Msheireb Galleria Trade Area Analysis Market Assessment DOHA RETAIL MARKET ANALYSIS DEMAND/ MARKET: Undersupply ▪ Qatar has experienced a slight downturn in economic growth since 2014. Doha: Undersupply/Oversupply Oversupply Economic growth was hit by the global downturn in demand for energy and consequent slump in prices and, therefore, Qatar’s export revenues 500,000 ▪ The economic and diplomatic blockade of Qatar by Saudi Arabia, UAE, 0 Bahrain and Egypt may continue to undermine economic growth in the outlook period -500,000 SUPPLY: -1,000,000 • This explosion of retail space is likely to cause an oversupply of shopping centre space during the outlook period existing supply approx. 1,600,000m2 -1,500,000 of GLA • Upcoming supply up to 2022 is forecasted at 2,500,000m2 of GLA -2,000,000 • Main upcoming retail projects Place Vandome, Doha Mall, North Gate and 2021 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 2023 similar) GLA (m2) 2006 Source: McARTHUR + COMPANY Analysis IMPLICATIONS FOR RETAILERS: • Operators are spoiled for choice (more options) • Oversupply impacting low business confidences across the region and lack of appetite for expansion • Variety of choice providing retailers better leverage when it comes to dealing with Landlords • Retailers to rationalize store networks (close non-performing locations) rather than expand IMPLICATIONS FOR LANDLORDS: • Slower Leasing velocities in the new properties • Pressure on rental values • Rising in the vacancy rates among existing properties • Dated and poorly located properties to suffer more 2 Market Background & Consumers KEY FINDINGS ▪ Qatar has experienced a downturn in economic growth since 2014. Heavily dependent on the gas industry, economic growth was hit by the global downturn in demand for energy and consequent slump in prices and, therefore, Qatar’s export revenues. ▪ The economic and diplomatic blockade of Qatar by Saudi Arabia, UAE, Bahrain and Egypt may continue to undermine economic growth in the outlook period, although the effects of the isolation on GDP growth began to ease in 2018. ▪ Qatar’s population is expected to reach 2.7 million as at the end of 2018. Around 63% live in labour compound accommodation, however, leaving just 1,000,000 residents living in households. ▪ There were around 192,000 households in Qatar in 2018, with an average 5.3 members per household. Around 47,000 were Qatari households (ie headed by Qatari nationals) and 145,000 non- Qatari households. ▪ Qatar’s hosting of the 2022 FIFA World Cup will drive tourism infrastructure development worth more than USD20 billion in the run up to the tournament. The investment will indirectly sustain the demand for retail in the coming years, although the direct impact for shopping centres of the tournament itself is expected to be a short lived boost. 3 Supply Analysis KEY FINDINGS ▪ The supply of retail space within modern shopping centres in Doha is already above average for the GCC in terms of GLA per capita. Moreover, the city experienced an explosion of new mall space during 2016/2017 with the opening of Mall of Qatar and Doha Festival City. ▪ Furthermore, the pipeline of future supply continues to be strong with more space scheduled for delivery in the years leading up to the city’s FIFA World Cup 2022 event, such as Place Vendôme and Doha Mall. ▪ This explosion of retail space is likely to cause an acute oversupply of shopping centre space during the outlook period, Doha Festival City which will impact rental values and put pressure on the existing supply stock, particularly the more dated and poorly located properties. ▪ Doha Festival City, Mall of Qatar, City Centre Doha and Villagio Mall are the dominant large-scale modern centres in Doha. Souq Waqif also remains a family favourite destination among residents and tourist visitors. ▪ The forthcoming masterplanned city district, Msheireb Downtown Doha, is also likely to provide the city with an attractive alternative dining destination. Mall of Qatar 4 Supply Analysis DOHA RETAIL SUPPLY: FUTURE DEVELOPMENTS # Shopping Centre Centre Type GLA (m2) 1 Place Vendome Super-Regional 185,000 2 Doha Mall Regional 100,000 3 North Gate Regional 100,000 4 Jawharat Al Wa'ab City Regional 75,000 5 Joud Mall - Barwa Commercial Ave Regional 64,000 6 Boulevard Mall Regional 62,000 Place Vendome 7 Marina Mall Regional 60,000 8 Abu Hamour Shopping Village Regional 52,210 The Galleria - Msheireb Project Regional 48,000 9 Katara Plaza & Children's Mall Community 30,000 10 Doha Oasis Mall Community 25,000 11 Al Waab Retail Community 24,000 12 04 Mall Community 15,000 Doha Mall Source: McARTHUR + COMPANY Analysis, MECSC. 5 Supply Analysis DOHA: MODERN GLA DEVELOPMENT ▪ Qatar has a higher than average GLA per capita at 0.59m², Modern Retail Development GLA per Capita in GCC: compared to the GCC average of 0.31m² per capita as at the end 2018 of 2018. Dubai UAE ▪ Further rapid development expected: Place Vendome in Lusail, The Galleria at Msheireb, Boulevard Mall, North Gate Mall and Qatar Doha Mall. Bahrain GCC Average ▪ A significant element of uncertainty over opening timelines has Kuwait entered the market amid the opening of Mall of Qatar and Doha KSA Festival City, as well as the economic blockade of the country by Oman several GCC neighbours. - 0.50 1.00 1.50 GLA (m² per capita) Source: McARTHUR + COMPANY Analysis, MECSC, Developers; Trade interviews Doha: Mall GLA Supply 2010-2020 (m²) 3,000,000 2,500,000 DOHA FESTIVAL CITY 2,000,000 MALL OF QATAR 1,500,000 GLA (m²) GLA 1,000,000 500,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: McARTHUR + COMPANY Analysis, MECSC, Developers; Trade interviews 6 Demand Analysis DRIVE TIME ANALYSIS Source: McARTHUR + COMPANY Analysis, MECSC, Developers; Trade interviews 7 Demand Analysis TRADE AREA: RESIDENTIAL We expect the trade area of the project to include the resident households of urban Doha lying within 30mins drive from the project. Residential Population & Households 2020 2029 Official population data for the administrative zones of Qatar is available from the 2015 Census and we have forecast this data forward through to 2029 at the Population zone level. We expect there to be over 457,000 people and 95,000 households living within 0-10mins 17,300 21,878 20mins drive of the project by 2020, which we expect to rise to 560,000 people and 115,000 households by 2029. We expect the population of the trade area as a whole to rise from an estimated 0-20mins 457,229 560,455 907,000 people in 189,000 households in 2020 to reach 1..1 million people in 235,000 households by 2029. 0-30mins 907,091 1,139,412 People per Household 4.8 4.8 Households 0-10mins 3,618 4,520 0-20mins 95,609 115,797 0-30mins 189,678 235,417 Development of Lusail will swell the population living within 30mins of the site Source: McARTHUR + COMPANY Analysis based on Ministry of Development Planning and Statistics data 8 Demand Analysis HOUSEHOLD EXPENDITURE In order to determine the spending patterns of the residents of the primary trade Average Annual Expenditure per 2020 2029 area, we have use the government’s Household Expenditure and Income Survey Household (QAR) (2013) as the basis. The survey sets out average spending patterns for Qatari, Non-Qatari and Total households in Qatar. Food * 44,818 56,963 In modelling the spending data for residents of the primary trade area (shown Apparel * 17,776 22,592 opposite), we have made the following assumptions: ▪ The primary trade area comprises a mix of both Qatari and non-Qatari Housing 82,206 104,481 households and as such, we have used the national average for both types of household. Home * 25,469 32,370 ▪ Average incomes and spending will grow in line with real economic growth Healthcare 7,868 10,000 (as per IMF), ie by around 2-3% per annum. Transport 50,763 64,518 By 2020 we expect resident households of the trade area to spend an average of QAR138,000 per year on retail, dining and entertainment (RDE), rising to Comms 20,413 25,944 QAR176,000 by 2029. Recreation * 12,705 16,148 Education 16,902 21,481 Restaurants * 16,610 21,111 Misc * 21,462 27,278 Overseas Travel 39,952 50,777 TOTAL 316,992 402,886 * of which Retail, Dining & 138,841 176,462 Entertainment 9 Demand Analysis TRADE AREA: TOTAL HOUSEHOLD RDE SPENDING Multiplying the total number of households by the average household spending on retail, dining & entertainment (RDE) yields the total expected spending within the project’s catchment zone by residential households. Household spending on retail, dining & entertainment within the PTA is thus expected to reach QAR26 billion in 2020 rising to QAR41 billion by 2029. Item Unit 2020 2029 Households # 189,678 235,417 Average Household Spending on RDE QAR 138,841 176,462 Total Spending on RDE* QAR million 26,335 41,542 Source: McARTHUR + COMPANY based on National Centre for Statistics & Information 10 Demand Analysis SECONDARY TRADE AREA: TOURISTS The number of hotel guests staying in Qatar reached nearly 5 million during Qatar: Hotel Guest Nights 2013-2020f 2016, but dropped by around 10% in 2017 owing to the economic slowdown and reduction of visitors from GCC neighbours following the blockade. 6,000,000 We expect that as the economy recovers in 2019 and 2020 and Qatar’s hosting 5,000,000 of the 2022 FIFA World Cup will drive tourism infrastructure development and 4,000,000 restore growth to hotel guest numbers. 3,000,000 2,000,000 1,000,000 - Source: McARTHUR + COMPANY; Ministry of Development Planning and Statistics Qatar Hotel Guest Nights per Month 2017 500,000 400,000 300,000 200,000 100,000 0 Sheraton Grand Doha Resort Source: Ministry of Development Planning and Statistics 11 Demand Analysis TRADE AREA SUMMARY - 2020 Msheireb Galleria Target Customers 900,000 million 4.4 million QAR26 billion residents annual hotel guest nights annual spending on in 190,000 households in Doha 3-5 star hotels retail, dining & entertainment 12 .