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Investing in Norway from an international Real Estate Market Perspective

International. Investing in Norway from an international Real Estate Market Perspective. Chris Staveley 9 th February 2012. Akershus Eiendom: international cooperation.

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Investing in Norway from an international Real Estate Market Perspective

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  1. International Investing in Norway from an international Real Estate Market Perspective Chris Staveley 9th February 2012

  2. Akershus Eiendom: international cooperation • Akershus Eiendom has had a formal cooperation agreement for 10 years with Jones Lang LaSalle as its sole partner in Norway since the agreement was signed in 2001 • The cooperation agreement includes transactions, corporate solution services for key clients, research and valuation Jones Lang LaSalle: Our Global Capital Markets Platform • Combining the in-depth local knowledge of over 1,300 investment and corporate finance professionals based in 209 offices around the world • Completed over $300 billion of sales, acquisitions and finance transactions since 2006, of which over 40% have been cross border • Unique relationships with active sellers and buyers across the globe through the International Capital Group 2

  3. 9.1 Global Asia Pacific 13.9 3.4 Americas 2.8 Europe Middle East European Commercial Real Estate Demand is Global 83.5 2011: €bn Equity rich investors (e.g. Canadian and US pension funds) from the Americas have become increasingly active across Europe in 2011 YoY growth in capital inflows Global Sources of Funds Sharp increase in capital flows from outside Europe NB: Other geographies or unknown capital accounted to EUR 5.8 billion Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, January 2012

  4. European Transaction Activity 2011  35%  6% 1.6 Other 14% 3.8  17%  1%  108% Office 44% 8.4 5.8 Industrial 8% 36.8 1.9 Retail 33%  29% 3.2 22.8 2.4 1.8  32% 2.2 16.1 1.6 0.6 -45%  -2%  1.8 3.7 0.5 European Investment Volumes (all commercial sectors, EUR bn) 2011 Volume by sector TOTAL EUR 118.7 bn EUR bn Circles: € billions traded in full year 2011 % change 2010 vs. 2011 Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, January 2012 4

  5. New Capital Sources in the European Market 1 Kingdom Street* London, UK Cityhold Property AB Group (Sweden) Polish Telecoms* Warsaw, Poland Qatar Holding (Qatar) €268m €135m Aviva Tower* London, UK Private (Indonesian) Olympia* Brno, Czech Republic ECE and NPS(Germany and South Korea) €326 €262.5m Regent St Estate* (25%) London, UK NBIM (Norway) PEP* Munich, Germany TIAA-CREF(USA) €550m €400m Hotel de Crillon* Paris, France Royal Family(Saudi Arabia) 20 Columbus Courtyard* London, UK M1 (Lebanon) €250m €180m 11-12 St James* London, UK MEPF(Malaysia) O’Parinor (51%)* Paris, France NPS (South Korea) €223m €168m * Jones Lang LaSalle advised

  6. Investment in the Nordics has been strengthening Nordic Market Share Nordics increasing their market share – the market was a similar size to France in 2011 Source: Jones Lang LaSalle; Akershus Eiendom (Norway) Sadolin & Albaek (Denmark), January 2012

  7. Domestic Purchasers Drive the Nordic Markets in 2011 As highly liquid markets, the dominance of domestic investors in Sweden and Norway illustrates the level of wealth within the countries Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, IHS Global Insight Jan 2012

  8. INCREASE IN INVESTMENT FLAT DECREASE IN INVESTMENT Where Real Estate capital wants to invest 2012 NORDICS – investors like the Nordics because their better than average economic outlook RUSSIA – positive long term growth trend will attract more international capital into the market UK – remains attractive as a highly liquid market and a perceived “safe haven” sitting outside the €zone GERMANY – investors attracted to the stability offered by the economy FRANCE –Strong recovery since 2009 but volumes could fall after deals were brought forward to take advantage of the tax incentive CEE – continued growth will attract investors with some appetite for risk; activity will be driven by availability of product SOUTHERN EUROPE – High levels of investor caution; some interest from opportunity funds but pricing will have to adjust further Source: Jones Lang LaSalle

  9. Countries with Stronger Outlook will attract Capital Net Growth in Investment in 2011 (€bn) Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, Oxford Economics, Global Insight Jan 2012

  10. European Office Property Clock Q4 2011 Rental Growth Slowing Rents Falling Rental Growth Accelerating RentsBottoming Out The Jones Lang LaSalle Property ClocksSM Note This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle as at end of December 2011 Markets can move around the clock at different speeds and directions The diagram is a convenient method of comparing the relative position of markets in their rental cycle Their position is not necessarily representative of investment or development market prospects. Their position refers to Prime Face Rental Values London City, London West End, Paris, Zurich Oslo Moscow Helsinki Warsaw Düsseldorf, Geneva, Stockholm Berlin, Hamburg, Munich Lyon, Stuttgart Athens Lisbon Cologne Copenhagen Barcelona, Brussels Milan Amsterdam,Budapest,Dublin, Madrid St. Petersburg Edinburgh, Rome Source: Jones Lang LaSalle IP, January 2012 Bucharest, Frankfurt, Istanbul, Kiev, Luxembourg, Prague 10

  11. Office Rental Trend is Strong in Nordic Markets… Prime Office Rental Change Q4 2010 – Q4 2011 % change Source: Jones Lang LaSalle; Akershus Eiendom (Norway), January 2012 11

  12. Q4 2011 Office Capital Value/m2 vs.10-year Average (local currency in 2011 prices)

  13. Domestic Dominance but Very Liquid Markets Direct RE Investment per capita: 2011 Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, IHS Global Insight Jan 2012 * Central London investment volumes includes offices only

  14. Highest High Semi Low Opaque The Norwegian Market has High Levels of Transparency NORWAY Source: Jones Lang LaSalle, LaSalle Investment Management

  15. Oslo Prime Yields becoming more Aligned with Europe Prime Yield % Prime yields in Oslo are in line with a weighted European average but are sitting well below the long-term average 20 Year Average 20 Year Average Source: Jones Lang LaSalle; Akershus Eiendom (Norway), January 2012 * Yield is weighted 15

  16. Rental Forecasts Strongly suggest Outperformance in Oslo Source: Jones Lang LaSalle, December 2011

  17. Finland UK Sweden Germany Norway Norwegian Economic Outlook is Positive Norway GDP growth looks set to outperform • Higher GDP growth than Europe in 2012: we forecast + 2.3% vs. + 0.2% in the EU-27 • Better labour market in Norway: unemployment is one of the lowest in Europe • While inflation is under control: inflation is anticipated to remain below target Over 2012-2016 Norway’s average annual growth outperforms other major European economies Annual Average Growth 2012-16 Norwegian inflation forecast to remain below target Unemployment expected to remain low Forecast Forecast ILO Umemployment Rate (%) Consumer Price Index Annual Growth (%) Source: Oxford Economics

  18. Norwegian Bonds relatively stable against German bunds % point spread over German 10 year bunds Source: Datastream; February 2012 Source: Datastream; February 2012

  19. Sovereign Debt, not an issue for Norway Developed Countries – Total Government debt and fiscal balance as a % of GDP Government Total Debt as % of GDP 2011 Government Fiscal Balance % GDP 2011 Source: Global Insight, November 2011

  20. Nordic Regions’ Banks’ Tier 1 capital ratios healthy Nordic banks are the most well capitalised in Europe and will have more scope for lending activity Source: Bank of America Merrill Lynch Equity Research

  21. Strong Capital Base will support Norwegian Market… Top 10 Global Sovereign Wealth Funds Total Assets (US$bn) Source: www.swfinstitute.org

  22. +27% +18% +13% +7% +3% … and Population Growth in Norway and Oslo Region is Strong Population Growth Forecasts Forecast Annual Population Growth Index (2005=100) Source: Oxford Economics; December 2011

  23. Investing in Norway – International Perspective • European real estate demand is global • Nordic investment is relatively strong – but highly domestic • Norwegian market has strong prospects and will attract new capital sources • Norwegian economic backdrop is very robust – should increase the relative attractiveness of the market • Perception of a lack of liquidity – not necessarily real • Domestic competition and transaction speed are barriers • A market too far for regional funds? – Should not be the case

  24. Takk! This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent ofJones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

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