Feasibility Study: Project Neighborhood

Feasibility Study
Project Neighborhood
Draft Report
July 31, 2018

Notice: About this report
This document (herein after referred to as the ‘Report’) is being provided to Al Kayan Regional Trading Establishment (“the Client” or “Kayan”),
in relation to carrying out advisory services for a parcel of land located in Jeddah, Saudi Arabia.
This Report has been prepared in accordance with the terms of the Engagement Letter (the “Engagement Letter”).
This Report is provided solely for use by the Client in accordance with the terms of reference set out in the Engagement Letter, and should be
used only for this purpose. This Report may not be copied, reproduced or distributed (in whole or in part) nor may its contents be divulged by the
Client other than in confidence to the Client’s professional advisers (“Other Recipients”) for the purpose of giving the Client advice. The Client
may disclose the Report to Other Recipients for informational purposes only, following prior written consent by KPMG for which the approval will
not be unreasonably withheld after receiving a Hold Harmless Letter by the intended recipients. These readers however will not be considered
“users” of the Report. In addition, KPMG will require a written acknowledgement by the requesting party of the terms of the release of the
Report.
This Report has been delivered on the basis that you shall not quote our name or reproduce our logo in any form or medium without our prior
written consent. You may disclose the whole or part of the report to your legal and other professional advisers for the purposes of your seeking
advice in relation to this Report, provided that when doing so you inform them that disclosure by them (save for their own internal purposes) is
not permitted without our prior written consent, and to the fullest extent permitted by law KPMG accept no responsibility or liability to them in
connection with the Report.
This Report is not suitable to be relied on by any party wishing to acquire rights against KPMG (other than the beneficiaries) for any purpose or in
any context. Any party other than the beneficiaries that obtains access to this Report or a copy of it and chooses to rely on this Report (or any
part of it) does so at its own risk. To the fullest extent permitted by law, KPMG does not assume any responsibility and will not accept any liability
in respect of this Report to any party other than the Client.
This Report includes certain statements, estimates, projections and assumptions with respect to presentation of data. No representation is made
or warranty given as to the accuracy or reasonableness of such data presented. No reliance should be placed on any such data and nothing in
this Report is or should be relied on as a promise or representation as to the future. Accordingly (subject as aforesaid), not the Firm, nor KPMG
International, nor affiliated partnerships or bodies corporate, nor the directors, shareholders, managers, partners, employees or agents of any of
them nor any other person, shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on
any statement in or omission from this Report and any such liability is expressly disclaimed.
This report makes reference to “KPMG analysis”. This indicates only that we have (where specified) undertaken certain analytical activities on the
underlying data to arrive at the information presented. Additional, this Report includes forecasts and projected information which are either
extrapolation of past trends or extrapolation of underlying data based on growth rates cited by various official and/or independent private
researchers. We do not accept any responsibility for the accuracy of the underlying data and such growth rates used.
© 2018 KPMG Al Fozan & Partners Certified Public Accountants, a registered company in the Kingdom of Saudi Arabia, and a non-partner member firm of the KPMG network of
independent firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 2
Document Classification: KPMG Confidential
Limitations
Neither the Firm, nor KPMG International, nor affiliated partnerships or bodies corporate, nor the directors, shareholders, managers, partners,
employees or agents of any of them (Parties), have verified any of the information contained herein, and no such party, entity or person makes
any representation or warranty, express or implied, as to the accuracy, reasonableness or completeness of the information contained in the
Report or any other oral or written information made available to any interested party or its advisers at any time. So far as permitted by law, and
except in the case of fraud by the party concerned, all such Parties expressly disclaim any and all responsibility and liability for, or based on, or
relating to the accuracy or sufficiency of any such information contained in, or errors or misstatements in or omissions from, this Report or based
on or relating to the Recipients’ use of the Report.
Nothing in this report constitutes a valuation or legal advice. This Report is not a prospectus and does not constitute or form any part of an offer
or invitation to subscribe for, underwrite or purchase securities or any of the assets, business or undertaking described herein, nor shall it or any
part of it form the basis of, or be relied upon, in any way in connection with any contract or investment decision relating to any securities, assets,
business or undertaking. Accordingly, interested parties are advised to carry out their own due diligence, investigations and analysis of any
information contained or referred to herein or made available to them at any stage.
Recipients in jurisdictions outside KSA should inform themselves about and observe any applicable legal or regulatory requirements in relation
to the distribution or possession of this Report to or in that jurisdiction. In this respect, neither KPMG International, the Firm nor any of their
affiliates nor their respective directors, officers, employees and agents nor any of the Parties accept any liability to any person in relation to the
distribution or possession of this Report to or in any such jurisdiction.
The assessment has involved secondary research. While every effort was made to obtain comprehensive information, the quality of the
assessment depended on the availability of secondary data. Furthermore, the assumptions used in the preparation of this report are the current
prevailing market characteristics in terms of performance. It should also be noted that the Financials prepared in this report are based on the high
level market analysis and can change during the engagement due to in-depth analysis of each and every factor affecting the returns.
Market research findings and recommendations are within the confines of the scope of research conducted and are therefore based on ‘ceteris
paribus’ conditions (all other non-measured variables remaining equal). Recommendations therefore do not guarantee predicted future behavior,
as they may be influenced by factors outside of the research and changing market conditions.
Table of Content
Page
Executive Summary 5
Socio-Economic Overview 7
Jeddah Real Estate Market Overview 30
Site Analysis 91
Project Development Concept 102
Financial Analysis 108
Appendices 141
• Executive Summary
• Socio-Economic Overview
• Jeddah Market Overview
• Site Analysis
• Project Development Concept
• Financial Analysis
• Appendices
Executive Summary
Introduction ■ Al Kayan Regional Trading Establishment has appointed KPMG to provide real estate and financial advisory services for a
mixed use development in Jeddah, intended to host various real estate sectors on a 1.5 million sqm land in Wadi Al Asla,
Jeddah
■ KPMG scope of work includes conducting a market assessment of the relevant real estate sectors and financial feasibility
study of the proposed project
■ The relevant real estate sectors and industries analysis have been conducted by KPMG, except for the Equestrian Industry
which has been mainly sourced from a prior market study conducted by Kayan for the proposed project. KPMG has not
reviewed, analyzed or challenged any of the information provided by Kayan
Project ■ The total land area of the project site measures approx. 1.5 million square meter, out of which around 42% is leasable land
Development earmarked for the development of an equestrian facility (70% of the leasable area), a leisure facility (27% of the leasable
Concept area), and a hospitality facility (3% of the leasable area)
■ The non-leasable area is preserved for common areas such as roads, parking, hardscape-landscape, offices, and other
common facilities.
■ As communicated by Kayan, the project owner(s) will be developing the infrastructure and the super-structure of the
equestrian, leisure, retail, and hospitality components and operate them.
Project Summary ■ The project is estimated to cost SAR 2,284 million, comprising of SAR 536 million infrastructure cost, and SAR 1,748 million
development cost of the superstructure (SAR 605 Equestrian, SAR 157 Mn Leisure, SAR 522 Mn Retail, and SAR 464
hospitality)
■ No land cost has been assumed as the land is being granted by government authorities for the sake of developing the project
■ The resulting project IRR is estimated to be 13.1%, the equity IRR is 12.8%, while the project payback period is 11.3 years,
which includes three years of construction period.
• Jeddah Real Estate Market Overview
• Site Analysis
• Appendices
Socio – Economic Overview
Country Overview A Economic Overview B Demographic Overview C
Country Profile 1 Macroeconomic Indicators 1 KSA Population Trends 1
Government Revenues &

2 Jeddah Population Trends 2
Expenditures
Disposable Income &
Vision 2030 3 3
Consumer Spending
Saudi Arabia Retail
4
Performance
KSA Labor Force
5
Distribution
Jeddah Labor Force
6
Distribution
A
Saudi Arabia is the second largest country in the MENA and the largest in the GCC
region with around 32.6 mil ion population and SAR 2.5 tril ion GDP
1.0
Location
The Kingdom of Saudi Arabia (“KSA” or the “Kingdom”) is located in the
south-west of Asia; bounded by the Red Sea from the west; Jordan, Iraq, and
Kuwait from the north; Arabian Gulf, Bahrain, Qatar, and United Emirates from Iraq
the east and Yemen and Oman from the South
Land area
Total land area of the Kingdom is 2.15 million square kilometers
Population Kingdom of
Saudi Arabia
The population of KSA was estimated to reach 32.6 million in 2017 including
20.4 million Saudi nationals
Government
The Kingdom is a monarchy and Al Saud is the ruling family. The current ruler
is King Salman bin Abdul Aziz Al Saud who ascended the throne in 2015
The king and the council of ministers form the executive and the legislative
authority. The state consultative council has the mission of giving its opinion
Gross Domestic Product
on any general issue submitted to the council
Nominal GDP SAR 2,564 Billion
Major cities
Real GDP Growth - 2017 -0.8%
Riyadh Capital of the country Madinah Sacred city of Muslims
Consumer Price Inflation 2017 1.1%
Jeddah Trading capital & major port Dammam Oil and port city
Budgetary developments in SAR
Makkah Sacred city of Muslims Dhahran Military city
2017 (Budget) 2017 (Actual) 2018 (Budget)
Currency Revenues 692 billion 696 billion 783 billion
The local currency is Saudi Arabian Riyals (“SAR”). It is pegged to the United Expenditures 890 billion 926 billion 978 billion
States Dollar (“USD”) with a conversion rate of: USD 1 = SAR 3.75
Balance -198 billion -230 billion -195 billion
Source: EIU, Ministry of Finance, GASTAT

Expenditures
Disposable Income &
Vision 2030 3 3
Consumer Spending
Saudi Arabia Retail
4
Performance
KSA Labor Force
5
Distribution
Jeddah Labor Force
6
Distribution
B
Although economic growth retraced over the past couple of years, recent
government initiatives are intended to place it back on the positive track
1.0
Nominal GDP of KSA (SAR Bn) • KSA’s GDP witnessed relatively a noticeable growth between 2011 and
2014. The nominal GDP rose at a 4% CAGR per annum during that
period
2,836
2,800 •
2,760
However, due to the decrease in oil price since late 2014, the country
2,668
2,564
2,517
2,444
2,424
has not been able to keep up with the same pattern of GDP growth. The
nominal GDP registered a 13.5% decrease in 2015 compared to 2014
1,981
• However, this has come as a blessing in disguise as the government is

now embarking upon implementing structural changes to the economy
and moving towards economic diversification
• The announcement of “Vision 2030” and the “National Transformation
Program 2020 (NTP)” are major restructuring plans initiated by the
2010 2011 2012 2013 2014 2015 2016 2017 2018F government attempting to minimize the Saudi economy’s dependence
on oil revenues
Real GDP Growth Rate • Due to the existing economic pressures, however, the government
extended the NTP Program until 2023
• Economic growth is anticipated to bounce back and the GDP growth is
10.0% expected to witness a 1.7% upsurge in 2018, backed by government’s
5.4% initiatives to diversify the economy
4.8%
3.7% 4.1%
2.7%
1.7% 1.7%
-0.8%
2010 2011 2012 2013 2014 2015 2016 2017 2018F
Source: GASTAT, Ministry of Finance

B
The government’s capital spending coupled with the rebound in the oil sector
and the private sector stimulus plan are expected to support economic growth
1.1
Real GDP by Sector - 2017 • The largest sector of the economy is the oil sector, accounting for 43.4%
of the GDP, while the non-oil sector stood at 56.6% in real terms at the
end of 2017
Government
Others, 1.98%
Finance &
Services, • The major economic sectors contributing to the Gross Domestic Product
13.92% in real terms are the Oil Sector, the Government Services Sector, the
Insurance,
Wholesale & Retail Sector, and the Non-Oil Manufacturing Sector
3.62%
Ownership of
• The oil sector is forecasted to grow by 1.5% as result of marginally higher
Oil Sector, oil production in 2018. Saudi crude oil production averaged 10 mbpd in
Dwellings, 43.40% 2017 and it is expected to be rising marginally, by around 100 thousand
5.09%
barrels per day (tbpd), to an average of 10.1 mbpd during 2018.
Moreover, the oil sector GDP is likely to be boosted by the opening of the
Transport, Storage, export oriented Jizan refinery in 2018
& Communication,
5.94% • Rise in the government’s budgeted capital expenditure, combined with
capital expenditures through the Public Investment Fund and the National
Wholesale & Development Fund and private sector stimulus, are anticipated to boost
Retail, 9.06% economic growth with the presence of a number of downside risks
Construction,
Agriculture, • Consumer and corporate spending could be affected after the
2.38% implementation of VAT, the rise in expat levies and dependency fees,
4.58% Non-Oil
Manufacturing, Non-Oil and the rise in electricity tariffs and gasoline prices
Electricity, Gas
& Water, 8.49% Mining, 0.40% • The Minister of Energy, Industry and Mineral Resources’ establishment
1.36% of an export bank, with a SAR 30 billion capital to support the sale of
industrial and mining products internationally, in addition to the Ministry
of Commerce and Investment’s initiative to support exports by a new
SAR 5 billion initiative, should improve the outlook of the non-oil
manufacturing sector in 2018 and beyond
Source: GASTAT, Ministry of Finance, Jadwa
B
Recorded budget deficits since 2014 were a result of high government spending
and reduced revenues driven by the sharp decline in oil prices
2.0
Government Revenues & Expenditures (SAR billions) • After four years of continuous budget surplus, Saudi Arabia recorded a
budget deficit in 2014, driven by high government spending and sharp
1,500 decline in global oil prices
1,000
• KSA’s budget recorded huge deficits of SAR 367 billion, SAR 297 billion,
and SAR 230 billion in 2015, 2016, and 2017; respectively. The deficit
was due to low oil prices and elevated expenditures
500
• Actual revenues in year 2017 were SAR 696 billion, while expenditures
reached SAR 926 billion
-
• It is noteworthy that 2018 budgeted expenditures amounting to SAR 978
(500)
billion are the highest in the Kingdom’s history, while 2018 budgeted
2010 2011 2012 2013 2014 2015 2016 2017 2018 (B) revenues amount to SAR 783 billion, resulting in a SAR 195 billion deficit
Revenue Expenditures Surplus/Deficit • In spite of fiscal deficits realized since 2014, the government has been
prioritizing investments in non-oil sectors to enhance sustainable and
2018 KSA Budget Breakdown By Expenditure (SAR billions) strong economic growth
Public Programs Unit 89 • 2018’s budget reflected the government vision to support the
continuous development of the Kingdom’s social infrastructure
Infrastructure and Transport 54
Econmic Resources 105 • Both education and healthcare sectors are key economic sectors for
which the government has locked-up a high budget as shown in the
Health and Social Development 147
adjacent chart
Education 192
Municipality Services 53 • Government spending on infrastructure and social development is likely
to promote job creation in the economy, thus leading to a higher
Security and Regional Adminstration 101
consumer expenditure and purchasing power
Military 210
Public Administration 26
Source: GASTAT, Ministry of Finance

B
Recent increases in non-oil revenue wil enable the government to sustain its
fiscal spending attempting to generate continuous economic growth
2.1
Oil and Non-oil Revenue (SAR Bn)

Chart Title
1,400
111 112 37% 37% 40%
109
33%
99 35%
1,200
1,145
1,034 1,035
27% 30%
1,000
79 913
25%
800
670
52 54 20%
600
12% 44 492
10% 446 440 15%
10% 7% 8% 334
400
256 291 10%
127 166 166

200
83 102 118
71 5%
- 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 (Budget)
Oil Revenue Non Oil Revenue Non Oil Share (%) Oil Price
• Historically, the economy of Saudi Arabia has been dependent on oil revenues, with the average non-oil revenues constituting no more than
10% of total revenues between 2010 and 2014
• Given the decline in oil prices, the government is undertaking major initiatives to broaden the revenue base, thus reducing dependency on oil
revenues
• Non-oil revenue grew at a CAGR of 20.2% between 2010 and 2017, compared to a 5.8% decline in the CAGR of oil-based revenue during the
same period
• It is noteworthy that the share of non-oil revenues increased from 10% in 2010 to 37% in 2017, driven by the decrease in oil revenues and
increase in non-oil revenues
Source: GASTAT, Ministry of Finance, KPMG Research & Analysis
B
Vision 2030 was set to reduce several decades’ dependency on oil prices
fluctuation, imposing significant impact on the government’s fiscal policies
3.0
Historical Government Revenues & Expenditures (SAR Bn))
Source: Vision 2030 , Fiscal Balance Program

B
Vision 2030’s key objective is to develop alternative sources of revenue, lower
dependency on public spending, and increase the private sector contribution
3.1
• Vision 2030 is a plan to reduce Saudi Arabia's dependence on oil, diversify its economy, and develop public service sectors such as health,
education, infrastructure, recreation and tourism
• Goals include reinforcing economic and investment activities, increasing non-oil industry trade between countries through goods and consumer
products, and increasing government spending on the military, manufacturing equipment and ammunition
A Thriving An Ambitious
A Vibrant Society
Economy Nation
Key Themes of “Vision 2030”

Source: Vision 2030
B
Economic prosperity is attempted through more employment, women’s
contributions, public investments, and private sector empowerment
3.2
Raise KSA’s global ranking in the Logistic Performance Index from 49 to 25 and ensure regional leadership
Rise from the 25th current position to the top 10 countries on the Global Competitiveness Index
Move from current position as the 19th largest economy in the world into the top 15
Increase the Public Investment Fund’s assets, from SAR 600 Bn to over SAR 7,000 Bn
Raise share of non-oil exports in non-oil GDP from 16% to 50%

A Thriving Economy
Increase women’s participation in the workforce from 22% to 30%
Increase FDI from 3.8% to the international level of 5.7% of GDP
Increase private sector’s GDP contribution from 40% to 65%
Increase SME contribution to GDP from 20% to 35%
Encourage financial institutions to allocate up to 20% of overall funding to SMEs by 2030
Lower the rate of unemployment from 11.6% to 7%
Localize over 50% of military equipment spending by 2030
Ensure the mining sector reaches SAR 97 Bn by 2020, creating 90,000 job opportunities
Reach an initial target of generating 9.5 GW of renewable energy
Increase the localization of oil and gas sectors from 40% to 75%
Increase the contribution of modern trade and e-commerce to 80% of retail sector by 2020
Source: Vision 2030
B
The other themes of the vision emphasize and empower social fabric supported
by an effective, transparent, accountable, and high-performing government
3.3
Raise KSA’s rank in government Effectiveness Index from 80 to 20

An Ambitious
Raise KSA’s rank on the E-Government Survey Index from 36 to be among top 5 nations
Increase non-oil government revenue from SAR 163 Bn to SAR 1,000 Bn

Nation
Aim to have trained, through distance learning, 500,000 government employees by 2020
Increase household savings from 6% to 10% of total household income
Raise non-profit sector’s contribution to GDP from less than 1% to 5%
Rally one million volunteers per year (compared to 11,000 now)
Increase Umrah capacity from 8 to 30 million every year

A Vibrant Society
Have 3 Saudi cities recognized in the top-ranked 100 cities in the world
More than double the number of Saudi heritage sites registered with UNESCO
Increase household spending on local cultural and entertainment activities from the current of 2.9% to 6%
Increase the ratio of individuals exercising at least once a week from 13% of population to 40%
Even though 47% of Saudi families already own their homes, government aim to increase this rate by 5% by 2020
Government's goal by 2020 is for 80% of parents to be engaged in school activities and the learning process of their children
Increase the average life expectancy from 74 to 80 years
Source: Vision 2030

B
To achieve the vision’s aspirations and hopes, many transformative programs
have been launched to pave the way for the Vision to achieve set goals
3.4
Under Vision 2030, the government developed Vision Realization Programs (VRPs) intended to assure the achievement of vision objectives and to
translate the vision into measurable programs and action plans. The Saudi Council of Economic and Development Affairs has identified a list of 12
programs to achieve the vision:
Public National Fisical Balance Saudi Character Enriching the Hajj

National Industrial
Investment Transformation Program Enrichment and Umrah
Development &
Fund Program Program Program Experience
Logistics
Program
Privatization Strategic Finacial Sector The Housing National

Development Lifestyle
Program Partnership Program Companies
Program Improvement
Program Promotion
Program
Program
Source: Vision 2030, KPMG Research & Analysis

B
In May 2018, Saudi Arabia launched the SAR130 bil ion 'Quality of Life Program
2020‘, aiming to achieve non-oil GDP growth in related sectors by 20% per year
3.5
Lifestyle Improvement program:
Improve individuals lifestyles by developing an ecosystem to support and create new options that boost citizens and residents participation in
cultural, environmental and sports activities. This is in addition to other suitable activities that contribute to enhancing the quality of life of
individuals and families, creating jobs, diversifying economic activity and raising the status of Saudi Arabian cities so that they rank among the best
cities in the world. The quality of life program 2020 aims to achieve non-oil GDP growth in related sector by 20% per year until 2020. The
contribution of local content in theses sectors is targeted to increase by 67% until 2020.
The Program Objectives Includes:

The main objective of the program is to increase the involvement of the private sector in the
development of the strategy by improving participation in vital areas that require high capital
expenditures and the return on investment is initially low.
There have been 23 Quality of Life Program objectives identified, including four objectives
directly related to the concept of life style:
1 Promotion of sporting activities
Excellence in several sports regionally and globally

2
Development of diverse entertainment opportunities to meet the needs of

3 the population
4 Enhancement of Saudi contribution of arts and culture
Source: Vision 2030, KPMG Research & Analysis


Expenditures
Disposable Income &
Vision 2030 3 3
Consumer Spending
Saudi Arabia Retail
4
Performance
KSA Labor Force
5
Distribution
Jeddah Labor Force
6
Distribution
C
Saudization efforts and other government regulations might limit the population
growth in the non-Saudi segment, leading to a lower overall population growth
1.0
Saudi Arabia Population (Mn)
36.0 36.6 37.3

34.2 34.8 35.4
32.6 33.1 33.7
31.1 31.7
29.2 29.6 30.3
27.1 28.4
13.4 13.7 13.9
12.8 13.0 13.2
12.1 12.4 12.6
10.7 11.2 11.7
9.0 9.4 10.2
8.4
18.7 19.4 19.8 19.4 19.7 19.9 20.1 20.4 20.8 21.1 21.5 21.8 22.2 22.6 23.0 23.4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Saudi Population Non Saudi Population
• Saudi Arabia’s population stood at 32.6 million by the end of 2017 out of which 20.4 million were Saudi nationals, representing 62.5%, while the
non-Saudis stood at 12.1 million, representing 37.1%
• The population base increased from 27.1 million in 2010 to 32.6 million in 2017 growing at a 2.6% CAGR. Going forward, the population is
expected to reach 37.3 million by 2025, growing at a 1.7% CAGR
• Population growth has been driven by the birth of Saudi nationals and the significant influx of non-Saudis coming to the Kingdom for job
opportunities
• However, Saudization efforts and other government regulations such as dependent fee and taxation might limit the population growth in the non-
Saudi segment leading to a lower increase in the overall population growth.
Source: GASTAT, KPMG Research & Analysis

C
A young population base supplies the nation with a dynamic and productive
workforce, setting the stage for sustained consumption
1.1
KSA Demographic Structure (2017)
Gen – Z Gen – Y Gen – X Baby Boomers

4,000,000 25% 34% 27% 14%
3,500,000
3,000,000
Population
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
0-4 yrs. 5-9 yrs. 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ yrs.
yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs. yrs.
1986 1970
2006 Males Females
• Generations Y and Z comprise of around 59% of the country’s population. Hence, it is very important to understand their requirements and
aspirations. As they are younger and have exposure to modern facilities, it is essential that the products and services offered to them cater to
their needs
• It is worth mentioning that the Saudi national population base is nearly equally divided between males and females. However, the non-Saudi
population base comprise mainly of males as the non-Saudi workforce usually live as singles in the Kingdom leaving their families behind in their
home countries

C
Growth in Jeddah’s population base is expected to continue over the medium
term, however, at a slower pace than previous years
2.0
Jeddah Total Population (Million)
4.8 4.8 4.9

4.5 4.6 4.7
4.3 4.4 4.5
4.1 4.2
3.9 4.0
3.58 3.6 3.8
2.5 2.5 2.6 2.6

2.3 2.4 2.4 2.4
2.1 2.2 2.2
1.9 2.0 2.1
1.8 1.8
1.8 1.8 1.8 1.9 1.9 2.0 2.0 2.0 2.1 2.1 2.1 2.2 2.2 2.2 2.3 2.3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Saudi Population Non Saudi Population
• Jeddah is the second largest city in Saudi Arabia after Riyadh by population. The population of Jeddah stood at 4.2 million by the end of 2017,
accounting to 13% of the Kingdom’s population
• Out of Jeddah’s total population, 2.2 million were Saudis, representing 52.4% and 2 million were non-Saudis, representing 47.6%
• The population increased from 3.5 million in 2010 to 4.2 million in 2017 at a 3.6% CAGR. In line with the overall population growth, Jeddah’s
population is expected to reach 4.9 million by 2025, growing at a 1.7% CAGR
• The relatively slower growth rate in the forecasted period represents the exodus trend among non-Saudi families

C
Current economic conditions and government initiatives might temporarily
reduce the pace of disposable income growth realized over the past years
3.0
Jeddah’s Personal Disposable Income (SAR Mn) • Personal Disposable Income (PDI) and Personal Disposable Income
per Capita are two key economic indicators, which are often observed
to gauge the overall state of the economy. High personal disposable
income (including high PDI per capita) indicate high purchasing power
of the population
• If the PDI is increasing at a higher rate than real GDP, this indicates
133,091
130,997
130,149
125,862
118,283 that the population is getting wealthy at a faster rate, and this is
110,978
104,705
92,072
leading to an increase in demand for high quantity and quality of

86,510
goods, services, and real estate in the economy. The more prosperous
a population becomes, the more it tends to spend on discretionary
goods and services
2010 2011 2012 2013 2014 2015 2016 2017 2018 E • PDI per capita can be influenced by the unemployment rate and the
participation rate. As the unemployment rate decreases, a greater
percentage of the labour force is earning labour income and this would
Jeddah’s Personal Disposable Income / Capita (SAR) increase PDI on a per capita basis if other factors remained constant
• The disposable income in Jeddah rose at a 6.1% CAGR between 2010
and 2017. This is mainly attributable to the accumulation of wealth
during times of economic growth and the lack of income taxes in the
country. Moreover, the PDI per capita of the country grew at a CAGR
of 3.4% during the same period
31,111
30,832
30,606
30,440
29,747
28,707
27,914
•
25,352
24,180
It should be noted that Personal Income is the sum of all incomes

received by residents, including returns for investments, and transfers
from the government and other sectors (such as welfare, allowance
programs, and insurance). This might explain the increase in the city’s
overall PDI
2010 2011 2012 2013 2014 2015 2016 2017 2018 E
Source: Euromonitor , GASTAT, KPMG Research & Analysis

C
As a result of a prolonged disposable income reduction, individuals and
households wil most likely end up changing their consumption patterns
3.1
Jeddah Consumer Expenditures per Capita (SAR) • Saudi Arabia’s household consumption per capita grew between 2010
and 2017 at a 4.3% CAGR
• Recent decrease in consumption patterns over the past couple of
years can be attributed to the economic slowdown and the recent
regulations and initiatives such as Value Added Tax, cut in subsidies,
increase in tariffs and other taxes, layoffs, etc
• Nonetheless, the commencement of the household allowance
29,769
29,607
29,509
28,786
27,717
27,203
26,165
program by mid-2017, might allow low-to-middle income households

24,064
22,000
more room for spending

• Saudi Arabia announced details of a new financial package to help
citizens cope with the higher price of energy, The main purpose of
these programs is to help families with limited income cope with
2010 2011 2012 2013 2014 2015 2016 2017 2018 E higher energy prices and new taxes. Equally important is that they will
Jeddah Consumer Expenditures Breakdown act as a financial stimulus to counter the effects of reduced disposable
income caused by the new price changes
6% Food & Beverage

10% 24% Household Goods & Services
Personal Goods & Services
4%
Accommodation
7% Transportation
7%
Communication
9%
7% Education
Leisure
26% Miscellaneous Goods & Services
Source: Euromonitor , GASTAT, KPMG Research & Analysis

C
Historical Point of Sale Transactions indicate an upward trend in consuming
trends but a reversal in consumers’ basket value
4.0
Point of Sale Transactions • Despite their limitation in representing the overall market performance,
the Point of Sale Transactions, published by SAMA, highlight the
250 ,000
200,467
800
ongoing trend in the retail market

•
700
200 ,000
172,835
182,749 In spite of the increment in overall POS transaction values between
159,970 708
600
2012 and 2017, the central bank’s disclosed numbers portray an

134,194 395
500
upward trend in total sales, total number of transactions, and number

122,226
150 ,000
525
327 299.9 of POS Terminals. However, their interpretation reveals a downward
400
238 265 276.2

100 ,000
225.4 300
trend in consumers’ basket value

107.8 138.8
92.5
•
200
50, 000
100
Sales, Transactions, and POS Terminals grew at 10.4%, 24.4%, and
26.5% CAGRs respectively, while Sales per Transaction and Sales per
0 0
Terminal decreased at 11.2% and 12.7% CAGR respectively between

2012 2013 2014 2015 2016 2017
2012 and 2017
Sales (SAR Mn) Transactions (Mn) POS Terminals ('000)
Retail Sales Performance Point of Sales Transaction in 2017 (SAR Bn)
1,321 Transportation 17.6

1,245
1,153 Health 18.5
Restaurants and Hotels 19.5
767 Beverage and Food 24.1
662 668
514 506 489 Clothing and Footwear 26.1
438
348 283 Recreation and Culture 8.2
Miscellaneous Goods and Services 59.4
Telecommunication 2.1
Education 6.3
2012 2013 2014 2015 2016 2017 Public Utilities 2.5
Sales per Transaction (SAR) Sales per POS Terminal (SAR Mn) Others 16.1
Source: SAMA, KPMG Research & Analysis

C
Guided by Vision 2030 and NTP 2020, the government is taking initiatives to
reduce unemployment rates and encourage private sector employment
5.0
KSA Labor Force Distribution by Education Status - 2017 • The Saudi labor market can be described as highly dependent on
foreign labor, especially in the private sector. Nearly 57% of labor force
1% 1% 1% comprise of foreign workers, mostly working in private sector. The
Illiterate
Read & Write Kingdom’s dependence on foreign labor is attributed to several factors:
7%
Primary - Large demand for workers in the oil industry and the construction
23% 13%
Intermediate sector
Secondary or Equivalent - Temporary labor requirements for infrastructure projects
7% Diploma - Substantially lower wages compared to Saudis
20%
Bachelor Degree - Lack of Saudi employment in blue collar jobs
27%
Higher Diploma / Master Degree • Although the overall unemployment rate in the Kingdom is 5.8%, the
Doctorate unemployment rate among Saudis is 12.8%
• However, the high Saudi unemployment rate drove the Ministry of
Labor and Social Development to initiate a new set of labor quotas to
KSA Labor Force Distribution by Age Group and Nationality - 2017 reduce the unemployment rate of nationals
• A major portion of Saudi workforce is employed in the public sector,
65+ however the National Transformation Program 2020 is encouraging
more Saudis to work in the private sector
55 - 59
• According to recent surveys conducted by General Authority of
45 - 49 Statistics, the Kingdom’s active labor force totaled 13.5 million
individuals
35 - 39
25 - 29
15 - 19
-15000001,500,000
-1000000 -500000 0 500000 1,500,000
1000000 1500000
Saudi Non Saudi
Source: GASTAT, Ministry of Labor

C
Despite the substantial increase of the province and city’s labor force, that
ascent was seasonal and mainly driven by booming construction works
6.0
Jeddah Labor Force 2017
Makkah Province Labor Force Distribution 2017 (Mn)

KSA Labor Force Distribution 2017 3.2
2.9 3.1
Riyadh 2.6 2.7
2.5
Makkah 1% 27% 2.3
Madinah 1% 2.0
Qassim
2%
Eastern Province
Asir 4%
Tabuk 1% 26%
2%
Hail 2% 1.4 1.5 1.5 1.6
1.3 1.3 1.2
Northern Border 6%
1.0
Jazan
Najran 6%
17% 5% 2010 2011 2012 2013 2014 2015 2016 2017
Al Baha
Al Jouf Jeddah Makkah Taif Others
• The largest portion of the labor force is distributed between the three major provinces, Riyadh, Makkah and the Eastern Province. These three
provinces are estimated to be collectively hosting around 70% of total labor force in Saudi Arabia
• Jeddah city is approximately accommodating 50% of Makkah Province’s labor force, followed by Makkah and Taif, which accommodate 24% and
14%, respectively
• Jeddah city’s labor force grew from 1.0 million in 2010 to 1.16 million in 2017, at a 2.1% CAGR
• Decline in net employment of non-Saudis during H2 2017 and early 2018, is mainly attributed to the sharp decline of the contracting sector
coupled with the imposition of taxes and fees and deportation of illegal labor force
Source: GASTAT, Ministry of Labor
• Site Analysis
• Appendices
Jeddah Real Estate Market Overview
Leisure Sector Overview D Retail Sector Overview G Office Sector Overview H
Equine Industry Overview E Hospitality Industry Overview F KSA Retail Trends 1 Market Overview 1
Introduction 1 Tourism Market Overview 1 KSA Consumer Spending 2 Market Determinants 2
Major Activities 2 Hospitality Market Overview 2 Demand Drivers 3 Demand Drivers 3
Equine Ecosystem 3 Hotel Supply Interpretation 3 Game Changers 4 Market Typology 4
Equine Events 4 Hospitality Performance Brief 4 Retail Formats 5 Office Classification 5
Market Challenges 5 Supply & Demand Analysis 5 Success Criteria 6 Supply & Demand Analysis 6
Supply Brief 6 Hotels Success Factors 6 Supply Landscape 7
Performance Brief 7 Market Performance 8
Demand Synopsis 8 Supply & Demand Analysis 9
Case Study 9
D
Leisure is the free time from prior commitments during which recreation and
entertainment activities take place
1.0
• Humans spend their time in activities of daily

living, work, sleep, social duties, and leisure, the latter
being time free from prior commitments to physiologic
or social needs, a prerequisite of recreation and
entertainment
• It is important to acknowledge the difference between
leisure and recreation. Leisure and recreation are highly
correlated, but they are not the same. Recreation takes
place during leisure but not all leisure is given over to
recreation
• If the motive is enjoyment and personal satisfaction and
the performance of the activity has its own appeal, then it
is recreation
• The growth of leisure time can be traced back to the
beginning of the conversion of fundamentally rural
societies into modernized and industrial ones, where the
effect of socio-economic and institutional factors and
technological progress have resulted in reducing the
working hours
• The growth of leisure time has led people to demand
more recreation facilities and provisions. The demand for
recreation refers to the amounts of various recreational
activities in which a population will be willing and able to
participate, given that:
– Access to facilities is easy
– Resources are adequate
– Environmental conditions are acceptable
Source: KPMG Research & Analysis
D
What differs recreation from entertainment is an individual’s active or passive
physical involvement in a specific activity
1.1
Putting Leisure in Context
Leisure Recreation Entertainment
• Leisure is defined as a quality of • Recreation is an activity of leisure, leisure • Entertainment is a form of activity that
experience or as free discretionary time being discretionary time holds the attention and interest of an
• Free time is time spent away from • The need to do something for recreation
audience, or gives pleasure and delight.
In other words, it is an event,
business, work, job hunting, domestic is an essential element of human biology
performance, or activity designed to
chores, and education. It also excludes and psychology. Recreational activities
entertain others
time spent on necessary activities such as are often done for enjoyment,
eating and sleeping amusement, or pleasure and are • It can be an idea or a task, but is more
considered to be fun likely to be one of the activities or events
• Recreational activities can be communal
that have developed over and extended
number of years specifically for the
or solitary, active or passive, outdoors or
purpose of keeping an audience's
indoors, healthy or harmful, and useful
attention
for society or detrimental
D
In Saudi Arabia, daily routines in general, and leisure time in specific vary between
weekdays and weekends
1.2
• More time is spent on leisure activities during weekends compared to

Typical Weekdays Time Budget (hours) weekdays
• During weekdays, individuals as well as families tend to fill their leisure
Sleep time with light and unplanned activities, such as outdoor activities, dining
6 Getting Ready out, visiting friends and relatives, exercising, etc.
8
Transport
• Comparatively during weekends, individuals and families tend to fill their
leisure time, in addition to light activities, with more planned and costlier
1 Work activities such as short trips and outdoor activities
Eating
1
1 Leisure
7 Typical Weekdays Leisure Typical Weekend Leisure
Activities and Destinations Activities and Destinations
Typical Weekend Time Budget (hours)
Sleep
8
12 Getting
Ready
1 Eating
3
Leisure

D
In addition to the currently practiced typical leisure activities, other ones can be
exploited and experienced in Saudi Arabia
1.3
Recreation Activities Entertainment Activities
• Basket Ball • Hunting • Art exhibits • Travelling

• Football • Boxing • Fairs exhibition
• Tennis • Walking • Museums
Sports Exhibitions
• Running • Swimming • Consumer
• Mountain • Bicycling Trade shows
Climbing • Cricket
• Camping • Hiking • Circus • Comedy

• Fishing • Rafting • Concerts clubs
Outdoor
• Off-Roading • Horseback • Operas • Theatre
Activities • Gardening Riding Live • Sports • Drama
• Caving • Theme Parks Entertainment • Video art
• Amusement
• Reading • Video Games Parks
Indoor Activities • Yoga • Studying
• Exercising
• Broadcast
(TV)
• Gathering • Visiting • Internet
• Film
Social Activities • Partying Relatives Mass Media • Print Media
(Cinema)
• Picnicking • Outdoor
• Video Games
Media
• Audio
• Sightseeing (Music)
Travel
• Discovery

D
Six prevailing driving forces are shaping the leisure sector and wil determine its
direction and evolvement over the coming future
1.4
Credit leads to an increase in consumer

The Saudi society is conservative and prefers the
spending, thus leading to higher GDP
separation between the two sexes in both private
(gross domestic product) and thereby
and public places. This results in the separation
faster economic growth. If credit is
between genders in public places, such as schools,
used to purchase productive resources,
universities, markets, hospitals and public parks , as
it helps in economic growth and adds
well as in private places such as in homes, cars, and
to income. However, credit further
waiting rooms at all facilities and utilities
leads to the creation of debt cycles
Various modes of entertainment Throughout the majority of the year,

(such as casinos) are currently not the outside temperature exceeds
Government 40°C during the day in most cities.
Regulations
permitted in Saudi Arabia mainly due
Climate
to the outstanding Shariah Compliant Sector This further puts a limitation on the
regulatory framework. However, the Driving convenience of entertainment
government is recently promoting Forces centers in Saudi Arabia, offering
entertainment venues and activities more opportunities for indoor rather
that are in harmony with local norms than outdoor recreation and
and beliefs entertainment
Spending on leisure activities in general and Saudi Arabia has a young and fast growing
on recreational and entertainment facilities in population with 59% of its total inhabitants are
specific is mainly driven by the population’s under the age of 35. The highest demand for
purchasing power. A weak purchasing power entertainment facilities comes from population
diverts people towards personalized and of the age 19 and below, and this constitutes
cheaper alternatives while a strong one 32% of the total population of KSA
diverts them towards more complex and
expensive ones

D
Consumers’ selection of leisure venues is determined by the level of complexity
accompanying the decision making process
1.5
Buying Decision Behavior • Complex Buying Behavior: such type of behavior occurs
when a consumer intends to pay for a service which is risky,
expensive, and is bought infrequently such as a long distance
or expensive leisure trip
Level of Involvement • Variety Seeking Buying Behavior: consumers try to
experience different facilities and services, such as
aquariums, because they want to experience a variety of
High Low services. This is the reason that most consumers do a lot of
brand switching
• Dissonance Reducing Buying Behavior: such type of buying
Difference between Product Offerings
Significant
behavior occurs when a service is relatively expensive, risky,

Complex Buying Variety Seeking and bought infrequently but the difference between brands is
Behavior Buying Behavior insignificant, such as horseback riding
• Habitual Buying Behavior: such type of behavior occurs when
the consumer pays for low cost, frequently bought services
such as amusement parks and cinemas. In such cases, brand
loyalty does not occur and consumers only pay for particular
brands because of their familiarity
Dissonance
Habitual Buying
Few
Reducing Buying
Behavior
Behavior
The selection of leisure venues is mainly governed by Variety Seeking
Buying Decisions. Accordingly, consumers might not express loyalty to
a specific brand or facility and end up switching between them in
accordance with their financial capabilities

D
Moreover, consumers’ demand for complementary services, such as lodging, is
derived from autonomous demand for leisure activities and venues
1.6
Classification of Demand
Autonomous Demand Derived Demand Unmet Demand
• Demand for a product/service that is • Derived demand refers to the • Unmet (latent) demand is defined as
not associated with the demand of demand for a product/services that demand from people who would be
other products/services is known as arises due to the demand for other interested in demanding a product
autonomous or direct demand products/services or visiting a destination but do not
• Autonomous demand arises due to • For example, demand for petrol, do so due to various reasons such as
the natural desire of an individual to diesel, and other lubricants absence of interest, availability of
directly consume the product or depends on the demand of other alternatives, lack of awareness,
experience the service vehicles. Apart from this, the and other factors and influencers
• For example, demand for food, demand for raw materials is also
shelter, clothes, vehicles, derived demand as it is dependent
entertainment, medical consultation on the production of other
is autonomous as it arises due to products, and demand for
biological, physical, and emotional substitutes and complementary
needs of consumers goods is also derived demand.
Similarly, demand for hotel rooms
is dependent on demand for leisure
or business trips

D
Therefore, the success of leisure venues and their auxiliary facilities depends on
offering a sustainable added value to the right target market
1.7
There are a number of factors which have been demonstrated over time to determine the success of leisure products and
services:
Substantial marketing efforts across the various stages of the lifecycle are
Awareness required to increase the target market’s awareness of the subject-matter
activity in general and the facility in specific
With the
Finding and maintaining the desire and interest in performing a certain
availability of
activity or visiting a destination can be done through targeting the right
Interest various leisure
market segment and continuously offering services that exceed
alternatives and
expectations
consumers’
inclination to
A facility’s convenience, before, during, and after the visit, plays a major experience
Convenience role in attracting leisure seekers, otherwise, they will be lost to other different activities,
alternative facilities and activities sustainable
competitive
Seasonality can be disadvantageous to a leisure facility, however, it offerings targeting
Seasonality becomes advantageous when an activity is promoted as scarce and time- the right audience
limited need to be
introduced
A facility’s uniqueness stems from key differentiating factors that result in
a competitive advantage and strong value proposition. However,
Uniqueness
substantial efforts are required to maintain this competitive advantage
over the long term
D
It should be noted that around 60% of households belong to lower social classes
earning less than the average monthly median disposable income of SAR 11,801
1.8
Consumer Expenditure (2017) Monthly Household Disposable Income
Healthcare 2% 14,0 00 14. 00%
11.52%
Education
12. 00%
3.0% 12,0 00
10. 00%
Transport 10.9% 10,0 00
8.0 0%
Communication 6.4% 8,00 0
5.37%
5.04%
3.35% 6.0 0%
Miscellaneous 13.7% 6,00 0
4.0 0%
1.94%
Leisure, Hotel & Catering 9.0% 4,00 0
2.0 0%
Housing
-0.43%
25.7% 2,00 0
0.0 0%
9,114 10,164 10,504 11,034 11,626 11,852 11,801

Household goods & services 29.7% - -2.00%
* Includes expenditure on personal care, jewelry, silverware, watches and

2011 2012 2013 2014 2015 2016 2017
clocks, travel goods, personal effects, social protection, insurance,
financial services and other goods and services Monthly Household Disposable Income Growth(%)
Social Class in Saudi Arabia (2017) • Classes D and E are the largest social classes in Saudi Arabia,
representing 62% of households
• The median monthly disposable income per household averaged SAR
11% Class A 11,801 in 2017
31% 9% Class B • The median monthly disposable income has increased at a 4.4% CAGR
between 2011 and 2017, however its annual growth has, to some extent,
Class C witnessed a decreasing pace since 2012
18%
Class D • Consumers’ spending on leisure activities represented 9% of total
households spending
31% Class E
Source: Euromonitor, KPMG Research & Analysis

Market Overview 1 Tourism Market Overview 1 KSA Consumer Spending 2 Market Determinants 2
Case Study 8 Supply & Demand Analysis 9
E
Despite its admiration by local individuals and communities, the equine industry is
stil non-organized and underdeveloped
1.0
• Equestrian sports and activities hold a great value for the kingdom and
its leadership, with the first equestrian club being established in the
era of King Abdulaziz
• Due to its irregularity, King Abdullah Bin Abdul Aziz established an
equine club under the Ministry of Labor & Social Development
• According to King Abdulaziz Arabian Horses Center, the number of
Arabian horses registered in the center exceeds 27 thousand horses,
with almost 9 thousand horse owners
• The equine industry is not well established with the majority of
facilities being in ranches owned and managed by individuals and
families who started the business as a hobby
• The first equestrian club in Jeddah was established more than 25
years ago in Asfan
• The industry in Jeddah mostly comprises of clubs which are not
properly designed to provide modern services and facilities, in
addition to privately owned stables
• Due to it being underdeveloped, the equine industry didn’t get the full
attention it deserves
• However, vision 2030 capitalizes on diversifying the economy and
opening up the country to tourists while focusing on undeveloped
sectors such as sports, leisure and entertainment
• Accordingly, opportunities for a properly designed and regulated
equestrian facilities might surface
E
There is a wide range of equine activities that can be explored and attended
other than common races and ridings
2.0
8. Rodeo is a competitive sport that arose 1. Endurance riding is an equestrian sport based on
out of the working practices of cattle controlled long-distance races
herding in some countries. Today it is a
sporting event that involves horses and 2. Dressage is a highly skilled form of riding
other livestock, designed to test the skill performed in competition as well as an art
and speed of the cowboys sometimes pursued solely for the sake of
mastery
7. Driving, when applied 3. Reining is a riding competition
to horses, ponies, mules, for horses in which the riders guide
or donkeys, is a broad term for 8 the horses through a precise pattern
hitching equines to 7 1
of circles, spins, and stops
a wagon, carriage, cart, sleigh, or Major
other horse-drawn vehicle by 6 Equine 2 4. Show jumping is a part of a
means of a harness and working group of English
them in this way.
Activities
5 3
riding equestrian events that also
4 includes dressage, eventing,
and equitation
6. Horse racing is
an equestrian performance sport, typically 5. Polo is a team sport played
involving two or more horses ridden on horseback. The objective is to
by jockeys (or sometimes driven without score goals against an opposing team.
riders) over a set distance for competition Players score by driving a small hard white
ball into the opposing team's goal using a
long-handled wooden mallet

E
The equine ecosystem contributes to the economy through direct and indirect
employment as well as consumers’ spending on equine activities
3.0
 Private Owners: People from the community who own horses of

various disciplines
 Breeders: Horse breeders who purchases specific mares & stallions

to produce new generations of horses
Private
Owners  Employees: Staff that overlooks and provides daily care needed by
Fans the horse
Riders &
Participants  Horse Feed Suppliers & Producers: Most of the livestock is produced
locally and sold to suppliers
Breeders
Veterinarians &  Tack & Miscellaneous: Stores that provides equestrian equipment
Pharmaceutical
Companies  Recreational Riders: Horse enthusiasts who takes riding lessons for
Employees enjoyment
Recreational  Veterinarians & Pharmaceutical Companies: professionals who treats

Riders diseases, disorders, and injuries in animals in addition to animals
Tack & medications suppliers
Miscellaneous Horse Feed
Stores Suppliers &  Riders & Participants: Jockeys, endurance, show jumping and
Producers dressage riders fall into this category
 Fans: Horse enthusiasts that attends equestrian related events such

as racing or show jumping competitions
Source: Client Information

E
In spite of the numerous competitions held in Jeddah annually, organized racing
events do not attract enough audience as yet
4.0
• Competitions in Jeddah are held on a seasonal basis for

Official Sponsors of Flat Racing
7 months a year, from October to April, due to climate
conditions
• Jeddah Equestrian Club specializes in Flat Racing for
mainly thoroughbred horses and offers few races for
Arabian horses that are bred for racing Custodian
Saudi
• The final annual program of the competitions is held at Arabian
of the Two
Holy
Ministries
Private
Companies
Breeders
or Owners
the Equestrian Club, the race is held on a weekly basis Airlines
Mosques
every Thursday
• Jeddah lacks an indoor arena for show jumping
competitions, therefore, competitions are held at a
private equestrian club
• The Saudi Equestrian Federation announces a schedule
of competitions around the Kingdom at the beginning of Official Sponsors of Show Jumping
every season
• The number of visitors per racing event in Jeddah
ranges between 150 and 250 persons depending on the
type of racing
Saudi
Private
Equestrian Ministries
Companies
Federation

E
Evolution of the industry is mainly restricted by constraints that make it
inconvenient for practitioners to experience and enjoy equine activities
5.0
Environmental
Location Space Weather
Sustainability
• Keeping livestock animals in • A horse riding club is optimally • Horse riding facilities need to • Weather is an important aspect
large numbers in a compact built on a large area of land that consider how to manage their when it comes to planning for
space affects the overall health can fully accommodate all the ongoing environmental the horse riding facilities and
and sanitary conditions of the animals as well as having ample sustainability activities
area room for riding
• This includes managing water • Most horse races and events in
• Therefore, equestrian clubs • The associated infrastructure use, since horse facilities often The Kingdom occur from the
need to be located far from required for horse riding require substantial volumes of afternoon till midnight
urban centers facilities such as car parking water, in addition to maintaining
along with all equipment the soil and vegetation
• Hence, equestrian clubs’ required to ease operation have
distance from urban centers to be significant
and the required time to reach • The absence of such facilities
them might reduce interest in might negatively affect demand
equine activities

E
It is anticipated that more than 70 private and public ranches are available in
Jeddah
6.0
• The adjacent map and the table below highlight the location
of various equestrian clubs in Jeddah 7
• The majority of equestrian clubs are located towards the

north eastern side of Jeddah
• Jeddah Equestrian Club is the first club to be open for public,
holding activities and events in addition to horseraces during 6
the weekends
4 5
• It should be mentioned that most equestrian clubs and
stables in the city are privately owned and operated 2 3
• It has been observed that privately owned clubs are more

A
organized and developed compared to public ones
1
Prominent Ranches in Jeddah
1 Trio Ranch
2 Al Jazeerah Equestrian Club
3 Al Muntaha Equestrian Center
4 Kinndah Stable
5 Royalty Equestrian Club
6 City Horse Stable
7 Jeddah Equestrian Club 8

8 King Abdulaziz University Equestrian Club
A Project Site Equestrian Clubs
Source: KPMG Research & Analysis, Client Information
E
The prices of equine activities vary between ranches depending on the quality of
provided services and horses’ breed
7.0
• The graphs below illustrate the prices for some of the services provided by selected equestrian clubs in Jeddah
• Full horse boarding means providing the horse a stall, turnout, and daily care such as feedings, grooming, and stall cleaning
• Full boarding prices ranged between SAR 1,200 and SAR 2,300, depending on the quality of the services provided for horses in addition to the
number of food servings
• Horseback riding are usually 30 to 45 minutes sessions with a horse provided by the stable and under the supervision of equine trainers
• Prices for the riding sessions range between SAR 80 and SAR 120, subject to the breed of the horse and the number of sessions purchased
Full Horse Boarding Prices (SAR/Month) Horseback Riding Sessions Prices (SAR)
2500 140
120
2000
100
1500 80
1000 60
40
500
20
0 0
Al Jazeerah Royalty Equestrian City Horse Stable Al Jazeerah Royalty Equestrian City Horse Stable
Equestrian Club Club Equestrian Club Club

E
Case Study: City Horse Stable
8.0
General Information
Location Mersal Village Street, East of Jeddah
Status Completed in 2016
Target Market Middle to High Income
Number of Horse Shelters 160
Land Area 392,000 Sqm
Built Up Area Approx. 40,000 Sqm
Number of Tournaments 12 Per Year
• Horseback Riding Area for Kids

• Mosque
Facilities and Amenities
• Separated Area for Females (under
construction)
Performance (SAR)
Horseback Riding Training Session 80 – 85 SAR
Horse Boarding (Includes feeding,
2,000 – 2,300 SAR Per Month
grooming & shaving)
Membership Price (To use the facilities) 300 SAR Per Month
Veterinary Services (Initial checkup) 300 SAR
Tournament Participation Fees 50 – 200 SAR
F
The importance of lodging choices during an outbound visit make the hospitality
industry one of the significant influencers of the tourism sector performance
1.0
• A visit is an occasion when a person or a group of people go

to a place for leisure, as part of a job, or to do something else
• The visit can be to a local destination within the immediate or
near reach of a person, and can be distant requiring a special
Leisure / MICE trip to that destination
Demand • Contrary to outbound destinations, visits to local destinations
do not require lodging in hospitality properties
• Fulfilling a visit to an outbound destination results in
exercising a chain of activities that involve various economic
sectors. The sectors involved in the chain of activities jointly
form the tourism industry
Local Outbound • Lodging choice is one of the major considerations of a visit to

an outbound destination and the selection of a lodging facility
Destination Destination usually undergoes a major consideration by the travelers’
decision making and trip planning processes
• Accordingly, visitors’ purpose of visit, their preferred type of
accommodation, and their length of stay, play a major role in
Tourism shaping the performance of the hospitality industry
• Other factors that equally play a major role in shaping the
performance of the hospitality industry in general, and
individual properties in specific, are:
– Importance of the location
Hospitality – Competitive advantage of the property
– Supply of competing offerings

F
Jeddah’s new airport wil serve up to 30 mil ion annual passengers upon its first
phase completion, and up to 80 mil ion upon completion of subsequent phases
1.1
King Abdulaziz International Airport Passenger Movements (‘000)

20,000
15,000
70%
International
10,000
36%
5,000 31% Domestic
Domestic
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
International Domestic
• Being a gateway for Hajj and Umrah pilgrims, King Abdulaziz International airport is the busiest airport in the Kingdom
• Historically, passengers movement have always been dominated by international tourists. However, of late, domestic tourists arrival have
increased significantly
• International passengers movement grew at a 10.7% CAGR between 2007-2010, while domestic passengers movement increased at 0.2%
CAGR during the same period
• Between 2011-2015, international passengers movement grew at 4.6% CAGR, while domestic passengers movement witnessed a robust
growth of 12.3% CAGR during the same period
• The airport is currently undergoing a three phased expansion plan. Upon the completion of the first phase, capacity of the airport will increase
to 30 million annual passengers, followed by 43 million and 80 million passengers in the second and third phases, respectively

F
The latest published statistics indicate that Jeddah was visited by 0.86 mil ion
inbound and 5.2 mil ion domestic tourists
1.2
Jeddah Inbound Tourists by Purpose of Visit Jeddah Domestic Tourists by Purpose of Visit
6.34% Leisure / Shopping Leisure / Shopping

15.7% 15.8%
35.2% Visiting Friends & Family 35.6% Visiting Friends & Family
(VFR) 12.5% (VFR)
Corporate (Business / Corporate (Business /

Conference) Conference)
42.8%
Others 36.1% Others
• The latest published statistics indicate that Jeddah city has been visited by approximately 0.86 million inbound tourists, representing 11.1% of the
total inbound tourists to Makkah province, and 5.2 million domestic tourists, representing 37.7% of the total 13.8 million domestic tourists to
Makkah Province
• The majority of inbound tourists (42.8%) visited Jeddah for business and conference, followed by visiting friends and relatives. The majority of
those tourists came from neighboring countries including UAE, Bahrain, Qatar and Kuwait
• Visiting friends and family (VFR) proved to be the primary reason for domestic tourists to visit Jeddah amounting to 36.1% of total domestic
victors, followed by leisure and shopping, attracted by Jeddah’s location as it is situated at the coastline of Red Sea and by the variety of touristic
facilities
• Unlike inbound tourists, only 12.5% of domestic tourists visited Jeddah for the purpose of business and conference
Source: Saudi Commission for Tourism & National Heritage ,KPMG Research & Analysis
F
The majority of domestic tourists usually visit Jeddah for leisure, especial y during
holidays and school breaks
1.3
Jeddah Domestic Leisure Visitors (Mn) • The majority of Jeddah visitors usually come for leisure, shopping,
and visiting friends and relatives. The percentage of leisure visitors
6.13 averaged 86% of total domestic visitors for the period 2005-2014
4.93 4.99
• Usually, domestic tourists visit Jeddah during holidays and school
4.47 breaks. Accordingly, the potential number of annual visits varies
4.09 4.07 Average = 4.36 between 1 and 4
3.72 3.75 • Domestic visitors’ length of stay ranged between 1 and 7 days
• The estimated spending per trip by domestic visitors in 2016 was SAR
1,668 per trip, equivalent to SAR 9,007 per household. Visitors’
N/A N/A spending is estimated to increase at 1.94% CAGR annually
• Recreation spending by inbound tourists stood at 16% of total
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 spending compared to 12.6% average spending on the national level
and 10.13% in Makkah Province
Breakdown of Domestic Tourism Expenditures per Annual Breaks and Vacations

Visitor (2016)
5 8 8
2% days days days 92 days
20% Accommodation
31-Mar-17
27-Jan-17
11-Nov-16
16-Nov-16
9-Sep-17
4-Feb-17
9-Jun-17
8-Apr-17
F&B
34%
SAR 1,668 Transportation
Recreation & Entertainment
18% Shopping
Others
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16% 10%
2016 2017
Source: Saudi Commission for Tourism & National Heritage, KPMG Research & Analysis
F
While inbound tourists prefer to stay in hotels, domestic tourists usually prefer to
stay in furnished apartments
2.0
Jeddah Inbound Tourists by Type of Accommodation • The graphs on the left illustrate the type of accommodations
preferred by both domestic and inbound tourists
11%
• Inbound tourists prefer to stay in hotels (41%) due to following
reasons:
Hotel
– Quality of services offered by hotels
41% Furnished Apartment – Relatively smaller sizes than domestic tourists
40% Private – Proximity to leisure and recreational venues
Other
– They tend to visits for relatively shorter stay
8% • On the other hand, a large number of domestic tourists prefer to stay
in furnished apartments (47%), mainly due to following reasons:
– Relatively large family sizes
Jeddah Domestic Tourists by Type of Accommodation – Longer stay
2%
– Affordable rentals
• Inbound tourists usually travel with higher budgets as compared to
23% Hotel domestic tourists which are more price cautious
27%
Furnished Apartment • Inbound tourists also expect better services and try to stay close to
the city center and various touristic destinations such as retail
Private venues and leisure and recreational facilities
Other
47%
Source: Saudi Commission for Tourism & National Heritage ,KPMG Research & Analysis
The existing hotel stock standing at 19,200 keys is expected to substantial y
F
increase in the coming 3-4 years, especial y in the 4 & 5 Star categories
3.0
1 Radisson Blu Hotel • The majority of existing hotels are concentrated on the western side of
2 Holiday Inn Jeddah Gateway the city (near Corniche) and on arterial roads such as Prince
N Elaf Jeddah Hotel - Red Sea
3
Mall Mohammad Ibn Abdulaziz Road, Madinah Road, and Palestine Road
4 Sheraton Jeddah Hotel
5 Jeddah Hilton • Hotel stock standing at approximately 19,200 (across all categories),
6 Sofitel Jeddah Corniche has witnessed a 11% CAGR between 2012 to 2017
7 Mövenpick Al Nawras Jeddah
8 Rosewood Jeddah
9 Habitat Hotel
• A number of international hotel operators are expanding their presence
in Jeddah, considering the long term market outlook of the city
Mövenpick Hotel City Star
1 10
22
3
Jeddah
11 Le Meridien Jeddah • Approximately 2,500 hotel keys (3, 4 & 5 star) are expected to be
23 12 Ramada Continental Jeddah added in Jeddah hotel market between 2018 and 2020, which will
4 28 13 Radisson Blu Hotel increase the current hotel stock by 13%
5 2 14 Park Hyatt Jeddah
18
7
6
25
24
9 10
15 Crowne Plaza Jeddah
16 InterContinental Jeddah
• The market is mainly focusing on upscale hotels as 90% of upcoming
8 17 Jeddah Marriott Hotel
hotels are being positioned in 4 & 5 star categories
11 18 Centro Shaheen
26 19
27 21 19 Assila Hotel by Rocco Forte
17 20 Ritz Carlton
20 14 12 21 Novotel Jeddah Tahlia
16 15 13 22 Millennium Hotel Some of the Prominent Upcoming Supply
23 Kempinski Hotel
24 Marriot Jeddah Hotel
25 Fairmont Jeddah
26 Raffles Hotel
27 Elaf Galleria Hotel
28 The Langham Jeddah
146 Keys 100 Keys 144 Keys 189 Keys
Existing Upcoming
F
Due to the current economic slowdown, Jeddah’s hotel market has witnessed
weaker occupancy rates in 2017 compared to previous years
4.0
3 Star Hotels 4 Star Hotels 5 Star Hotels

350
71% 68%
80% 800
78% 90%
1,400
79% 90%
65% 73% 68%

67% 61%
80%
70% 700
80%
300
1,200
70%
70%
60% 600
250
1,000
60%
60%
50% 500
200
50% 800
50%
40% 400
320 320 314 670

40%
1257
657 643 1207
150 40%
1146
600
30% 300
30%
30%
100
400
20% 200
20%
20%
50
10% 100 200
10%
10%
0 0% 0 0%
0 0%
2015 2016 2017 2015 2016 2017 2015 2016 2017

ADR (SAR/night) Occupancy (%) ADR (SAR/night) Occupancy (%) ADR (SAR/night) Occupancy (%)
• Jeddah’s hospitality market witnessed a strong performance till 2015. However, due to the current economic slowdown and its effect on
corporate and individual demand, the market has witnessed weaker occupancy rates in 2016-17 when compared to 2015. Nonetheless, ADRs
have shown some relative resistance to the current changes during the same period
• The 3 Star Hotel category in Jeddah city has exhibited relatively stable performance over the past 3 years, due to the consistency of their demand
fundamentals
• The 5 Star Hotel segment was affected adversely during the last 3 years mainly due the decline in corporate tourists coupled with delivery of new
hotel rooms amid current economic slowdown
• Going forward, it is expected that the market will remain subdued in the short to medium term

F
With the anticipated huge forthcoming supply, Jeddah’s hotel market is expected
to witness a substantial decrease in occupancy rates
5.0
Jeddah Hotels Demand & Supply Analysis

35,000
74% 68% 70%

80%
68% 66%
30,000
63% 70%
60%
25,000
50%
20,000
40%
15,000
30%
10,000
20%
5,000
10%
15,550 11,519 19,214 13,008 21,414 14,562 23,415 16,317 27,530 18,302 32,368 20,549
- 0%
2015 2017 2019 2021 2023 2025
Hotel Supply Hotel Demand Implied Occupancy
• The above chart depicts the existing and future demand and supply of hotel rooms in Jeddah city
• Hotel demand is derived from the domestic and inbound number of arrivals, the share of tourists using hotels, the average length of stay and
average number of guest per room
• Demand is expected to increase at around 6% CAGR to reach 20,549 rooms by 2025, while the number of supplied units is estimated to reach
32,368 rooms. Therefore, it is anticipated that market is likely to witness occupancy levels between 60%-70%
• Though considerable level of supply is anticipated during the projected period, government initiatives to diversify economy and sustained
demand from both inbound and domestic tourists might set the stage for absorbing this additional supply over the long term

F
Proximity (distance) to (from) demand generators and favorable destinations
plays a major role in determining the success (failure) of a lodging property
6.0
• Proximity to demand generators is very crucial to a hotel’s success

and understanding the depth of those demand generators is very
important
1 • Companies often establish negotiated rates with hotels that not only
meet their needs, but that are also located near their offices and
A Unique Proximity to leisure visitors tend to stay in hotels that are adjacent to their
Experience Demand favorable destinations
6 Generators • Hotel developments are usually clustered near major demand
generators in respective submarkets, such as a Central Business
District, Uptown District, or suburban business park
2 • Unlike central areas and downtowns, demand generators in the
suburbs tend to be few and far between. The likely candidates are
Understanding Proximity to shopping malls, universities, research centers, exhibition centers,
Supply Success Factors Vibrant and leisure destinations
Dynamics Neighborhood
5
Well-
Controlled Perfect Mix
3
Costs

F
A vibrant and live surrounding neighborhood of a hotel grants residents
accessibility to nearby facilities and enriches their overall experience
6.1
• Vibrant neighborhoods are dense and compact, and feature diverse

land uses, among other characteristics
• Adding to their lodging experience, today’s travelers are increasingly
seeking to experience the surroundings and nearby amenities. The
1 potential inconvenience of either using public transportation or
A Unique Proximity to renting a car simply to go to a restaurant will eliminate a hotel from
Experience Demand being selected by such travelers
6 Generators • While larger and dense urban cities have a built-in advantage in
respect to a typical hotel’s proximity to other venues and attractions,
this becomes increasingly important in other less-dense urban areas
2 • Most attractions are eventually built closer to demand generators,
decreasing the attractiveness of distant hotels
Understanding Proximity to
Supply Success Factors Vibrant
5
Well-
3
Costs

F
Targeting various market segments protects a hotel against seasonality and
exposure to one or few demand drivers
6.2
• Properties that are dependent on one demand generator face a

higher risk of being affected or completely collapsing if that source of
demand weakens or disappears
1 • Within the city’s CBD for example, hotels can receive a steady flow of
both business and leisure travelers throughout the year. This mix can
A Unique Proximity to be drastically different for a traditional business-focused hotel in a
Experience Demand suburban business park
6 Generators • There are other well-established markets where the one-industry rule
is often ignored and hotel occupancies remain elevated year-round.
Nevertheless, even those markets experience seasonality, and it is
2 crucial for hotels in those markets to maximize their demand
segmentation
Understanding Proximity to • Most often, a healthy mix of business, group, and leisure, along with
Supply Success Factors Vibrant a well-balanced demand segmentation, adds to the long-term
Dynamics Neighborhood success of a hotel
5
Well-
3
Costs

F
Controlled initial and operating costs is a guarantee of reasonable returns and an
insurance against potential weak performance
6.3
• While there is no doubt that revenues are the major determinants of

a hotel’s returns, the latter might be eroded by elevated expenses
• Remote locations or landmark hotels often have to operate with
elevated fixed and variable costs that are near to impossible to be
1 reduced
A Unique Proximity to
Experience Demand
6 Generators
2
5
Well-
3
Costs

F
Increased supply of hotel rooms in a defined geography can affect a hotel’s
performance and detriment its success
6.4
• Besides the possibility of a main demand generator leaving the

market, nothing can affect the future performance of a hotel more
than unexpected changes in the supply dynamics
1 • Hotel markets are always changing, and this may include future
hotels closing (unlikely), as well as future hotels opening (highly
A Unique Proximity to likely)
Experience Demand • If new supply is not on the horizon in the near future, it is almost
6 Generators guaranteed that, at some point in the asset’s holding period, new
supply will enter the market. The impact that this new supply will
have on the subject asset will depend on its competitive weight and
2 size of the market
5
Well-
3
Costs

F
With the abundance of supply and similarity of room styles, amenities, and
services, hotels can differentiate themselves by offering unique experiences
6.5
• Hotels that reflect the uniqueness of their surrounding are well

positioned to capture travelers’ demand for unique experiences. It is
not a coincidence that hotel designs are becoming less standardized
and more reflective of the local culture
1 • The desire to experience more of local surroundings is one of
A Unique Proximity to handful reasons behind the rise of Airbnb. Technology continues to
Experience Demand change the way we travel. Websites such as TripAdvisor, Kayak, and
6 Generators Booking.com, among others, are making it incredibly easy for
travelers to see in detail what they are purchasing before arriving at
a property. Written reviews, photos, and even videos that point out
2 all the good or bad can provide assurance to travelers that they are
making the right or wrong decision, regardless of a hotel’s brand
affiliation
5
Well-
3
Costs

G
Recent retail trends indicate that organized shopping in Saudi Arabia as a social
activity, is becoming increasingly popular and mainstream
1.0
KSA Retail Sales (SAR Bn) • Over the last decade, retail space supply in Saudi Arabia has
gradually shifted away from independent high street retail units
504
456 478 towards new destination shopping centers. Recent trends indicate
407 416 431
367 389 that organized shopping in KSA as a social activity, is becoming
345
303 increasingly popular and mainstream
• Future population growth, increase in disposable income, and
domestic & inbound tourism are set to increase the demand for
quality retail destinations in the Kingdom
2011 2012 2013 2014 2015 2016 2017E 2018F 2019F 2020F
• New developments in major cities are positioning themselves as
destination shopping malls, hosting entertainment facilities, within
Food Non - Food
the limits of prevalent cultural norms, as well as international retail
chains. These developments have been welcomed due to the arrival
of many major international brands that have boosted the retail
sector growth
• The Saudi retail sector continues to expand and diversify. Clustered
Food Retail Non-Food Retail retail mall and strip concepts are gaining ground in the country as a
new retail trend. Also, mass grocery retailers are expanding their
portfolios and geographic presence while non-food retailers are both
entering and expanding in the country
• The Global Retail Development Index (GRDI) ranks the top 30
developing countries for retail investment using more than 20
macroeconomic and retail-specific variables to identify most
successful markets with future potential. Saudi Arabia has ranked
46.6% 53.4% 11th on the index in 2017, maintaining the substantial potential
growth the country has, despite its descent from the 8th rank in 2016
Source: ATKearney, EIU , KPMG Research & Analysis

G
Historical Point of Sale Transactions indicate an upward trend in consuming
trends but a reversal in consumers’ basket value
1.1
Point of Sale Transactions • Despite their limitation in representing the overall market
performance, the Point of Sale Transactions, published by SAMA,
250 ,000 800
highlight the ongoing trend in the retail market

200,467
• In spite of the increment in overall POS transaction values
700
182,749
172,835
200 ,000
159,970 708 between 2012 and 2017, the central bank’s disclosed numbers
600
134,194 395
500
portray an upward trend in total sales, total number of

122,226
150 ,000
525
327 299.9
400
transactions, and number of POS Terminals. However, their

238 265 276.2
100 ,000
225.4 300
interpretation reveals a downward trend in consumers’ basket

107.8 138.8 value
92.5
200
50, 000
100
• Sales, Transactions, and POS Terminals grew at 10.4%, 24.4%,

0 0
and 26.5% CAGRs respectively, while Sales per Transaction and

2012 2013 2014 2015 2016 2017 Sales per Terminal decreased at 11.2% and 12.7% CAGR
Sales (SAR Mn) Transactions (Mn) POS Terminals ('000) respectively between 2012 and 2017
Retail Sales Performance Point of Sales Transaction in 2017 (SAR Bn)
1,321 Transportation 17.6

1,245
1,153 Health 18.5
Restaurants and Hotels 19.5
767 Beverage and Food 24.1
662 668
514 506 489 Clothing and Footwear 26.1
438
348 283 Recreation and Culture 8.2
Miscellaneous Goods and Services 59.4
Telecommunication 2.1
Education 6.3
2012 2013 2014 2015 2016 2017 Public Utilities 2.5
Sales per Transaction (SAR) Sales per POS Terminal (SAR Mn) Others 16.1
Source: SAMA, KPMG Research & Analysis

G
Despite the current economic slowdown, Jeddah’s consumers’ expenditures are
expected to continue their ascent to potential y reach SAR 165.7 bil ion in 2020
2.0
Consumer Expenditures by City - 2015 Jeddah Consumer Expenditures (SAR Bn)
165.7
153.9
143.0
133.3
125.8
118.8
20% 109.6
Riyadh
Jeddah
Makkah
13%
Madinah 50%
Dammam 6%
2014 2015 2016 2017 2018 2019 2020
4%
Others Food, Beverages & Tobacco Clothing and Footwear
7%
Housing Household Goods and Services
Health Goods and Medical Services Transport
Communications Leisure and Recreation
Education Hotels and Catering
Miscellaneous Goods and Services
• Jeddah city recorded the second highest overall consumer expenditures in the country , accounting to 13% of total consumer expenditures
in the country
• Consumer expenditures in Jeddah grew to SAR 118.8 billion in 2015, at a 9.3% CAGR from 2011. Further, it is expected to reach SAR 165.7
billion in 2020
• The majority of consumer expenditure is spent on food and beverages (F&B), followed by housing
• Over the medium term, growth in consumer spending coupled with increasing population and elevated disposable income might result in
growing demand for retail space
Source: EIU, Euromonitor, KPMG Research & Analysis
G
The retail sector is mainly driven by demographic, economic, and governmental
factors that determine its performance
3.0
Economic Growth
Disposable Income
The Nominal GDP of KSA is forecasted to The disposable income in KSA rose at a
grow from SAR 2,575.2 billion in 2016 to 6.5% CAGR between 2011 and 2016 and it
SAR 3,405 billion in 2020, growing at a is expected to reach SAR 1,693 billion in
CAGR of 7.2% during this period. As the 2020. An increase in disposable income
economy expands, consumers will be will result in increased spending by
increasingly confident about their spending consumers on accommodation and
and are expected to spend more, which will shopping which will progressively benefit
directly drive growth in the retail sector the residential and retail sectors
Retail Sales Retail Sector
Tourism
The retail sales have been rising at a
Drivers
The retail market could greatly benefit
CAGR of 6.5% since 2011 and it is from the government’s support to the
expected to grow at a CAGR of 5.4% to tourism sector. Government initiatives
reach SAR 504 billion in 2020. This might lead people to change their
increasing trend in retail sales will vacation plans from international to
encourage the local and foreign retailers to local touristic destinations
invest in the Kingdom.
Demographic
Household Consumption
The growing young population is a key source of
increase in local demand and will be a major driving Household consumption per capita in Saudi Arabia
force for real estate development, retail shopping grew from SAR 24,026 to SAR 32,133 at a 6.0%
centers, leisure outlets and entertainment zones CAGR between 2011 and 2016. Going forward,
household consumption per capita is expected to grow
at a 4.4% CAGR to reach SAR 37,375 in 2020
Source: General Authority of Statistics, Ministry of Finance, KPMG Research & Analysis
G
The following game-changers might reshape the future of the retail sector over
the medium and long run…..
4.0
Municipal and Governmental Technological Advance Entertainment Value Added Tax (VAT)
Regulations
• Regulations that directly govern the • E-commerce is gradually stealing • The government’s initiative to • Saudi Arabia recently announced a
operation of retail shops might from the traditional brick-and- promote internal tourism will have Value Added Tax that is expected
impose high risks on the retail mortar retail market share as major a major impact on the overall retail to be introduced in 2018.
sector. For example, the regulation staples and discretionary market sector. Historically, due to the • It will be up to 5% of retail sales,
to close shops at 9 pm might players are extending their reach by absence of decent leisure excluding 95 basic food items,
reduce the time dedicated for serving clients online. This might attractions, organized retail centers health, education, and social
shopping and leisure and reduce the need for physical and have been regarded and visited as services.
accordingly limit consumers’ geographic expansion and enable leisure destinations. Accordingly, • The implication of VAT may
spending and affect consumers’ anchor tenants to better loosening leisure restrictions and weaken the demand for premium
behavior and shopping patterns understand their clientele and opening the door for direct leisure and luxury retail as consumers will
customize their services investments might somehow be at become more price conscious and
the expense of retail selective before making a
purchase.

G
….. subsequently affecting the market equilibrium
4.1
100% Foreign Ownership in Retail Cost of Living in the Lights of Saudization Feminization
Sector Economic Reforms
• In line with Vision 2030 goals, Saudi • In December 2015, the KSA • Saudization follows wider labor • Strategic objectives outlined in the
Arabia has approved 100% foreign government announced plans to reform plans outlined in Vision 2030 NTP 2020 include empowering
ownership of retail businesses, reform prices of water, electricity, and NTP 2020 aimed at reducing women, materializing their
previously capped at 75%. natural gas and petroleum products the unemployment rate from potentials, and increasing their
to make up for falling oil revenues. 11.6% to 7%. Nitaqat is percentage of employment from
• Upon the implication of this rule,
continuously developed to facilitate 22% to 30% by 2030.
retail environment may become • The gradual implement of these
Saudization across private
more competitive in the Kingdom, reform might result in a reduction in • Increased participation of females
organizations.
making the introduction of new overall retail spending due to lower in labor market will upsurge the
retail developments more disposable incomes. • Declining unemployment rate is household disposable income,
challenging. • It may reduce the demand for likely to have positive impact on subsequently the retail sale is
• Local retailers could experience a premium and luxury retail. retail sector due to increase in expected to increase with healthy
decline in sales due to expected disposable income among Saudi ratios.
increase in quality and variety of nationals. • The retail sales among female-
brands. • Furthermore, it may have positive oriented categories is likely to
effect on discretionary retail sales. witness faster growth as compared
to other categories.

G
Multiple forms of retail formats are available in Saudi Arabia which can be
differentiated by their concept, size and trade area
5.0
Key Retail formats in KSA
Neighbourhood Community
Centre or Lifestyle Centre
Centre
Discount Centre
• Convenience store offering mid- to high- • General merchandisers or drugstores • Specialized in one field and offers
quality products within a residential area offering products at a discount for bargain only one category or theme of
• Single anchor serving within 3 km radius shoppers products
• 2 or more anchors serving within 6 km • Trade area between 8-12 km
Regional Shopping Superregional
Power Centre
Centre Shopping Centre
• House category-dominant anchors, home • Self-help grocery store along with general • Larger than regional format and
improvement store, factory outlets shops merchandise and mid-high quality fashion provide food, fashion and
• Trade area within 10 km goods entertainment under one roof
• 2 or more anchors serving within 5-10 km • Trade area between 5-25 km
Source: International Council of Shopping Centers, KPMG Research & Analysis
G
Jeddah is hosting a variety of retail shops ranging from malls, street facing line
shops and neighborhood stores catering to all segments of the population
5.1
Typical Number of Anchor Primary

Retail Format Concept Area (sqm) Type of Anchor/Shops
Grade Anchors ratio Trade Area
Fragmented
Mostly Maximum 1
Retail / Strip • Convenience 1,000 – 10,000 • Supermarket • 30 – 50% 1 – 3 Km
Grade B anchor
Retail
Neighborhood
Grade B • Convenience 2,500 – 15,000 1 or more • Supermarket 30 – 50% 3 Km
Center
• General • Full-line dept. store

Regional Merchandise • Junior dept. store
Mostly 30,000 –
Shopping • Fashion (Mall, 2 or more • Mass merchant 50 – 70% 5 – 15 Km
Grade B 70,000
Center typically • Disc. dept. store
enclosed) • Fashion apparel
• Similar to
• Full-line dept. store
Super regional Regional Center
Mostly • Junior dept. store 5 – 25 Km
Shopping but has more 70,000+ 3 or more 50 – 70%
Grade A • Mass merchant
Center variety and
• Fashion apparel
assortment
Source: Britannica, International Council of Shopping Centers, KPMG Research & Analysis
G
To determine the prospects of a retail destination, developments are primarily
evaluated based on four key criteria
6.0
Location Accessibility Tenants Mix Atmosphere
• The location is the primary factor to be considered when evaluating the prospects of retail destinations, which are assessed in terms of their
proximity to demand generators
• Accessibility to the retail destination as well as its visibility are among the major criteria. Frontage on main roads, distance from traffic
congestions, and availability of multiple access points are major considerations for evaluation
• The profile and variety of tenants are the major determinants of a property’s targeted market segment and subsequently its marketing and
financial success
• The destination’s atmosphere and characteristics are important in defining customers' mood, their satisfaction, and their buying behavior

G
Catchment area segments are often described in terms of the distance
between customers’ homes or work places and the area or site
6.1
• The catchment area is the geographic area that contains the customers of a particular site. Thus,
it determines the potential retail demand at a particular site and, among other factors
• Usually, the catchment area is divided into three parts. The primary trading area is the zone in
which the majority of customers are based. It encompasses 50% to 80% of the customers. The
secondary trading area contains about 15% to 25% and the fringe or tertiary trading area includes
the remaining customers that shop occasionally at a location as an alternative to local shopping.

G
The decision as to which kind of retail location to select depends on the
developer’s strategy
6.2
• The appropriateness of a specific site is based upon the retailer’s strategy (retail formats, merchandise, pricing strategy, etc.) and is influenced
by a substantial number of factors that need to be investigated
• The following factors are often considered in retail location decisions:
Potential Customers Potential Competitors Estimated Costs
• Population size, age profile, household • Existing retail activity (direct • Acquisition cost
size competitors, indirect competitors, • Development cost
• Population growth anchor stores, attractions, compatibility) • Rent cost
• Population density • Existing retail specifications (selling • Lease terms
area, turnover estimates,
• Cultural and ethnic groups • Building restrictions
department/product analysis, trade
• Income levels areas, age of outlets, standard of • Maintenance costs
• Disposable income design, car parking) • Staff availability
• Employment • Competitive potential (outlet expansion, • Delivery cost
• Neighborhood classification refurbishment, vacant sites)
• Home-ownership levels • Proximity of key competitors, traders,
• Building/demolition plans brand leaders
• Spending patters
• Shopping patterns
• Lifestyle measures

G
Currently, super Regional Malls occupy the largest part of Jeddah’s organized
retail space supply
7.0
21 1
2
Moj Plaza
Roshan Mall
• Historically, the retail sector in Jeddah was mostly comprised of
N unorganized high-street retail outlets, souks, and neighborhood
1 3 Aya Mall
4 Red Sea Mall centers
5 Mall of Arabia
22 6 Hera Mall • However, due to changes in consumer behavior and consumptions
7 Al Yasmin Mall patterns, developers reviewed and repositioned their project pipeline
8 Sultan Mall
9 Star Avenue
to increase the supply of indoor shopping malls targeting both higher
10 Aziz Mall and lower end markets
2 23 11 N2 Mall
3
12
13
Tahlia Commercial Center
Jeddah Intl. Center
• Nevertheless, street facing retail units remain an important and
popular segment of the city’s overall retail provision
14 New Town Center
4 5
6 7 15
16
Flamingo Mall
Haifa Mall
• With recent completions (Yasmine Mall and expansion of Red Sea
24 8 17 Al Andalus Mall Mall), the current organized retail stock is approximately 1.4 million
9 18 Al Salam Mall square meter.
11 10
19 Al Jamea Plaza
12
13
1425 15
20
21
Event Mall
Panorama Mall
• Jeddah‘s organized retail supply is dominated by super regional
22 Kingdom Tower Mall
malls, accounting for 45% of the existing supply, followed by
16 23 Jawharat Jeddah regional malls with 41%. The share of super-regional malls is
24 Lamar Tower Retail expected to increase as most of forthcoming supply belongs to this
2617 18 25 Jeddah Park Mall
26 Jeddah Gate Retail
category.
27
19
27 Al Qalam Mall
• Also, additional 370,000 square meters of organized retail space are
expected to be delivered in short to medium term.
20 • Most of the upcoming supply is located towards the North of the
Jeddah as the city’s commercial and business districts are shifting
towards the north, increasing demand for quality retail space in the
area
Existing Upcoming
G
Arabian Centers, the operator of retail destinations such as Arab Mall, Al Salam
Mall, and Haifa Mall, is currently the major retail space supplier in Jeddah
7.1
Percentage Market Share of Organized Retail
Real Estate Red Sea

Commercial Markets
Markets
7.46%
7.65% Arabian Centres
Alesayi 20.99%
3.39%
Kinan Al Andalus
3.93% 5.88%
Abad
Jarir Sairafi Investments
& Real Estate
3.12% 4.21%
5.77%

G
Jeddah’s popular retail destinations are mainly differentiated in terms of their
scale and tenants’ mix
7.2
Class A
Al Salam Mall
Stars Avenue Aziz Mall
Le Chateau Red Sea Mall
Khayat Center
Arab Mall
Le Mall
Al Andalus Mall
Jamjoom Center
Roshan Mall Serafi Mega Mall
Commercial Super-Regional
Centers Sultan Mall Flamingo Mall Malls
Basateen Center Hayfa Mall Hira International Mall
Theatro Mall
Salama Center Musaadiya Plaza
Jeddah Mall Nojood Center Baroum Center
Coral Mall
Unrated
GLA 10,000 40,000 70,000
G
The ongoing economic slowdown coupled with the expected upcoming retail
space supply are likely to put more pressure on rents and occupancy rates
8.0
Grade A Retail Malls Grade B Retail Malls

95% 93%
4,000
90% 100% 3,000 120%
3,500
90%
98% 98% 95%
2,500 100%
80%
3,000
70%
2,000 80%
2,500
60%
2,000 50% 1,500 60%
3,350 3,250 2,600 2,548 2,523

3,087
40%
1,500
1,000 40%
30%
1,000
20%
500 20%
500
10%
0 0% 0 0%
2015 2016 2017 2015 2016 2017
Rental Rate (SAR/sqm) Occupancy (%) Rental Rate (SAR/sqm) Occupancy (%)
• The above charts depict the average rental rates and occupancy rates of line shops in Grade A and B malls in Jeddah
• Historically, Jeddah’s retail market has performed well due to the increase in disposable income and consumer expenditures
• Based on our market survey, the average rental rates witnessed a healthy 4-7% annual increase till 2015; however, lessors could not increase
rental rates during 2016 due to the decrease in retailers’ sales growth. In 2017, the market witnessed a modest decline of 4-5% in rentals rates
• The average rental rate of Grade A retail space stood at SAR 3,087 per square meter compared to SAR 2,523 for Grade B retail space

G
Despite the increase in organized retail supply, occupancy rates are expected to
recover after the slight decline encountered between 2016 and 2019
9.0
Jeddah Retail Demand and Supply Analysis (Mn sqm)
91% 91%
3.00 100%
90% 90% 87% 87% 89%

84% 83% 84% 86%
82% 90%
2.50
80%
2.41
2.31
70%
2.21
2.19
2.00
2.10
2.05
2.00
1.92
60%
1.90
1.80
1.80
1.69
1.50 50%
1.58
1.58
1.47
1.43
1.38
1.33
40%
1.28
1.27
1.27
1.20
1.14
1.00
1.06
30%
20%
0.50
10%
- 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Retail Supply Retail Demand Implied Occupancy
• In 2016, demand for organized retail space was 1.20 million square meters and it is expected to reach 2.41 million square meters in 2025
increasing at a 6.8% CAGR
• Despite the huge supply in the pipeline and the current economic retracement, the market is expected to absorb forthcoming supply during
the projected period due to anticipated increase in demand
• However, as anticipated demand enters the market, visitors’ footfall might shift from outdated retail destinations towards new, more
attractive organized retail destinations with more spirited themes and vibrant tenants’ mix

Introduction 1 Tourism Market Overview 1 KSA Consumer Spending 2 Demand Drivers 2
Major Activities 2 Hospitality Market Overview 2 Demand Drivers 3 Market Typology 3
Equine Ecosystem 3 Hotel Supply Interpretation 3 Game Changers 4 Office Classification 4
Equine Events 4 Hospitality Performance Brief 4 Retail Formats 5 Market Performance 5
H
Driven by the decrease in the city’s labor force, demand for office space in
Jeddah might remain relatively subdued over the short to medium term
1.0
 Jeddah is one of the region‘s busiest cities and has experienced sustained growth in the
business sector over the past few years
 However, demand for office space in Jeddah remained relatively subdued in 2017 as a
result of a slowdown in commercial activity. As tenants become increasingly cost
sensitive, the majority of demand has been for fitted out units below 300 square meters
 We expect this trend to continue throughout 2018 until the non-oil economy picks up
and the reforms set out in Vision 2030 and the NTP feed through into the wider
economic system
 Jeddah doesn’t have a defined primary Central Business District (CBD)
 Grade A office space developments are concentrated mainly on King
Abdul Aziz Road, Prince Sultan Street, and Tahlia Street
 Traffic congestion and the lack of parking space have led to the
dispersal of new office space to a variety of locations across the city
 Most of the new Grade A developments are targeting large
enterprises and exhibiting a strong tendency to provide better parking
facilities, fitness centers, coffee shops and other amenities
 Many companies in Jeddah have owner-occupied built premises
 As new offices enter the market, lower quality properties, located in
less strategic areas of the city, might experience decline in their
occupancy rates

H
Transformation of the country’s economic base coupled with the ongoing
changes in employment trends are likely to affect the demand for office space
2.0
Economic Shrinking • Office sizes are shrinking as companies move

• The development of offices spaces is Office Sizes away from individual offices in favor of
Sectors correlated to the development of a domestic cubicles
economy and increase in productivity • An increasing number of employees and
• A positive growth in the economy ignites an workers, especially among nationals, are
optimistic sentiment in office space demand looking for freelancing opportunities, creating
a demand for flexible working spaces
• Corporate profits of domestic industries Technological •

Investment directly captures the financial capacity and
Technological developments and full time
Development connectivity to necessary information, and
growth of firms that may need to expand
the potential for remote working are likely to
• Profits are a source of retained earnings, so influence the labor market of the future and
they provide a clue about how much money increase the effectiveness of employees
is available to fund investments in plant and
• This might result in lower demand for office
equipment, and offices accordingly
space
Employment Location
• Growth in employment rate is driven by
• Proximity to central business districts, the
various demographic factors, such as
ease of accessibility, transport connectivity,
population growth and education
and availability of suitable infrastructure
• Higher employment rates imply higher support the demand for office space
demand for office space

H
Three broad office market typologies can be identified based on the relative
distribution of office stock across urban areas
3.0
Centralized (Urban Core)

Central office market areas with high level of employment density. Occupiers tend to benefit from
clustering effects of being close to their competitors and customers. They tend to be in larger towns
1
and cities with a vibrant central area that is supported by a strong retail and leisure offer and good
public transport links
Polycentric (Fringe / Peripheral)
2 Edge of town and suburban employment centers, offices interspersed with residential areas.
They could be locations where there is a more equal distribution of office space between central,
peripheral and out-of-center locations. They are characterized by their good access to urban
core through metropolitan transportation networks and links
Decentralized (Out-of-Town)
3 Large out-of-town business parks and science parks located on the edge of urban
settlements. One of the drivers behind decentralized office markets is a highly constrained
urban center, meaning there is little alternative than for office space to be taken-up in the
fringe/out-of-center where development opportunities are more freely available and or where
large strategic employment developments exist on the edge of the urban area

H
Jeddah has a wide variety of office developments. Most of the upcoming supply
is targeting Grade A+ and Grade A tenants
4.0
Office Market Segmentation and Characteristics
Characteristics Grade A+ Grade A Grade B Grade C
• Publicly listed companies

Tenant Profile • Large businesses • Small to medium businesses • Small businesses
• Large businesses
• In prestigious locations
• Outside central business • Old central business areas
Location within central business • Central business district
district • Main city roads
district
• Premium architecture and • Dated interior but properly • Dated interior and not
Finishing • High quality interior
finishing maintained properly maintained
• Ample tenant parking and

guest parking • Adequate tenant parking and
Parking • Adequate tenant parking • Inadequate parking
• Easy ingress/egress to office guest parking
units
• State-of-the-art security • 24 hour security personnel

Security • 24 hour security personnel • Limited security presence
technologies but with limited staff
• Gym
Amenities • Cafeteria • Cafeteria • N/A • N/A
• Day care center
H
So far, and contrary to other market segments, Grade A office space has
resisted a sound correction in rentals and occupancy rates
5.0
Grade A Office Performance Grade B Office Performance
91% 91% 85% 83%

1,200
89% 100% 1,000
80% 90%
90% 900
80%
1,000
80% 800
70%
70% 700
800 60%
60% 600
50%
600 50% 500
1,085 1,052 1,021 920 902 40%
40% 400
811
400 30%
30% 300
20%
20% 200
200
10%
10% 100
0 0% 0 0%
2015 2016 2017 2015 2016 2017
Rental Rate (SAR/sqm) Occupancy (%) Rental Rate (SAR/sqm) Occupancy (%)
• Historically, Jeddah’s office market has enjoyed a healthy performance. However, since 2015, the impact of economic slow down started to
emerge and the market started witnessing a decline in both rents and occupancy rates
• Rental rates of premium office buildings observed a modest decline, while rentals of Grade B office buildings located at secondary locations
witnessed a significant drop of 8-10%
• This decline is attributable to depressed demand and gradually increase in office space supply
• Given the current market condition and the bulk of supply in the pipeline, the current trend is expected to continue over the short to medium
term as market needs time to absorb existing and upcoming supply

H
Unlike Riyadh, Jeddah doesn’t have a primary defined CBD, rather, office buildings
are scattered around arterial roads
6.0
 Jeddah’s office market can be characterized as having a

polycentric typology with office buildings scattered with no
defined primary CBD
 Office spaces are mostly located on arterial roads like Tahlia
Street, Sari Street, Prince Sultan Street, Madinah Road, King
Abdullah Street, King Abdul Aziz Road, and others
 A historic shortage of adequate office space and traffic
congestion on the major commercial arteries like King
Abdullah Street, Madinah Road, and Palestine Street, has
compelled some office occupiers to seek alternative options
and move towards more accessible venues like Jeddah
Corniche, King Abdul Aziz Road, and Prince Sultan Street
 Grade A offices are mainly located on King Abdul Aziz Road,
Prince Sultan Street, Jeddah Corniche and Tahlia Street
 Grade B and C offices are mainly located on Madinah Road,
King Abdullah Road, and Sari Street
King Abdul Aziz Road

Prince Sultan Road
Madinah Road
Tahlia Street
Palestine Street

H
The majority of the existing and forthcoming office supply is clustered on Tahlia
Street and Prince Sultan Street
6.1
1 Map Legend
4 Existing Office Buildings Forthcoming Office Buildings
1 Headquarters 1 PPA Office Park
2 Zahran Business Center 2 Lamar

3 Salama Center 3 Jeddah Gate
4 King Road Tower 4 Kingdom Tower
5 C1 Tower 5 Al Khair Tower

6 The Courtyard
1 7 Jameel Square
17
2 8 Bin Homran Tower
2
3 9 Saudi Business Center
5 6 10 Badriya Business Center
4 10
14
11 Al Khayat Tower
8 12 Jamjoom Center
7
16 11 13
13 Jeddah 7575
15 14 Private Offices
12
5 9 15 Gulf Plaza
3
16 Elite Center
17 Sultan Center

H
Occupancy rates are expected to decrease further upon the delivery of planned
projects and those under construction
6.2
84%
2.5 0 90%
79%
74%
80%
74% 73% 72% 71% 70% 69% 69% 68% 67%

2.0 0
66% 65% 70%
60%
1.5 0
50%
40%
1.0 0
30%
20%
0.5 0
10%
0.82
0.97
1.15
1.37
1.63
1.93
0.52
0.62
0.57
0.72
0.61
0.65
0.89
0.70
0.76
1.06
0.82
0.88
1.26
0.95
1.02
1.49
1.10
1.19
1.77
1.28
1.38
2.11
0.0 0 0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total Demand for Office Space in Jeddah (Mn SQM)

Total Supply of Office Space in Jeddah (Mn SQM)
Implied Occupancy Rate

• Site Analysis
• Appendices
Site Analysis
Site Assessment I
City Overview 1
City Connectivity 2
Site Macro Assessment 3
Site Micro Assessment 4
Site Accessibility 5
Population Density 6
Site SWOT Analysis 7
I
The Project Site is located in Jeddah, populated by more than 4 mil ion persons,
the second business hub in KSA and the gateway to the holy cities
1.0
• The Project Site is located in Jeddah, the major city of Makkah

Province, and the second business hub of Saudi Arabia
• The city of Jeddah is located on the west coast of the Kingdom, in
the middle of the eastern shore of the Red Sea
• Jeddah is the most populous city of the province, where 50.4% of
its population resides. It is the administrative capital of Makkah
province where offices of many government departments and Makkah Province
ministries are located
• Jeddah acts as the gateway to two of the holiest cities for
Muslims, Makkah and Madinah. Since Makkah city does not have
an international airport, visitors to Makkah have to use King Rabigh
Abdulaziz International Airport in Jeddah. Religious tourism to
these holy cities results in millions of pilgrims visiting Jeddah, Khulais
Al Kamil
which makes King Abdulaziz International airport the busiest Al Khurma
airport in the country Al Jumum
• Jeddah is also one of Saudi Arabia's primary leisure cities and is Jeddah Taif
frequented by tourists as a popular destination for vacation. It is Turbah Ranyah
also known for its diverse cultures, traditional souqs, historical Makkah
sites, modern fully serviced malls and other recreational activities
such as scuba diving, team sports, etc
Al Lith
• Jeddah is also a major business and trading hub in the Red Sea
region. The Jeddah Islamic Port is the largest port in Saudi Arabia
and the Red Sea region
Al
Qunfidhah

I
Jeddah City can be reached through a network of roads and air routes that
connect it to other major cities in Saudi Arabia
2.0
Jeddah is located in the Western part of Saudi Arabia and it has

connectivity to other cities of the Kingdom through several transportation
means.
Tabouk
By Road
• Jeddah is well connected with other cities in KSA by an excellent
network of roads
Riyadh
• Riyadh road and subsequently Dammam road provide access to Madinah Dammam/
central and eastern cities including Riyadh, Dammam, Al Khobar, Al Khobar
Dhahran etc.
• Northern parts of the Kingdom can be accessed through Rabigh
Expressway
Makkah
Jeddah
• Jeddah-Jazan Expressway facilitates access to southern cities such
as Abha, Jazan and Najran
By Air Najran
• There are frequent flights to and from most of the cities in KSA to Jazan
Jeddah on a daily basis. Jeddah can be reached from any corner of
Approximate distances and travel time between Jeddah and other cities
Saudi Arabia within 2 hours of flight time
By Rail To Driving Distance Driving time Flying time
Makkah 86 km 1 hr 7 mins NA
• At present, Jeddah city is not accessible through any rail network, but Madinah 407 km 3 hrs 57 mins 1 hr 5 mins
Haramain High Speed rail will connect Jeddah city with Makkah Al
Tabouk 1,017 km 9 hrs 31 mins 1 hr 30 mins
Mukarmah, Rabigh, King Abdullah Economic City (KAEC) and Madina
Riyadh 939 km 8 hrs 27 mins 1 hr 35 mins
• In addition, a network of more than 4,000 km railway lines is under Dammam/Al Khobar 1,362 km 12 hrs 10 mins 2 hrs 5 mins
construction which is likely to provide better connectivity among Najran 887 km 9 hrs 29 mins 1 hr 25 mins
major cities of KSA Jazan 730 km 7 hrs 50 mins 1 hr 30 mins
I
The Project Site is located on Hada Al Sham Road, to the Eastern side of Jeddah
City
3.0
• The Project Site is overlooking Hada Al Sham Road, to the eastern

side of Jeddah N 1
• Furthermore, the Project Site is surrounded by mountains, private 2
farms, and numerous empty lots
• The Project site is ideally positioned along Hada Al Sham Road 3
which is considered as a major transport route linking the eastern
side of Jeddah with Makkah city
• The map on the right illustrates the location of some of the Project Site
significant destinations in relation to The Project Site
• While the table below shows their distance from the site: 4
No. Development Approx. Distance

1 King Abdullah Sport City 52.7 km 5 6
2 Jeddah Economic City (Kingdom Tower) 70.2 km 7
8
3 King Abdulaziz International Airport 44.6 km
4 Jeddah Waterfront 55.7 km 9
5 Jeddah Downtown Project 50.8 km
6 Haramain Rail Central Terminal 43.7 km
7 King Abdulaziz University & Hospital 47.2 km
Al Hijrah Highway Hada Al Sham Road Al Haramain Highway
8 Jeddah Historical Area 51.3 km
9 Jeddah Islamic Sea Port 55.8 km
Source: KPMG Research & Analysis, Google Earth

I
The Project Site is located in an undeveloped area and is bordered by vacant
plots surrounding it from all fronts
4.0
Project Site
Project Site
• The Project Site is situated to the east of Jeddah city and is in

close proximity to Al Hijra highway
• From the East, the Project Site is bounded by empty lands
• From the West, the Project Site is bounded by empty plots and
farmers wooden shacks
• From the North, the Project Site is bounded by Hada Al Sham

Road which links it to the city
• From the South, the Project Site is bounded by empty lots

I
The project site comprises of a total 1,576,169 square meters of land area, and is
characterized by its irregular shape
4.1
• The project site encompasses a total land area of

1,576,169 square meters N
• The northern side of the Project Site overlooking Hada Al
Sham Road measures approximately 1,185 meters, the
southern side measures 1,750 meters, the eastern side
measures 1,000 meters, while the western side
measures 910 meters
• KPMG team conducted a detailed Project Site inspection
to understand its physical features
• The Project Site is of irregular shape, which may not allow
for optimal utilization
• The Project site appears to be unlevelled and bounded by
mountains from southern and western sides
• The following slide provides a more detailed look at the
Project Site and provides additional pictures from different
directions and angles while the table below provides the
Project Site’s coordinates for the purpose of identifying its
location via Google Earth • It is important to note that dimensions are indicative and only measuring the farthest points in
each side
Plot Map Coordinates
21°40'36.6"N
39°27'55.0"E
Source: KPMG Research & Analysis, Google Earth, Client’s Information

I
The project site is not leveled and has a protrusion of rock and small mountains
towards the center and from the south
4.2
1 2 3
4 5
4
2 3 5
1

I
The Project Site can be accessed from multiple roads mainly Hada Al Sham Road
and Al Hijrah Highway
5.0
• The above map presents the Project Site’s connectivity to the surrounding area
• Vehicles wishing to access the Project Site from the northern part of Jeddah can travel south on Al Haramain Highway, then take the exit
towards Hada Al Sham Road and travel east to reach the northern boundary of the Project Site
• Furthermore, vehicles approaching the Project Site from the south & west of Jeddah can drive north on Al Haramain Highway, then go right to
Hada Al Sham Road and head east to reach the northern boundary of the Project Site
• In addition, vehicles wishing to reach the Project Site from Makkah should travel west on Al Hijrah Highway, then take the exit towards Hada Al
Sham Road, head west and take the first U-turn, then drive east to reach the Project Site
I
Population density of the Project Site catchment area is significantly low
compared to other areas of the city
6.0
• The Project Site has been assessed based on population

residing in its primary catchment (up to 5km) and N
secondary catchment (10km) areas
• The population density within 5km and 10km catchment
has been estimated to be 4.4 and 5.7 persons per square
kilometer, respectively
• This is observed to be substantially lower as compared to
population densities observed in fully developed areas of
the city where it ranges between 15,000 to 20,000
persons per square kilometer
• The relatively lower density is attributed to the fact that a
large portion of the catchment area comprises of 5 km
mountains and empty lands
• Therefore, the Project Site might experience shy footfall
unless it was developed into a sought after destination
with relevant facilities and amenities to ensure a unique
selling proposition
Population Density Around the Project Site

10 km
5 km 10 km
Estimated Population 345 1,778
Population Density 4.4 / km² 5.7 / km²
Source: KPMG Research & Analysis, Google Earth, Population Explorer

I
Site SWOT Analysis
7.0
Strength Weakness
— The Project Site benefits from direct accessibility and — Hotel operators may find the location of the Project Site
connectivity to main highway and arterial roads unattractive given its distance from the central area which may
— The Project Site’s distance from the central area allows it to impact travel time from and to the subject site
achieve lower land value which may reflect a positive — The existing Makkah-Jeddah Expressway captures most of the
financial return for the proposed development traffic coming from or going to Jeddah, which results in less
— The size of the land allows the accommodation of multiple, traffic/footfall for the Proposed Development
complementary, and mutually beneficial real estate asset — The Site is situated within an undeveloped area with relatively low
classes population density
— The large frontage on the main road and the vacancy of — The irregular shape of the plot may lead to increased building
adjacent creates excellent and clear visibility for the project costs and wasted spaces
Opportunities Threats
— Proximity to potential future demand generators as the city’s — Possibility of development of direct and indirect competitive
urban development moves towards the east and the north offerings in raw land parcels surrounding the Project Site may
— Given the location and size, the site can accommodate a impact the proposed project’s performance in the long term
mixed use development comprising of various components,
thus, diversifying the risk of operating a single use
development
— Planned projects such as Wadi Al Assla Project will greatly
improve the site’s attractiveness over the long term
• Site Analysis
• Appendices
The planned project is a mixed use development comprising of an equestrian club
featuring complementary leisure, hospitality, and commercial facilities
• The Subject Site considered for this study encompasses a total land area of 1,531,787 sqm
and is envisioned to become an equestrian club featuring hospitality and leisure components
along with ancillary uses like a mosques, parking spaces, green areas and parks
• The equestrian component will span over 448,610 sqm of land, which will comprise of
approximately 27 facilities, including but not limited to a racing track, indoor and outdoor
arenas, and stables (please refer to Appendix 1 for a detailed list of the project components)
• A 19,060 sqm of land area will be allotted to hospitality components which will
accommodate one hotel and cottage houses to cater for the demand generated by the
equine and leisure facilities
• The leisure and retail components occupy 173,400 sqm of land area and will accommodate
all leisure facilities including sport city, shooting club, falcons club, visitor center and retail
outlets
• The land area allotted to support facilities will accommodate an office building, parking area,
and hardscape/landscape areas
• The distribution of areas is detailed as follows:
Component Land Area (SQM) Built Up Area (SQM)

Equestrian 448,610 488,210
Leisure 115,400 116,800
Retail 58,000 174,000
Hospitality 19,060 90,560
Support Facilities (Common Area) 890,717 145,980
Total 1,531,787 1,015,550
The equestrian club constitutes the largest component of the master plan
occupying 448,610 square meters of land

The planned project constitutes part of a wider master-plan development named
Wadi Al Assla Project
10
Planned Project
Total Land Area :1.5 million sqm
4
1- Equestrian Club
2- Safari park
3- Entertainment
4- Golf park
5- Sustainable infrastructure
8
6- Lake 1
7 Parks
8- Residential Zone 9
9- Hospital & Education 3 2
10- Protected 5 • The Proposed Project is part
7 of a wider master-plan
development named Wadi Al
4 Assla Master-plan. This
master-plan covers132.9
6 sq.km of land and is located
about 30 km to the east of
Jeddah’s Haramain
expressway
Wadi Assla Master-plan

The nature of the planned project results in a large portion of the land to be non-
income generating, allocated to common areas and facilities
Land Area: 1,531,787 sqm
41.9% 58.1%
641,070 sqm 890,717 sqm
Leasable Land Distribution Non-Leasable Land Distribution
70% 53%
47%
27%
3% 0%
Equestrian Leisure Hospitality Parking, Roads & Public Parks Offices
Common Areas
• As mentioned, the total land area of the Project Site measures 1,531,787 sqm, with 41.9% of the land area constituting leasable area, while
58.1% is non-leasable. The non-leasable area comprises of land earmarked for the development of amenities such as roads, walkways, green
spaces, offices etc.
• As highlighted in the above graph, the equestrian component is the largest component representing 70% of the leasable land area

The equine allocated area constitutes the largest component of the income
generating components
% Share of
Leasable
Product Land Area Built-up Area Total Land Descriptions
Area
Area
Equestrian Component 448,610 488,210 29.3% - -
Leisure Component 115,400 116,800 7.5% - -
Retail Component 58,000 174,000 3.8% 104,000 sqm -
715 Rooms
Hospitality Component 19,060 90,560 1.2% 45,120 sqm
36 Cottage Houses
Parking, Roads, &

472,580 142,380 30.9% - -
Common Area
Public Parks 417,237 - 27.3% - -
Offices 900 3,600 0.1% - -
For our financial calculations in the following section, we have assumed the following:
• We have assumed 60% efficiency rate to estimate the leasable area for the hotel and the retail components
• The assumed room sizes for the hotel and the cottage houses are 45 sqm and 360 sqm respectively

• Site Analysis
• Appendices
Financial Analysis – Approach and Framework
• In order to assess the financial feasibility of the proposed project, our financial analysis mainly focuses on the following:
– Project development costs (Capital Expenditure - CAPEX)
– Revenue assumptions for the proposed components of the project based on KPMG market assessment and/or
Basis of
Client’s input regarding business plan and aspirations
Assessment – Operational expenses for the proposed components of the project based on KPMG estimates and further discussed
with the Client
– Financing mix of the project and finance charges based on discussions with the Client
• The assumptions underlying the projected costs, (related to proposed project development concept, capital expenditure,
capital structure, and financing terms) are based on the input obtained from the Client
• Revenue assumptions are usually based on our findings from the market assessment and further discussions with the
Client. However, due to the niche-market nature of the core components and the absence of relevant quantitative
Sources of information and comparable benchmarks for them, as well as the dependence of auxiliary components on core facilities’
Assumptions performance, we have based our financial analysis on the revenue assumptions provided by the client, as per the agreed
scope of work between KPMG and the Client
• KPMG is not responsible for, has neither independently verified, nor has checked the accuracy of any information and/or
assumptions provided by the Client
• Assumptions such as escalation rates have been estimated by KPMG based on readily available information
• Financial projections were prepared for the duration of the project (13 years which includes 3 years of construction and 10
years of operation). The three years construction period is based on the client’s assumption
Financial
Projections
• Projected free cash flows to Project and Equity were analyzed to estimate key financial indicators including project IRR,
equity IRR, and project payback period
• A sensitivity analysis on key drivers of cash flows was undertaken to analyze the effect of changes on Project IRR
Financial Model – Structure
A detailed financial model has been developed to undertake the

• Revenue Assumptions financial analysis of the Proposed Project. The model is structured to
• Project Cost incorporate the following assumptions:
• Capital Structure
• Operating Costs • The proposed development concept
• Revenue forecasting considering rental rates and revenue
escalation rates
• Total project cost along with phasing
• Proposed capital structure and finance charges
• Operating costs
• Balance Sheet • Other assumptions including revenue escalation rates, and
• Income Statement depreciation
• Cash Flow Statement
• No taxation has been assumed
• The assumptions and calculations that are used in the model feed
into the projected income statement, balance sheet, and cash
flow statement of the proposed project
• The projected free cash flows were then analyzed to estimate key
financial indicators including project IRR, equity IRR, and project
• Key Financial Ratios payback period
• Project Returns • Sensitivity analysis on key drivers of cash flows (rental rates,
• Sensitivity Analysis CAPEX, and OPEX) were undertaken to analyze the effect of
changes in their assumed values on Project IRR
Financial Model - Revenue Elements
Operating Revenue
Equestrian Hospitality
Leisure Components Retail Component
Components Components
1. Average Daily Rates (ADRs) 4. F&B Revenue

2. Occupancy Rates 5. Subscription / Membership Fees
3. Annual Rent per Square Meter 6. Other Revenue
• The equestrian components are the major drivers of revenue for the project. The success of the equestrian component is
supposed to drive the success of the other auxiliary components
Financial Model - Cost Elements
CAPEX OPEX
Properties General & Administrative
Roads & Sidewalks Depreciation & Amortization
Hardscape & Landscape Interest
Land Cost Hotel Opex
Parking Area Retail Opex
Offices Equestrian Opex
Maintenance Leisure Opex
Capitalized Interest
General Assumptions and Project Development Cost
General Assumptions
Project The project construction is expected to be completed in three years time
1 Development
Operation The project operations are expected to start from the beginning of the 4th forecasted year and are likely
2 Period to continue indefinitely
Business The developer intends to develop the infrastructure and build and operate the hospitality, retail, leisure, and
3 Model equestrian components
Total Project Forecast Period : 13 Years
Project Development Cost Breakdown Project Development Cost **

Cost / SQM Total Cost
Land NIL * NIL *
Infrastructure SAR 350 SAR 536 Mn
Infrastructure Cost 27% 23%
Hotels Development SAR 5,118 SAR 464 Mn
Hotels Development Cost
Retail Development SAR 3,000 SAR 522 Mn
Retail Development Cost
Leisure Development SAR 1,344 SAR 157 Mn
Leisure Development Cost
SAR
7% 2,284 Mn Equine Development SAR 1,240 SAR 605 Mn
Equine Development Cost 20%
Total SAR 2,284 Mn
23% * The land is assumed to be subsidized by the landlord, a governmental entity. Accordingly, no
land value has been assigned
** The total development cost number does not include the incurred capitalized interest
Source: KPMG Analysis of Client Information

Revenue Assumptions (1/2)
Equestrian Revenue Assumptions (per annum) Hospitality Revenue Assumptions
Race Track SAR 168.0 Mn 5 Star Hotel ADR SAR 400 / night
Racing Tack Middle Space SAR 6.0 Mn Cottage House ADR SAR 1,000 / night
Indoor Arena SAR 5.0 Mn

Outdoor Arena SAR 5.0 Mn Retail Revenue Assumptions
Saddling Area & Vet Barns SAR 10.0 Mn Total Leasable Area 104,400 m2
21 Horse Rental Stables (504 Horses) SAR 6.0 Mn Rent / SQM SAR 700 / m2
101 Horse Rental Stables – VIP ( 788 Horses) SAR 14.0 Mn
VIP Center & Lounges (VIP Pavilion) SAR 0.75 Mn Leisure Revenue Assumptions (per annum)
Equine Exercise Reha Center SAR 4.8 Mn Sports City Building SAR 3.0 Mn
Equine Assisted Therapy SAR 3.0 Mn Sports City Landscape & Fields SAR 2.0 Mn
Equine Education Center SAR 30.0 Mn Shooting Club SAR 7.2 Mn
Grand Stand SAR 3.9 Mn Falcons Club SAR 0.6 Mn
Veterinary Hospital SAR 4.8 Mn
Visitor Center SAR 0.3 Mn
International Quarantine SAR 1.0 Mn
• We have presumed a lease and ADR escalation of 3% per annum
Housing for Employees SAR 3.0 Mn
• Hospitality’s respective 15% F&B and Other Service revenues have
Horse Manure – Waste Transplant SAR 0.5 Mn been assumed
Local Quarantine SAR 0.5 Mn • Please refer to Appendix 2 for more details about equestrian and leisure
revenue assumptions
Source: KPMG Analysis of Client Information
Revenue Assumptions (2/2)
Annual Retail Lease Schedule (%) Annual Hotels Occupancy Schedule (%)
60%
60%
60%
60%
60%
60%
60%
50%
80%
80%
80%
80%
80%
80%
80%
80%
40%
70%
60%
30%
60%
60%
60%
60%
60%
60%
60%
50%
Project Project
40%
30%
Development Development
Phase Phase
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Office Retail Occupancy Rate Five Star Hotel Occupancy Rates Cottage House Occupancy Rates
• We have assumed relatively lower occupancy rates for the hospitality component during the initial years of operations mainly due to size of the
project, its location, and the perceived target market. Afterwards, occupancy rates are expected to approximate the city’s average rate, subject
to the project owner’s success in promoting the equestrian component and attracting footfall
• It is noteworthy that the demand for the proposed hospitality and retail components will be mainly driven by the major components (equestrian
and leisure) of the project

Cost Assumptions
General Master Plan Expenses (% of revenue) Hospitality Expenses (% of corresponding revenue)
G&A Expenses 5% Room Expenses % of Room Revenue 15%
Maintenance Expenses 2% F&B Expenses % of F&B Revenue 60%
• The project developer is assumed to incur some expenses related Utility Expenses % of Gross Revenue 8%
to the operation of the master plan and offering the necessary Maintenance Expenses % of Gross Revenue 5%
services to maintain its common areas and facilities
Marketing Expenses % of Gross Revenue 10%
G&A Expenses % of Gross Revenue 12%
Expenses (SAR Mn)
Management Fees % of Gross Revenue 2%
17 8
25 15 15
41 33 15 68 68 Retail Expenses (% of revenue)
15 68 68
68 68
15 68
68 31 32
68 29 30 30 Utility Expenses (electricity, water, etc.) 4%
68 28 28
23
18 Maintenance Expenses 6%
14
185 190 Marketing Expenses 1%

Project 161 165 170 175 180
131 141 151
Development G&A Expenses 4%
Phase
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
• The project owner has assumed the operating cost of the
equestrian and leisure components to be 40% of their respective
Cost of Sales Operating Expenses Depreciation Amortization Interest revenues

Capital Structure
Debt Phasing & Repayment (SAR Mn) Cash Balance (SAR Mn) and DSCR
1,800 1.8
2
293.1
1.7
251.6 1,600 1.8
217.3 1.5 1.6
1,400
1.4 1.4
1.4
1,200
1.2
1,000
1
800
0.8
600 0.6
400 0.4
200 0.2
(152.4) (152.4) (152.4) (152.4) (152.4) - 0
2019 2020 2021 2022 2023 2024 2025 2026 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Cash Balance (SAR Mn) DSCR
• We have estimated project development to be 70% financed by equity, while the remaining 30% will be financed through debt. The interest
cost is assumed to be 6%
• The 30% debt is equivalent to SAR 762 million. The drawdown will be in line with the construction period during first three years
• The repayment of debt will start post completion and will be repaid in equal five installments
• As depicted in the above graph, the Debt Service Coverage Ratio (DSCR) post development varies between 1.4 and 1.8 during the five years
repayment period

Projected Income Statement
Income Statement
SAR'000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Revenue - - - 371,820 406,171 442,015 471,614 484,576 498,190 512,190 526,891 541,389 556,612
Cost of Sales - - - (131,235) (140,865) (150,897) (160,625) (165,134) (169,862) (174,727) (179,828) (184,880) (190,177)
Gross Profit - - - 240,585 265,307 291,118 310,989 319,442 328,328 337,463 347,064 356,509 366,434
Other Operating Expenses - - - (13,518) (18,091) (22,884) (27,569) (28,190) (28,895) (29,617) (30,431) (31,116) (31,894)
EBIZDA - - - 227,067 247,216 268,234 283,420 291,252 299,434 307,846 316,633 325,393 334,540
Depreciation - - - (67,422) (67,422) (67,422) (67,422) (67,422) (67,422) (67,422) (67,422) (67,422) (67,422)
Amortisation - - - (15,353) (15,353) (15,353) (15,353) (15,353) - - - - -
EBIZ - - - 144,292 164,441 185,459 200,645 208,477 232,012 240,425 249,212 257,971 267,119
Interest Expense - - - (41,410) (33,128) (24,846) (16,564) (8,282) - - - - -

Earning Before Zakat - - - 102,882 131,313 160,613 184,081 200,195 232,012 240,425 249,212 257,971 267,119
Zakat Expense - - - - - - - - - - - - -
Net Income - - - 102,882 131,313 160,613 184,081 200,195 232,012 240,425 249,212 257,971 267,119
* Infrastructure and superstructure are depreciated over 35 years; FF&Es are depreciated over 10 years

Projected Balance Sheet
Balance Sheet
SAR'000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Assets
Current Assets
Cash & Cash Equivalents - - - 68,945 134,131 228,771 346,650 478,608 742,773 1,051,997 1,369,947 1,696,896 2,032,934
Total Current Assets - - - 68,945 134,131 228,771 346,650 478,608 742,773 1,051,997 1,369,947 1,696,896 2,032,934
Non-Current Assets
Fixed Assets 698,233 1,613,968 2,360,940 2,278,166 2,195,391 2,112,616 2,029,841 1,947,066 1,916,252 1,848,831 1,781,409 1,713,988 1,646,566
Total Non-Current Assets 698,233 1,613,968 2,360,940 2,278,166 2,195,391 2,112,616 2,029,841 1,947,066 1,916,252 1,848,831 1,781,409 1,713,988 1,646,566
Total Assets 698,233 1,613,968 2,360,940 2,347,111 2,329,522 2,341,386 2,376,491 2,425,674 2,659,026 2,900,828 3,151,356 3,410,884 3,679,500
Liabilities
Unearned Income - - - - - - - - - - - - -
Accounts Payable - - - 35,693 39,195 42,850 46,277 47,669 49,009 50,386 51,703 53,259 54,757
Debt 217,302 510,445 762,019 609,615 457,211 304,808 152,404 - - - - - -
Total Liabilities 217,302 510,445 762,019 645,308 496,406 347,658 198,681 47,669 49,009 50,386 51,703 53,259 54,757
Shareholder's Equity
Equity 480,931 1,103,523 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921 1,598,921
Retained Earnings - - - 91,522 209,312 353,577 519,068 699,168 907,979 1,124,361 1,348,651 1,580,825 1,821,232
Statutory Reserve - - - 11,360 24,882 41,230 59,820 79,916 103,117 127,159 152,081 177,878 204,590
Total Shareholder's Equity 480,931 1,103,523 1,598,921 1,701,803 1,833,116 1,993,729 2,177,810 2,378,005 2,610,017 2,850,442 3,099,653 3,357,624 3,624,743
Total Liabilities and Shareholder's Equity 698,233 1,613,968 2,360,940 2,347,111 2,329,522 2,341,386 2,376,491 2,425,674 2,659,026 2,900,828 3,151,356 3,410,884 3,679,500

Projected Cash Flow Statement
Cash Flow Statement
SAR'000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Net Profit - - - 102,882 131,313 160,613 184,081 200,195 232,012 240,425 249,212 257,971 267,119
Depreciation - - - 67,422 67,422 67,422 67,422 67,422 67,422 67,422 67,422 67,422 67,422
Amortization - - - 15,353 15,353 15,353 15,353 15,353 - - - - -
Increase/ (Decrease) in Creditors - - - 35,693 3,502 3,655 3,427 1,392 1,340 1,378 1,317 1,557 1,498
Cash Flow from Operations - - - 221,349 217,590 247,044 270,283 284,362 300,773 309,224 317,950 326,949 336,038
Capital Expenditure (698,233) (915,735) (746,972) - - - - - (36,608) - - - -

Cash Flow from investment (698,233) (915,735) (746,972) - - - - - (36,608) - - - -
Debt Facility Drawdown 217,302 293,144 251,574 - - - - - - - - - -

Debt Repayments - - - (152,404) (152,404) (152,404) (152,404) (152,404) - - - - -
Equity Injection 480,931 622,592 495,399 - - - - - - - - - -
Cash Flow from Financing 698,233 915,735 746,972 (152,404) (152,404) (152,404) (152,404) (152,404) - - - - -
Cash Beg. Balance - - - - 68,945 134,131 228,771 346,650 478,608 742,773 1,051,997 1,369,947 1,696,896
Net Cash Flow During the Year - - - 68,945 65,186 94,640 117,879 131,958 264,165 309,224 317,950 326,949 336,038
Cash End Balance - - - 68,945 134,131 228,771 346,650 478,608 742,773 1,051,997 1,369,947 1,696,896 2,032,934

Project Returns and Key Performance Indicators
Key Performance Indicators Project Returns
13.1%
46.9% 47.2% 47.6%
46.5%
41.2%
38.9%
36.2%
32.2% Returns
27.6%
8.4% 8.8% 8.8% 9.3% 8.8% 8.4%

7.4% 8.0%
6.2% Project IRR
Equity IRR
Project Payback Period
2022 2023 2024 2025 2026 2027 2028 2029 2030
ROE Net Profit Margin
2 Years
Sensitivity Analysis
Project IRR Sensitivity to Change in:

-30% -20% -10% 0% 10% 20% 30%
Retail Lease Revenue 12.2% 12.5% 12.8% 13.1% 13.3% 13.6% 13.8%
Retail Occupancy Rate 12.6% 12.8% 13.0% 13.1% 13.1% 13.1% 13.1%
Leisure Revenue 12.9% 13.0% 13.0% 13.1% 13.1% 13.1% 13.2%
Equestrian Revenue 10.2% 11.2% 12.1% 13.1% 13.9% 14.8% 15.6%
Hotels ADR 12.4% 12.6% 12.8% 13.1% 13.3% 13.5% 13.7%
Hotels Occupancy Rate 12.7% 12.8% 12.9% 13.1% 13.2% 13.3% 13.4%
Infrastructure Cost 14.0% 13.7% 13.4% 13.1% 12.8% 12.5% 12.2%
Construction Cost 15.1% 14.4% 13.7% 13.1% 12.5% 11.9% 11.4%
Opex 15.6% 14.8% 13.9% 13.1% 12.1% 11.2% 10.2%
Equity IRR Sensitivity to Change in:

-30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0%
Debt Ratio 13.0% 13.0% 12.9% 12.8% 12.6% 12.3% 11.7%

• Site Analysis
• Appendices
Appendix 1
List of Components & Sub-Components
Equestrian Zone
Equestrian Sub-Components Land Area Built-up Area

Race Track 56,800 56,800
Racing Track Middle Space (Polo Field, Lazy River, Endurance Village 181,000 181,000
Indoor Arena 7,200 7,200
Outdoor Arena 9,600 9,600
Warm Up Arena 7,200 7,200
Saddling Area & Vet Barns (Polo Stables) 11,100 11,100
Horse Rental Stables 21 Stables (504 horses) 26,000 26,000
Horse Rental Stables (VIP) 101 Stables (788 horses) 43,000 43,000
VIP Center and Lounges (VIP Pavilion) 850 2,550
Equine Exercise Reha Center 5,300 10,600
Equine Assisted Therapy 10,600 21,200
Equine Education Center 17,600 17,600
Grandstand 8,500 8,500
Veterinary Hospital 7,600 15,200
International Quarantine 4,000 4,000
Housing for Employees 4,800 19,200
Winner Circle 960 960
Horse Cremation 1,100 1,100
Horse Manure - Waste Transplant 1,800 1,800
Local Quarantine 4,100 4,100
Daily Use 1,200 1,200
Storage 6,200 6,200
Trail 25,000 25,000
Maintenance and Storage 7,100 7,100
Total Equestrian 448,610 488,210

Non-Equestrian Zone
Hospitality Sub-Components Land Area Built-up Area

5 Star Hotel 6,700 53,600
5 Star Hotel Podium and Parking 12,000 24,000
Cottage Houses 360 12,960
Total Hospitality 19,060 90,560
Leisure Sub-Components Land Area Built-up Area

Sports City Buildings 11,100 11,100
Sports City Landscape and fields 16,400 16,400
Shooting Club 8,900 8,900
Falcons Club 1,200 1,200
Visitor Center 2,100 2,100
Public Park 75,000 75,000
Mosques 700 2,100
Total Leisure 115,400 116,800
Retail Sub-Components Land Area Built-up Area

Restaurants, Retail Shops, Outlets 58,000 174,000
Total Retail 58,000 174,000

Common Area
Common Area Sub-Components Land Area Built-up Area

Office Building 900 3,600
Services 3,600 -
Parking 94,980 142,380
Asphalt 180,000 -
Sidewalks 35,000 -
Unused Space 24,000 -
Buffer – Unbuilt Area 135,000 -
Hardscape – Landscape 417,237 -
Total Common Area 890,717 145,980

Appendix 2
Revenue Assumptions
Revenue Assumptions
Equestrian Sub-Components Revenues

(SAR)
Sponsorships SAR 10 Mn + Ministerial Subsidies SAR 3 Mn + Government Subsidies
Race Track 168,000,000
SAR 150 Mn + Advertising SAR 5 Mn
Racing Track Middle Space (Polo Field, Lazy River,
Water Village SAR 5 Mn + Polo Field SAR 1 Mn 6,000,000
Endurance Village
Indoor Arena Lease 5,000,000
Outdoor Arena Lease 5,000,000
Saddling Area & Vet Barns (Polo Stables) Annual Memberships ( SAR 50,000 x 200 members) 10,000,000
Horse Rental Stables 21 Stables (504 horses) Monthly Rents (SAR 1,000 x 504 stables x 12 months) 6,048,000
Horse Rental Stables (VIP) 101 Stables (788 horses) Monthly Rents (SAR 1,500 x 788 stables x 12 months) 14,184,000
VIP Center and Lounges (VIP Pavilion) Annual Memberships (SAR 2,500 x 300 members) 750,000
Equine Exercise Reha Center Horses Memberships (SAR 500 monthly charge x 800 horses x 12 months) 4,800,000
Equine Assisted Therapy Memberships (SAR 500 x 500 members x 12 months) 3,000,000
Equine Education Center Memberships (SAR 1,000 x 2,500 members x 12 months) 30,000,000
Grandstand Tickets (SAR 50 x 3,000 visitors x 26 events) 3,900,000
Veterinary Hospital Admissions (SAR 1,000 x 400 horses x 12 months) 4,800,000
International Quarantine - 1,000,000
Housing for Employees Accommodation (SAR 500 per month x 500 employees x 12 months) 3,000,000
Horse Manure - Waste Transplant - 500,000
Local Quarantine - 500,000

Revenue Assumptions
Non-Equestrian Sub-Components Revenues

(SAR)
Sports City Buildings Annual Memberships (SAR 6,000 x 500 members) 3,000,000
Sports City Landscape and fields - 2,000,000
Shooting Club Memberships (SAR 2,000 x 300 members x 12 months) 7,200,000
Falcons Club Memberships (SAR 1,000 x 50 members x 12 months) 600,000
Visitor Center Visits (SAR 30 x 50 visitors x 200 days per year) 300,000

Thank You

Feasibility Study: Project Neighborhood

Uploaded by

Copyright:

Available Formats

You might also like

Feasibility Study: Project Neighborhood

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Feasibility Study: Project Neighborhood

Uploaded by

Copyright:

Available Formats

Feasibility Study

July 31, 2018

Country Overview A Economic Overview B Demographic Overview C

Country Profile 1 Macroeconomic Indicators 1 KSA Population Trends 1

Government Revenues &

Country Overview A Economic Overview B Demographic Overview C

Country Profile 1 Macroeconomic Indicators 1 KSA Population Trends 1

Government Revenues &

• However, this has come as a blessing in disguise as the government is

Source: GASTAT, Ministry of Finance

Source: GASTAT, Ministry of Finance

Oil and Non-oil Revenue (SAR Bn)

111 112 37% 37% 40%

256 291 10%

127 166 166

Historical Government Revenues & Expenditures (SAR Bn))

Source: Vision 2030 , Fiscal Balance Program

Key Themes of “Vision 2030”

Raise share of non-oil exports in non-oil GDP from 16% to 50%

Increase women’s participation in the workforce from 22% to 30%

Increase FDI from 3.8% to the international level of 5.7% of GDP

Increase private sector’s GDP contribution from 40% to 65%

Increase SME contribution to GDP from 20% to 35%

Encourage financial institutions to allocate up to 20% of overall funding to SMEs by 2030

Lower the rate of unemployment from 11.6% to 7%

Localize over 50% of military equipment spending by 2030

Reach an initial target of generating 9.5 GW of renewable energy

Raise KSA’s rank in government Effectiveness Index from 80 to 20

Increase non-oil government revenue from SAR 163 Bn to SAR 1,000 Bn

Increase household savings from 6% to 10% of total household income

Raise non-profit sector’s contribution to GDP from less than 1% to 5%

Rally one million volunteers per year (compared to 11,000 now)

Increase Umrah capacity from 8 to 30 million every year

Increase the average life expectancy from 74 to 80 years

Source: Vision 2030

Public National Fisical Balance Saudi Character Enriching the Hajj

Privatization Strategic Finacial Sector The Housing National

Source: Vision 2030, KPMG Research & Analysis

Lifestyle Improvement program:

The Program Objectives Includes:

1 Promotion of sporting activities

Excellence in several sports regionally and globally

Development of diverse entertainment opportunities to meet the needs of

4 Enhancement of Saudi contribution of arts and culture

Source: Vision 2030, KPMG Research & Analysis

Country Overview A Economic Overview B Demographic Overview C

Country Profile 1 Macroeconomic Indicators 1 KSA Population Trends 1

Government Revenues &

Saudi Arabia Population (Mn)

36.0 36.6 37.3

Saudi Population Non Saudi Population

Source: GASTAT, KPMG Research & Analysis

KSA Demographic Structure (2017)

Gen – Z Gen – Y Gen – X Baby Boomers

Source: GASTAT, KPMG Research & Analysis

Jeddah Total Population (Million)

4.8 4.8 4.9

2.5 2.5 2.6 2.6