Exhibit 10.8.3

 

23 June 2015

 

Omagine Plot, Muscat, Oman

 

Valuation Report

[page1_001.jpg] 

 [page1_002.jpg]

 

 

 

 

[page2_001.jpg] 

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 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved 

 

 

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 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved 

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved3

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved4

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved5

 

 

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 

[page_1.jpg]

Source: Google Earth

 

Micro Location

[page_1i.jpg]

 Source: Google Earth 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved6

 

 

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

[imgs1_11.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved7

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved8

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved9

 

 

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:

 

[imgs1_14.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved10

 

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved11

 

 

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):

 

[imgs1_16.jpg]

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved12

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved13

 

 

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 18th 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.    

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved14

 

 

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)

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved15

 

 

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 31st 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”

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved16

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved17

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved18

 

 

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:

 

  [img001.jpg] 

 

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”.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved19

 

 

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   

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved20

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

The following diagram shows the extent of the infrastructure:

 

[img25.jpg]

 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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved21

 

 

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:

 

 [img003.jpg]

 

Source: Omagine LLC

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved22

 

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved23

 

  

Omagine Plot, Muscat, Oman 23 June 2015

 

  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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved24

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved25

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

  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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved26

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved27

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

3.7 Time Chart of Key Milestone within the Development Agreement

[imgs004.jpg]

*Government Deadline as per the Development Agreement

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved28

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

3.8 Client Timetable for Project Implementation

 [imgs005.jpg]

  

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved29

 

 

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.

 

 [imgs006.jpg]

 

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.

 

 [imgs007.jpg]

 

Source: Oxford Economics, 2015

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved30

 

 

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.

 [imgs1_35.jpg]

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.

[imgs1_35ii.jpg]

 

Source: Oxford Economics, 2015

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved31

 

 

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.

 

[imgs1_36.jpg]

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved32

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved33

 

 

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.      

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved34

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

  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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved35

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved36

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved37

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved38

 

 

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”.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved39

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved40

 

  

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 demonstrated 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.

 

[imgs1_45.jpg]

 

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 percentage 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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved41

 

 

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.

 

[imgs1_46.jpg]

 

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    

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved42

 

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved43

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved44

 

 

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.

 

[imgs1_49.jpg]

 

  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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved45

 

  

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.

  

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved46

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved47

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved48

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved49

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved50

 

 

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.

 

[imgs1_55.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved51

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

[imgs1_56.jpg]

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved52

 

 

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   Movie/Performance Theatre  2,375  Cinema  10 
120  346,746   Total  28,620           6,481,375

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved53

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved54

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved55

 

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved56

 

 

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.

 

6.5Marina 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.

 

6.6Residential 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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved57

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

6.6.1Villas

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved58

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

6.6.2Townhouses

 

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.

 

6.6.3Apartments

 

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

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved59

 

 

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.

 

6.6.4Serviced 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.

 

6.7Office 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 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved60

 

 

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.

 

6.8Retail 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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved61

 

  

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved62

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved63

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

  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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved64

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved65

 

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved66

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved67

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved68

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved69

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved70

 

 

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.

  

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved71

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

  ● 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;

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved72

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

●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

                            

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved73

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved74

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

  ● 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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved75

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved76

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved77

 

Omagine Plot, Muscat, Oman 23 June 2015

 

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 wiling 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.

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved78

 

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix C: Photographs

  

[imgs1_83.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved79

 

  

Omagine Plot, Muscat, Oman 23 June 2015

 

[imgs1_84.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved80

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix D: Initial Master Plan with Phasing

 

[imgs1_85.jpg] 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved81

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix E: Integrated Tourism Complex Licence

 

 [imgs1_86.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved82

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix F: Omagine Marina Configuration

 

[imgs1_87.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved83

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix G: Krooki

 

[imgs1_88.jpg] 

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved84

 

 

Omagine Plot, Muscat, Oman 23 June 2015

 

Appendix H: Estate Master DF Summary Sheet

 

[imgs1_89.jpg]

 

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved85

 

 

 [imgs1_90i.jpg] 

 

 

 

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 [imgs1_90ii.jpg]

 

 

 

 

 

 

 

 

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.