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Investment opportunities in Swedish Real Estate A leading European investment market

Investment opportunities in Swedish Real Estate A leading European investment market. Invest in Sweden Agency. Foreign investments The Swedish real estate market The Swedish economy Investment proposal Regional investment opportunities Contacts & further information.

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Investment opportunities in Swedish Real Estate A leading European investment market

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  1. Investment opportunities inSwedish Real EstateA leading European investment market Invest in Sweden Agency www.isa.se

  2. Foreign investments The Swedish real estate market The Swedish economy Investment proposal Regional investment opportunities Contacts & further information “Sweden is a highly active investment market with good transparency and a presence of other foreign investors. We are here to stay long-term.” Pieter HendrikseCEO, ING Real Estate InvestmentManagement Europe Contents www.isa.se

  3. Foreign investments www.isa.se

  4. Strong investment inflowsForeign investments inSwedish real estate, 2001–2005, SEK billion* * 9 SEK = 1 EUR Source: DTZ (01), Jones Lang Lasalle (02-05) www.isa.se

  5. Steady increase in foreign ownershipDirect foreign ownership, 2001–2005, SEK billion* * 9 SEK = 1 EUR. • Source: DTZ. www.isa.se

  6. Europe’s fourth-largest investment market Turnover European real estate markets, share of direct investments Source: Jones Lang Lasalle www.isa.se

  7. Strong international investor presence Acta, Norway Keops, Denmark Allianz, Germany Lehman Brothers, US London & Regional, UK Bank of Ireland PB, Ireland Oppenheim Immo, Germany Blackstone Group, US Resolution Properties, UK CGI, Germany Rodamco, Netherlands CGS, Germany Royal Bank of Scotland, UK Degi, Germany Sten & Ström, Norway Deka, Germany Whitehall Funds, UK Doughty Hanson, UK Vital, Norway GE Real Estate, US ING Real Estate, Netherlands www.isa.se

  8. Norway and Denmark major investors in 2005Investor origin 2005, total foreign investment SEK 49 billion Source: Jones Lang Lasalle www.isa.se

  9. Investors range the full spectrumType of investors 2005, total foreign investment SEK 49 billion IH = Investment horizon, YR = Initial yield requirement Source: Jones Lang Lasalle www.isa.se

  10. Type of premisesTotal acquired area: 4.4 million sq.m. Source: Jones Lang Lasalle www.isa.se

  11. Popular cross-border market Share of European cross-border transactions 2005, percent Source: Jones Lang Lasalle www.isa.se

  12. Transaction highlights 2005 Price, MSEK • 9,000 • 4,245 • 2,900 • 2,900 • 2,700 • 2,650 • 2,640 • 2,100 • 1,950 • 1,768 • Seller| Property unit |Buyer • Tornet (Lehman Brothers/Ratos) |Remaining properties|Fabege • Coop |129 properties across Sweden|ING Real Estate, Netherlands • Fabege |10 properties in Stockholm Niam, Sweden|Whitehall Funds, UK • Fabege |11 properties in Stockholm| Keops, Denmark • GE Real Estate |84 properties in 54 cities|Keops, Denmark • Capona |30 hotel properties (3 transactions)| Norgani, Norway • Resolution Properties |Swedish retail park portfolio| Oppenheim Immobilien, Germany • Fabege |21 properties in Stockholm|GE Real Estate, US • Fabege and Atrium |Office property in Stockholm|Keops, Denmark • Tornet |40 properties in northern Sweden and Västerås| Keops, Denmark www.isa.se

  13. Investors view Sweden favorably “In terms of liquidity, transparency and ease of doing business, Sweden is one of Europe’s most highly developed markets for real estate.” Philippe Camu, Managing Director, Goldman Sachs “People are professional, efficient and have a great sense of integrity. The fact that all documentation is in English facilitates greatly.” Hilary Fitzgibbon, Senior Acquisitions Manager, Bank of Ireland Private Banking “Sweden is a market with very few pitfalls. Doing business is easy, advisors are qualified and the legal system works extremely well.” Ole Vagner, CEO, Keops www.isa.se

  14. The Swedish real estate market www.isa.se

  15. Strong investment marketTotal transaction value 2001–2005, SEK billion* * 9 SEK = 1 EUR. • Source: Newsec (01-04), Leimdörfer (05) www.isa.se

  16. Majority of commercial property held by active ownersEstimated market value 2005,SEK 660 billion (EUR 73 billion) Note: Industrial properties are excluded, since the majority of these are owner occupied. Source: Newsec www.isa.se

  17. Ownership Swedish residential property Estimated market value 2005, SEK 1,123 billion (EUR 125 billion) Source: Swedish Property Federation www.isa.se

  18. Sweden’s largest property owners Acta Keops Alecta Kungsleden Akademiska Hus London & Regional, UK Akelius Nordisk Renting (RBS, UK) AMF Pension Norrporten AP Fastigheter Rodamco, Netherlands Atrium SEB Trygg Liv Balder Stena Fastigheter Castellum Vasakronan Diligentia/Skandia Wallenstam Fabege Whitehall Funds (Goldman Sachs, US) GE Capital, US Wihlborgs Hufvudstaden Source: Newsec www.isa.se

  19. Excellent transparencyOnline analysis and forecasting tools available www.isa.se

  20. Good availability of property lenders Aareal Bank “There is good supply of qualified advisors and several providers of debt capital. The way we like to do business is how Swedes like to do business.” Jan DijkstraVice President, Global Principal Investments, Merrill Lynch International Nord LB Deutsche Bank Nykredit Postbank Eurohypo FöreningsSparbanken The Royal Bank of Scotland SBAB GE Capital SEB Handelsbanken West Immo HSH Nordbank Württemberger Hypo Hypo Real Estate Scandinavia Nordea www.isa.se

  21. Treatment of capital gains Exempt Minimum holding for gains Unlisted companies – none Listed companies – 10% Treatment of dividends Exempt Minimum holding for dividends Unlisted companies – none Listed companies – 10% Minimum ownership period Unlisted companies – none Listed companies – 10% Interest deduction Yes Debt/equity restrictions None Attractive holding company regime www.isa.se

  22. Internet access to land register • Location of the property unit • Title holder • Plans and regulations • Mortgages • Easements • Tax assessment values • Purchase price for the last transfer www.isa.se

  23. Easy to buy commercial propertyTime to register a property, days Norway 1 Sweden 2 Netherlands 2 Lithuania 3 Iceland 4 Finland 14 Switzerland 16 Slovak Republic 17 Bulgaria 19 UK 21 Greece 23 Source: World Bank 2005 ”Doing Business Registering Property” www.isa.se

  24. Transparent and reliable Simple documentation requirements Deals often packaged in special purpose companies Use of standardized contracts No need for title insurance Few restrictions on transfer of real property “Transactions can be carried out very rapidly. Not least, the system provides great security to all parties involved.” Ole Vagner, CEO, Keops Secure, reliable and cost-efficient Legal aspects www.isa.se

  25. Commercial lease regulations tied to the real property code Standard form contracts normally used for commercial leases www.isa.se

  26. Low corporate taxes Simple taxation structure Dividends normally exempt from withholding tax Participation exemption rules No thin capitalization rules Transfers of shares in real estate company not subject to transfer tax Promoting innovative deal structures Fiscal aspects www.isa.se

  27. International and professional business environment • Counsel • Baker McKenzie • Cederquist • Deloitte • Ernst & Young • Glimstedt • Kilpatrick Stockton • Linklaters • Mannheimer Swartling • MAQS • PricewaterhouseCoopers • Trägårdh & Falkenborn • Vinge • White & Case Advisors • Aberdeen Property Investors • Catella • CB Richard Ellis • Colliers International • Cushman Wakefield • DTZ • Jones Lang Lasalle • Leimdörfer • NAI Svefa • NewSec • Savills www.isa.se

  28. Competitive corporate tax rate2006, percent Source: PricewaterhouseCoopers, Swedish Ministry of Finance, Jan 2006 www.isa.se

  29. Relevant Swedish taxes • Corporate income tax 28 percent • Property transfer tax 3 percent • Value added tax 25 percent • Annual property tax • Residential property 0.5 percent * • Commercial office space 1.0 percent • Industrial property 0.5 percent • Stamp duty on mortgages 2 percent Note: Tax rates applicable in January 2006. * No tax or tax at a lower rate applies during the first 10 years after construction. www.isa.se

  30. The Swedish economy www.isa.se

  31. A diversified economy2005, Industry sector distribution of exports Of Swedish origin Source: Statistics Sweden www.isa.se

  32. Home to multinationalsSweden’s largest companies Volvo Group, automotive 210.4 Ericsson, mobile systems 132.0 Skanska, construction 121.3 Electrolux, household appliances 120.7 Vattenfall, energy 113.4 Volvo Cars, cars 104.6 The Volvo FH 16 SCA, pulp & paper 90.0 Coop, retail 86.5 Telia Sonera, telecommunications 81.9 ICA, retail 71.8 Sales 2004, SEK billion, 1 SEK=EUR 0.11, $ 0.13 www.isa.se

  33. Strong macroeconomic performanceGovernment net lending 2003-2007, percent of nominal GDP * Estimates Source: OECD, January 2006 www.isa.se

  34. Strong economic growth Annual average GDP growth 2001-2005, percent “Sweden has a high level of industry diversification and economic internationalization. The country stands a very good chance of continued growth above the EU average.” Malcolm Morgan, Managing Director, DEGI   Source: National Institute of Economic Research, 2006 www.isa.se

  35. Inflation goal metAnnual average inflation rate 2001-2005, percent Source: National Institute of Economic Research, Eurostat, OECD www.isa.se

  36. Investment proposal www.isa.se

  37. Easy to do business Good market liquidity Sizeable investment market High market transparency Reliable public information Low total transaction costs Fiscal and legal structures that contribute to attractive transaction schemes Diversified economy. “Investors are primarily attracted by Sweden’s market cycle position, an attractive yield gap, and a favorable economic outlook.” Constantin StolbergManaging Director Hypo Real Estate Scandinavia What’s in it for the investor? www.isa.se

  38. Attractive yield gapYield vs long-term bond rates 1998-2005 Source: NewSec www.isa.se

  39. Appropriate timingTotal returns, Swedish commercial properties 2000–2005, percent Source: SFI/IPD Swedish Property Index www.isa.se

  40. Increasing returnsTotal returns, Swedish investment properties, 1995-2005, percent Source: IPD www.isa.se

  41. Swedish krona stable against the euroCurrency stability, SEK vs EUR and USD, 2000-2005 “… given the strong krona, hedging costs are relatively moderate.” Willem LedeboerChief investment officer Rodamco Europe Source: Central Bank of Sweden www.isa.se

  42. Regional investment opportunities www.isa.se

  43. Opportunities across Sweden • Stockholm • Göteborg • Malmö|Lund • University cities: Karlskrona, Linköping, Luleå, Norrköping, Umeå, Uppsala, Västerås, Växjö, Örebro www.isa.se

  44. Significant property marketsOffice stock European cities, million sq.m., Q4 2005 Foreign investments into Sweden is primarily directed to major metropolitan areas. However, attractiveness of other cities is on the rise. 1. Paris, France 48.7 2. Greater London, UK 27.4 3. Munich, Germany 17.8 4. Berlin, Germany 16.5 5. Hamburg, Germany 13.5 6. Madrid, Spain 13.5 7. Brussels, Belgium 11.7 10. Stockholm 10.8 18. Göteborg 3.1 23. Malmö, Sweden 1.4 Source: Jones Lang Lasalle www.isa.se

  45. Contacts & further information www.isa.se

  46. Real estate companies | Property owners AP-Fastigheter, Diligentia, Fabege, GE Real Estate, Jernhusen, JM, Kungsleden, London & Regional Properties, NCC Property Development, AB Sagax, Skanska Commercial Dev. Nordic, Vasakronan, Swedish Property Federation Advisors – realestate consultanciesCatella Corporate Finance, CB Richard Ellis, Cushman & Wakefield, DTZ, Jones Lang Lasalle, Leimdörfer, NAI Svefa, NewSec, Savills Advisors – law firms Baker & McKenzie, Cederquist, Glimstedt, Kilpatrick Stockton, Linklaters, Mannheimer Swartling, MAQS, Trägårdh & Falkenborn, Vinge, White & Case Advisors – legal & accounting PricewaterhouseCoopers Regional investment organizationsStockholm Business Region, Business Region Göteborg, Position Skåne “We work extensively with local partners for tax, legal and other advisory services.We have found people to be very professional, reliable and good to work with.” Jens Goettler,Head Investment Department Europe North and West, Deka Immobilien Investment ISA Partners www.isa.se

  47. ISA contact and information • Real Estate publication available for download at www.isa.se/publications • ISA contact: Sigvard Beck-Friis Head of Establishment Services and Real Estate project. Tel: +46 8 402 78 25 sigvard.beck-friis@isa.se Sigvard Beck-Friis www.isa.se

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