ●

The right to use, design, plan, construct and Develop the Existing Land;

      ● Subject to Approvals and EIAs, the right to design, plan, construct, build, create, operate, manage, own and control the Created Waterways;
      ● The right to charge fees or service charges appropriate for the purpose of upkeep, maintenance, operation and management of the Development;
      ● The right to connect, have access to, use and utilise government infrastructure;
      ● The right to impose and to procure compliance with the Standards, the Final Master Plan, the Development Control Plan and timeframes set forth within Schedule 7 with the Project Area;
      ● The right to use and manage the Sea Area within the area of a marina;
      ● The right to do all such things that are necessary so as to create one or more plots and to subdivide any part or all of the Project Area;
      ● The right to sell, lease, mortgage, utilise or undertake dealings in respect of Units, Plots or any part of the Project Area including buildings;
      ● The right to grant exclusive and non-exclusive commercial licences;
      ● The exclusive right to levy such fees on Third Party Purchasers who are granted rights of usage, usufruct or any sort of occupation;
      ● The right to create an encumbrance by way of Security Interest for the purpose of securing finance for the Project;
      ● The right, subject to Law, to use and/or reclaim such area of the Sea Bed and Sea Area as is necessary and to acquire the Usufruct Rights or Freehold Title to the Reclaimed Land, subject to Government approval;
      ● The right to develop, build and operate in the Project Area a sewage treatment plant;
      ● The right to dispose of waste in sites provided by the government;
      ● The right to access the Project Area and to grant access to third parties;
      ● The Project Company shall primarily operate and benefit from the Project through the sale and leasing of plots, buildings or units.
      ● If the Project Company shall affect any of the Customary Rights identified in a Government approved Social Impact Assessment for the Project Area, then the Project Company shall pay all such compensation as shall be required by Law.

 

  Transferability As confirmed by Omagine’s legal advisor, the Usufruct Agreement is transferable in a market transaction as stated in the DA under in Clause 5.

 

3.3 Development Agreement

 

As informed by the Client, Omagine LLC have a Development Agreement (which includes a Usufruct Agreement as detailed above) with The Government of the Sultanate of Oman. A summary of this Agreement is detailed in the table below:

 

  Development Agreement (DA) Summary
   
  Dated 02 October 2014
     
  Parties The Government Of The Sultanate Of Oman as represented by the Ministry of Tourism (“Government”)
     
    OMAGINE LLC, the “Project Company”

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Development Agreement (DA) Summary

 

  Objectives   1. To promote the development of hotel and tourism facilities in the Sultanate of Oman;      
      2. To utilise the specialised knowledge of, and experience and expertise in the development and related facilities of the Project;
      3. Designate the Project as an Integrated Tourism Project;
      4. To complete the Project in accordance with the Development Agreement including the Minimum Building Obligations and grant the Project Company sufficient legal rights with respect to the Project Area.

 

  Term 20 years with certain clauses surviving the term until expiry of the Usufruct Term

 

  Grants The Ministry of Tourism grant Omagine Project the recipe of Integrated Tourism Complexes.

 

  Founder Shareholders The Founder Shareholders of the Project Company are:
     
      ● Royal Court of Affairs
      ● Omagine Inc., Delaware USA corporation
      ● Journey of Light, Inc., a New York USA corporation
      ● Consolidated Contracting Company, SA., a Panamanian company
      ● Consolidated Contractors Co. Oman LLC, an Omani company

 

  Minimum Building Obligations (MBO)   1. The seven sphere shaped Buildings, each approximately 20m in diameter and identified as item number 1 in the drawing of the Initial Master Plan in Schedule 6, defined as the “Pearls”;
    2. Two hotel Buildings, one being a five star hotel and one being a four star hotel, and identified as item number 2 in the drawing of the Initial Master Plan in Schedule 6, defined as the “Hotels”;
      3. Notwithstanding the definition in Clause 1, the MBO is comprised of and constitutes the Substantial Completion in accordance with the DCP and the requirements of this DA of the construction of (a) the seven Pearls and (b) one of the hotels;
      4. The Project Company will keep the Government informed of the progress of the design and construction of the MBO via the MBO report to be delivered to the Government pursuant to Clause 7.1.3.
      5. The Parties agree that the Final Master Plan will be prepared by the Project Company and Approved by the Government pursuant to the provisions of the DCPF.

     

Exemptions The DA exempts Omagine LLC from Omani income taxes until 2020 (renewable in 2019 for another 5 years)

   

We are aware that under Section 5.1.2 of the Development Agreement, an Environmental Impact Assessment is to be conducted on the area of sea bed that will be affected by the reclamation works for the project. We have not been provided with any evidence of this study and therefore have provided our opinion of Fair Value based on the Assumption that this will be conducted within the short term, without affecting the project timeframe, and will not have a detrimental outcome to the project costs and timeframe. We are informed that the costs related to this study have been included within the cost information provided to us by the Client for the proposed project.

 

3.4 Infrastructure Timeframe and Obligations

 

We are aware that the Client will not bear any costs related to the design or provision of Government Infrastructure up to the Inner Boundary, and including (a) the Water Utility Tie-ins for the potable water utility and (b) the Road Connection Points, all of which the foregoing (a) and (b) are located on the Inner Boundary, or (c) the Roads, and all such costs shall be borne by the Government.

 

The Client shall not bear any costs with respect to the removal of any buildings or structures in existence in or upon the site as of the execution date, and all such costs shall be borne by the Government.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Schedule 8 of the Development Agreement constitutes the minimum requirements for the Government Infrastructure. The locations and specifications of the Roads and water utility are specified below, and have been agreed by the Ministry of Tourism (“MOT”), provided that, the Client receives the Approval for the final locations and specifications of such Roads and water utility from the relevant Government Authority. The Final Master Plan shall include at least the following with respect to the provision of such Government Infrastructure:

 

With respect to the Roads and water supply, the parties agree as follows:

 

  1. The Government will procure the construction of the:

 

a. Roads to the Road Connection Points and the Inner Boundary, and
     
b. associated pedestrian walkways, curbs and reservations, ancillary hard and soft landscaping, signage and traffic management systems to the Inner Boundary (collectively, the “Road Elements”) which are to be procured and provided up to the Inner Boundary, plus the procurement, provision and construction of:
     
c. the Water Utility Tie-ins, and
     
d. all associated infrastructure either outside the Initial Master Plan or within the perimeter landscaped area.

 

  2. The parties shall grant each other all access and other rights as may be reasonably required for the purposes of the Government’s construction, installation or delivery of the Roads, the Road Elements, the connection of the Roads at the Road Connection Points, and for the purpose of the Government’s connection of the water utility to each appropriate Water Utility Tie-in.
     
  3. The Government undertakes to Substantially Complete or procure the Substantial Completion of the construction of all:

  

  a. Road Elements, and
     
  b. Roads up to each Road Connection Point and to the Inner Boundary not later than that date specified therefore in the tables below.

 

  4. It is understood and agreed by the parties that:

 

  a. The Government, at its cost and expense, will procure all property rights, easements or right-of-way necessary to build, install and deliver:

 

i. the Government Infrastructure and, if applicable, the Private Sector Public Infrastructure and Utilities and any infrastructure associated therewith over, under and/or through the perimeter landscaped area to the Inner Boundary, and
     
ii. the Road Elements; and

 

  b. the Government shall:

 

i. connect the Roads to the Main Road at the appropriate Road Connection Point, and
     
ii. connect the potable water utility to the appropriate Water Utility Tie-ins at the appropriate Water Utility Delivery Points, and
     
iii. deliver the potable water via the PC Distribution Network to the end users; and

  5. In the event that the development of the Initial Master Plan exceeds the assumptions set out in the Development Agreement and as contained in the traffic impact assessment or the Final Master Plan, which extra development creates additional demand unable to be supplied from the Government Infrastructure constructed as required, the Government or the Private Sector Utility Companies shall, if requested by the Client and at the cost of the Client, carry out all works as are necessary to expand the Government Infrastructure or Private Sector Public Infrastructure and Utilities in so far as this is necessary to satisfy the additional demand.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Road Infrastructure

 

Those roads which are to be constructed and maintained by the Government in accordance with the specifications set out in the table below are defined as the “Roads”. Each of those points on the Inner Boundary identified below up to which the Government is to construct the Roads is defined as a “Road Connection Point”.

 

The table below summaries the specifications:

 

  Item   Description
       
  Roads to be constructed up to the Inner Boundary:   The Roads shall be at least two lanes in either direction with the appropriate turning lanes, roundabouts, traffic signage and signals. The Roads are to be constructed from the Main Road to the Inner Boundary and through and upon the Perimeter Landscaped Area at the locations indicatively shown on the Roadways Infrastructure and Utilities drawing attached below and such Roads are to be connected to the four Road Connection Points and to the Inner Boundary at the locations shown indicatively on the Roadways Drawing. The Roads are to be constructed in accordance with the specifications contained in the Final Master Plan.
       
  Timing for completion:   The Substantial Completion of the Roads will be required within eighteen months after the Effective Date.

 

The diagram below shows the extent of the road infrastructure:

 

    

 

Source: Omagine LLC

 

Potable Water

 

Each of those points on the Inner Boundary as shown on the diagram below, up to which (i) all the required Works for the water utility is to be constructed, and (ii) the water utility is to be delivered by the Government, is defined as a “Water Utility Delivery Point” and the structure, interface and related equipment to be provided by the Government at each Water Utility Delivery Point, necessary to connect the water utility to the PC Distribution Network is defined as a “Water Utility Tie-in”.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The Government will procure the supply and delivery of the potable water utility to the relevant Water Utility Delivery Point as set below.

 

  1. The Government will:

 

a. procure and provide each Water Utility Tie-in for potable water that is required to connect the potable water utility at each Water Utility Delivery Point, and
     
b. design, build, install, test, maintain and connect each Water Utility Tie-in and the infrastructure necessary to connect the potable water utility to the PC Distribution Network.

 

  2. The Government shall, for the purposes of complying with its obligations with respect to the provision of the Government Infrastructure, be granted free access to, and use of, the PC Distribution Network and the Government will procure that all quantities of water consumed or utilised within the Initial Master Plan shall be delivered, collected or removed by underground route and sold and billed directly by the Government to the end user.
     
  3.

The Client shall liaise closely with the Government with regard to the Government’s design, schedule of work, completion and connection of each Water Utility Tie-in at each Water Utility Delivery Point to ensure that such construction and connection takes place in accordance with the relative specification set out in the Final Master Plan.

     
  4. The Government or the Government company supplying potable water to the Initial Master Plan shall procure that the quantities of potable water delivered to end users shall be determined on a monthly basis by a reading of the relevant meter.
     
  5. The Government undertakes to Substantially Complete or procure the Substantial Completion of the construction of all pipes, trenches and other related structures up to and including each Water Utility Delivery Point and to the Inner Boundary so that each Water Utility Tie-in has been tested and commissioned and has the full capacity of potable water available for immediate use by end users not later than the dates specified therefore in the table below.

 

  Item   Description
       
  Infrastructure:   Underground potable water trunk mains connected to the appropriate connection points at the relevant Water Utility Tie-ins with a capacity sufficient to supply not less than 8,200 cubic meters of potable water per day to the Initial Master Plan at the minimum pressure and flow rates to suit the form of Development envisaged by the Development Control Plan.
       
  Points of construction
and tie-ins 		  All potable water infrastructure is to be constructed up to the Inner Boundary. The Water Utility Tie-ins shall be situated and constructed at the Water Utility Delivery Points on the Inner Boundary and such points are indicatively marked A, B, and C on the preliminary Water, Communications, Electricity drawing below (the “WCE Drawing”) and their precise locations will be definitively shown in the Final Master Plan.
       
  Timing   The supply of potable water shall be available commensurate with the start of construction and shall be provided progressively at the volumes requested from time to time by the Client to suit the rate of Development as determined from time to time by the Client. The table below sets out the indicative timing required for the supply of such potable water which timing may be varied by the Client from time to time by reasonable notice to the Government.

 

    Volume per day (m3)     Months    
      902       4    
      1,886       16    
      4,674       32    
      5,822       44    
      6,724       51    
      8,200       60    

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The following diagram shows the extent of the infrastructure:

 

 Source: Omagine LLC

 

Sewage

 

The table below shows the infrastructure specifications for sewage management:

 

    Treated   Raw
  Infrastructure Underground Treated Sewage trunk mains connected to the appropriate connection points at the relevant Utility Tie-in with a capacity sufficient to convey not less than 1,050 cubic meters per day of Treated Sewage without surcharge, backup or overflow from the connection point at the relevant Utility Tie-in to the PC Distribution Network and adequate to convey the flow.   Underground Raw Sewage trunk mains will be constructed and connected by the relevant Private Sector Utility Company to the appropriate connection points at the relevant Utility Tie-in so that the Raw Sewage generated and conveyed via the PC Distribution Network to such Utility Tie-in, will be discharged into the relevant Private Sector Utility Company’s Raw Sewage collection system without surcharge, backup or overflow. The aforementioned underground Raw Sewage trunk mains will have the capacity to accept a minimum of 6,400 cubic meters per day of Raw Sewage from the Initial Master Plan.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

    Treated   Raw
  Points of construction
and tie-ins

All Treated Sewage infrastructure is to be constructed up to the Inner Boundary. The Utility Tie-ins for Treated Sewage shall be situated and constructed at the Utility Delivery Points on the Inner Boundary and are marked S1 and S2 on the preliminary sewage collection drawing below.

 

All Raw Sewage infrastructure is to be constructed up to the Inner Boundary. The Utility Tie-ins for Raw Sewage shall be situated and constructed at the Utility Delivery Points on the Inner Boundary and are indicatively marked S1 and S2.

 

  Timing

The supply of Treated Sewage shall be available commensurate with the start of construction, and shall be provided progressively at the volumes requested from time to time by the Client to suit the rate of development. The figures below set out the indicative timing required for the supply of such Treated Sewage:

  The capacity for discharge of the Raw Sewage generated into the Private Sector Utility Company’s Raw Sewage collection system shall be available commensurate with the start of construction, and shall be provided progressively at the volumes requested by the Client to suit the rate of development. The figures below set out the indicative timing required for the supply of such Treated Sewage:

 

  Volume per day (m3)     Months     Volume per day (m3)     Months  
    430       8       704       4  
    750       20       2,048       18  
    1,050       32       3,776       26  
                    5,248       32  
                    6,400       44  

 

The diagram below shows the extent of the Sewage Infrastructure:

 

 

 

Source: Omagine LLC

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Electricity and Telephone (ET)

 

The table below shows the specification for the Electricity and Telephone Infrastructure:

 

  Item   Description
       
  Infrastructure:   Underground electrical cables connected to the appropriate Utility Tie-in with a capacity sufficient to supply not less than 56 megawatts demand and 537 megawatt-hours of electricity usage per day plus such other underground cables, wires and/or pipes or conduits as may be required for fibre optics, telephone and satellite communications’ lines in accordance with the specifications shown in the Approved PSPI&U Plan and Final Master Plan.
       
  Points of construction and tie-ins   All ET infrastructure is to be constructed up to the Inner Boundary. The two Utility Tie-ins for ET shall be situated and constructed (i) at the Utility Delivery Point on the Inner Boundary   indicatively marked as point A on the ET Drawing below, and (ii) at one other redundant Utility Delivery Point to be identified in the Final Master Plan and PSPI&U Plan.
       
  Timing     Supply of ET shall be available commensurate with the start of construction, and shall be provided progressively at the rates requested from time to time by the Client to suit the rate of Development as determined from time to time by the Client. The figures below show the timing required for the supply of the indicated megawatt hours per Day of electrical power, which timing may be varied by the Client from time to time by reasonable notice to the relevant Private Sector Utility Company.
       

    Megawatt-hours per day     Months    
      107       5    
      322       15    
      429       36    
      510       44    
      537       50    

  

The diagram following the Portable Water infrastructure specification also reflects the extent of the Electricity and Telephone infrastructure.

 

Please note, the timing, capacity requirements and final design of the Government Infrastructure will be contained in the Final Master Plan. The parties agree that the Government Infrastructure as approved shall meet at least the foregoing minimum requirements.

 

3.5 Private Sector Public Infrastructure and Utilities (PSPIU)

 

The Client and each relevant Private Sector Utility Company (“PSUC”) shall meet and agree on the final plan for PSPIU (the “PSPI&U Plan”).

 

The Client shall not bear any costs related to the design or provision of the PSPIU up to Inner Boundary and including the Utility Delivery Points and Utility Tie-ins located on the Inner Boundary, and all such costs shall be borne by the relevant PSUC.

 

We understand the following has been agreed:

 

  1. The relevant PSUC will procure the construction of the:

 

  a. power supply, and

 

  b. discharge of storm water and waste water services,

 

which are to be procured and provided up to the Inner Boundary, plus the procurement, provision and construction of

 

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  c. all Utility Tie-ins, and
     
  d.  all associated infrastructure either outside the Initial Master Plan or within the perimeter landscaped area, and associated with any of the foregoing,

 

in accordance with the requirements and specifications set out in the DA.

 

  2. The Parties shall each grant to the other and to the relevant PSUC all access and other rights as may be reasonably required for the purposes of the relevant PSUC’s construction, installation or delivery of the PSPIU and for the purpose of its connection of the utilities to each appropriate Utility Tie-in.
     
  3. Except for the potable water utility which will be supplied by the Government, the relevant PSUC will procure the delivery of each utility to the relevant Utility Delivery Point as set forth in the DA.
     
  4. The relevant PSUC will:

i. procure and provide each Utility Tie-in that is required to connect to each of the utility services supplied at each relevant Utility Delivery Point, and
     
ii. design, build, install, test, maintain and connect each such Utility Tie-in and the infrastructure necessary to connect each such utility to the PC Distribution Network

 

  5. The relevant PSUC shall be granted free access to and use of the PC Distribution Network and will procure that all quantities of any utility consumed or utilised within the Initial Master Plan shall be delivered, collected or removed, as the case may be, by underground route and sold and billed directly by such PSUC to the end user.
     
  6. The Client shall liaise closely with the relevant PSUC with regard to such PSUC’s design, schedule of work, completion and connection of each Utility Tie-in at each Utility Delivery Point to ensure that such construction and connection takes place in accordance with the relative specification set out in the PSPI&U Plan and Final Master Plan.
     
  7. The relevant PSUC supplying any utility to the Initial Master Plan shall procure that the quantities of such  utility delivered to end users shall be determined on a monthly basis by a reading of the relevant end user’s metre.
     
  8. The relevant PSUC undertakes to substantially complete or procure the substantial completion of the construction of all pipes, cables and trenches and other related structures up to and including each Utility Delivery Point and to the Inner Boundary so that each Utility Tie-in has been tested and commissioned and has the full capacity of the relative utility available for immediate use by end users not later than the dates specified.
     
  9. It is understood and agreed that:

 

a. the Client shall not own the Private Sector Public Infrastructure and Utilities and that all Private Sector Public Infrastructure and Utilities shall remain the property of the relevant Private Sector Utility Company; and
     
b. the Client shall never have any liability to any person resulting from or connected with the existence, use, maintenance or operation of the Private Sector Public Infrastructure and Utilities;
     
c. except as otherwise stated herein, the relevant PSUC, at its cost and expense, will procure all property rights, easements or right-of-way necessary to build, install and deliver the Private Sector Public Infrastructure and Utilities and any infrastructure associated therewith over, under and/or through the perimeter landscaped area to the Inner Boundary; and
     
d. the relevant PSUC shall:

 

  i. connect the Private Sector Public Infrastructure and Utilities at the appropriate Utility Delivery Point to the appropriate Utility Tie-in, and

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  ii. deliver the utilities via the PC Distribution Network to the end users; and

 

  e. In the event that the development of the Initial Master Plan exceeds the assumptions set out in the DA and as contained in the traffic impact assessment or the Final Master Plan, which extra development creates additional demand unable to be supplied from the Private Sector Public Infrastructure and Utilities constructed as required by Clause 9.2 and the DA, the Private Sector Utility Companies shall, at the request of the Client and at the cost of the Client, carry out all works as are necessary to expand the Private Sector Public Infrastructure and Utilities in so far as this is necessary to satisfy the additional demand.

 

3.6 Freehold Acquisition Plan

 

  1. Acquisition of Freehold Title

 

At any time during the term of the Usufruct Agreement, the Client, Third Party Developers, Third Party Purchasers and their respective Affiliates shall each have the right to acquire freehold title of any unit, plot or sub-plot of the Initial Master Plan from the Government, subject to the Development Agreement.

 

  2. The Client’s Acquisition of Freehold Title

 

In the event that the Client wishes to acquire a Freehold Title, the parties shall proceed as follows:

 

  a. The Client shall give a ninety (90) Days written notice (as per the attached form) to the Government Authorities of its intention to acquire the Freehold Title (“Notice of Intention to Purchase”).

 

  b. The parties shall execute thereafter, but no later than ninety (90) Days from the date of delivery of the Notice of Intention to Purchase to the Government, a Freehold Sale and Purchase Agreement for the respective unit, plot or sub-plot of the Initial Master Plan (“Purchased Unit”), in the format as required by the Law.

 

  c. The registration fee for the transfer of the Freehold Title to the Client shall be based on the Land Price.

 

  d. Upon the transfer of the Land Price for the respective Purchased Unit and within ninety (90) Days from the Delivery date of the Request, the Government shall transfer the Freehold Title of the Purchaser’s Plot to the Purchaser; free from any other Third Party or Customary Rights and do all such things, registration acts and declarations as are necessary for such transfer to become effective as soon as practicably possible.

 

  3. Affiliate’s acquisition of Freehold Title

 

In the event that an Affiliate of the Client wishes to acquire a Freehold Title by way of assignment of the right to acquire Freehold Title, the parties shall proceed as follows:

 

  a. The conditions stated in Clauses 4 and 24 of the Development Agreement have been complied with.

 

  b. The Client shall give a Notice of Intention to Purchase to the Government of its intention for an Affiliate of the Client to acquire the Freehold Title.

 

  c. The Parties shall execute hereafter, but no later than ninety (90) Days from the date of delivery of the Notice of Intention to Purchase to the Government, a Freehold Sale and Purchase Agreement for the Purchased Unit, in the format as required by the Law.

 

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  4. Third Party Developer or Third Party Purchaser’s acquisition of Freehold

 

  a. The Government shall be under no obligation to transfer Freehold Title directly to Third Party Purchasers of individual residences. In such case, the Client or an affiliate shall purchase the Freehold Title from the Government and register the same, after which time the Freehold Title may then be sold to the Third Party Purchaser or Third Party Developer in accordance with a commercial sales agreement entered into between the Parties. Such commercial sales agreement shall reflect the full commercial value of the building apartment or structure at the time of registration of the transfer of the Freehold Title.

 

  b. The Client may, at any time, assign the right to acquire Freehold Title to a, Plot or sub-plot, to a Third Party Developer, a Third Party Purchaser or any of their respective Affiliates. However registration of a Plot or sub-plot may only occur after Substantial Completion or in accordance with Clause 6.7 of the Development Agreement.

 

  c. If the Client assigns the right to acquire Freehold Title to any Third Party Developer or Third Party Purchaser, then such Third Party Developer or Third Party Purchaser shall not be entitled to further assign such right to any Third Party.

 

  d. At any time after Substantial Completion, or if prior to Substantial Completion upon satisfaction of the requirements of the Development Agreement and upon a written request by the Client, the Government shall directly transfer a Freehold Title of a Unit to a Third Party Developer or a Third Party Purchaser (each referred to hereinafter as “Purchaser”), provided that the Client has: (a) declared in writing to the Government that it has executed a valid agreement with the Purchaser regarding the assignment of its Freehold Title acquisition rights under the Development Agreement to the Purchaser; (b) requested the Government to register Freehold Title in accordance with the conditions set out in the Development Agreement (“Request”); (c) provided the Government with all necessary details and copies of documents, as are legally required, for the valid registration of the Purchaser’s Unit from the Government directly to the Purchaser; and (d) provides evidence that there is deposited into the designated Government Account, the Land Price for the Purchaser’s Unit.

 

  e. The Government and the Purchaser shall execute not later than thirty (30) Days after the delivery of the Request, a Freehold Sale and Purchase Agreement for the Purchased Unit, whereby the Government’s sole consideration shall be the Land Price.

 

  f. Upon the transfer of the Land Price for the respective Purchased Unit and within ninety (90) Days from the Delivery date of the Request, the Government shall transfer the Freehold Title of the Purchaser’s Plot to the Purchaser; free from any other Third Party or Customary Rights and do all such things, registration acts and declarations as are necessary for such transfer to become effective as soon as practicably possible.

 

  g. It is expressly agreed that the registration fees to be charged by the Government for the registration of Freehold Title pursuant to an assignment of a right to acquire Freehold Title will be based in the purchase price paid by the Third Party Developer or Third Party Purchaser (which shall be the full commercial value of the land or buildings) that has been paid or is payable to the Client, if such assignment is duly notified to the Government. The Freehold Title must be registered within twelve (12) Months from the date of the completion of the buildings to be erected on the Unit which was subject of the transfer.

 

For the avoidance of doubt, after Substantial Completion has occurred:

 

  i. the Client may transfer the Freehold Title to undeveloped Land directly to any Third Party other than to Third Party Purchasers of undeveloped land used for individual residential units;

 

  ii. in case of a sale to Third Party Purchasers of undeveloped land for individual Residence Units, Freehold Title shall only be transferred if the necessary infrastructure and utilities have been substantially completed up to the respective Plot (namely roads, pavements, street  lighting, electricity, water and sewage), except where infrastructure falls under the responsibility of a Private Sector Utility Company; and

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  iii. the Client shall not enter into any new agreements to assign its right to acquire Freehold Title to any Third Party Developers and Third Party Purchasers and the Government shall only transfer Freehold Title directly to the Client, or any of its Affiliates, save for transfers or assignments that have been agreed prior to Substantial Completion.

 

  h. Within ninety (90) days from the date of signature of any agreement, regarding the assignment of  the right to acquire Freehold Title, the Client shall inform the Government in writing of the name and address and particulars of the plot, sub-plot or unit relating to the assignment.

 

Should the Project Company require Freehold Title to or to pass transfer thereof to Third Parties, the Reclaimed Land or any portion thereof, the Project Company shall pay to the Government the Land Price. Land Price means the price payable to the Ministry of Housing for Freehold Title to the Existing Land (or any part thereof) granted pursuant to the Usufruct Agreement, the value of which shall be OMR 25 per square meter and increased by six per cent (6%) (or such other percentage as determined by Law from time to time), each year from the registration date of the Usufruct Agreement to the end of the month in which the request for registration of Freehold Title has been submitted to the Ministry of Housing.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

3.7 Time Chart of Key Milestone within the Development Agreement

*Government Deadline as per the Development Agreement

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

3.8 Client Timetable for Project Implementation

 

  

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Omagine Plot, Muscat, Oman 23 June 2015

 

4   Country and City Overview  

  

4.1 Country Overview

 

Oman is pushing to diversify its economy and reduce its dependence on the oil sector. While this process has been underway for some time, the development of other sectors of the economy such as transport, tourism and agriculture has become even more important given the recent major decline in oil prices. The government pledged a 4.5% increase in spending in 2015, although a deterioration of government oil revenues will likely impact the progress of large infrastructure projects planned for this year. The Ministry of Finance is looking for ways to minimise potential shortfalls and has proposed new taxes and tariffs in specific industries, but the fiscal deficit is still expected to widen going forward.

 

4.1.1 Economic and Fiscal Indicators

 

Based on the most recent figures published by Oxford Economics, Oman’s Nominal GDP as at 2014 stood at approximately USD 80.4 billion in 2014, with a growth rate of 3.2% from the previous year.

 

 

 

Source: Oxford Economics, 2015

 

The financial downturn in the second half of 2008 slowed down GDP growth in the country. Over the coming years, GDP growth was expected to grow between 3 .0 % and 4 .0 % but this has been revised down to between 2.5% and 3.0% to reflect the fall in oil prices. Oman’s GDP remains dominated by the industry (incl. oil) sector which accounts for approximately 67% of its GDP by output, thereby making the country’s GDP heavily dependent on the global price of crude oil. However, despite the recent significant drop in oil prices, Oman raised its spending in its 2015 Government budget, signalling resilience towards investments on major projects and infrastructure improvement.

 

 

 

Source: Oxford Economics, 2015

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

We note although oil is the major contributor to GDP in Oman, the percentage of GDP generated by oil is decreasing. Conversely over the past decade, both industrial and service activities have increased their individual contribution to the country’s economy. As outlined in its Vision 2020 Plan, Oman intends to put further emphasis on growth in industry, financial services and tourism.

 

4.1.2 Demographic and Employment Indicators

 

Based on figures from the Oxford Economics February 2015, the Sultanate’s population was approximately 3.9 million in 2013, of which approximately 55% are Omani nationals.

 

The graph below indicates the growth in population over the past two years, as well as the forecasted growth leading up to 2018. The population has experienced a constant increase in recent years as many expatriates have moved to Oman following the increase in development within the region.

 

Source: Oxford Economics, 2015

 

It is also important to note that approximately 40% of the population is under 25 years of age. Thus, a large quantum of working population is expected to enter the economy in the short to mid-term.

 

The Governorate of Muscat had a population of approximately 1.16 million 2013, such that it comprised approximately 29% of the country’s population. Within Muscat, expatriates accounted for approximately 60.9% of the workforce population in the Governorate.

 

The graph below shows the increase in employment number over the past few years and predicts future numbers.

 

Source: Oxford Economics, 2015

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The rise in expatriate population in the region is likely to increase the workforce in the country. At the same time, Oman’s relatively large national workforce will ensure workforce participation growth in the near future, unlike other countries in the region which rely more heavily on foreign labour.

 

The graphs below indicate the breakdown between expatriates and Omanis in the Sultanate that work in the Government and Public sector.

 

 

Source: Oxford Economics, 2015

 

It is evident from these graphs that the public sector is comprises mainly of Omani workers (86%) and this is the reverse for the private sector which is 89% comprised of expatriate workers.

 

4.1.3 Investment Indicators

 

A number of economic projects under development have already attracted the attention of multinational companies such as the Sohar Industry Port Company (SIPC), which was launched in 2002 as a JV between the Government of Oman and The Port of Rotterdam. This area will form the backbone of the country’s economic diversification program and has already received over USD 14 billion in investment.

 

Additionally, the recent US-Oman Free Trade Agreement (FTA) is another element of the diversification strategy and contains prominent features on investment promotion, especially in the fields of construction, engineering, telecommunications and finance.

 

These development strategies fall under the Government’s Vision 2020 plan for economic diversification and have generated significant foreign interest through investment. Although Oman does not have the large scale, high economic growth of some of its neighbours it has assessed and positioned itself tactically to attract investors in ways that are parallel to its own course of growth in the future.

 

Due to its sustained and measured development, Oman ranks very low in FDI (Foreign Direct Investment) and FDI intensity as compared to its GCC neighbours. However, its highly favourable World Bank and Economic Freedom ranks (ranked 5th out of 19 countries in the Middle East and North Africa region in 2012) are positive and could play a part in raising foreign investor interest in the future.

 

In terms of the outlook, there are new free zones being set up near ports and other key transportation links which are likely to have a positive impact on the economy. Although Oman is not likely to enter bilateral trade agreements, additional FTAs are likely to be signed along with the rest of the GCC. A GCC-Singapore FTA was signed in 2008 and similar pacts are under negotiation with the EU, India, China, South Korea, Australia and New Zealand.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

4.1.4 Tourism Indicators and Analysis

 

According to a report by the World Travel and Tourism Council, the tourism industry directly contributed 3% to Oman’s GDP in 2013. Furthermore, the total contribution of the industry to Oman’s GDP stood at approximately 6.4% during 2013 and is expected to have risen by 9.4% in 2014.

 

Based on statistics from the same report, travel and tourism direct contribution to GDP is expected to grow by approximately 10.2% in 2014 and observe a growth of approximately 5.4% per annum in the next decade.

 

According to the 2014 Statistical Yearbook, the number of guests in the country increased from 1.63 million to 1.84 million between 2010 and 2012. This represents a growth of 6.2% over the two-year period.

 

While a variety of nationalities visit the country, it should be noted that the majority of the guests visiting Oman are from GCC countries. Furthermore, guests from other Arab countries in the Middle East and North Africa comprise close to 60% of all guests visiting the country.

 

With favourable tourism policies, opportunities exist to target tourism from other continents into Oman, as well as boosting its attractiveness with the already existing tourist base.

 

4.1.5 Infrastructure Developments and Transportation Networks

 

Oman’s infrastructure is currently witnessing expansion, with numerous road projects, bridges, tunnels and national railway networks to be developed over the next few years.

 

In the Oman Projects Forum 2013, it was revealed that the country is set to see a large surge in infrastructure spending, with approximately USD 50 billion being injected in the next few years both from the private and public sectors in order to boost the economy.

 

Of the USD 50 billion, an estimated USD 20 billion will be spent on transportation projects, including the Oman National Railway project, Sohar, Ras Al Hadd, Duqm and Adam airports, upgrades to Batina coastal road and expressways, and Muscat and Salalah Airports expansion schemes.

 

USD 17 billion will be injected in the oil and gas sector, and an estimated USD 13 billion will be invested in the manufacturing and industrial sectors.

 

With the Omani economy heavily relying on the oil and gas industry, infrastructure projects are an efficient way for the Government to reinvest oil and gas earnings into the national economy.

 

The Government is starting to realise that Oman is well positioned to become a regional logistics hub due to its favourable geographic position and improving infrastructure. However, this can only be realised through strong and active partnerships between the Government and the private sector.

 

Some of the major infrastructure works include 60 kilometres of roads that have been constructed and another 50 kilometres illuminated in 2012.

 

Plans for pedestrian walkways are also in place in Ras Al Hail Street (5 km), Al Taimeer Street (8 km), Al Huda Street (7 km), adjacent to A’Sayyeda Mayzoon Mosque (4 km) and Dama Street (4 km).

 

Additionally, four parks have also been built in South Al Hail, South and North Mawaleh and Al Khoud.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Implications

 

Substantial investments in Muscat infrastructure are being made or planned, and they are focused on the developed areas as well as the western parts of Muscat.

 

With infrastructure around the site area already being developed, it is expected that the continuous upgrading of such transportation networks around the area will positively impact the visibility and accessibility of the site, thereby capturing a wider target market.

 

4.1.5.1 Airport Developments

 

Muscat International and Salalah International Airport including three regional airports are under development and will be the new gateway to the Sultanate of Oman.

 

The New Salalah International will able to handle one million passengers per annum and the new Muscat International Airport will have capacity to handle 12 million passengers per annum (MPPA). Both these new airports are schedule to be completed in the coming years.

 

The total gross floor area for the new Muscat International terminal building is 344,995 sq m with an overall airport land area of 21 sq km. Further expansions is planned for Muscat International airport in three subsequent phases, ultimately boosting the airport`s capacity to 24, 36 and 48 MPPA.

 

See below the key facts of the new developments:

 

  Key Facts   Muscat   Salalah
  Terminal Building BUA (sq m)   344,995   65,638
  ATC Tower height (metres)   97   57
  Check-in counters   96   24
  Aircraft remote stands   30   8
  Passenger boarding bridges   29   8
  Bags per hour baggage processing capacity   5,500   n/a
  Airside Hotel   Yes   n/a
  A380 capable   Yes   Yes

 

The new Muscat International Airport will have the capacity to handle 12 million passengers annually. Further expansions planned in three subsequent phases will ultimately boost the airport capacity to 24, 36 and 48 million passengers when the demand is required.

 

4.1.6 PESTLE Analysis

 

  Political   Social
       
  ● The country has enjoyed stable governance over the past few decades, with the exception of the protests that were triggered by the Arab Spring;   ● Young citizen population provides opportunity for high workforce availability in the country;
           
  ● The Government quickly responded to protests in 2011 by reshuffling the cabinet and introducing economic reforms;   ● Strong Government incentives to reduce reliance on the foreign workforce;
           
  ● The health of Sultan Qaboos is a concern for the stability of the country as no successor confirmed.   ● Omanisation policy to enable locals to better enter the workforce with focus on the private sector.
           
  ● The civil unrest in Yemen also poses a threat to Oman on its Western border.      

 

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  Economic   Legal
       
  ● The country’s large geographic area and strategic location in relation to European and Asian markets provide potential opportunities for the country;   ● Until recently, GCC nationals were the only foreigners allowed to buy land in Oman, according to Royal Decree 21/2004 which extended land ownership rights to GCC nationals and GCC corporate entities (wholly owned by GCC nationals). However, the Royal decree 12/2006 has expanded foreign ownership rights to include non-GCC nationals in ITC projects;
           
  ● Inflation was at 1.2% in 2013 and is expected to have been around 1% for 2014;   ● Investors are now allowed to own majority stakes in Omani companies, with a cap of 70% being offered for foreign investors in large industrial projects;
           
  ● Expansion of Sohar and Salalah ports to increase industrial activity;   ● 100% ownership is granted in specific cases by the Development Council for projects capitalised above USD 1.3 million.
           
  ● Free Trade Agreement with the US to increase growth in trade;      
           
  ● Real estate ownership for expatriates within Integrated Tourism Complexes (ITCs) to increase investment in real estate and diversify the economy;      
           
  ● Stable GDP growth representing the Government's careful planning and diversification policies in non-oil sectors;      
           
  ● Increase in minimum wages for Omani citizens in private sector to increase Omani representation in the private sector workforce.      
           
  Technological   Environmental
           
  ● Advances in Oman’s telecommunications sector, including tie-ups with Omantel and international carriers.   ● Varied climate in different parts of the country could increase tourism (e.g. Salalah);
         
        ● Diverse and unspoiled natural beauty that include mountainous areas, desert oasis, long beaches and large amount of marine eco life;
         
        ● Tropical storms and floods due to the exposure to the Sea of Oman/Indian ocean.

 

4.1.7 Legal Framework

 

The following tables have regard to legislation relevant to the Subject Property:

 

Royal Decree No. 21/2004

 

  Purpose To Regulate the ownership of real estate by GCC Citizens in the member state
       
  Details As of 2004, a Royal Decree was issued by the Government of Oman:
     
    Article 1 GCC Citizens may rent and own built properties and lands for housing or investing purpose in any state by one of the following methods affirmed by law, or by testament or inheritance, and they shall be treated in this regard as the citizens of the state where the estate is located.
    Article 2 If the estate is a land, it shall be built completely or invested during four years from the date of registering it in the name of the citizen. Otherwise, the country involved shall have the right of the property disposal and compensating the owner with the same property value at the time of its purchase or the value at the time of its sale whatsoever less in addition to preserving his right of complaint before the competent authority. The state shall have the right to extend the said period if convinced by the reasons of the owner delay for construction.
    Article 3 The owner may dispose the built estate in any time, if the estate is a land, he has the right to dispose it from the date of completing its construction, or investing it or from passing four years since it was registered in his name. An exception for disposal may be given before such period provided that permission from the authorised entity is obtained.

 

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Royal Decree No. 12/2006

 

  Purpose To Promulgate the Real Estate Ownership Act in the Integrated Tourism Complexes
       
  Details As of 2004, a Royal Decree was issued by the Government of Oman:
     
    Article 1 Omani and Non-Omani of natural or juridical personalities are allowed, for the purpose of accommodation or investment by way of one of the legally recognized forms of ownership, to own lands or constructed units in integrated tourism complexes licensed by competent government authorities. Without prejudice to the right of the government to restrict ownership to Omanis in any integrated tourism complex, the Executive Regulations shall lay down the procedures, rules conditions and criteria of ownership in these complexes with respect to both Omanis and non-Omanis.
    Article 2 Subject to the approval of the Ministry of Tourism, a natural or juridical personalities who have acquired properties in integrated tourism complexes by a usufruct and have provided it with public services and utilities, may dispose the built units or lands subdivisions prepared for building subject to, the payment of an upgrade levy to the Ministry of Housing Electricity and Water. The amount of the upgrade levy shall be proportional to the total value of the land held in usufruct. The Executive Regulations shall determine the value of the upgrade levy contingent upon the approval of the Ministry of Finance.
    Article 3 It is permissible for the owner to sell built real estates at any time. However, anyone who bought a plot of land in an integrated tourism complex should develop it to a finished appearance or exploit it within four years from the date of registering it in his name. No disposition of land shall be made within these four years except by mortgage to finance its development. If the land is not developed or utilized during this period, the Ministry of Housing, Electricity and Water may dispose it by sale on public auction and reimburse the owner the price of the plot at the time of purchasing it or its price at the time of selling it, whichever is less, without prejudice to the owner’s right to judicial appeal before the competent authorities.
    Article 4 The Ministry of Housing, Electricity and Water may extend the period mentioned in the preceding article if the purchaser submitted to Ministry of Tourism an application for extension outlining the grounds for the required extension and if the delay is deemed justifiable on the basis of the recommendation of the Ministry of Tourism. This additional period shall not exceed more than two years. The Executive Regulations shall lay down the procedures and the details of such application and the period of its submission.
    Article 5 The sale by public auction shall be performed by a government committee to be formed and its statement of the procedures and rules governing it by a decision of the Minister of Housing, Electricity and Water in coordination with the Ministry of Tourism. This Committee shall include technical, financial and legal resources as well as a representative of the Ministry of Tourism.
    Article 6 This act shall not prejudice the right of the state to expropriate property for the public interest against the payment of a fair compensation pursuant to laws and rules prevailing in the Sultanate of Oman.
    Article 7 Rights of inheritance, wills and all after-death dispositions of properties subject to this act shall be in accordance to the laws of the country to which the owner belongs. If one year ended after  the death of the owner and the notification of the embassy of the country that the owner belong, no heir has submitted a claim of the estate of the deceased owner, then the Ministry of Tourism shall determine who would manage the property, provided that it shall be devolved to the government of Oman after the elapse of fifteen years, save the right of any legitimate heir to compensation. The Executive Regulations shall demonstrate the procedures for the submission of applications and claims to inheritance together with supportive documents. The Executive Regulations shall also decide the government unit which should handle the notification, the amount of the property management fees and shall establish the procedures for the execution of after-death transaction.
    Article 8 A Non-Omani owner of a property built for accommodation or investment may be granted residence permit for him and his first-degree relatives. The Executive Regulations shall after coordination with the parties concerned, establish the procedures and stipulations for granting such residence permits.
    Article 9 The Minister of Tourism shall form a government committee to be entrusted with the task of licensing integrated tourism complexes in accordance with established rules and criteria. The ministerial decision forming the committee shall also determine its mandate and modus opera.
    Article 10 All dispositions and transactions carried out in respect of tourism complexes prior to the enforcement of this act shall be valid and legally binding.

 

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Royal Decree No. 191/2007

 

  Purpose Issuing the Executive Regulations of the Real Estate Ownership Act in Integrated Tourism Complexes
         
  Details As of 2004, a Royal Decree was issued by the Government of Oman:
       
    Article 1 Definitions – See Full Document
    Article 2 Non-Omani natural or juridical personalities may own built-up property or plots of land, prepared for building or exploitation, in integrated tourism complexes, within the intent of accommodation or investment purposes, in accordance to the Act and this executive regulation.
    Article 3 The Ministerial Committee – pursuant to the public interest – may advise the Government Licensing Committee to withhold the title of integrated tourism complex from certain sites wherein the Committee deems to restrict ownership to Omani nationals only.
    Article 4 Two natural first-degree relatives may jointly own a built unit or a land plot prepared for building but shall severally and jointly be subject to the rules and provisions of this executive regulation.
    Article 5 The following conditions will have to be met in order to obtain a license for setting up an integrated tourism complex:
      a) The minimum project land area shall be 200 thousand square meters. However, in case a Tourism Complex requires, for the erection of its facilities, an area of government land greater than the stipulated minimum limit, then such an area shall be determined by the Tourism Ministerial committee subject to the approval of the Council of Ministers.
      b) The Land must be designated for commercial, commercial/residential or tourism use.
      c) The developers shall produce a conceptual plan to be approved by the Ministry of Tourism and the government committee for permits.
      d) The percentage of land exploited for building shall not exceed 30% of total land area.
      e) The ratio of land used for setting up non-tourism properties shall not exceed 50% of the total area of land exploited for building.
      f) The developers shall satisfy all planning and environmental requirements of integrated tourism complexes.
      g) The distance between the site of the integrated tourism complex and the nearest international boundaries of the Sultanate of Oman shall not be less than 20 kilometres.
      h) The proposed site of the tourism integrated complex must be free from any restrictions.
      i) The number of residential units in the complex shall not exceed the number of the hotel units *.
      * This clause is added by the Ministerial Decision No. (98/ 2009)
      The Minister of Tourism may, in coordination with the Minister, qualify the licensing conditions for setting up an integrated tourism complex in pursuance of public interest.
    Article 6 The developer - prior to fulfilment of registration formalities of property units or land plots – shall make available the infrastructure facilities, connect utilities to the project and complete one of the proposed tourism projects in the integrated tourism complex; in accordance to the provisions of this executive regulation and the development agreement.
    Article 8

For the purpose of implementing the provisions of article (2) of this Act , the calculation of the levy value

(price per square meter) of the land awarded by a usufruct right shall be as follow:

      a. The market value per meter of land at the time of award of the usufruct rights which shall be known by calculating the average of three estimates made by three real estate specialists, with the concurrence of the Ministry of Finance.
      b. A simple 6% rate of the market value per meter shall be added annually from the date of the award of the usufruct rights up to the date of registration.
      The Ministerial Committee may revise this rate in accordance to public interest.
    Article 9 The developer who is granted usufruct right over a government land shall not be allowed to transfer the title of the constructed units or the land plots prepared for construction in an integrated tourism complex; except if the levy of such units or plots has been paid in compliance with article (8) of this executive regulation and the stipulated fees has been paid to the Ministry.
    Article 10 The Ministry shall maintain a separate real estate registry for integrated tourism complexes, in which all transactions pertaining to each integrated tourism complex shall be recorded, including transactions following death. Those eligible and concerned persons may access such registry and obtain legal certificates extracted from it against payment of a fixed fee.
    Article 11 The owner shall commit to provide building completion on the land plot owned in an integrated tourism complex, or such a land plot shall, at least, be developed into a form of finished structure or be utilized for the designated purpose, within a period that does not exceed four years from the date of the plot registration in the name of the owner in the real estate cadastre.

 

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Royal Decree No. 191/2007

 

    Article 12 The Ministry may, on the basis of a recommendation from the Ministry of Tourism, extend the period stipulated in article (11) herein for the development or exploitation of the plot by not more than two years upon an application submitted by the owner to the Ministry of Tourism with supportive justifications provided that it is submitted before the original period expiration.
    Article 13 The extension of time given to the owner shall not be in excess of two years, commencing from the day following the expiry of the four year period stated in Article (11) herein.
    Article 14 The developer shall commit to inform in writing the Ministry of Tourism and the Committee of the cases of default by the owners on the requirement of exploitation or development of the land within the period stipulated in articles (11) and (12) herein. This communication shall be made within the last month of such a period as applied to each owner.
    Article 15 The owner is not allowed to dispose of the land plot owned in an integrated tourism complex except by means of mortgage to finance its development; however he may dispose it if it is developed, or developed into a form of finished structure, or exploited for the designated purpose.

 

Decision No. 49/2009

 

  Purpose The amendments of the Implementing Regulations of the Expatriate Residence Law which are relevant to a purchaser/owner of a property in Integrated Tourism Complex (such as The Wave, Muscat) could be summarized in the following points:
       
  Details 1. Multiple Entry Visa:
      This Visa will be granted by the Concerned Authority to an expatriate who wishes to enter the Sultanate for more than one time. It allows its holder to enter the country and stay for the period specified therein. It is a condition that the holder enters the Sultanate within three months from the date of its issuance. This Visa shall be granted to an expatriate purchaser of a plot of land prepared for construction or a constructed unit at one of the Integrated Tourism Complexes the registration of which has not been completed and without a sponsor. Following that the visa may be granted to the purchaser’s family members of first degree and also to the legal representative of a juristic person who purchased a plot of land or a property for a maximum of two natural persons. The Visa shall be valid for a period of not less than six (6) months and not more than one (1) year and may be renewed to a similar period. The Visa allows its holder to enter and stay in the country for a period of not more than three (3) weeks each time.
    2. Owner’s Visa:
      To be granted by the Concerned Authority without a sponsor to an expatriate who owns a constructed unit at one of the Integrated Tourism Complexes in the Sultanate. It may also be granted to two natural persons who legally represent the owner of a constructed unit if the owner is a juristic person. The Visa shall be used within six (6) months from the date of issue.
    3. Joining an Owner Visa:
      To be granted by the Concerned Authority without a sponsor to the spouse of the expatriate owner of a constructed unit and holds an Owner’s Residence in the Sultanate and to his family members of first degree. The Visa shall be used within six (6) months from the date of issue.
    4. Owner’s Residence:
      To be granted by the Concerned Authority without a sponsor to an expatriate who owns a constructed unit in one of the Integrated Tourism Complexes in the Sultanate. It may also be granted to two natural persons legally representing the owner of a constructed unit if the owner is a juristic person.
    5. Residence for Joining an Owner:
      To be granted by the Concerned Authority without a sponsor to the spouse of an expatriate who owns a constructed unit and holds an Owner’s Residence in the Sultanate and to be granted to his family members of first degree.
    6. Normally the residence of each child will expires when the child reaches the age of twenty one and the residence of each of the expatriate’s brothers/sisters will expire when the brother/sister attains the age of eighteen unless such a child, or brother/sister is granted a residence of his/her own. However, those who obtain Residence for joining an Owner will be exempted from the age stipulation as per Decision No. 49/2009.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Decision No. 49/2009

 

    7. The Residence of an expatriate who owns a Property in an Integrated Tourism Complex will expire when the expatriate disposes of his property by any action which transfers the ownership following which the Residence of expatriate’s wife, children and family members will also expire.
     
    8. Normally and under Article (21) of the Implementing Regulations of the Expatriate Residence Law, an expatriate must apply through his sponsor, for the renewal of his residence within a period not less than 15 days before its expiry. The application for renewal must be signed by the expatriate and his sponsor. The expatriate’s passport must be valid for at least 90 days. However, under this new Decision, a new paragraph has been added to Article (21) stating: “As an exception to that, the application for renewal may be applied by the expatriate directly in case of residence without a sponsor”.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

4.2 Muscat Real Estate Market Overview

 

The Muscat Real Estate Market is a small and opaque market. Up until recently, the Expat community in Muscat was very small. With tourism and expat workers increasing in the region, Muscat and Oman as a whole has become a more attractive market for investment and development.

 

The Omani Government has recently enabled the freehold purchase of land/property to expatriates. This has been restricted to certain areas known as Integrated Tourism Complexes. A foreign national can now purchase the freehold right of a property in these areas which also brings the benefit of an Omani visa for the period that the property title is held under the name of the foreign national.

 

Integrated Tourism Complex Overview

● An Integrated Tourism Complex (ITC) is a piece of land designated to setting up a tourism scheme that offers all or some tourism property services; whether such a designation is made on the basis of usufruct or proprietary rights depending on the license issued by the Government licensing committee.
● Prior to 2006 and according to Royal Decree 21/2004, GCC nationals were the only foreigners allowed to buy land in Oman, where land ownership rights were extended to GCC nationals and GCC corporate entities (wholly owned by GCC nationals). However, the Royal decree 12/2006 has expanded foreign ownership rights to include non-GCC nationals in ITC projects.
● In order to encourage FDIs, specifically in real estate, the Government of Oman has established Integrated Tourism Complexes. These have been driven by financial policies by the Central Bank of Oman, increased real estate and tourism demand for select locations in Oman, as well as long-term Government initiatives and investments.
● Foreigners who purchase property in ITCs automatically get a residency visa for themselves as well as their family members, which has been encouraging non-residents to invest in property in Oman for retirement or investment purposes, or to use as a second home.
● ITCs are starting to reshape Muscat’s real estate, by addressing the increasingly sophisticated needs of both Omani and international investors. The natural beauty of numerous areas in Oman is also contributing to the success of ITCs as many of them are designed around unspoiled natural landscape.

 

4.2.1 Retail Market Overview
   
  Evolution of Muscat Retail Market

 

Throughout the past decade, Muscat has witnessed the reshaping of consumerism through the creation of new shopping centres. Traditionally Muscat’s population relied on souks to purchase wares and foodstuff.

 

In the past decade, however, the introduction of more modern shopping centres and hypermarkets in Muscat has provided an alternative shopping experience for Omanis and expatriates alike. The four existing major malls, namely Muscat City Centre, Qurum City Centre, Markaz Al Bahja and Muscat Grand Mall, represent 45% of quality retail area in Muscat. Within these shopping centres, hypermarkets and/or supermarkets are integral to the retail mix and drive footfall. Of the major hypermarkets present in Muscat, Lulu and Carrefour exhibit high market shares.

 

Besides major malls and retail centres, Muscat is characterised by a large quantum of street retail. Quality, high street retail within the city generally experiences high occupancy levels with rental rates in many cases reaching as high as those attained by major malls. Key retail streets include Ruwi High Street, Al Khoud High Street, Seeb High Street and Al Khuwair Commercial Street.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

As the retail market works to improve its offering with major upcoming malls in the pipeline, such as Palm Mall and Muscat Festival City, and existing malls, such as Muscat Grand Mall, work to improve and expand, the retail market is expected to become more competitive in the short to medium term.

 

Existing Stock

 

As dem onstrated in the chart below, community shopping centres comprise the majority of quality retail GLA in Muscat, accounting for 56% of total quality stock. Regional centres follow with 33% of existing stock and include Muscat City Centre, the largest mall in the city.

 

 

Source: JLL, 2014

 

Approximately 76% of the existing quality retail stock is concentrated in the city’s four largest and most prominent shopping malls, namely Markaz Al Bahja, Qurum City Centre, Muscat City Centre and Muscat Grand Mall.

 

Although there exists a small per centage of neighbourhood centres, there are very few high quality developments of this type, with the exception of The Walk at The Wave, which was opened in 2014. As a consequence, many consumers shop for convenience goods at alternative retail centres, such as hypermarkets, traditional souks and/or ground floor shops located in residential areas.

 

In addition to the retail types above, there also exists a significant amount of street retail within the city. High street retail stock benefits from high occupancies and includes major streets such as Ruwi High Street, Al Khoud High Street, Seeb High Street and Al Khuwair Commercial Street, where the retail offering is geared towards providing lower quality brands that cater to the demographics of the surrounding population.

 

The table below presents a summary of quality retail locations in the city. It does not enumerate total existing retail stock.

 

Selection of Existing Quality Retail Stock

 

  No.   Name of Centre   Type   GLA (sq m)  
  1   Muscat City Centre   Regional     60,484  
  2   Muscat Grand Mall   Community     40,000  
  3   Qurum City Centre   Community     20,600  
  4   Markaz Al Bahja   Community     19,000  
  5   Al Araimi Complex   Community     12,000  
  6   The Walk – The Wave   Community     10,850  
  7   Zakher Mall   Neighbourhood     8,000  
  8   Opera Galleria   Speciality     6,500  
  9   Jawharat Al Shatti   Speciality     5,000  
  10   Ruwi Plaza   Speciality     1,200  
  Total             183,634  

 

Source: JLL Research

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Future Supply

 

Demand for retail space in Muscat has stimulated the future development of a significant number of “mega” malls to be completed in the coming years, as well as the expansion plans within existing major malls in the city, such as Muscat Grand Mall, Muscat City Centre and Qurum City Centre.

 

The chart below highlights the trend towards significant future development of regional retail centres, ultimately accounting for more than 65% of expected future retail supply.

 

 

Source: JLL, 2014

 

Within these future retail centres, developers are increasingly looking to improve entertainment and leisure options for Muscat’s consumers in order to improve the overall shopping experience, drive footfall and increase the average time spent within given shopping centres.

 

The chart above also indicates future development of community and neighbourhood centres located in proximity to residential communities. This particular trend is in response to demand for quality retail of these types, best exemplified until now by The Walk at the Wave.

 

The table below presents the expected future retail development until 2020.

 

Future Retail Supply

 

  No.   Name of Centre   Type   GLA (sq m)     Expected Completion Date
  1   Avenues Mall   Regional     70,000     2015
  2   Muscat Grand Mall Expansion   Community     40,000     2015
  3   Panorama Mall   Community     21,000     2015
  4   Muscat Oasis Mall   Community     20,246     2015
  5   Muscat City Centre Expansion   Regional     10,000     2015
  6   Qurum City Centre Expansion   Regional     5,000     2015
  7   Palm Mall   Super Regional     56,500     2017
  8   Muscat Festival City   Regional     100,000     2019
  Total             322,746      

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

It can be noted that there is a substantial amount of quality retail supply expected to enter the market in the next five years, with approximately 40% of this future supply expected to be completed in 2015.

 

Market Performance Indicators

 

Market Trends:

 

● The retail rental market in Muscat continues to move in favour of the regional and community shopping centres as well as prime, high street locations.
     
● However, as retail supply increases rental growth is expected to come under strain, particularly in regards to secondary and/or less competitive retail centres.

 

Market Occupancy:

 

● Current occupancy levels in major regional and community malls remain high, regularly reaching 90% to 100%.
     
● High street retail, such as those spaces located along Ruwi High Street, Al Khoud High Street, Seeb High Street and Al Khuwair Commercial Street, also benefit from high occupancies and rental rates in many cases as high as those achieved by major malls.
     
● Although overall occupancy is expected to decrease in the near future with the entrance of a large quantity of supply in the market, occupancy rates in the larger malls in Muscat are likely to remain above 80%.
     
● In the case of less desirable shopping centres, these developments are likely to experience greater rental decreases, resulting in the emergence of a two-tier retail market.

 

Rental Values

 

The table below highlights average retail rent performances in the Muscat market.

 

Retail Rental Performance

 

  Shop Type   Rental Range   Basis of Rent
  Anchor   1% - 2%   % of Turnover
  Line Shop   15-20   OMR/sq m/month
  F and B   20-25   OMR/sq m/month
  RMUs (Kiosks)   350-500   OMR/month

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

4.2.2 Hospitality Market Overview

 

Factors influencing the Market

 

Tourism Marketing and Growth:

 

● One of the main objectives of the Omani Government is to diversify the economy by reducing the reliance on oil and increasing the focus on alternative revenue-producing sectors, such as tourism, which is expected to become a major contributor to the economy in the near future.
     
● Accordingly, the Ministry of Tourism (MoT) was created in June 2004 and became an independent ministry in charge of promoting Oman as an upscale tourist destination. Since then, the ministry has participated in several tourism related fairs and exhibitions in Japan, Germany and the United Kingdom, to create awareness among travel and trade professionals.
     
● The MoT is also planning to diversify the tourism product to include opportunities for eco-tourism, adventure tourism and cultural tourism. One of the main concerns of the authorities is to preserve and protect the country’s natural environment and local customs and traditions.
     
● In the beginning of 2012, the Ministry of Tourism announced ambitious growth plans for the tourism sector in Oman. The authorities have set a target of receiving 12 million visitors annually by 2020. This represents a CAGR of 22% between 2010 and 2020.
     
● The announcement of this objective has reaffirmed the Ministry’s position to promote and develop tourism in the country. Part of this growth is expected to come from the increase in cruise tourism to the country.

 

Business Environment:

 

● The business environment and future outlook that Oman offers has a direct impact on the volume of business and corporate travellers.
     
● Oman is enhancing its position as a business hub in the region, with many multinationals (London Mining, Citi Bank, Shoe Mart, Mulk Group amongst others) from various sectors, such as Finance, Banking, Legal, Consulting, Construction, Information Technology, Advertising and many more, are relocating their offices from neighbouring countries to Oman.

 

Foreign Direct Investment in Tourism (Integrated Tourism Complex):

 

● Foreign Direct Investment (FDI) is a key contributing factor to the growth of Oman’s tourism sector and this investment is further encouraged by offering freehold development opportunities in tourism designated areas.
     
● An Integrated Tourism Complex (ITC) is defined as a piece of land designated for setting up a development that offers all or some of tourism property services. Whether such a designation is made on the basis of usufruct or proprietary rights depends on the license issued by the Government licensing committee.
     
● In addition to ITCs, a number of joint ventures between the Omani Government and investors are also anticipated to stimulate FDI.
     
● The following are some of the main investments that are expected to positively contribute to the tourism sector in Muscat:

 

● “The Wave” is a USD 805 million freehold ITC, which once completed will cover an area of over 2.5 million sqm combining 4,000 residential units, retail, leisure and hotel accommodation, a marina and a golf course. Around 1,800 units have been completed, while the remaining units are being progressively handed over between now and 2018.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

● “Muscat Hills” is an estimated USD 780 million project including an 18-hole golf course, a gated residential development, a boutique resort hotel, premium office space, retail outlets and entertainment facilities. The construction of the first phase of residential units and infrastructure is complete. Currently only a handful of two-bedroom apartments and villas from the first phase are still available for sale. Phase two is expected to offer additional residential units and a hotel.

 

● Other ambitious ITC projects such as the “Yiti Resort” and “Saraya Bandar Jissah” are also expected to put Muscat at the forefront of the regional luxury tourism scene.

 

● The “Saraya Bandar Jissah” project is under construction and the first phase components, forming approximately 70% of the total planned project components, are expected to be ready in 2017. Phase 2 is expected to be completed by 2021.
     
● The “Yiti Resort” development is currently on hold with no concrete project start date. Negotiations with Qatari Diar to buy Sama Dubai’s stake in the project are ongoing.

 

● Oman Convention and Exhibition Centre is currently under development near the Muscat International Airport. Scheduled for completion in 2016, the project is estimated at USD 1.8 billion. The facility will offer more than 22,000 sqm of meeting and exhibition space along with a 3,200 seat auditorium. The centre is expected to have four hotels within the precinct of the facility.
     
● Muriya Tourism Development Company, promoted by Orascom Development Holding and Omran, has secured the portfolios of leading international hospitality brands, including Four Seasons Hotels and Resorts and Missoni Hotel for its tourism destination “Jebel Siffah.” Currently, it has started operations at the Sifawy boutique hotel, which has a total of 55 guest rooms.
     
● Besides the large ITC projects, a number of smaller individual resort developments such as the “Bandar Khairan Resort” and the “Al Qalah Resort” are expected to enter the market. These developments will also have a positive impact on the tourism sector in Oman.

 

Current and Future Stock Mapping

 

The following map shows the existing and future quality hotels in Muscat.

 

 

  1 Al Bustan 8 Golden Tulip 15 Platinum Hotel 22 Safeer International Hotel 29 Kempinski
  2 Intercontinental 9 Muscat Holiday Inn 16 Ramee Dream Resort 23 Safeer Continental 30 InterContinental
  3 Oman Sheraton 10 Al Falaj Mercure 17 Ruwi Hotel 24 Park Inn 31 Fairmont
  4 Grand Hyatt 11 Radisson Blu 18 Bawsher 25 Ibis 32 Four Seasons
  5 The Chedi 12 Haffa House 19 Al Bahjah 26 Best Western Premier 33 Missoni
  6 Shangri La 13 Majan 20 Rami Guest Line (Holiday Inn Villa) 27 City Seasons Hotel    
  7 Crowne Plaza 14 Ramada 21 Sifawy Hotel 28 Oberoi    

 

Source: JLL

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Current Stock

 

● Approximately 3,710 rooms of the total hotel room supply in Muscat exist within quality hotels. All the 5-star hotels in the city are managed by international hotel chains.
     
● In 2011, the Al Bustan Palace was rebranded as a Ritz Carlton property, taking over the management of the hotel from InterContinental.
     
● There were also plans to demolish the InterContinental Muscat and build three new hotels on that site. However, as per JLL’s understanding, the contract of the InterContinental has been renewed, and the existing hotel will continue to operate for the next 4 to 5 years with minor refurbishments.
     
● Most of the 4-star city centre hotels primarily cater to business demand.
     
● In terms of leisure demand, hotels such as the Ritz-Carlton, The Chedi, Grand Hyatt and Shangri La Barr Al Jissah Resort Complex are the main leisure properties. All of these hotels have waterfront and offer access to a beach.
     
● A boutique hotel has commenced operations in the Jebel Siffah development during 2012. This property is the first to open in a project that comprises residential and other hospitality components. At the time of JLL’s visit to the hotel in July 2014, the occupancy rates were around 5 – 10%.
     
● Sheraton Muscat is currently closed for renovation and was expected to reopen in mid-2013. However, refurbishment work is still ongoing

 

Future Supply

 

● Approximately 2,125 quality branded rooms are in the pipeline for the Muscat market.
     
● It must be noted that while several projects have been announced in the past few years, many are undergoing financing difficulties halting the development progress and materially slowing down the actual timeframe of completing these properties. As a result, most of these projects, as per our understanding, will only enter the market between 2015 – 2017.
     
● Various projects, such as the Kempinski and the Fairmont at The Wave, have faced delays. The Kempinski is currently under construction and is expected to be completed during 2015. The Four Seasons and Missoni Hotel in Jebel Sifah are yet to start any construction work, as developers sort out financing issues. Saraya Bander Jissah is also progressing slowly.
     
● Projects such as Salam Yiti are currently on hold as the joint venture between Omran and Sama Dubai has been dissolved and the development is currently on hold due to the restructuring of the developers. However, talks with Qatari Diar to buy Sama Dubai’s stake in the project are ongoing.
     
● One of the key development players in Oman is the Oman Tourism Development Co., also known as Omran. It is the development arm of the Ministry of Tourism and is currently promoting the Convention Centre that should enter the market in the next two years.

  

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Omagine Plot, Muscat, Oman 23 June 2015

 

Market Performance Indicators

 

● Post 2008, the overall hotel performance in Muscat declined due to the effect of the economic downturn and limited increase in visitor numbers. Performance decline was more significant in terms of occupancy rather than ADR, as hotels tried to retain previous ADR levels.
     
● However, slow signs of stability and modest recovery started to be witnessed in early 2012, with occupancy levels picking up, though ADR had declined by 7% between 2011 and 2012 and then at a lower, but still negative growth of 1.9% between 2012 and 2013, reflecting a decline in city-wide average rates.
     
● Between 2012 and 2013, occupancy levels grew by 11% and ADR contracted by 1.7%.
     
● The cyclical pattern in occupancy observed is a clear indication of the level of seasonality experienced by the market.
     
● The period ranging from November to April experiences high level of demand, with occupancies in this period ranging between 65% and 80%, followed by shoulder periods of May, September and October. The period ranging from June to August is considered to be low season.
     
● The period of low season continues to remain a concern. 2011 witnessed higher levels of decline with occupancy performance ranging between 29% and 38%. However, occupancy significantly improved in the last few years with 2014 on track to close at around an average of 68%.

 

4.2.3 Residential Market Overview

 

Residential developments across the city

 

● A large part of the residential developments in Muscat is outdated and old, especially in old areas such as Ruwi, Wadi al Kabir and the Port area;
     
● High-quality residential villas are mostly found in Shatti al Qurum, Qurum, Madinat A’Sultan Qaboos and more recently in Airport Heights;
     
● New developments such as “The Wave” and “Muscat Hills” are setting up new standards for quality residential development.

 

Future Supply Characteristics and Trends

 

● As developers continue to accommodate the changing tastes and preferences of Muscat’s expatriates and local community, residential supply will continue to grow.
     
● The growth is seen to stretch the western borders of the city, towards Airport Heights where mixed-use gated community “The Wave” is seeing ongoing construction. As the area becomes more developed, more residents will be willing to move there driven by higher quality product and improving surrounding infrastructure and supporting amenities.
     
● Historically areas such as Qurum, Shatti Al Qurum and Madinat Sultan Qaboos have been popular among expatriates. These remain popular areas given their proximity to the beachfront, numerous demand generators, major landmarks of the city as well as most of the office buildings of regional and international corporations.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

● Developments such as The Wave and Muscat Hills remain highly popular among Muscat’s expatriates community despite their location away from the city centre.
     
● It is expected that more developments will capitalise on tenants’ willingness to sacrifice location for a higher quality product catering to their specific tastes and preferences.

 

Market Performance Indicators

 

● The following tables provide a general overview of the prices and rents achievable in various areas of Muscat.
     
● It should be noted that many factors determine the achievable rates such as size, location, quality and availability. The rates provided exclude gated communities and ITC developments.
     
● Non GCC nationals are not permitted to purchase real estate property in Oman unless it is within an ITC.

 

Villa Sales Prices in 2014  

  Apartment Sales Prices in 2014

Area   OMR/Sq M   Area   OMR/Sq M
Shatti Al Qurum   850 – 2,300   Shatti Al Qurum   850 – 2,300
Qurum   750 – 2,100   Qurum   750 – 2,100
Athaiba   550 – 2,000   Athaiba   550 – 2,000
Madinat Sultan Qaboos   600 – 1,900   Madinat Sultan Qaboos   600 – 1,900
Al Bawshar   650 – 1,100   Al Bawshar   650 – 1,100
Al Khuwair   550 – 1,000   Al Khuwair   550 – 1,000

 

Source: JLL Research

 

4.2.4 Office Market Overview

 

Current Trends

 

● While demand for office space is steadily expected to grow, the relatively large introduction of office supply in the past 24 months create reservation for any immediate proposal for new introductions. This has created ample supply within the following locations:

 

  ● Old Muscat;
     
  ● Al Khuwair;
     
  ● Qurum.

 

● This recent supply is expected to suffice Oman’s office requirements in the short term.
     
● Although, statistics would suggest that the office market in Muscat is healthy, any introduction or provision of office space should be in due consideration of the current market conditions indicating prolonged absorption periods due to large introductions of supply over the past couple of years.
     
● Although there is a major over supply of Grade B and C office space, the demand for higher quality Grade A office space is strong with occupancy within certain schemes ranging from 75% to 90%.
     
● Average office rents range from OMR 48/sq m per annum to OMR 96/sq m per annum. We are aware that rents for Grade A office space have remained stable.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Future Supply

 

● Due to the current demand for Grade A office space, there are several developments in the pipeline or recently completed:

 

● Al Khonji Real Estate and Development LLC announced the launch of a project which includes a mix of 58 super-modern office, with additional shops, a showroom and restaurants in 2013. This will be located in Al Khuwair.
     
● The Wave, currently under development, has a commercial component which will offer office space.
     
● Construction has completed on office space within Tilal Residence, Al Khuwair spread over 41,000 sq m of land.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

5 Valuation Methodology

 

5.1 Master Plans and Development Plans

 

The project is assumed to be completed in accordance with the current master plan as advised by the Client. JLL has not independently assessed or verified the viability of the current plans but has relied upon information provided by the Client in terms of development content and areas. A copy of the master plan is attached at Appendix D.

 

5.2 Valuation Method

 

In arriving at our opinion of Fair Value of the Usufruct Right in the Property, we have, as agreed with the Client, used the Income Approach based on a discounted cash flow (DCF). Given the specific conditions contained within the Usufruct Agreement and Development Agreement it is difficult to compare the Subject Property with other usufruct agreements as they rarely exist within the Middle East and North Africa property markets and hence we are not aware of any transactions occurring. That said, we have provided a land market commentary to contextualise the opinion of Fair Value.

 

Income Approach

 

The Income Approach is based on a discounted cash flow approach that determines the current value of the property by first determining the sales values of the built units and serviced land that will be available for sale in the development and are phased over an appropriate sale period. From the estimated value of the sales proceeds we deduct the estimated costs to complete the service infrastructure and buildings, which are also phased over an appropriate period. The projected net cash flow is discounted at an appropriate risk adjusted target Internal Rate of Return to arrive at a residual value for the land. This represents the best price a well-informed, rational and efficient developer/investor would pay for the land in its current condition at the valuation date. Due to the number of inputs this approach is sensitive to any change in the inputs and this can have a significant effect on the reported value.

 

We have modelled our discounted cash flow using the ‘Estate Master Development Feasibility’ software package.

 

Market Approach

 

The Market Approach derives the value of the Property by comparing it to other properties for which the price is known. Ideally, the Property is compared and contrasted to identical properties which have recently been sold or where no recent transactions have taken place, the asking price at which the comparable properties are currently listed for sale. Adjustments may be required to reflect the period of time that has passed between the transaction date and the date of valuation or the price that is expected to be achieved following a negotiated sale.

 

Following an analysis of the terms of sale, an appropriate unit of comparison is chosen, for example, a rate per square foot of land/built-up area. Further subsequent adjustments may be required to factor in differences in location, size (quantum), quality and specification, permitted use and density (Floor Area Ratio) etc. The market approach is the process in which value is derived by analysing sales which occurred around the date of valuation regarding similar properties/sites and comparing these properties to the Subject Property.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

6 Income Approach

 

6.1 Valuation Rationale - Revenue

 

We have been provided with an Initial Master Plan (Section 2.3.1) as provided by the Client. We have used the Income Approach based on a discounted cash flow to provide an opinion of Fair Value assuming the land will be fully developed in line with the Development Agreement. We have assumed all residential units will be sold on a presales strategy while other components will be operated over a five year period after which a sale is forecast.

 

We have assumed that all community and operations land and buildings will not be sold. The map in Section 2.3.1 provides plot locations within the master plan.

 

The following section provides our forecast sales phasing and construction phasing as provided by the Client.

 

6.2 Development Phasing

 

6.2.1 Sales Phasing

 

We have assumed that the various components of the project will be progressively sold over the development period with the following table illustrating the sales phasing we have adopted for the residual land valuation.

 

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

 

Source: JLL, 2015

 

6.2.2 Construction Phasing

 

A twelve month project planning and tender period is reflected in the cash flow before infrastructure work commences

 

Adopted Construction Phasing

 

      Cash flow Period
  Plot No.   Component Type   Start Date - End Date
  -   Land Reclamation   Jan-16 - Dec-19
  -   Utilities   Jan-16 - Dec-19
  -   Infrastructure   Jan-17 - Dec-19
  1   Landmark - Pearls and Ancillaries   Jan-17 - Dec-19
  2   5* Hotel - Balcon   Jan-17 - Dec-18
  3   4* Hotel - Theatre   Jan-17 - Dec-18
  4   Serviced Apartments   Jan-18 - Dec-20
  5   4* Hotel   Jan-18 - Dec-19
  6   Apartments   Jan-18 - Dec-18
  7   Apartments   Jan-18 - Dec-18
  8   Apartments   Jan-18 - Dec-18
  9   Apartments   Jan-18 - Dec-18
  10   High End Souk   Jan-18 - Dec-18
  11   Tower 3 - Marina   Jan-18 - Dec-18
  13   Apartments   Jan-19 - Dec-19
  14   Apartments   Jan-19 - Dec-19
  15   Apartments   Jan-19 - Dec-19
  16   Market Place   Jan-19 - Dec-19
  19   Apartments   Jan-20 - Dec-20
  20   Apartments   Jan-20 - Dec-20
  22   Apartments   Jan-21 - Dec-21
  23   Apartments   Jan-21 - Dec-21
  24   Apartments   Jan-20 - Dec-20
  26   Townhouses   Jan-21 - Dec-21
  27   Townhouses   Jan-22 - Dec-22
  28   Townhouses   Jan-22 - Dec-22
  29   Office   Jan-20 - Dec-20
  30   Office   Jan-20 - Dec-20
  31   Office   Jan-22 - Dec-22
  32   Office   Jan-22 - Dec-22
  33   Clubhouse   Jan-18 - Dec-18
  34   Listed Below    
      12 Bedrooms – Oceanfront   Jan-18 - Dec-18
      8 Bedrooms - Oceanfront   Jan-18 - Dec-18
      7 Bedrooms - Ocean View   Jan-18 - Dec-18
      6 Bedrooms - Ocean View   Jan-17 - Dec-17
      5 Bedrooms - Ocean Access   Jan-17 - Dec-18
      4 Bedrooms - Wadi Park   Jan-18 - Dec-19
      Apartment – Plot 34   Jan-21 – Dec-22

 

  Source: JLL, 2015

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

6.3 Landmark Plot No.1 - Revenue

 

We have made several high level assumptions regarding the revenue and potential value of the Landmark PlotNo.1. We have relied upon retail lease rates within Muscat and also leisure and retail rental rates within the United Arab Emirates where there is an established tourist and entertainment market.

 

The table below provides comparable pre-lease rental rates for properties within the Wave.

 

The Wave Retail Lease Transactions

 

  Location   Tenant   Size (Sq M)   Rent (OMR/Sq M pm)
  Retail Centre, The Wave (pre-let)   More Café   495   16
  Retail Centre, The Wave (pre-let)   Gloria Jeans   146   24
  Retail Centre, The Wave (pre-let)   Kwik Kleen   34   18
  Retail Centre, The Wave (pre-let)   Omantel   75   22

 

The research shows that rental rates range from OMR 16/sq m per month to OMR 24/sq m per month. These leases were generally for five year terms with rental uplifts every two years.

 

The table below represents passing rental rates for entertainment properties within Dubai. Although the much of the information is confidential the equivalent rental rates range from the equivalent of OMR 6.7/sq m per month for theme park space extending to 7,041 sq m to OMR 11.7/sq m per month for children’s entertainment space extending to 4,565 sq m.

 

Dubai Retail Lease Transactions

 

  Location   Tenant Type   Size (Sq M)   Rent (AED/Sq M pa)   Rent (OMR/Sq M pm)   Turnover Rent
  Confidential   Theme Park Operator   7,041   807   6.7   N/A
  Confidential   Children’s Entertainment   4,565   1,399   11.7   N/A
  Confidential   Ice Rink   3,887   807   6.7   Clause Present
  Confidential   Aquarium   3,332   1,399   11.7   N/A
  Ibn Battuta Mall   Cinema   -   1,270   10.6   N/A
  Bowling City   Entertainment   2,044   829   6.9   N/A

 

Based on our research we have adopted the following gross rental rates after growth for the different elements of the Landmark plot as detailed in the table below.

 

Adopted Landmark Plot No. 1 Rental Rates

 

  Landmark Property   Leasable Area   Use   Rent
(OMR/Sq M pm) 		  Rent
(OMR/Sq M pa) 		  Gross Rental Income After Growth (OMR)
  Oman Pearl   1,520   Leisure   10   120   221,917
  Culture Pearl   1,188   Leisure   10   120   173,373
  Innovation Pearl   1,520   Leisure   10   120   221,917
  Energy Pearl   1,520   Leisure   10   120   221,917
  Sea Pearl   950   Leisure   10   120   138,698
  Earth Pearl   1,188   Leisure   10   120   173,373
  Sky Pearl   1,520   Leisure   10   120   221,917
  Exhibition Space   7,600   Leisure   5   60   554,794
  Towers 1   190   F and B   35   420   97,089
  Towers 2   190   F and B   35   420   97,089
  Pearl Retail Units   4,090   Retail   30   360   1,791,290
  Pearl Food Kiosks   898   F and B   45   540   589,815
  Retail Units   2,375   Retail   25   300   866,865
  Restaurants   1,496   F and B   35   420   764,575
  M ovie/Performance Theatre   2,375   Cinema   10   120   346,746
  Total   28,620               6,481,375

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

We have assumed that the remaining parts of the property will be ancillary to the Pearls as detailed below.

 

Landmark Plot No. 1 - Ancillary Facilities

 

  Landmark   BUA (Sq M)  
  Concourse (Below Boardwalk)     22,400  
  Service Corridor     11,756  
  Boardwalk     22,400  
  Child Play Area     100  
  Beach Creation     1,300  
  Amphitheatre     2,500  
  Green Room and Backstage Area     700  
  Technical Production Studio Structure     500  
  Public Restrooms     600  
  Personal Rapid Transit Way (People Mover)     11,000  
  Piazza - Central Park Space     13,652  
  Back Of House Support     1,200  
  Site works - Landmark     2,800  
  Omagine Guide Service (Kiosks)     200  

 

The escalated gross rental revenue for the first year is estimated at OMR 4,861,034 before deductions for incentives, leasing fees and operating expenditure.

 

Entertainment zones/parks would generally be purchased on the basis of future revenue potential. The table below summarises the inputs and assumptions we have made with regard to the Landmark Plot No. 1:

 

Landmark Operating Revenue and Cost Estimation, Year 1 to Year 5

 

  Revenue Assumptions   Unit   Year 1     Year 2     Year 3     Year 4     Year 5  
  Gross Rental Income   OMR     4,861,034       6,481,378       6,481,378       6,675,819       6,675,819  
  Outgoings and Vacancy   OMR     972,207       1,296,276       1,296,276       1,335,164       1,335,164  
  Letting Costs   OMR     388,883       -       -       -       -  
  Net Operating Income   OMR     3,499,944       5,185,102       5,185,102       5,340,655       5,340,655  
  Exit Yield   %                                     8 %
  Property Resale                                         66,758,190  
  Total Rental Income                                         31,175,427  
  Total Revenue                                         97,933,618  

 

Source: JLL, 2015

 

To derive the rental revenue we have assumed that the proposed Landmark Plot No. 1 will comprise of 28,619 sq m of leasable retail space. We have adopted a 8% exit yield which is applied at the end of year 5. This provides an exit sales price of OMR 66,758,190 and a total escalated rental revenue of AED 31,175,427 over the 5 years of operation.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

6.4 Hotel Revenue Assumptions

 

Hospitality investments are generally purchased on the basis of future income potential. Past performance provides some guide to the future performance of a hotel, but often new macro-economic factors or local supply issues mean that a fresh view needs to be taken of the performance potential of the hotel.

 

6.4.1 5 Star Hotel

 

We are instructed that the 5 star hotel will comprise of 280 keys and the anticipated target operators for this type of hotel include the likes of Kempinski and JW Marriot. We have made several assumptions regarding the value of the hotel component of the development.

 

The Client has provided the number of keys which the proposed hotel would comprise. This assumptions equates to a net room area of 100 sq m for a 5 star hotel which, based on current market norms, is generous. The revenue per key reflects the fact that the rooms are larger than standard for this type of product.

 

With reference to competitive market occupancy rates, the details of our calculation are provided below:

 

Hotel and Serviced Chalet Revenue Estimation, Year 1 to Year 5

 

  Revenue Assumptions   Unit   Year 1     Year 2     Year 3     Year 4     Year 5  
  ADR   OMR/ Key / Day     125       140       150       156       162  
  ADR Chalets   OMR/ Key / Day     188       210       225       234       243  
  Occupancy –Hotel   %     50.00 %     55.00 %     60.00 %     65.00 %     67.50 %
  Occupancy – Chalets   %     15.00 %     20.00 %     25.00 %     30.00 %     30.00 %
  RevPAR   OMR/ Key / Day     91       119       146       171       182  
  F and B   %     35 %     37 %     37 %     37 %     37 %
  OTH   %     5 %     10 %     10 %     10 %     10 %
  Total RevPAR         127       175       215       252       268  
  Profit Margin   %     30 %     32 %     35 %     35 %     35 %
  Profit Per Room (RevPAR)         38       56       75       88       94  
  Net Operating Income (NOI)   OMR     8,057,831       11,850,458       15,908,259       18,665,691       19,853,508  
  Sold Chalets   OMR     25,875,000       26,910,000                          
  Hotel Resale @ 10%   OMR                                     198,535,078  
  Total Cash flow   OMR     33,932,831       38,760,458       15,908,259       18,665,691       218,388,586  

 

Source: JLL, 2015

 

The total escalated rental and sales revenue after five years of operation followed by a sale is OMR 325,655,825. The sale price in year five of the cash flow after adopting a 10% exit yield is OMR 198,535,078.

 

We have applied a 13% discount rate to this cash flow. This provides a Net Present Value at Year 1 of OMR 233,971,712 after growth.

 

6.4.2 4 Star Hotel - Theatre

 

We have assumed the 4 star hotel comprises 280 keys and anticipated target operators for this type of hotel include the likes of Sheraton and Radisson. We have made several assumptions regarding the value of the hotel component of the development.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The Client has provided the number of keys which the proposed hotel could comprise. This assumption equates to a net room area of 80 sq m for a 4 star hotel which, based on current market norms, is generous. The revenue per key reflects the fact that the rooms are larger than standard for this type of product.

 

With reference to competitive market occupancy rates, the details of our calculation are provided below:

 

Hotel and Serviced Chalet Revenue Estimation, Year 1 to Year 5

 

  Revenue Assumptions   Unit   Year 1     Year 2     Year 3     Year 4     Year 5  
  ADR   OMR/ Key / Day     90       99       107       111       116  
  Occupancy   %     57.00 %     65.00 %     72.00 %     72.00 %     72.00 %
  RevPAR   OMR/ Key / Day     51       64       77       80       83  
  F and B   %     32 %     35 %     35 %     35 %     35 %
  OTH   %     3 %     5 %     7 %     7 %     7 %
  Total RevPAR         69       90       109       114       118  
  Profit Margin   %     32 %     34 %     38 %     38 %     38 %
  Profit Per Room (RevPAR)         22       31       42       43       45  
  Net Operating Income (NOI)   OMR     2,264,916       3,130,447       4,245,358       4,415,172       4,591,779  
  Hotel Resale @ 9%   OMR                                     51,019,765  
  Total Cash flow   OMR     2,264,916       3,130,447       4,245,358       4,415,172       55,611,544  

 

Source: JLL, 2015

 

The total escalated rental and sales revenue after five years of operation followed by sale is OMR 69,667,437. The sale price in year 5 after adopting a 9% exit yield is OMR 51,019,765.

 

We have applied a 12% discount rate to this cash flow. This provides a Net Present Value at Year 1 of OMR 49,134,060 after growth.

 

6.4.3 4 Star Hotel

 

We have assumed the 4 star hotel comprises 280 keys and anticipated target operators for this type of hotel include the likes of Sheraton and Radisson. We have made several assumptions regarding the value of the hotel component of the development.

 

The Client has provided the number of keys which the proposed hotel would comprise. This assumption equates to a net room area of 80 sq m for a 4 star hotel which, based on current market norms, is generous. The revenue per key reflects the fact that the rooms are larger than standard for this type of product.

 

With reference to competitive market occupancy rates, the details of our calculation are provided below:

 

Hotel and Serviced Chalet Revenue Estimation, Year 1 to Year 5

 

  Revenue Assumptions   Unit   Year 1     Year 2     Year 3     Year 4     Year 5  
  ADR   OMR/ Key / Day     100       110       119       124       128  
  Occupancy   %     55 %     65 %     73 %     73 %     73 %
  RevPAR   OMR/ Key / Day     55       72       87       90       94  
  F and B   %     30 %     35 %     35 %     35 %     35 %
  OTH   %     5 %     10 %     10 %     10 %     10 %
  Total RevPAR         74       104       126       131       136  
  Profit Margin   %     30 %     33 %     37 %     37 %     37 %
  Profit Per Room (RevPAR)         22       34       47       48       50  
  Net Operating Income (NOI)   OMR     2,276,505       3,496,543       4,755,103       4,945,307       5,143,119  
  Hotel Resale @ 9%   OMR                                     57,145,770  
  Total Cash flow   OMR     2,276,505       3,496,543       4,755,103       4,945,307       62,288,890  

 

Source: JLL, 2015

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

he total escalated rental and sales revenue after 5 years of operation followed by sale is OMR 77,762,348. The sale price in year five after adopting a 9% exit yield is OMR 57,145,770.

 

We have applied a 12% discount rate to this cash flow. This provides a Net Present Value at Year 1 of OMR 57,182,686 after growth.

 

6.5 Marina Revenue

 

We have made several high level assumptions regarding the revenue and potential value of the Marina.

 

Marinas rarely transact as a standalone asset and would generally be purchased along with a hotel. They are usually valued on the basis of future revenue potential. The table below summarises the inputs and assumptions we have made with regard to the Marina.

 

Marina Operating Revenue and Cost Estimation, Year 1 to Year 10

 

  Item   Unit   Yr 1     Yr 2     Yr 3     Yr 4     Yr 5     Yr 6     Yr 7     Yr 8     Yr 9     Yr 10  
  Total Revenue   OMR     582,222       584,055       768,384       824,101       932,904       932,904       1,079,787       1,079,787       1,079,787       1,079,787  
  Occupancy   %     45.0 %     45.0 %     60.0 %     65.0 %     75.0 %     75.0 %     90.0 %     90.0 %     90.0 %     90.0 %
  Net Revenue   OMR     494,889       496,446       653,126       700,486       792,968       792,968       917,819       917,819       917,819       917,819  
  Resale   12%                                                                             7,648,491  
  Cash flow   OMR     494,889       496,446       653,126       700,486       792,968       792,968       917,819       917,819       917,819       8,566,310  

 

Source: JLL, 2015

 

The total revenue after 10 years of operation followed by sale is OMR 15,250,650. We have reflected construction costs of OMR 1,334,494 in year one of the Cash flow and have adopted a discount rate of 15%. This produces an Net Present Value of OMR 5,396,178.

 

6.6 Residential Component

 

We have gathered evidence of sales and quoting prices from ITC developments within Muscat. A sample of the sales prices achieved within The Wave development for villas, townhouses and apartments are shown in the following table.

 

  No.   Location   Type     View     No. of Beds     Area
(Sq M) 		    Price     Rate
(OMR/Sq M) 		 
  1   The Wave     Townhouse       Community       2       209       175,000       837  
  2   The Wave     Townhouse       Community       2       125       175,000       1,401  
  3   The Wave     Townhouse       Community       3       356       250,000       702  
  4   The Wave     Villa       Community       3       356       376,000       1,056  
  5   The Wave     Villa       Community       5       516       495,000       959  
  6   The Wave     Villa       Lakefront       4       525       652,000       1,242  
  7   The Wave     Villa       Beachfront       5       540       1,400,000       2,593  
  8   The Wave     Apartment       Community       2       134       159,000       1,187  
  9   The Wave     Apartment       Community       3       200       225,000       1,125  
  10   The Wave     Apartment       Community       1       76.6       105,000       1,371  
  11   The Wave     Apartment       Sea       3       200       320,000       1,600  
  12   The Wave     Apartment       Sea       3       200       350,000       1,750  

 

Source: Varions

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

6.6.1 Villas

 

Based on the commentary at Section 4.2.3 and further research, we are of the opinion that villa units at the Omagine development could achieve the following sales rates:

 

Residential Villas - Adopted Sales Rate

 

  Item   Adopted sales rate
(OMR per sq m) 		 
  4 Bedrooms - Wadi Park     1,200  
  5 Bedrooms     1,200  
  5 Bedrooms - Ocean Access     1,300  
  6 Bedrooms - Ocean View     1,500  
  7 Bedrooms - Ocean View     1,450  
  8 Bedrooms - Oceanfront     2,000  
  12 Bedrooms - Oceanfront     1,950  

 

Source: JLL, 2015

 

The rates are blended rates and reflect the fact that some units will achieve higher and lower sales price rates, subject to micro-location characteristics, such as views, and proximity to the beach.

 

Based on the rates above, the breakdown of the total revenue for the residential component on Plot No.34 is as follows:

 

Residential Villas – Calculation Summary

 

  No.   Item   Net Sales Area
(sq m) 		    Sales Rate
(OMR per sq m) 		    Total Current Sales Revenue
(OMR) 		    Total Escalated Sales Revenue
(OMR) 		 
  1   4 Bed - Wadi Park     57,120       1,200       68,544,000       77,102,678  
  2   5 Bed     31,500       1,200       37,800,000       44,220,654  
  3   5 Bed - Ocean Access     31,500       1,300       40,950,000       47,905,708  
  4   6 Bed - Ocean View     13,920       1,500       20,880,000       23,487,160  
  5   7 Bed - Ocean View     8,400       1,450       12,180,000       13,700,844  
  6   8 Bed - Oceanfront     8,400       2,000       16,800,000       18,897,715  
  7   12 Bed - Oceanfront     8,000       1,950       15,600,000       17,547,878  
      Total     158,840               212,754,000       242,862,637  

 

 Source: JLL, 2015

 

The total escalated sales revenue after pre-sales and sales phasing is OMR 242,862,637.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

6.6.2 Townhouses

 

Based on the commentary at Section 4.2.3 and further research, we are of the opinion that residential units at the Omagine development would achieve the following blended sales rates:

 

Residential Townhouses - Adopted Sales Rate

 

  Item   Adopted Sales Rate
(OMR per sq m) 		 
  Townhouse     1,000  

 

Source: JLL, 2015

 

The rates are blended rates and reflect the fact that some units will achieve higher and lower sales prices, subject to micro-location characteristics, such as views and proximity to the beach.

 

Based on the rates above, the breakdown of the total revenue for the land plots 26, 27 and 28 is as follows:

 

Townhouses – Calculation Summary

 

  No.   Item   Net Sales Area
(sq m) 		    Sales Rate
(OMR per sq m) 		    Total Current Sales Revenue
(OMR) 		    Total Escalated Sales Revenue
(OMR) 		 
  1   Townhouses - 26     49,091       1,000       49,091,000       62,115,984  
  2   Townhouses - 27     27,164       1,000       27,164,000       35,745,358  
  3   Townhouses - 28     17,345       1,000       17,345,000       22,825,233  
      Total     93,600               93,600,000       120,686,575  

 Source: JLL, 2015

 

The total escalated sales revenue after pre-sales and sales phasing is OMR 120,686,575.

 

6.6.3 Apartments

 

Based on the commentary at Section 4.2.3 and further research, we are the opinion that residential apartment units at the Omagine development would achieve the following sales rates:

 

Residential Apartments - Adopted Sales Rate

 

  Item   Adopted Sales Rate
(OMR per sq m) 		 
  Apartments - 6,7,8,15     1,200  
  Apartments - 9,13,14     1,600  
  Apartments -22,23     1,000  
  Apartments -24     1,100  
  Plot 34 Apartments     1,200  

 

Source: JLL, 2015

 

The rates are blended rates and reflect the fact that some units will achieve higher and lower sales price rates, subject to micro-location characteristics.

 

Based on the rates above, the breakdown of the total revenue for the residential apartments is as follows:

 

Apartments – Calculation Summary

 

  No.   Item   Net Sales Area
(sq m) 		    Average Sales Rate
(OMR per sq m) 		    Total Current Sales Revenue
(OMR) 		    Total Escalated Sales Revenue
(OMR) 		 
  1   Apartments     378,188       1,254       480,575,700       575,391,121  

 

Source: JLL, 2015

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

The total escalated sales revenue after pre-sales and sales phasing is OMR 575,391,121.

 

We are informed that some of the apartment buildings have a ground floor retail component. We have considered this and believe that although a higher rate of sale would be achieved, due to the reduced efficiency of retail space, the overall effect would be equal to that of apartment space.

 

6.6.4 Serviced Apartments

 

Based on the commentary at Section 4.2.3 and further research, we are of the opinion that proposed serviced apartment units on Plot No. 4 would achieve the following sales rate:

 

Residential Apartments - Adopted Sales Rate

 

  Item   Adopted Sales Rate
(OMR per sq m) 		 
  Apartments     1,300  

 

Source: JLL, 2015

 

The rates are blended rates and reflect the fact that some units will achieve higher and lower sales price rates, subject to micro-location characteristics.

 

Based on the rates above, the breakdown of the total sales revenue for the proposed Plot No. 4 is as follows:

 

Serviced Apartments – Calculation Summary

 

  No.   Item   Net Sales Area
(sq m) 		    Sales Rate
(OMR per sq m) 		    Total Current Sales Revenue
(OMR) 		    Total Escalated Sales Revenue
(OMR) 		 
  1   Serviced Apartments     67,248       1,300       87,435,525       100,320,135  

 

Source: JLL, 2015

 

The total escalated sales revenue after pre-sales and sales is OMR 100,320,135.

 

6.7 Office Component

 

We have investigated market rents for Grade A and various types of office space in Muscat. That said, we are of the view that any office space on Omagine project would be developed to Grade A specification. The table below provides lease rental rates for properties within Muscat.

 

Office Lease Rates

 

  Location   Size
(Sq M) 		    Net Rent
(OMR/Sq M pm) 		 
  Al Khuwair     275       10  
  Shatti Al Qurm     10,870       9  
  Al Khuwair     928       9  
  Al Khuwair     928       9  
  Ghala     27,610       10  

 

The research shows that rental rates for Grade A office space range from OMR 9/sq m per month to OMR 10/sq m per month.

 

Considering the above, we have formed our opinion of the net market rent at OMR 120/sq m pa.

 

  Item   Adopted Net Rental Rate (OMR per sq m)  
  Office     120  

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

To estimate the sales revenue of the office component of the development we have used the Income Capitalisation Method. This method requires the capitalisation of the Net Operating Income of the office units.

 

We understand that neither a proposed tenant mix nor proposed designs for the office space are available. In the absence of this, we have assumed that the gross office space will comprise an efficiency of 80%. As such, the total leasable area of the office space amounts to 37,174 sq m.

 

Below is a summary of the calculation for the office component of the Omagine development.

 

Office Component – Calculation Summary

 

  Description   Leasable Area (sq m)     Current Total (OMR)     Escalated Total  
  Net Operating Income     37,174       4,460,880          
  Cap Rate             10 %        
  Resale Value (Yr 1)             47,397,360       61,266,348  

 

Source: JLL, 2015

 

The calculation above provides an escalated total revenue of OMR 61,266,348 on sale of all the office space as strata on the first year of construction completion of each office plot.

 

6.8 Retail Component

 

We have investigated market rent for various types of retail space in Muscat. The table below provides pre-lease rental rates for properties within the Wave.

 

The Wave Retail Lease Rates

 

  Location   Tenant   Size
(Sq M) 		    Gross Rent
(OMR/sq m pm) 		 
  Retail Centre, The Wave (pre-let)   More Café     495       16  
  Retail Centre, The Wave (pre-let)   Gloria Jeans     146       24  
  Retail Centre, The Wave (pre-let)   Kwik Kleen     34       18  
  Retail Centre, The Wave (pre-let)   Omantel     75       22  

 

The research shows that rental rates range from OMR 16/sq m per month to OMR 24/sq m per month. These leases were generally for five year terms with rental uplifts every two years.

 

Considering the above, we have formed our opinion of the net market rent.

 

  Item   Adopted Net Rental Rate (OMR/sq m per annum)  
  High End Souk     222  
  Tower 3     222  
  Market Place     222  

 

To estimate the sales revenue of the retail components of the development we have used the Income Capitalisation Method. This method requires the capitalisation of the Net Operating Income of the retail units.

 

We understand that neither a proposed tenant mix nor proposed designs for the retail space are available. In the absence of this, we have assumed that the Tower 3 space will comprise an efficiency of 80% whereas the High End Souk and Market Place will comprise an efficiency of 60%. As such, the total leasable area of the retail space amounts to 5,003 sq m.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

Below is a summary of the calculation for the retail component of the Omagine development.

 

Retail Components – Calculation Summary

 

  Description   High End Souk     Tower 3     Market Place     Current
Total
OMR 		    Escalated Total
OMR 		 
  Leasable Area (sq m )     3,972       240       791       5,003       -  
  Net Operating Income     794,400       48,000       158,200       1,000,600       1,258,456  
  Cap Rate     9 %     9 %     9 %     9 %        
  Resale Value (Yr 1)     8,826,667       533,333       1,757,778       11,117,778       12,584,558  

 

Source: JLL, 2015

 

The calculation above provides an escalated total revenue of OMR 12,584,558 on sale of all the retail space on the first year of completion.

 

6.9 Sales Escalation

 

We have adopted a sales price escalation rate at 4%.

 

6.10 Sales Revenue Collection Profile

 

The following table illustrates the revenue collection profiles we have adopted for each phase in the residual land valuation based on years after date of exchange or sale.

 

Sales Revenue Collection Profile

 

  Item   Year 0
% 		    Year 1
% 		    Year 3 - Balance on settlement
% 		 
  Serviced Apartments, Townhouses, 4 Bedroom Villas     30.00 %     30.00 %     40.00 %
  All Villas (excluding 4 Bedroom Villas)     90.00 %     0.00 %     10.00 %
  Plot No. 34 Apartments     50.00 %     40.00 %     10.00 %
  All Apartments (excluding those on Plot No. 34)     30.00 %     0.00 %     70.00 %

 

Source: JLL, 2015

 

6.11 Gross Project Revenue

 

The Gross Escalated Project Revenue for the full development of the Omagine project calculates to OMR 1,525,554,199.

 

6.12 Administration and Legal, Marketing and Sales Commission

 

We have allocated 0.5% of total sales for marketing costs and 0.5% of total sales for administration and legal costs. We have also allocated sales commission of 2% of the gross sale price for agents/brokers.

 

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6.13 Usufruct Land Purchase Cost

 

Under the Development Agreement, Omagine received the Subject Property at an agreed deferred price of OMR 25/sq m of land area. This price will be escalated at a fixed rate of 6% pa from the Effective Date. This is payable when the Usufruct owner assigns the title of any part of the land. Any land that is not sold within the Usufruct’s term will be return to the Omani Government at zero cost to Omagine. The table below details the annual forecast fees payable per year for the freehold title sales

 

  Year     Fees (OMR)  
  1       -  
  2       -  
  3       -  
  4       436,046  
  5       10,828,815  
  6       7,476,741  
  7       1,665,022  
  8       1,491,413  
  9       2,755,203  
  10       985,616  
  11       -  
  12       4,219,823  
  Total       29,858,679  

 

Source: JLL, 2015

 

6.14 Net Project Revenue

 

The Omagine project has a Total Net Project Revenue of OMR 1,466,274,002. We note that the Total Net Project Revenue is after deduction of selling/letting costs and the Usufruct Land Purchase Costs.

 

6.15 Development Costs

 

Construction Costs

 

The construction costs equate to the full development of the Subject Property as specified in the Development Agreement.

 

Land Reclamation costs are those costs associated with the dredging and reclaiming of land within the Subject Property and adjacent seabed to form the Initial Master Plan land area.

 

The infrastructure and utilities costs relate to all infrastructure and utilities needed within the Inner Boundary of the plot. The details of this can be found in Section 3.4.

 

All other costs are associated with the construction of operational, saleable and community assets. The table below summarises the construction costs used for the proposed project.

 

Adopted Construction Costs

 

  Component   No. Units     Size (Sq M)     Cost/Unit     Cost/Sq M     Total Current Cost (OMR)     Total Escalated Cost (OMR)  
  Land Reclamation     -       -       -       -       29,741,357       30,633,597  
  Utilities     -       -       -       -       17,240,848       17,758,073  
  Infrastructure     -       -       -       -       24,577,048       26,073,790  
  1 - Landmark - Pearls & Ancillaries     -       123,133       -       630       77,625,130       82,352,501  
  2 - 5* Hotel - Balcon     280       86,885       272,369       878       76,263,324       80,907,760  
  3 - 4* Hotel - Theatre     280       24,970       95,590       1,072       26,765,263       28,395,267  
  4 - Serviced Apartments     724       79,115       61,829       566       44,764,145       48,914,990  
  5 - 4* Hotel     280       24,970       95,590       1,072       26,765,263       29,247,125  
  6 - Apartments     334       75,049       115,584       514       38,605,070       42,184,802  
  7 - Apartments     60       13,503       115,765       514       6,945,919       7,589,993  
  8 - Apartments     125       28,020       115,307       514       14,413,437       15,749,952  

 

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  Component   No. Units     Size (Sq M)     Cost/Unit     Cost/Sq M     Total Current Cost (OMR)     Total Escalated Cost (OMR)  
  9 - Apartments     155       34,836       115,610       514       17,919,575       19,581,204  
  10 - High End Souk     1       6,620       2,666,059       403       2,666,059       2,913,274  
  11 - Tower 3 - Marina     1       300       130,797       436       130,797       142,925  
  12 - Marina Operations (with berths)     -       -       -       -       -       -  
  Boat Slips/Piers     50               24,247       -       1,212,347       1,248,717  
  Boaters' Building     1       174       16,524       95       16,524       17,020  
  Marina Operations Building     1       335       75,505       225       75,505       77,771  
  Marina Services Building     1       670       30,117       45       30,117       31,021  
  13 - Apartments     190       42,685       115,564       514       21,957,087       24,712,894  
  14 - Apartments     180       40,607       116,045       514       20,888,167       23,509,816  
  15 - Apartments     82       18,519       116,172       514       9,526,140       10,721,755  
  16 - Market Place     1       1,318       18,031       14       18,031       20,294  
  19 - Apartments     139       31,278       115,751       514       16,089,346       18,651,962  
  20 - Apartments     199       44,877       116,003       514       23,084,647       26,761,433  
  22 - Apartments     133       29,892       115,612       514       15,376,391       18,360,215  
  23 - Apartments     147       32,970       115,372       514       16,959,708       20,250,779  
  24 - Apartments     55       12,414       116,104       514       6,385,739       7,402,822  
  26 - Townhouses     110       49,091       247,802       555       27,258,234       32,547,757  
  27 - Townhouses     61       27,164       247,258       555       15,082,754       18,549,885  
  28 - Townhouses     39       17,345       246,951       555       9,631,107       11,845,047  
  29 - Office     -       11,617       -       467       5,430,514       6,295,454  
  30 - Office     -       11,617       -       467       5,430,514       6,295,454  
  31 - Office     -       11,617       -       467       5,430,514       6,678,847  
  32 - Office     -       11,617       -       467       5,430,514       6,678,847  
  33 - Clubhouse     1       278       149,929       539       149,929       163,832  
  34 - Villas     -       -       -       -       -       -  
  Villas - 12 Bedrooms - Oceanfront     8       8,000       648,818       649       5,190,544       5,671,847  
  Villas - 8 Bedrooms - Oceanfront     10       8,400       554,124       660       5,541,239       6,055,062  
  Villas - 7 Bedrooms - Ocean View     12       8,400       471,267       673       5,655,200       6,179,590  
  Villas - 6 Bedrooms - Ocean View     24       13,920       362,259       625       8,694,221       9,223,700  
  Villas - 5 Bedrooms - Ocean Access     120       63,000       329,708       628       39,564,980       41,974,487  
  Villas - 4 Bedrooms - Wadi Park     120       57,120       282,981       594       33,957,705       37,106,501  
  Apartments     285       64,080       115,658       514       32,962,636       39,359,111  
  Total                                     741,453,589       818,837,173  

 

Source: Omagine LLC, 2015

 

The total construction costs for the project total to an un-escalated cost of OMR 741,453,589 and an escalated cost of OMR 818,837,173, both excluding contingency allowance.

 

We would however caution that JLL have not undertaken cost investigations and that a more accurate construction cost survey should be undertaken by a professional qualified quantity surveyor. Should the outcome of a more rigorous expert cost analysis reveal costs which are significantly different to the costs we have adopted, we would recommend a re-valuation of the property is conducted.

 

Professional Fees and Contingency

 

We have adopted Project and Development Management fees of 2% of project costs and Professional fees of 8% of project cost. These costs (escalated) add up to OMR 107,575,601 for the full development.

 

We have assumed a escalated construction cost contingency allowance of OMR 81,883,717 which equates to approximately 10% of total construction costs.

 

Cost Escalation

 

We have assumed a 3% per annum construction cost escalation adopted from year one of the cash flow onwards with reference to Oxford Economics inflation indexes.

 

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6.16 Usufruct Rent

 

As stated in Section 3.2, the Usufruct Agreement owner has to pay an annual fee which is calculated at a rate of OMR 0.3/Sq M and is multiplied by the remaining Existing land and Reclaimed Land that the Project Company are in possession of on 31 December of each year. The Usufruct Agreement stipulates that this fee is not to be charged for the first five years after Ratification (signing of the Usufruct Agreement) but will be paid every year thereafter until expiry of the Usufruct Agreement. The table below details the annual forecast fees payable per year for the Usufruct Rent.

 

  Year     1-5       6       7       8       9       10       11       12-25  
  Usufruct fees (OMR)     0       147,912       138,810       130,557       128,741       109,142       100,250       100,250  

 

6.17 Project Discount Rate/Target Project IRR

 

Rational developers in the region use high discount rates for high risk projects. The project discount rate is a reflection of the risk-free rate and a risk premium for the development, risk to the associated cash flows as well as the opportunity cost of the capital. We have also taken into account the risks associated with the completion of the construction programme and in achieving the anticipated projected income.

 

The various risks associated with development have necessitated the use of a 15% project discount rate or target Internal Rate of Return (IRR). The project discount rate is a reflection of the risk-free rate and a risk premium for the development, risk to the associated cash flows as well as the opportunity cost of the capital. We have also taken into account the risks associated with the completion of the construction programme and in achieving the anticipated projected income.

 

6.18 Residual Land Valuation Summary

 

Based on the foregoing report commentary and assumptions, we conclude that the residual land value calculation based on a discounted cash flow returns a value which reflects the full development of the Omagine Project. We provide a summary of our residual land valuation calculation below after adopted growth but before discounting.

 

Residual Land Valuation Summary

 

  Description   Total After Growth (OMR)  
  Landmark Plot*     66,758,190  
  Hotel Units     340,288,458  
  Marina Unit     5,396,178  
  Residential Units     1,039,260,467  
  Office Units     61,266,348  
  Retail Units     12,584,558  
  Less Selling Costs     53,972,973  
  Less Usufruct Land Purchase Costs     29,858,683  
  NET SALES REVENUE     1,441,722,544  
  Landmark Plot     31,175,427  
  Less Outgoings and Vacancies     6,235,085  
  Less Letting Fees     388,883  
  NET RENTAL INCOME     24,551,459  
  TOTAL REVENUE     1,466,274,002  

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

  Construction Costs     818,837,172  
  Contingency at 10%     81,883,717  
  Professional Fees     107,575,601  
  Usufruct Rent (per annum)     2,158,913  
  TOTAL COSTS     1,162,187,788  
  Project Discount Rate     15 %
  Net Present Value     151,374,405  
  Fair Value (Rounded)     150,000,000  

 

*Total rental income over a five year holding period of the Landmark Plot.

 

This calculates to OMR 137/sq m of land area and OMR 132/sq m of BUA. A summary of the Estate Master calculation is provided at Appendix H.

 

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7 Land Market Commentary

 

We have provided a land market commentary for large raw and serviced development land which have transacted in the past or are advertised on the market within Oman and the UAE.

 

7.1 Comparable Land Transactions

 

Muscat is characterised as an ‘opaque market’ hence no centralised database exists where transactions are recorded and publically available.

 

We have been provided with the land transaction details of plots that have sold in Muscat Hills as previous mentioned in the section above. Muscat Hills Golf and Country Club has embarked on a serviced land sales strategy for approximately 100,000 sq m of land located at the Muscat Hills development.

 

  Date   Location   Type   Description   Land Size
(Sq M)* 		    BUA
(Sq M) 		    Price
(OMR) 		    Rate on Land
(OMR/Sq M) 		    BUA Rate
(OMR/Sq M) 		 
  Q3/Q4 2014   Muscat Hills   Residential   G+7 @ 70%     10,000       56,000       4,500,000       450       80  
  Q3/Q4 2014   Muscat Hills   Residential   G+7 @ 70%     10,000       56,000       6,000,000       600       107  

 

*Approximate area

 

Due to the scale of the Subject Property, a significant discount for quantum would be attributed to the land rate of these comparables as the Subject Property is approximately 100 times the size of the serviced land transactions conducted. We would also apply a discount for the Usufruct and Development Agreement obligations.

 

Due to the market being opaque and the limited availability of freehold land within Muscat we are not aware of many publically available arm’s length land transactions in Muscat particularly with a sea frontage. We have therefore relied on transactions for land in similar locations within the United Arab Emirates whether there is more market transparency and sea front freehold and has previously transacted within the market.

 

An example of a recent transaction in Dubai that we are aware of includes a luxury residential villa and golf course zoned plot located in DubaiLand. The site area for the residential land is 15,000,000 sq ft and we are aware that the purchase price was approx. AED 533,000,000. However, the purchase price is to be spread over five years and by using a Discount Rate of 10%, the Net Present Value reflects a purchase price closer to AED 400,000,000. This therefore calculates to a day one estimated price of AED 26/sq ft (OMR 26/sq m) of land area.

 

We are aware of a recent serviced unrestricted freehold land transaction for sea/beach front land within Dubai’s Palm Jumeirah transacting at AED 650/sq ft of land which is the equivalent of OMR 700/sq m of land area. The land area had an FAR of 1.

 

An un-serviced waterfront land transaction occurred in the Business Bay/Dubai Health Care City Phase 2 master plan that extended to approximately 10,000 sq m with an FAR of 1. The purchase price was AED 212/sq ft of land area in 2006 with recent formal offers being made in the order of AED 360/sq ft of land area. This equates to approximately OMR 233/sq m and OMR 390/sq m of land area respectively.

 

We are also aware that Damac Real Estate purchased the 5,109,667 sq m “Akoya Oxygen” land plot for the equivalent of OMR 197,474,220. This equates to a rate of OMR 39/sq m and was one of the few single cash payments conducted for development land of this size over the recent past.

 

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We have highlighted recorded land transactions from the Dubai Land Department via REIDIN in the table below. The table shows what investors have historically paid for large parcels of undeveloped land within Dubai and demonstrates that quantum discounts that can be expected for large parcels of land over smaller more easily developed land plots.

 

Comparable Transactions

 

  Location   Registration
Date 		  Plot Area
(Sq Ft) 		    Plot Area
(Sq M) 		    Price
(AED) 		    Price
(AED/sq ft) 		    Equivalent
(OMR/Sq M) 		 
  Nad Al Shiba   Dec-13     1,108,231       102,958       4,552,381       4.1       4.4  
  Grayttesah   Nov-13     1,967,869       182,821       14,959,424       7.6       8.2  
  Um Nahed First   Mar-13     1,999,999       185,806       60,000,000       30       32.3  
  Lehbab First   Apr-12     1,189,949       110,550       15,000,000       13       14.0  
  Wadi Al Safa 4   Mar-11     2,000,000       185,806       20,000,000       10       10.8  
  Al Khawaneej Second   Mar-11     1,000,000       92,903       10,000,000       10       10.8  
  Dubai Lifestyle City   Jan-10     2,238,183       207,934       71,622,000       32       34.4  
  Dubai Land   Jul-09     24,719,462       2,296,513       681,463,020       28       30.1  

 

Source: Reidin

 

We note that none of these transactions have a sea frontage with sea frontage land commanding a premium. The table above shows that registered land sale prices based on land area have ranged between AED 4.1/sq ft of land (OMR 4/sq m) and AED 32/sq ft of land area (OMR 32/sq m) depending upon location. The largest land transaction is identified as transaction no. 1 located in Dubai which sold in 2009 for a sales rate of AED 28/sq ft of land area (OMR 30/sq m).

 

7.2 Large Comparable Asking Prices in Oman

 

As mentioned, we have not been able to identify any recent arms-length transactions for large plots of land within Muscat. We have had discussions with various agents and property consultants who are marketing plots for sale throughout Muscat. The general consensus is that vendor price expectations are above what can be achieved in the market. The largest advertised land plots near the Subject Property are provided in the table below.

 

Comparable Asking Prices

 

  No.   Location   Use   Plot Area
(Sq M) 		    Asking Price
(OMR) 		    Rate
(OMR/Sq M) 		 
  1   A'Nakheel Beach, Muscat   ITC     295,692       103,492,200       350  
  2   A'Zaibah, Muscat   Residential     263,351       144,843,050       550  
  3   Rusayl, Muscat   Residential - Gated     119,000       35,700,000       300  
  4   Wadi Al Lawami, Al Seeb   Commercial     40,577       8,000,000       197  
  5   Al Seeb   -     181,000       23,000,000       127  
  6   Muttrah, Muscat   Commercial     78,100       55,600,000       712  
  7   Al Seeb   Residential     13,880       13,000,000       937  

 

Source: JLL

 

The quoting rate for the above properties vary significantly. The largest properties are comparable no. 1, 2 and 3. We are of the opinion that these are the most comparable, subsequently they have more consistent asking rates ranging from OMR 300/sq m to OMR 550/sq m of land area. The variance between these is likely to be due to location and zoning type. Due to the opaque nature of the property market we have been unable to ascertain the specific permissible FAR for these properties but we are informed that they are generally below 3 with comparable no. 1 and 2 having an FAR of below 2.

 

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7.3 Conclusion

 

Given the recent transactions and asking prices available in Muscat, Dubai and Ras Al Khaimah, land prices for unrestricted freehold land generally ranges from the equivalent of OMR 26/sq m to OMR 750/sq m for land ranging from 13,880 sq m to 2,296,513 sq m with a significant quantum discount for land that is larger than 300,000 sq m. Un-serviced large land transactions that we are aware with an area of over 300,000 sq m have not transacted within the region in an arms-length transaction and an upfront cash payment for more than OMR 100/sq m of land area in the recent past. The Subject Property has the following characteristics, some of which would not be present within a freehold title, that make direct comparison challenging:

 

  1. Usufruct Rights including an annual rental fee which we estimate to be OMR 2,158,913;
  2. Usufruct land cost on creation of freehold title at OMR 25/sq m with 6% increase pa for the Effective Date which we estimate to be OMR 29,858,679.
  3. Development minimum build obligations including deferred land payment;
  4. The land extends to 1,000,000 sq m;
  5. Beach frontage with limited availability of prime beach frontage land in Oman;
  6. A low floor to area ratio (FAR).

 

We are therefore of the view that the opinion of Fair Value arrived to using the Income Approach based on a discounted cash flow is appropriate.

 

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8 Fair Value Commentary

 

8.1 IFRS 13 Commentary

 

The guidance contained in IFRS 13 indicates that a Fair Value measurement requires an entity to determine the following:

 

  Item     Our Approach
  a) The particular asset or liability that is the subject of the measurement (consistently with its unit of account).   In this case the asset comprises the Property described in this report on the basis of the ownership specified.
  b) For a non-financial asset, the valuation premises that is appropriate for the measurement (consistently with its highest and best use).   We have been instructed to assume the Property represents the highest and best use.
  c) The principal (or most advantageous) market for the asset
or liability. 		  We consider this to be the open market for development land.
  d) The valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of fair value hierarchy within which the inputs are categorised.   Development land assets which are comparable to the Property in terms of scale rarely transact in the open market. Therefore, we have agreed to use the Income Approach based on a discounted cash flow model to measure the Fair Value of the Property.

 

IFRS 13 requires a commentary to be made on the hierarchy of the inputs used in measuring Fair Value. Due to the opaque nature of the market and the fact that office buildings which are comparable to the Property in terms of scale are rarely traded in the Dubai property market, our valuation has been prepared using the Income Approach based on a discounted cash flow model. We have based our inputs on the most appropriate market based information available to us. However, our model contains a number of ‘unobservable inputs’ and should therefore be categorised within Level 3 of the fair value hierarchy.

 

The significant unobservable inputs adopted in our model are as follows:

 

●         Project phasing;

 

●         Construction costs;

 

●         Project discount rate.

 

Our model is sensitive to isolated changes in the inputs, particularly those highlighted above. Any significant increase (delay) in the project phasing, construction costs and project discount rate will result in a significant decrease in Fair Value. However, an increase in the project phasing may also, if it is associated with an increased risk of receiving the forecasted net cash flow, be accompanied by an increase in the project discount rate.

 

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Omagine Plot, Muscat, Oman 23 June 2015

 

9 Fair Value

 

9.1 Opinion of Fair Value

 

Based on the foregoing, we are of the opinion that the Fair Value of the Usufruct Right of the Property as at 31 December 2014 is:

 

OMR 150,000,000

 

(ONE HUNDERED AND FIFTY MILLION OMANI RIYALS)

 

No allowance has been made for any expenses of realisation or for taxation which might arise in the event of a disposal or for a purchaser’s cost of acquisition.

 

Liability

 

Our liability will be to our Client only and will be limited in aggregate to the fee for this assignment. This liability proviso does not apply with respect to ‘Clients Information’ as such information is considered the responsibility of the Client.

 

9.2 Principal Risks

 

Omagine is a long term development project which will require continued public and private sector support to overcome considerable engineering, economic and financial challenges. In our valuation we have identified a number of specific risks as noted below:

 

  ● General economic and demographic conditions: an increase in the resident population as a result of economic and employment expansion may increase demand although the fall in oil prices may have a significant effect on the Oman economy due to its reliance on oil as the largest contributor to GDP.

 

  ● The stability of Oman is of significant concern. Sultan Qaboos, the ruler of Oman, brought stability to the country when he took over from his father in a bloodless coup. Recently, the Sultan has been living abroad while receiving medical treatment and has not been conducting public duties. There are also concerns over the conflict arising in neighbouring Yemen.

  

  ● The scale of the development and nature of the site will significantly limit the number of potential buyers and the market might not be able to absorb the individual product offerings in the master development which can lead to oversupply conditions and possible resultant price corrections.

 

  ● The success of the land sales and subsequent absorption by third party investors is dependent upon and integral to the overall development and implementation of the project and its adherence to the master plan and time frame.

  

  ● Infrastructure risks: the timely provision of infrastructure, including water and electricity as well as connections to the road network is critical to the completion and saleability of assets under development and any delays may adversely impact sales receipts. Raising capital for the future sale/reimbursement of infrastructure works by a developer such as Omagine LLC could prove problematic and the disposal time may be pro-longed.

  

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  ● Construction costs: our analysis assumes that the developer has conducted an audit of construction costs for each phase of the development and that the construction costs adopted are in line with market to undertake or complete service and development works required. Should construction costs be significantly different and/or rise more rapidly or earlier than anticipated this can have an adverse effect on the underlying land value.

 

  ● External factors: with a significant component of purchaser demand from off-shore, any increased political instability in the region may affect confidence in or immigration to Muscat which can impact demand for property in the Sultanate both positively and negatively. Changes in economic conditions in source markets, both within the Middle East and more widely in markets such as Russia and CIS, India and Pakistan and Western Europe also impact demand for investment and second home properties.

 

  ● Increased competition from comparable projects within Muscat, could adversely impact future demand with a few similarly sized projects in the pipeline.

 

The Sultanate of Oman has experienced a rapid growth in population and commensurate development and investment activity over the past few years as a result of government plans, infrastructure projects, law and regulation changes and other stimulants to the economy. The government have actively encouraged the development of tourism and entertainment projects. The use of ITC’s will encourage FDIs and open Oman up to global tourism as foreign nationals are able to gain residency in the Sultanate.

 

9.3 Saleability of the Asset

 

The saleability of the asset is restricted by the size and scale of the proposed development, the limited number of buyers who would have the capability and financial resources to buy or deliver the development as planned and the limited availability of financing.

 

We therefore consider that the timeframe to achieve a sale could take an extended marketing period of more than six months.

 

9.4 Confidentiality and Publication

 

Finally, and in accordance with our normal practice we confirm that the Report is confidential to the parties to whom it is addressed for the specific purpose to which it refers. No responsibility whatsoever is accepted to any third party and neither the whole of the Report, nor any part, nor references thereto, may be published in any document, statement or circular, nor in any communication with third parties without our prior written approval of the form and context in which it will appear.

 

We further confirm the following:

 

  ● The statements of fact presented in the report are correct to the best of the Valuers knowledge;

 

  ● The analyses and conclusions are limited only by the reported assumptions and conditions;

 

  ● JLL are ‘External Valuers’ and its valuation consultants have no interest in the Subject Property.

 

  ● JLL’s fee is not contingent upon any aspect of the report;

 

  ● The valuation was performed in accordance with RICS ethical code and performance standards;

 

  ● The Valuers have satisfied professional education requirements;

 

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● The Valuers have experience in the category of the Property being valued;

 

● The Valuers have made a personal inspection of the Property;
     
● The Valuation maybe subject to RICS monitoring regulations

    

We trust that we have carried out the valuation in accordance with your instruction and should there be any points that require clarification, please contact the undersigned.

 

Yours faithfully,

 

For and on behalf of Jones Lang LaSalle UAE Limited (Dubai Branch)

 

  /s/ Youcef Elhachemi   /s/ Simon Brand
  Youcef Elhachemi mrics   Simon Brand frics
  Associate – Valuation Advisory   Head of Valuation Advisory - MENA

                            

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10 Assumptions and Caveats Relative to Valuation

 

10.1 General

 

  ● We assume no responsibility for economic or physical factors which may affect the opinions in this report which occur after the valuation date.

 

  ● We have relied extensively on information provided during discussions and in hardcopy by the Client. Whilst we believe that the data collected is accurate and reliable, JLL has not, as part of the valuation, performed an independent audit or review of the information gathered and does not express an opinion or any other form of assurance on the accuracy of such information. No responsibility is assumed for errors or omissions, or for information not disclosed which might otherwise affect the valuation estimate.

  

  ● We have accepted advice given to us on such matters as planning or statutory notices, easements, tenure, identification of property, site and areas, and all other relevant information. Dimensions, measurements and areas included in the valuation are based on information provided by Client and are assumed to be in line with RICS Code of Measuring Practice. No on-site measurements have been made. We have been advised that no material facts have been omitted from the information supplied.

  

  ● No opinion is intended to be expressed for matters which require legal expertise or specialised investigation or knowledge beyond that customarily employed by property valuers.

  

  ● Unless otherwise noted, no consideration has been given in this valuation to the value of the property if any located on the premises which is considered to be personal property, only the real immovable property has been considered.

  

  ● Maps and exhibits included in this report are for illustration only as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose, nor should they be removed from, reproduced or used apart from the report.

 

10.2 Title and Ownership

 

  ● No opinion to title is rendered. Data relating to ownership and legal description was obtained from the client or public records considered reliable. Title is assumed to be marketable and free and clear of all liens, encumbrances, easements, and restrictions except if specifically discussed in the report. The property is valued assuming it to be under responsible ownership, competent management and available for its highest and best use.

  

  ● The Property is valued as if wholly owned with no account being taken of any outstanding monies due in respect of mortgage bonds, loans or any other third party claims.

 

10.3 Condition and Compliance of Land

 

  ● The Property is valued assuming that it is in full compliance with all applicable state and local environmental regulations and laws.

 

  ● The Property is valued assuming all applicable zoning and use regulations and restrictions have been and will be complied with, unless otherwise stated and would not significantly change in future.

 

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  ● We have assumed no responsibility for hidden or unapparent conditions of the Property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for arranging for engineering studies that may be required to discover them.

 

  ● No detailed soil studies covering the Property was available for this valuation. It is therefore assumed that soil conditions are adequate and will continue to support the existing building construction consistent with highest and best use.

 

  ● Unless otherwise stated in this report, the valuers signing this report have no knowledge concerning the presence or absence of toxic materials in the improvements and/or hazardous waste on the land. No responsibility is assumed for any such conditions or for any expertise or engineering to discover them.

  

  ● No engineering survey has been made by the valuers. Except if specifically stated, no encroachment of real property improvements is considered to exist.

 

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Appendix A: General Principles Adopted in the Preparations of Valuations and Reports

 

These General Principles should be read in conjunction with JLL’s General Terms and Conditions of Business except insofar as this may be in conflict with other contractual arrangements.

 

1 RICS Valuation - Professional Standards (January 2014)

 

All work is carried out in accordance with the Practice Statements contained in the RICS Valuation – Professional Standards (January 2014) published by the Royal Institution of Chartered Surveyors, by valuers who conform to the requirements thereof. Our valuations may be subject to monitoring by the RICS.

 

2 Valuation Basis:

 

Our reports state the purpose of the valuation and, unless otherwise noted, the basis of valuation is as defined in the RICS Valuation – Professional Standards (January 2014). The full definition of the basis, which we have adopted, is either set out in our report or appended to these General Principles.

 

3 Disposal Costs Taxation and Other Liabilities:

 

No allowances are made for any expenses of realisation, or for taxation, which might arise in the event of a disposal. All property is considered as if free and clear of all mortgages or other charges, which may be secured thereon.

 

No allowance is made for the possible impact of potential legislation which is under consideration.

 

Valuations are prepared and expressed exclusive of VAT payments, unless otherwise stated.

 

4 Documentation:

 

We do not normally read leases or documents of title. We assume, unless informed to the contrary, that each property has a good and marketable title, that all documentation is satisfactorily drawn and that there are no encumbrances, restrictions, easements or other outgoings of an onerous nature, which would have a material effect on the value of the interest under consideration, nor material litigation pending. Where we have been provided with documentation we recommend that reliance should not be placed on our interpretation without verification by your lawyers.

 

5 Tenants:

 

Although we reflect our general understanding of a tenant’s status in our valuations, enquiries as to the financial standing of actual or prospective tenants are not normally made unless specifically requested. Where properties are valued with the benefit of lettings, it is therefore assumed, unless we are informed otherwise, that the tenants are capable of meeting their financial obligations under the lease and that there are no arrears of rent or undisclosed breaches of covenant.

 

6 Measurements:

 

All measurement is carried out in accordance with the Code of Measuring Practice (6th Edition) issued by the Royal Institution of Chartered Surveyors, except where we specifically state that we have relied on another source. The areas adopted are purely for the purpose of assisting us in forming an opinion of capital value. They should not be relied upon for other purposes nor used by other parties without our written authorisation.

 

7 Estimated Rental Value:

 

Our opinion of rental value is formed purely for the purposes of assisting in the formation of an opinion of capital value. It does not necessarily represent the amount that might be agreed by negotiation, or determined by an Expert, Arbitrator or Court, at rent review or lease renewal.

 

8 Town Planning and Other Statutory Regulations:

 

Information on town planning is, wherever possible, obtained either verbally from local planning authority officers or publicly available electronic or other sources. It is obtained purely to assist us in forming an opinion of capital value and should not be relied upon for other purposes. If reliance is required we recommend that verification be obtained from lawyers that:-

 

  i the position is correctly stated in our report;
  ii the property is not adversely affected by any other decisions made, or conditions prescribed, by public authorities;
  iii     that there are no outstanding statutory notices.

 

Our valuations are prepared on the basis that the premises (and any works thereto) comply with all relevant statutory and EC regulations, including fire regulations, access and use by disabled persons and control and remedial measures for asbestos in the workplace.

 

9 Structural Surveys:

 

Unless expressly instructed, we do not carry out a structural survey, nor do we test the services and we therefore do not give any assurance that any property is free from defect. We seek to reflect in our valuations any readily apparent defects or items of disrepair, which we note during our inspection, or costs of repair which are brought to our attention. Unless stated otherwise in our reports we assume any tenants are fully responsible for the repair of their demise either directly or through a service charge.

 

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10 Deleterious Materials:

 

We do not normally carry out investigations on site to ascertain whether any building was constructed or altered using deleterious materials or techniques (including, by way of example high alumina cement concrete, woodwool as permanent shuttering, calcium chloride or asbestos). Unless we are otherwise informed, our valuations are on the basis that no such materials or techniques have been used.

 

11 Site Conditions:

 

We do not normally carry out investigations on site in order to determine the suitability of ground conditions and services for the purposes for which they are, or are intended to be, put; nor do we undertake archaeological, ecological or environmental surveys. Unless we are otherwise informed, our valuations are on the basis that these aspects are satisfactory and that, where development is contemplated, no extraordinary expenses, delays or restrictions will be incurred during the construction period due to these matters.

 

12 Environmental Contamination:

 

Unless expressly instructed, we do not carry out site surveys or environmental assessments, or investigate historical records, to establish whether any land or premises are, or have been, contaminated. Therefore, unless advised to the contrary, our valuations are carried out on the basis that properties are not affected by environmental contamination. However, should our site inspection and further reasonable enquiries during the preparation of the valuation lead us to believe that the land is likely to be contaminated we will discuss our concerns with you.

 

13 Insurance:

 

Unless expressly advised to the contrary we assume that appropriate cover is and will continue to be available on commercially acceptable terms, for example in regard to the following:

 

Composite Panels

 

Insurance cover, for buildings incorporating certain types of composite panel may only be available subject to limitation, for additional premium, or unavailable. Information as to the type of panel used is not normally available. Accordingly, our opinions of value make no allowance for the risk that insurance cover for any property may not be available, or may only be available on onerous terms.

 

Terrorism

 

Our valuations have been made on the basis that the properties are insured against risks of loss or damage including damage caused by acts of Terrorism. We have assumed that the insurer, with whom cover has been placed, has been suitably reinsured.

 

Flood and Rising Water Table

 

Our valuations have been made on the assumption that the properties are insured against damage by flood and rising water table. Unless stated to the contrary our opinions of value make no allowance for the risk that insurance cover for any property may not be available, or may only be available on onerous terms.

 

14 Outstanding Debts:

 

In the case of property where construction works are in hand, or have recently been completed, we do not normally make allowance for any liability already incurred, but not yet discharged, in respect of completed works, or obligations in favour of contractors, subcontractors or any members of the professional or design team.

 

15 Confidentiality and Third Party Liability:

 

Our Valuations and Reports are confidential to the party to whom they are addressed and for the specific purpose to which they refer, and no responsibility whatsoever is accepted to any third parties. Neither the whole, nor any part, nor reference thereto, may be published in any document, statement or circular, nor in any communication with third parties, without our prior written approval of the form and context in which it will appear.

 

16 Statement of Valuation Approach:

 

We are required to make a statement of our valuation approach. In the absence of any particular statements in our report the following provides a generic summary of our approach.

 

The majority of institutional portfolios comprise income producing properties. We usually value such properties adopting the investment approach where we apply a capitalisation rate, as a multiplier, against the current and, if any, reversionary income streams. Following market practice we construct our valuations adopting hardcore methodology where the reversions are generated from regular short term uplifts of market rent. We would normally apply a term and reversion approach where the next event is one which fundamentally changes the nature of the income or characteristics of the investment. Where there is an actual exposure or a risk thereto of irrecoverable costs, including those of achieving a letting, an allowance is reflected in the valuation.

 

Vacant buildings, in addition to the above methodology, may also be valued and analysed on a comparison method with other capital value transactions where applicable.

 

Where land is held for development we adopt the comparison method when there is good evidence, and/or the residual method, particularly on more complex and bespoke proposals.

 

There are situations in valuations for accounts where we include in our valuation properties which are owner-occupied. These are valued on the basis of existing use value, thereby assuming the premises are vacant and will be required for the continuance of the existing business. Such valuations ignore any higher value that might exist from an alternative use.

 

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Appendix B: Interpretative Commentary of Fair Value

 

Definition and Interpretive Commentary reproduced from the RICS Valuation – Professional Standards January 2014, VPS 4

 

Valuations based on fair value shall adopt the definition and the conceptual framework settled by the International Valuation Standards Council (IVSC):

 

Definition

 

There are two recognised definitions of fair value – it is essential that the valuer makes explicit which definition is being adopted in any given case. The two definitions are:

 

(a) the definition adopted by the International Accounting Standards Board (IASB) in IFRS 13:

 

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

and

 

(b) the definition adopted by the IVSC in IVS Framework paragraph 38:

 

The estimated price for the transfer of an asset or liability between identified knowledgeable and wi l ing parties that reflects the respective interests of those parties.

 

1. It is important to recognise that the two definitions of fair value are not the same. When adopting the basis of fair value it is essential that the valuer establishes the correct definition for the purpose and sets it out in full in the terms of engagement and the report.

 

2. The guidance in IFRS 13 includes:

 

  Overview of fair value measurement approach  
     
  The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. A fair value measurement requires an entity to determine all of the following:  
     
  ● the particular asset or liability that is the subject of the measurement (consistently with its unit of account)  
       
  ● for a non-financial asset, the valuation premise that is appropriate for the measurement (consistently with its highest and best use)  
       
  ● the principal (or most advantageous) market for the asset or liability  
       
  ● the valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorised.  
       
    Copyright © IFRS Foundation.
All rights reserved. Reproduced by Royal Institution of Chartered Surveyors with the permission of the IFRS Foundation ® . No permission granted to third parties to reproduce or distribute. 		 

 

The references in IFRS 13 to market participants and a sale make it clear that for most practical purposes the concept of fair value is consistent with that of market value , and so there would be no difference between them in terms of the valuation figure reported.

 

3. In applying the IVS definition, valuers should refer to IVS Framework paragraphs 38-42 .
   
4. For more detailed guidance on the application of fair value for financial statements see VPGA 1, Valuations for inclusion in financial statements.

 

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Appendix C: Photographs

  

 

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Appendix D: Initial Master Plan with Phasing

 

 

 

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Appendix E: Integrated Tourism Complex Licence

 

 

 

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Appendix F: Omagine Marina Configuration

 

 

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Appendix G: Krooki

 

 

 

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Appendix H: Estate Master DF Summary Sheet

 

 

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Simon Brand FRICS
Head of Valuation Advisory MENA
Emaar Square, Building 1
Dubai, UAE
PO Box 214029
+ 971 4 436 2487
simon.brand@eu.jll.com 		Youcef Elhachemi MRICS
Associate – Valuation Advisory MENA
Emaar Square, Building 1
Dubai, UAE
PO Box 214 029
+ 971 (4) 436 24 50
youcef.elhachemi@eu.jll.com

 

 

 

 

 

 

 

 

www.jll-mena.com

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015.

 

This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.