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Real Estate – Mazaya
December 21, 2015
nbkcapital.com | 2• Other projects in pipeline:
Mazaya is looking to start work on a 350K sqft BUA mixed-use
project in Oman and has secured an OMR 10.5 million (around KD 8.2 million) financing
facility to fund construction. Given the very early stage of the project, we have valued it on
a land-only basis at its book value of KD 2.8 million. Mazaya has also bought a commercial
investment property in Turkey from a joint venture, and this is currently under development.
We have valued the property at its book value of KD 11.4 million, of which Mazaya has a 65%
direct stake. Mazaya’s other major undeveloped land bank includes, Kuwait (book value of KD
8 million), Abu Dhabi (book value of KD 6 million), Dubai (book value of KD 2.7 million) and
Lebanon (book value of KD 2.7 million, on which we assign 20% discount considering the
current uncertain political and security situation).
• Key risks:
1) Prolonged over-supply of commercial real estate in Kuwait could lead to pressure
on rents; 2) a further significant correction in the Dubai real estate market; and 3) a material
reversal in the interest-rate environment could affect potential customers, leading to a
slowdown in business.
Figure 1 Value of Dubai Real Estate Transactions (AED Billion) Figure 2 Dubai Real Estate Transactions (Units)
0
10
20
30
40
50
60
4Q2013
2Q2014
4Q2014
2Q2015
AED billion
Source: NBK Capital Source: Dubai Land Department, REIDIN, NBK Capital
Figure 3 Overview of Mazaya’s Queue Point/Queue Line Liwan Project
Queue Point
Description
Location
Dubailand (at the intersection of E311 and Dubai-Al Ain road)
S ize
2.9 million sqft (around 3,000 units)
Total revenue potential
KD 160 million (around AED 1.9 billion)
S tatus
Ongoing, around 65% pre-sold, 80-85% launched
Delivery schedule
2014-2020
Cashflow schedule
until 2020
Cummulative revenue recgnition so far
Around 30%
Current S elling price/sqft (AED)
700-750
Our forecast selling price/sqft (AED)
600
Contribution to our gross EV
Around 23%
Source: Mazaya, NBK Capital
While the value of transactions in
the Dubai real estate market has
plummeted this year, the volume of
transactions (in number of units)
has been relatively flat. This, in our
opinion, indicates much
stronger activity (or demand)
among lower-priced units, mainly in
the mid-income segment
0
4,000
8,000
12,000
16,000
4Q2013
2Q2014
4Q2014
2Q2015
Targeting the mid-income
segment and with an attractive
location, the project continues to
see good demand