AL MARYAH CENTRAL MARKET STUDY EXECUTIVE SUMMARY MAY 2018 THE KEY FINDINGS FROM THE INDEPENDENT MARKET RESEARCH UNDERTAKEN BY URBIS FOR THE AL MARYAH CENTRAL PROJECT ARE SUMMARISED IN THIS EXECUTIVE SUMMARY. AL MARYAH CENTRAL IS A SUPER REGIONAL MALL CURRENTLY UNDER CONSTRUCTION WHICH IS BEING Al Maryah Central The Galleria DEVELOPED ON AL MARYAH ISLAND BY GULF RELATED.

© Urbis 2018

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URBIS.COM.AU

URBIS.COM.AU REGIONAL CONTEXT

Al Maryah Island is centrally located between Al Reem Island and Island and has been designated by the Abu Dhabi Government to be the new “Financial Free Zone” and CBD for Abu Dhabi. The island is around 100 hectares in size and measures 2.3 km from north to south and 600 metres from east to west. Dubai, which is 150 km to the north- east of Abu Dhabi City, presently provides the greatest concentration of retail and super-regional shopping malls in the region including amongst others, and Dubai Mall. Part of the success of Al Maryah Central (AMC) will rest in its ability to change the higher order shopping habits of trade area residents. With the opening of new malls in Abu Dhabi over recent years, including Yas Mall, this trend is already occurring with a 2017 consumer research by the Brunswick Group indicating that almost two thirds of Abu Dhabi residents are now more likely to shop, eat and be entertained in Abu Dhabi than having to travel to Dubai. At the same time however, 30% of Abu Dhabi’s consumers still visit malls outside Abu Dhabi at least once a week with the main reason cited being for the entertainment options. A considerable amount of development on Al Maryah Island is already existing or underway. Plots are being progressively released over time to be developed into residential and commercial uses and when fully built-out Al Maryah Island is expected to be home to around 13,000 residents, 37,000 workers and over 1,000 hotel rooms.

3 Al Maryah Central Market Study Executive Summary The ongoing completion of the proposed thirteen bridges to Furthermore, the location of AMC on the western side of LOCAL Abu Dhabi Island and Reem Island will greatly enhance the Al Maryah Island provides a favourable location for food accessibility and appeal of Al Maryah Island and beverage tenants to take advantage of water and Abu Dhabi skyline views as exemplified by The Galleria, a key Overall, the location, site characteristics, accessibility and characteristic in attracting tourists and evening visitors. CONTEXT surrounding uses mean that this is an attractive site for a major retail centre. Strong population growth on Al Reem Island will also benefit the centre, as will the very high population densities to the west on Abu Dhabi Island. Gulf Related has a 37.5 acre site centrally located on Al Maryah Island on which it is developing a 293,500 sq.m GFA mixed use project comprising: ▪▪ The Galleria luxury mall (completed in 2013) with a GLA of 34,457 sq.m. ▪▪ Al Maryah Central (AMC), which will be a 150,340 sq.m GLA retail mall. ▪▪ A 350 room hotel/serviced apartment building and a 250 unit residential tower (to be completed in 2021/22). ▪▪ Two five star hotels: Rosewood Abu Dhabi and Four Seasons Hotel Abu Dhabi which opened in 2013 & 2016, respectively. ▪▪ The Abu Dhabi Global Market office precinct, completed in 2012 and comprising four premium office towers totalling 238,000 sq.m NLA. ▪▪ Adjacent to the Gulf Related site are: –– The recently completed Al Mayrah Tower office tower. –– A site committed for the NBAD commercial office tower. –– The Cleveland Clinic Abu Dhabi, a 364 bed hospital which opened in March 2015. –– Three residential towers to be developed by the Farglory Group and with the first tower currently under construction and due to be completed in 2019.

Prepared by Urbis for Gulf Related 4 URBIS.COM.AU

5 Al Maryah Central Market Study Executive Summary DESCRIPTION OF THE PROJECT

The Al Maryah Island Retail District includes two retail Abu Dhabi is for the entertainment options (46%). centres that will be seamlessly linked by a shopping Al Maryah Central’s extensive entertainment offer concourse connection and two sky bridges. should, in part, help to re-address this issue with a 21 screen VOX cinema centre, family and teen The market positioning of The Galleria, which opened entertainment centres, children’s activity zones and a in 2013, is decidedly upmarket with a strong emphasis public library. on luxury retail and food and beverage. The centre has been particularly successful in its leasing to first tier The mall will be aimed at the mid-market, with a far luxury tenants and dining which is attributable to a broader appeal than The Galleria, a consequence of its number of factors including the timing of the project; larger size and the market positioning of many of its it’s very high quality design and amenities together key anchor tenants. with its adjacency to the Abu Dhabi Global Market Considered together, The Galleria and Al Maryah (ADGM) complex and the surrounding development. Central should provide a very compelling retail offer The Galleria has a GLA of 34,457 sq.m. at a scale and quality that is presently lacking on Scheduled to open in August 2019, Al Maryah Central Abu Dhabi Island. The centre will also have other represents the major retail component of the Al advantages such as its growing on-site population of Maryah Retail Island District and on its own will have office workers, over 3,100 dedicated retail car parking approximately 150,340 sq.m GLA. spaces and its proposed public transport connections. In addition to having an enclosed retail offer, the centre Al Maryah Central represents the next generation via the promenade at The Galleria also provides some of mall for Abu Dhabi and from our assessment external retail and F&B (both licensed and unlicensed) it would appear to be of a superior quality to its with a waterfront setting that enhances its overall existing competitors in terms of its quality of finishes wider appeal to tourists. and ambience; its amenities (including rest rooms, changing rooms, sitting areas, Wi-Fi access, prayer rooms etc.); its simple and legible layout; its attractive façade and its extensive F&B and entertainment offer. According to Brunswick Group research, the most commonly cited reason for visiting malls outside The Galleria

Prepared by Urbis for Gulf Related 6 URBIS.COM.AU ECONOMIC OVERVIEW

The past two years have been challenging for Abu Dhabi Abu Dhabi’s position as a low-cost oil producer means rate of population growth within the UAE and Abu Dhabi with the ongoing effects of lower global oil prices adversely the emirate is well placed to continue its aggressive is strongly linked to its phase of economic growth. The impacting both economic growth and population growth infrastructure program. Furthermore, its substantial recovery in oil prices in 2018 should provide additional within the emirate and the city. Looking forward however, federal reserves should cushion the local economy in stimulus to the economy and help the government drive its the overall economic outlook for Abu Dhabi is positive the event of a major economic crisis. This should ensure diversification agenda forward. with real growth in GDP forecast at 5.1% per annum continued growth over the medium term. The resident base is relatively wealthy and the driven by expected increases in the price of oil and new Whilst oil continues to be an extremely important revenue fundamentals exist to support a number of new high quality infrastructure spending. Inflation is forecast to average source for Abu Dhabi, increasingly over time the economy retail centres, provided they are appropriately located, well around 3.3% per annum to 2022. will become more diversified and less reliant on oil. The planned and managed.

Consumer Price Ination Real GDP Growth ABUD DHABI & UAE, 2006  2022 ABUH DHABI & UAE, 2003  2022 UAE 18% Abu Dhabi Abu Dhabi Non-Oil Sectors 16% Abu Dhabi Forecast 13% 14% Forecast Abu Dhabi UAE Abu Dhabi UAE 8% 12% 2006 to 2017 2017 to 2022 2006 to 2017 +4.3% p.a. 2017 to 2022 +5.1% p.a. + 4.1% pa + 3.3% pa 10% 3% 8%

6% -2%

4% -7% 2%

0% -12% 2006 2008 2010 2012 2014 2016 2018 2020 2022 2006 2008 2010 2012 2014 2016 2018 2020 2022

Source: Oxford Economics 2016; Statistics Centre - Abu Dhabi; Urbis Source: Oxford Economics 2016; Statistics Centre - Abu Dhabi; Urbis

7 Al Maryah Central Market Study Executive Summary TOURIST MARKET

Abu Dhabi continues to grow as a tourist International tourists account for the The total tourist retail expenditure Delays to the development of the main destination, with international visitor bulk of Abu Dhabi’s tourist expenditure. market is forecast to increase by around retail centre on Saadiyat Island means growth at around 10% in 2017. This historic Urbis forecasts that international tourist 8.3% per annum (expressed in constant that Al Maryah Central is likely to be the growth path is supported by MasterCard visitation in the Abu Dhabi urban area will terms i.e. excluding inflation) through to favoured retail centre for tourists in the who ranks Abu Dhabi as one of the top increase steadily over the next five years, 2022. A primary driver of this increase downtown area for the foreseeable future. five fastest cities globally for international growing from 3.41 million in 2017 to around is the increasing number of international This has positive implications for retail overnight tourist spending. 4.0 million in 2019. Much stronger growth overnight visitors, forecast to grow on demand at Al Maryah Central, particularly is projected in 2020 and 2021 coinciding average by around 6.7% per annum through for the F&B and luxury, with tourists The completion of the new Midfield with the Expo 2020 in Dubai which runs to between 2017 and 2022. forecast to account for around 20% of Al Terminal at Abu Dhabi International Airport from October 2020 to April 2021. For the Maryah Central / The Galleria’s total sales. by the end of 2019 will provide further Overall, we expect Al Maryah Central will following year (2022) we are forecasting stimulus to the international visitor market, be an attractive destination for tourists there to be negative growth as the market which will help facilitate Etihad Airway's due to its very strong hotel and retail offer normalises before steady growth returns. It international expansion programme which including the licenced F&B cluster on the should be noted that our visitation numbers the airline is currently reviewing. waterfront which have seen strong sales include both hotel guests and those staying growth over the past 24 months. The prospects for tourism growth in with friends and relatives. Abu Dhabi are strong. The Abu Dhabi government continues to aggressively promote and market the city as an international tourist destination and it is International Overnight Tourism Visitation Total Tourist Retail Expenditure also undertaking a significant amount of ABU DHABI URBAN AREA ABU DHABI URBAN AREA investment in new tourism infrastructure. Daytrippers Saadiyat Island is central to this investment Domestic Overnight 0.6 0.7 International Overnight 0.6 with a number of major cultural attractions 0.5 1.2 1.2 0.5 1.1 being developed. The Louvre Abu Dhabi 0.5 1.0 1.0 opened in 2017 with the Zayed National 0.4 0.9 4.53 4.67 4.54 0.9 Museum (2022) and Guggenheim (2024) 3.98 4.0 4.0 3.41 3.73 3.8 scheduled to follow, creating a powerful 3.03 3.0 3.3 2.2 2.7 cultural tourist hub to rival any in the AED Billion world. Warner Bros. is scheduled to open International Visitors (Million) Visitors(Million) International 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 in mid-2018 on Yas Island whilst Sea World Source : Urbis is slated to open around 2023, also on Source: Statistics Centre of Abu Dhabi; Urbis Yas Island.

Prepared by Urbis for Gulf Related 8 URBIS.COM.AU TRADE AREA POPULATION & SPENDING

The trade area for Al Maryah Central includes a primary sector, two secondary sectors and two tertiary sectors. Al Maryah Central will draw different shares of the retail spending market from each of these sectors based on factors such as access, competition and demographics. As of 2018, the Primary sector is estimated to have a population of 233,000. The Abu Dhabi Island part of the primary sector is the most densely populated region of the city. The total trade area population is estimated at 538,000, which is approximately 50% of the total Abu Dhabi urban area population. The total Abu Dhabi urban population is estimated at 1.0 million (excluding labourers). Over the next four years, the trade area is forecast to grow at an average rate of 10,600 people per annum or 1.9%, with a good proportion of this growth to occur on both Reem and Saadiyat Islands. Stronger growth is anticipated after 2020 as Abu Dhabi’s economy continues to improve. Al Maryah Central’s location and excellent bridge links means it is very well placed to capture a large share of the downtown and Saadiyat Island resident retail spending markets.

9 Al Maryah Central Market Study Executive Summary The level of retail spending varies greatly according to Trade Area Population income levels and other socio-economic characteristics. It AL MARYAH CENTRAL, 2010 - 2026 is estimated that average annual retail spending per person POPULATION (000) in the (primary trade) is AED 36,600 which is around 5% TRADE AREA / SECTOR 2010 2018 2020 2022 2026 above the Abu Dhabi urban area average. This total refers Al Maryah Island 0.0 0.0 0.7 0.7 3.1 to the average amount all Abu Dhabi residents spend in retail shops, either locally or abroad. It excludes spend on Primary 212.5 233.0 239.4 247.8 264.8 entertainment and leisure which is estimated to be around Total Primary 212.5 233.0 240.1 248.5 267.9 AED 1,560 per capita. SECONDARY Overall, the total retail spending market by trade area East 0.2 6.5 8.0 10.8 19.2 residents in 2018 is estimated at AED 22.4 billion. This is West 172.6 190.8 194.0 199.0 210.0 forecast to grow at around 4.4% per annum to reach around Total Secondary 172.8 197.3 202.0 209.8 229.2 AED 26.6 billion by 2022. This will help support a range of new opportunities across Abu Dhabi. Main Trade Area 385.3 430.3 442.1 458.3 497.1 With its strong mid-market positioning, Urbis expects Al TERTIARY Maryah Central to attract strong market shares from the West 21.3 24.7 25.1 26.3 29.1 Primary whose residents have traditionally frequented South 67.8 82.8 87.8 94.6 107.0 malls such as and . Total Tertiary 89.1 107.5 112.9 120.9 136.1 Total Trade Area 474.4 537.8 555.0 579.2 633.2 Abu Dhabi Urban 857 1,002 1,046 1,102 1,226

Source : Urbis

Total Trade Area Retail Spending Market On-Site Secondary TA AL MARYAH CENTRAL, 20182026 (AED 2018) Tertiary TA Primary TA 0.2 40.0 0.1 0.0 7.6 35.0 0.0 6.8 0.0 6.1 30.0 5.4 4.9 25.0 11.5 10.4 20.0 9.5 8.1 8.7 15.0 10.0 9.3 10.1 11.0 11.9 12.9

Total Market (AED Billion) 5.0

2018 2020 2022 2024 2026 Source : Urbis

Prepared by Urbis for Gulf Related 10 URBIS.COM.AU RETAIL COMPETITION

Overall, Abu Dhabi is currently deficient in both quality and quantity of modern enclosed retail space Major Competitive Retail Centres compared to neighbouring Dubai. Whilst Marina Mall, Abu Dhabi Mall and Al Wahda Mall have been AL MARYAH CENTRAL, 2018 successful, these centres are becoming increasingly vulnerable due to incoming competition as a result CAR of their tired appearance or poor layout. Whilst the more recent arrivals of Yas Mall and TIME have undoubtedly had an impact on the trading performance of the existing malls, a gap still exists in the FROM AL MARYAH market for a high quality regional mall close to the heart of Abu Dhabi. SECTOR/CENTRE (MIN.) NLA (SQ.M) MAJOR TENANTS There is a considerable amount of new retail mall development currently being considered for Abu Dhabi Primary that could result in a substantial increase in the overall supply should all of these project proceed. Our Abu Dhabi Mall 0-5 72,000 Abu Dhabi Co-Op forecasts indicate total retail space increasing from 2.6 million sq.m in 2018 to around 3.1 million sq.m by the end of 2022 following the completion of major projects such as Al Maryah Central, City Centre Al Boutik 0-5 15,000 Waitrose Jazira and Reem Mall along with several Secondary East other smaller mall projects. In reality, Mina Centre 10-15 20,000 Abu Dhabi Co-Op delays to some of the malls listed are Supply of Retail Floorspace ABU DHABI URBAN, 20122023 (NLA SQ.M) Secondary West likely potentially pushing out the level of Reem new supply. 4,000 Other Mall Al Wahda Mall 10-15 91,300 Lulu Hypermarket Enclosed Retail City Centre The expected entry of MAF into the 3,500 Al Jazira 10-15 46,000 Lulu Hypermarket Abu Dhabi market is likely to raise the Al Maryah Central Madinat Zayed S.C. 10-15 88,000 Abu Dhabi Co-Op, Homes R Us standard and level of competition for 3,000 WTC Mall 10-15 62,000 regional sized malls of a similar size. 2,500 The location and scale of City Centre Al Tertiary West Jazira means that it will compete most 2,000 Marina Mall 20-25 122,000 Carrefour strongly against comparable sized malls 1,500 such as Al Wahda Mall , Khalidiyah Mall Nation Galleria 20-25 18,000 and . Unless these malls 1,000

Retail Floorspace (sq.m) Tertiary South take steps to improve their offer such Mushrif Mall 10-15 56,000 Lulu Hypermarket, Sharaf DG as Marina Mall has proposed, they are 500 Beyond expected to be most impacted by the 0 1 7 2 2 5 0 3 8 9 6 3 4 1 1 2 1 1 1 1 1 1 2 2 arrival of this new competition. 2 0 0 0 0 0 0 0 0 0 0 0 0 Yas Mall 30-35 235,000 Carrefour, Tryano, House of Fraser 2 2 2 2 2 2 2 2 2 2 2 2 1. Enclosed retail includes hypermarkets Dalma Mall 30-40 130,000 Carrefour Source : Urbis Source: Cistri

11 Al Maryah Central Market Study Executive Summary Future Competitive Retail Centres ABU DHABI URBAN - 2018

DRIVE TIME

FROM AL PROJECT ESTIMATED ASSUMED SECTOR/CENTRE MARYAH (MIN.) STATUS1 NLA OPENING (YEAR) Primary Al Maryah Central 0 U/C 184,797 2019 + The Galleria Paragon Bay 5-10 U/C 27,000 2019 Reem Mall 5-10 U/C 191,000 2022 Secondary East Saadiyat Retail 10-15 P N.A. Unknown Secondary West City Centre Al Jazira 10-15 U/C 80,500 2020 Tertiary West Marina Mall - Expansion1 20-25 P 142,000 2021 Beyond Al Qana Khor Al Maqta 20-25 P 20,000 2021

Source: Urbis 1. Includes an expansion of 20,000 sq.m P= Proposed, U/C = Under Construction The most relevant new competitor to Al Maryah Central will be Reem Mall. This project has been met with numerous delays and is now expected to be complete in 2021 or 2022. This timing provides Al Maryah Central with a significant first mover advantage, a distinct benefit in a difficult market with regard to both leasing and establishment of market share. Expected disruptions to Marina Mall as it refurbishes are expected to also benefit Al Marayh Central. The inclusion of Inditex and Alshaya brands amongst others to Al Maryah Central gives the centre a major head start. The combination of these popular brands combined with the concentrated luxury and fine dining of The Galleria will also provide Al Marayh Central with a competitive point of difference to nearby Abu Dhabi Mall due to the scale of integration with adjacent uses. Despite the difficulties in the Abu Dhabi retail market, The Galleria has reportedly achieved double digit sales growth over the past two years.

Prepared by Urbis for Gulf Related 12 CONCLUDING REMARKS

On the basis of this assessment, we believe that there is very good market potential for the proposed Al Maryah Central with the centre being well located to take advantage of the future growth in the Abu Dhabi retail as it recovers from several years of sub-standard growth. Despite a slow-down in growth of Abu Dhabi’s population, Al Maryah Central is still well-positioned to benefit from future growth. Saadiyat Island is an increasingly sought after residential location whilst several major completions on Reem Island will help further establish the residential population within a 15-minute drive time. It is expected that Al Maryah Central should be able to derive strong market shares from both these areas, particularly in the early years of the centre before other regional competition comes on-stream. Al Maryah Central’s first mover advantage presents it with many opportunities over its competition. Aside from being able to establish itself as the preeminent regional centre easily accessible from Abu Dhabi Island, its advanced construction also presents a major advantage in leasing over competitors such as Reem Mall. If Al Maryah Central can achieve similar success to what has occurred at The Galleria in securing a solid stable of major international brands, many of them first to market, it will make securing lease deals for competitors more difficult, particularly if exclusivity clauses are provided.

PEDESTRIAN FOOTFALL Footfall Forecast, 2019-2022 THE GALLERIA & AL MARYAH CENTRAL FOR AL MARYAH 32.0 CENTRAL IS FORECAST 28.0 24.0 AT 23.1 MILLION IN 2021. 20.0 16.0 23.1 12.0 20.7 21.9 8.0 Vistors (Millions) Vistors(Millions) 4.0 6.2 0.0 Source : Urbis 2019* 2020 2021 2022 (Partial year Sept to Dec)

13 Al Maryah Central Market Study Executive Summary URBIS & CISTRI

Urbis was established more than 50 years ago in In July 2016 Urbis established Cistri which represents Australia’s International business and is based in Hong Kong and Melbourne, Australia. We employ over 500 people and have Singapore. Cistri operates throughout Asia, the Middle East and North Africa providing a range of property market advise become Australia’s leading multi-disciplinary property including: market demand assessments, retail market strategies, income forecasts for shopping centre, site selection and advisory firm within expertise in: location strategies, project financial feasibility analysis and highest and best use studies. ▪▪ Property and retail economics The clients for the Cistri team tend to be large institutional property investors, property developers, retailers, investment ▪▪ Valuations banks or government. Internationally we have a blue-chip list of clients, including: ▪▪ Property and investment advisory ▪▪ ADIA ▪▪ Frasers Centrepoint ▪▪ Mapletree ▪▪ Social planning and research ▪▪ Al Futtaim ▪▪ GIC ▪▪ Morgan Stanley ▪▪ Urban and strategic planning ▪▪ AMP Capital ▪▪ Goldman Sachs ▪▪ SC Capital ▪▪ Heritage planning ▪▪ Asia Pacific Land ▪▪ HSBC ▪▪ Pavilion Group ▪▪ Corporate real estate ▪▪ Blackrock ▪▪ Ikano ▪▪ Sime Darby ▪▪ Urban design and master planning ▪▪ Blackstone ▪▪ LaSelle Investment Management ▪▪ Singapore Land ▪▪ Landscape design ▪▪ CapitaLand ▪▪ Lendlease ▪▪ Taubman ▪▪ CapitaMalls Asia ▪▪ Majid Al Futtaim ▪▪ Westfield ▪▪ Central Pattana ▪▪ Maquaire

Prepared by Urbis for Gulf Related 14 AUSRAIA IRAIOA Brisbane Hong Kong Gold Coast Singapore Melbourne Perth Sydney

Outside Australia, Urbis trades as Cistri