Marie Hunt Director of Research

What We Said Last Year “Further Yield Contraction Highly Unlikely” “Rental Return In The UK No Longer Self-Financing” “Lenders More Vigilant In Their Loan Assessments” “Irish Investors Less Dominant In The UK” “Office Sector Best-Performing Sector Of The Irish Market”

What We Said Last Year “Energy Performance Of Buildings Increasingly Topical” “Conditions In The Retail Sector More Competitive” “Securing Anchor Retail Deals Very Challenging” “Duty Of The Development Community To Adopt A Realistic Approach & Put The Brakes On Development Of New Homes”

ECONOMIC CONDITIONS FUNDING SUPPLY & DEMAND CONFIDENCE Property Market Performance

Sectors & Sub-Sectors The Occupier Markets The New Homes & Development Land Market New Homes Market Occupier Markets Investment Market Development Land Market

Irish Investment Caution Will Prevail In The First Half Of 2008 Yields Will Come Under Pressure Many Transactions Will Be Conducted Off-Market Huge Focus On Redevelopment Of Prime Assets Total Returns Will Moderate Stock Selection More Important Than Ever Confidence The Vital Ingredient!

Overseas Investment Investment Appetite Strong But Investors More Cautious Availability & Cost Of Finance Will Dictate Pace In 2008 Good Buying Opportunities Emerging Value Resurfacing In The UK More Focus On Established Markets Increasing Appetite For Emerging Locations Active Spending Expected Although Caution Will Prevail

Offices Strong Levels Of Activity Expected Although Down On 2007 Less Reliance On The Financial Sector More Forward-Funding Transactions Emerging Energy Efficiency & Sustainability Coming To The Fore No Significant Increase In Rental Levels In 2008 Improving Demand For Suburban Offices Landlords More Flexible On Lease Terms Oversupply Needs To Be Monitored Very Carefully

Retail Consumer Spending Expected To Ease In 2008 No Impact On Expansion Plans Of Irish Or Overseas Retailers Very Few New Shopping Centres Due To Open This Year More Focus On Redeveloping Older Facilities Landlords More Flexible On Leasing Terms Possibility Of More Turnover-Based Transactions Good Anchor, Good Design & Appropriate Tenant Mix Crucial Fundamentals To Remain Favourable But Some Casualties As Competition Intensifies

Industrial Healthy Levels Of Take-up Expected In 2008 Occupiers Continuing To Re-Locate To New ‘Hotspots’ Along New & Upgraded Road Networks Supply Unevenly Distributed Retail Sector A Bigger Driver Of Demand Demand For Larger Units Increasing No Significant Uplift In Rental Values Expected Land Values To Remain Stable

Hotels Pick-Up in Transactional Activity in 2008 Pent-Up Demand For Quality & Established Hotels Pace Of Activity Dependent On Availability Of Funding Purchasers Primarily Existing Operators More Focus On Core Fundamentals Existing Hotel Assets More Efficient Route Into Business Profitability & Competitiveness Being Eroded Hotel Business Fundamentally In A Very Strong Position

Pubs Reduction In Number Of Developers Buying Pubs In 2008 Strong Prices For Well-Located Properties With Established Turnover Figures & Future Trading Potential Existing Pub Operators Will Dominate Purchasing Activity Trading Conditions Will Put Some Under Financial Pressure Adapting To Changing Market Conditions Vital A High Margin Business That Can Be Very Profitable Availability Of Bank Funding & Realistic Price Expectations Will Dictate The Pace Of Sales Activity

New Homes Buyer Apathy Yet To Dissipate Stamp Duty Changes In Budget 2008 Welcome Further Decline In Annual Completions Expected This Year Considerable Backlog Of Unsold Inventory To Be Absorbed Developers Unlikely To Commence New Schemes Until 2009 Prices Stable In Some Uplift Possible In 2009 Fundamentals Remain Positive Pace Of Activity Wholly Dependent On Confidence

Development Land Increased Transactional Activity Following 2007 Price Falls Increase In Off-Market Transactions Demand From Opportunistic Developers For Well-Located Sites Demand For Provincial Land Will Remain Relatively Weak Lenders Need To Obtain Independent Advice Knowledge Of Existing And Proposed Transport Links Vital Some Irish Developers Focussing Overseas An Active Year For Experienced Players Taking A Long-Term View

Summary The Irish Property Market Will Weather The Storm Well In 2008 The Irish Economy Is Better Positioned Than Most Activity In Each Sector Will Vary Considerably Shrewd Investors Will Seek Out Buying Opportunities Occupier Markets Healthy Albeit Rental Growth More Subdued

Summary Pent-up Demand For Good Hotel & Pub Opportunities Significant Increase In Transactional Activity In Development Land Sector If The Market Accepts Price Adjustments New Homes Sector Will Rebound But Slowly A Challenging Year But Good Opportunities For Those Taking A Long- Term View Availability & Cost Of Funding And Confidence Vital

ECONOMIC CONDITIONS FUNDING SUPPLY & DEMAND CONFIDENCE Property Market Performance