Document:

Exhibit 10.5

 

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

 

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10Exhibit 10.6

 

Sultanate of Oman

Ministry of Tourism

Muscat

 

Ref: FO/IP/4407/2015

Date: 2 July 2015

 

Mr. Drohen Francis Joseph

Managing Director

Omagine LLC

PO Box 708, RB: 115

 

Dear Sir,

 

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

 

I am pleased to attach the following documents:

 

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

 

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

 

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

 

Kind regards,

 

(signed and stamped)

Hilal Bin Ghalib Bin Ali Al Hannai

Green Tourism Advisor

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

    	 

    	 

    

 

Sultanate of Oman

Ministry of Tourism

Muscat

 

Minutes of Receipt and Handover

 

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

 

	
        No.

         
	Name	Signature and stamp
	1.	
        On behalf of Ministry of Tourism

        Director of PLaning and Development
	(signed and stamped)
	2.	
        On behalf of Omagine LLC

        Mr. Drohen Francis Joseph
	(signed and stamped)

 

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

 

Date: 2 July 2015

 

22Report and Valuation for

 

OMAGINE LLC

 

Land at Al Mawelah North

 

Sultanate of Oman

 

January 2015

 

 

Arabian Real Estate LLC

PO Box 947 PC 116

Sultanate of Oman

 

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Table of Contents

 

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

 

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		1.	INSTRUCTION

 

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

 

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

 

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

 

Definitions are contained in the
General Principles at Appendix I.

 

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

 

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		2.	INTRODUCTION

 

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

 

The date of valuation is the date of this report.

 

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

 

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

 

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

 

		3.	DOCUMENTATION

 

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

 

		■	Land area identification plan annexed hereto

 

		■	Krooki number 01-05-12-01-1

 

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

 

		■	Usufruct Agreement dated August 2014

 

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

 

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

 

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

 

		4.	PURPOSE OF VALUATION

 

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

 

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

 

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

 

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		5.	LOCATION

 

SITUATION

 

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

 

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

 

ACCESS

 

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

 

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

 

SURROUNDING PROPERTIES

 

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

 

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		6.	DESCRIPTION

 

GENERAL DESCRIPTION

 

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

 

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

 

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

 

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

 

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

 

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

 

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		7.	SERVICES

 

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

 

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

 

		8.	OCCUPANCY & TENURE

 

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

 

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

 

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		9.	PLANNING AND DEVELOPMENT ASSUMPTIONS

 

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

 

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

 

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

 

		10.	CONDITIONS OF VALUATION

 

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

 

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		11.	VALAUTION

 

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

 

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

 

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

 

	
        Valuation hereby certified and signed
        

        Date of valuation: January 10 2015

        Christopher J. Steel FRICS

        Arabian Real Estate LLC

         

        Company Registration Number 1061295
	

 

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Appendix I

 

General Principles

 

Standard valuation assumptions

 

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

 

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

 

		1.	INSPECTION

 

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

 

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

 

		a.	That no deleterious or hazardous materials or techniques were used in the construction of the property
nor have since been incorporated.

		b.	That inspections of those parts which have not been inspected would neither reveal material defects
nor cause the Valuer to alter the valuation materially.

 

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

 

		2.	ENVIRONMENTAL CONSIDERATIONS

 

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

 

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

 

		a.	Investigations have not been undertaken on the site in the form of any geotechnical report to determine
the suitability of ground conditions or services for any new developments.

		b.	In the case of agricultural land, the Valuer is not able to accept any responsibility as to the
possible latent infestations in the soil or any disease which might affect crops or stock at any time in the future.

 

		3.	TENANTS

 

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

 

		4.	MEASUREMENTS

 

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

 

		5.	TOWN PLANNING, HIGHWAYS AND OTHER STATUTORY REGULATIONS

 

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

 

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		a.	the position is correctly stated in the report;

		b.	the property is not adversely affected by any other decisions made or conditions prescribed by
Local Authorities/ Municipality or other duly authorised governmental department; and

		c.	that there are no outstanding Statutory Notices.

 

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

 

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

 

		6.	LEGAL ADVICE

 

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

 

		7.	INSURANCE REINSTATEMENT COST (As Requested)

 

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

 

		a.	the buildings in their present form (unless otherwise stated);

		b.	buildings being constructed as proposed to be completed;

		c.	including the cost of clearance and professional fees but excluding:

		i.	Loss of rent: and / or

		ii.	Cost of alternative accommodation for the reinstatement period.

		iii.	Cost of decontamination of the land.

 

		8.	CONFIDENTIALITY

 

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

 

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		9.	GENERAL ASSUMPTIONS

 

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

 

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

 

		9.2	Unless otherwise specified the following items are excluded:

 

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

 

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

 

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

 

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

 

		10.	BASES OF VALUATION

 

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

 

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

 

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

		·	market value  

		·	market rent 

		·	investment value (worth) 

		·	fair value – International Financial Reporting Standards definition 

		·	fair value – International Valuation Standards definition.

 

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

 

		10.1	MARKET VALUE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

		(a)	to establish whether a use is possible, regard will be had to what would be considered reasonable
by market participants,

		(b)	to reflect the requirement to be legally permissible, any legal restrictions on the use of the
asset, eg zoning designations, need to be taken into account,

		(c)	the requirement that the use be financially feasible takes into account whether an alternative
use that is physically possible and legally permissible will generate sufficient return to a typical market participant, after
taking into account the costs of conversion to that use, over and above the return on the existing use.

 

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TRANSACTION
COSTS

 

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

 

		10.2	MARKET RENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

		10.3	FAIR VALUE 

 

		10.3.1	There are two recognised definitions of fair value:

 

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

 

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

 

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

 

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

 

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

 

		10.3.3	The guidance in IFRS 13 includes:

 

“Overview of fair value measurement approach

 

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

 

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		·	the particular asset or liability that is the subject of the measurement (consistently with its
unit of account)

		·	for a non-financial asset, the valuation premise that is appropriate for the measurement (consistently
its highest and best use)

		·	the principal (or most advantageous) market for the asset or liability

		·	the valuation technique(s) appropriate for the measurement, considering the availability of data
with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability
and the level of the fair value hierarchy within which the inputs are categorised.”

 

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

 

		10.3.5	Paragraphs 40 to 42 of the IVS Framework state:

 

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

 

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

 

    	22

    	 

    

 

“Examples of the use of fair value include:

 

      a.

 

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

 

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

 

		10.4	SPECIAL VALUE

 

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

 

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

 

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

 

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

 

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

 

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		10.5	SYNERGISTIC VALUE

 

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

 

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

 

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		11.	ASSUMPTIONS AND SPECIAL ASSUMPTIONS

 

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

 

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

 

Paragraphs 48 to 51 of the IVS
Framework state:

 

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

 

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

 

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

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

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

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

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

 

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

 

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

 

		12	FORCED SALES AND MARKETING CONSTRAINTS 

 

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

 

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

 

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

 

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

 

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

 

		13	COMPLAINTS PROCEDURE

 

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

 

		14	RICS MONITORING

 

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

 

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APPENDIX II Limiting Conditions 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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APPENDIX III 

Photographs 

(For location identification purpose only)

 

  

 

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APPENDIX IV 

 

The Project 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	34

    	 

    

 

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

 

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

 

    	35

    	 

    

 

APPENDIX V

 

INTEGRATED TOURIST DEVELOPMENTS

 

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

 

ITC SUMMARY

 

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

 

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

 

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

 

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

 

    	36

    	 

    

 

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

 

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

 

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

 

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

 

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

    	37

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Summary of ITC’s

 

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

 

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

 

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

 

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

 

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

 

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

 

Average sale rates are as follows:

 

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

 

The ongoing developments :

 

Muscat Hills Golf and Country Club 

 

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

 

Description

 

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

 

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

 

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

 

 

Product Phase 1

 

Pricing

 

	Product	 	No Units	 	 	Initial sales
 launch price
 (average) 2004
	 	Current resale
 value Q 4 2014
	 	Current RO.
 Per square
 meter
	 	 	Current $
 per square
 meter
	 
	2 Bed Apartments	 	 	100	 	 	RO. 85,000	 	RO. 135,000	 	 	931	 	 	 	2,420	 
	3 Bed Penthouses	 	 	25	 	 	RO. 180,000	 	RO. 300,000	 	 	1,052	 	 	 	2,735	 
	3 Bed Villas	 	 	30	 	 	RO. 150,000	 	RO. 350,000	 	 	1,077	 	 	 	2,800	 
	4 Bed Villas	 	 	25	 	 	RO. 175,000	 	RO. 400,000	 	 	1,142	 	 	 	2,971	 
	5 Bed Villas	 	 	25	 	 	RO. 190,000	 	RO. 525,000	 	 	1,400	 	 	 	3,465	 

 

Phase 2

 

	Product	 	Bedrooms	 	 	Offering Price
 2/2013 to present
	 	Area	 	 	RO. Per
 square meter
	 	 	Current $
 per square
 meter
	 
	Acacia	 	 	5	 	 	RO. 590,000	 	 	565	 	 	 	1,044	 	 	 	2,714	 
	Rivea	 	 	5	 	 	RO. 495,000	 	 	505	 	 	 	980	 	 	 	2,548	 
	Palm Vista	 	 	4	 	 	RO. 445,000	 	 	480	 	 	 	927	 	 	 	2,410	 
	Freana	 	 	4	 	 	RO.380,000	 	 	460	 	 	 	826	 	 	 	2,147	 
	Lake Terrace	 	 	4	 	 	RO.380,000	 	 	405	 	 	 	938	 	 	 	2,438	 
	Carteri	 	 	4	 	 	RO. 325,000	 	 	420	 	 	 	773	 	 	 	2,009	 
	Sacra	 	 	4	 	 	RO. 275,000	 	 	350	 	 	 	785	 	 	 	2,041	 

Note: Price excludes extras such as swimming pool

  

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

 

 

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

 

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

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Rental Values

 

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

 

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

 

Comments

 

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

    	43

    	 

    

 

The Wave

 

Development details 

 

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

 

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

 

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

 

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

 

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

 

    	44

    	 

    

 

Product (Releases to date)

 

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

 

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

 

Auction - Beach Front Properties1/12/2007

 

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

 

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

 

    	46

    	 

    

 

Shangri La Barr Al Jissah Resort & Spa

 

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

 

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

 

Product 

 

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

 

Pricing

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

 

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

 

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

 

    	47

    	 

    

 

Rental Rates

 

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

 

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

 

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

 

 

    	48

    	 

    

 

APPENDIX VI

 

Development Agreement (Linkage) & Land Title Papers

 

Schedule 1

 

Krooki; Mulkiya; Sea Area; Layout

 

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

 

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

 

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

 

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Part A

 

Krooki dated June 16, 2014

 

 

    	50

    	 

    

 

Part C 

The Sea Area

 

The Parties hereby agree as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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(All dimensions shown are indicative only)

    	52

    	 

    

 

Part D

 

Layout Plan:

 

Aerial Photograph and

Contour survey map

 

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

 

 

 

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