How to Maximise your Investment in Modern Europe Chris Staveley European Capital Markets

Direct real estate investment in Europe Transaction volumes set a new record at €95bn for 1H 2006 Source: Jones Lang LaSalle; Property Data (UK); KTI (Finland) Eur bn

Breakdown of transactions by location of asset H UK transactions still dominate with Germany in second place ahead of France UK 36% Germany 21% Other 12% Netherlands 3% Spain 4% France 16% Sweden 8% Source: Jones Lang LaSalle; Property Data (UK); KTI (Finland)

Investor Types H Hotel operator 2% Institutions 11% Private Individuals / Syndicates 15% Unlisted Funds 43% Unlisted PropCos/ Developers 8% Other 5% Listed PropCos/ Developers 8% Listed REITs 8% Source: Jones Lang LaSalle; Property Data (UK); KTI (Finland)

European Direct Real Estate Investment Volumes by Sector More than half of volume in offices and a quarter in retail. Hotels rise to 12% 0% 20% 40% 60% 80% 100% H1 Mixed-Use / Other Hotel Industrial Retail Office

Unlisted Funds – pan-Euro Institutions - Sweden REITs – French offices Middle East investor - London

What next?

EMEA Largest Markets Top 10 Markets (GDP Weights) GDP Growth Rate % p.a. Trend ’ “Weighted average Source: Consensus, September, November 2006, EIU November 2006 Mean* Germany UK France Italy Spain Russia Netherlands Belgium Switzerland Turkey 2005 $US bn

Short Term Rental Cycle Q Note: This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle as at end September 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 OFFICES Lisbon Prague, Amsterdam, Milan, Rome, Vienna, Athens, Edinburgh Düsseldorf, Zurich Berlin London City, Madrid Rental growth slowing Rents falling Rental growth accelerating Rents bottoming out Moscow Munich, Luxembourg, Helsinki, Budapest Brussels, Frankfurt, Geneva, Warsaw Dublin Paris Copenhagen London West End Stockholm, Lyon, Hamburg Oslo Barcelona

Investment Markets Source: Jones Lang LaSalle; Property Data (UK); KTI (Finland) Cross-Border Direct Investment Domestic Direct Investment Eur bn “Stable Transaction Volumes despite Lower Returns – with continued Investor Demand and Yield Levels remaining firm through 2007” “Watch interest rates with care” Forecast

 Positive Employment Growth in all Markets  Financial Services (0- 1.5%) Higher in Estonia, Hungary, Ireland, Slovakia, Romania  Healthy Business Services Growth ( %) Higher in Czech Republic, Greece, Hungary, Ireland, Latvia, Luxembourg, Lithuania, Romania Office Leasing ’000 m² Forecast Western Europe: Amsterdam, Barcelona, Berlin, Brussels, Dublin, Dusseldorf, Frankfurt, Hamburg, London (City & West End), Madrid, Milan, Munich, Paris, Stockholm, Central & Eastern Europe: Budapest, Moscow, Prague, Warsaw “Gross Leasing Activity to match 2006”  Expansion, Contraction and M&A  Availability & Price of Space  GDP & Job Growth  Health of Service Industries

Office Supply – Vacancy Rates & Completions ‘000 m² Western Europe: Amsterdam, Barcelona, Berlin, Brussels, Dublin, Dusseldorf, Edinburgh, Frankfurt, Hamburg, London, Luxembourg, Lyon, Madrid, Milan, Munich, Paris, Rotterdam, Stockholm, The Hague, Utrecht; Central & Eastern Europe: Budapest, Moscow, Prague, Warsaw Source: Jones Lang LaSalle European Research, October 2006 Forecast “Development Activity and Vacancy Rates Rising in CEE and Limited Supply response in Western Europe with Vacancy Rates on downward trend”

Retail  Macro Indicators remain supportive  Cross Border Retailers continue to expand  Development market really active  Unquenchable Investment Demand “Continuing sector strength” Logistics “Expect increasingly active occupier and development market in 07/08 with continued strong investor demand”  Drive for efficiencies from retailers, manufacturers and 3PL’s  Funds seeking product from specialist developers  Speculative development in some markets (UK, France, NL)

Sector Office Retail (Unit shops) Warehousing London % p.a. Continental European Cities % p.a. Source: Jones Lang LaSalle European Research Gross Returns: Capital Cities ’07 – ‘09 Central & Eastern European Cities % p.a. Moscow % p.a.

Conclusions  Europe’s occupier markets are in upward cycle – all sectors  Investment market to remain cash rich & product poor  Unlisted funds ever more important  Projected returns will be lower but still attractive  Investor confidence is judged still to be strong  2007 Investment Volumes should remain close to record 2006 levels

How to maximise your investment in Modern Europe  Core Markets : London, Paris, Benelux  Growth Markets : Spain, Nordics, Baltics  Recovery : Germany (?)  Emerging markets – Russia, Turkey, Eastern Europe

For more Jones Lang LaSalle research visit COPYRIGHT © JONES LANG LASALLE IP, INC Unauthorised reproduction prohibited. This presentation is based on material that we believe to be reliable. While every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. Contacts: Chris Staveley European Capital Markets Tel. +44 (0)