The Norwegian Commercial Property p y Market Presentation for Technopolis November 5, 2013 Agenda Introduction to Akershus Eiendom The Norwegian economy Oslo leasing market The investment market Akershus Eiendom AS Akershus Eiendom AS is an independent property advisor focusing on all types of commercial property: - offices - logistics/warehouse facilities - shops/shopping centres - hotels - land plots Akershus Eiendom has advised its clients on sales, leasing, development, research, valuations and other areas of the commercial property business since 1992. 1992 Akershus Eiendom has during the past five years handled sales transactions for properties of a total value of 30 billion NOK, NOK and has handled leasing of 845,000 m2 of office space. 3 3 Akershus Eiendom: Business areas & market shares Managing Director Per Kumle Marketing Leasing Backoffice Capital Markets Research & Valuation Ole Christian Iversen Head of Leasing Petter Nylend Head of Capital Markets Ragnar Eggen Head of Research Leasing agent, primarily for landlords. Sales agents, primarily for property owners and construction companies. Erik Andre Bratt Head of Valuation Mainly office and logistics in and around Oslo Market share 40-50% Mainly office in Oslo, but also logistics, retail, and hotels around Norway. Market share 20-25% l ll kinds k d off commerciall Valuation off all property for funds, property companies and others. Both regular and ad-hoc valuation projects. Advisory and research for the property market in general. general Market share 25-30% 4 4 Akershus Eiendom: Market leader Key figures Akershus Eiendom AS 7,0 7,7 7,1 7,0 6 45 4,5 3,5 4 2,6 2,3 3,2 2,0 2 20112 20111 20110 20009 20008 20007 300 20006 0 20001 400 Akershus Eiendom: Leasing volume per year, 1.000 m2 250 200 150 170 150 140 135 130 120 100 100 85 100 50 2012 2009 2008 2007 2006 2005 2004 2003 2002 0 2001 Hadrian Eie endom Colliers C CBRE Pa angea Property Ad dvisors Ca atella Corporate Finance Ne ewsec Union n Norsk Næringsm megling DTZ Realk kapital Eiendomsm megling 5 megling DNB Næringsm Akershus Eiendom ‐ 150 150 2011 100 225 2010 200 1.000 m2 per year Turnove er in MNOK, 2007 7 ‐ 2011 500 8,5 8 20005 600 10,0 10 20004 Research/ Valuation Transactions 20003 Leasing Property value, billion NOK 12 Akershus Eiendom: Value of properties sold per year, bNOK 20002 Akershus Eiendom - Market leader in all segments 5 5 International partner – Jones Lang LaSalle o Akershus Eiendom has had a formal cooperation agreement with Jones Lang LaSalle for 11 years o The cooperation includes transactions, services i for f k key clients, li t and d research h Jones Lang LaSalle Europe and Middle East o o o o o 4,200 people in 57 corporate offices across 24 countries 600 directly reimbursable client site staff Market leading capital markets business with €115 billion of transactions since 2005 Largest 3rd party property management agent with 25.9 million m² under management Supported by the Industry’s leading research capability with over 90 research professionals in the region 6 6 Transactions carried out by Akershus Eiendom Avantor/Industrifinansporteføljen 2.290 MNOK Pilestredet 35 670 MNOK Pilestredet Park 7450 MNOK Sørkedalsveien 6 540 MNOK Pilestredet 33 495 MNOK Middelthunsgate 17 700 MNOK Akerselva Atrium 587 MNOK Essendropsgate 3 Ibsen kvartalet 1,220 MNOK Sjølyst Arken 974 MNOK Schweigaards gate 17-19 730 MNOK Oslo Plaza Hotell 1 200 MNOK Brynsalleen 4 270MNOK Lysaker torg 45 700+ MNOK Karl Johans gate 12 / Kirkegata 23-25 537 MNOK Brynsalleen 6 453 MNOK Strømsveien 102 545 MNOK Haakon VII’s gt 5, 500 MNOK Strandveien 29 522 MNOK Fondbygget 620 MNOK Bjørvika felt B11b (Visma) 920 MNOK Kjørbo-anlegget 550 MNOK K2 Fornebu 9 945 MNOK Tjuvholmen Allé 1-5 875+ MNOK Biskop Gunnerus gt.14 (høyblokka), 580 MNOK Steen & Strøm + Karl Johans gate 16c – 1 070 MNOK Bjørvika felt B10a (PwC) 570 MNOK Biskop Gunnerus gt.14 (lavblokka) 760 MNOK Statoil Regional HQ 3 200 MNOK KLP-bygget, Felt B10b, Bjørvika 1200 MNOK 7 Agenda Introduction to Akershus Eiendom The Norwegian economy Oslo leasing market The investment market Norwegian economy makes moderate headway year--on-year volum me change, % 8% Annual GDP, mainland Norway and European union with forecast 6% 4% 2% 0% -2% European Union (27 countries) 4% -4% GDP Mainland M i l dN Norway -6% Status: o o Growth primarily stimulated by domestic demand, and d llarge investments i t t in i the th petroleum t l sector t iin particular Traditional Norwegian exports expected to pick up from 2015 Source: Statistics Norway Deviation analysis GDP Norway (M) Estimate 2012 2013 2014 Feb 12 2,7 % 2,8 % 3,4 % Jun 12 3,2 % 2,8 % 3,4 % Sep 12 3,6 % 3,1 % 3,2 % Des 12 3,3 % 2,9 % 3,5 % Feb 13 3,5 % 2,6 % 3,1 % 2015 3,4 % 3,4 % 3,4 % 3,4 % 2,8 % 2016 2,8 % 9 Siste tall offentliggjort: December 2012 Employers expectations of future employment Business leaders expected change in employment in 1 year 60 Percen ntage of respo ondents 50 40 30 20 10 0 Q1 03 Q1 04 Q1 05 Q1 06 More employees Q1 07 Q1 08 Q1 09 Q1 10 Fewer employees Q1 11 Q1 12 Q1 13 No change Status • Survey includes answers from over 500 business leaders Source: Norges Bank/TNS Gallup/Perduco 10 Employment forecasts have weakened during 2013 Change in total employment, Norway, 1990-2016E 2 800 4,1 % 2 600 3,5 % 2,9 % 2,7 % 2 200 2,2 % 2,0 % 1,9 % 1 7% 1,7 2 000 2% 1,3 % 1 800 1 600 3% -1,0 % 0,7 % 1,3 % 0,9 % 0,6 % 0,4 % 0,5 % 0,3 % 1 400 1 200 1 000 -0,9 % % 0,9 % 1,11,0 % 1,0 % 1% 0% -0,4 % -0,3 % -0,5 % Change, % Emplo oyees, thousands 2 400 4% 3,3 % -1% -1,2 % -2% 800 National employment change % Employment change %, average of SSB and DNB forecast Total employed Norway Norway, thousands Total employed, average of SSB and DNB forecast Source: Statistics Norway and DNB Markets 11 Unemployment Unemployment 2002-2013 (Seasonally adjusted figures) 120 000 12 000 100 000 10 000 80 000 8 000 60 000 6 000 40 000 4 000 20 000 2 000 - 0 -20 000 ((2 000)) -40 000 (4 000) Source: NAV (6 000) jan. 13 jan. 12 jan. 11 jan. 09 jan. 08 Unemployed jan. 07 jan. 06 jan. 05 jan. 04 jan. 03 jan. 02 Monthly chage jan. 10 -60 000 Long interest rates at all time low Norges Bank, Sight dep. rate SWAP 10 years NIBOR 3 months 10 year Gov Gov. Bond Status: The key policy rate was kept unchanged on the last policy meeting Jul 2013 Jan 2013 Jul 2012 Jan 2012 Jul 2011 Jan 2011 Jul 2010 Jan 2010 Jul 200 09 Jan 200 09 Jul 200 08 Jan 200 08 Jul 200 07 Jan 200 07 Jul 200 06 Jan 200 06 Jul 200 05 Jan 200 05 Jul 200 04 Jan 200 04 Jul 200 03 Jan 200 03 8,0 % 7,5 % 7,0 % 65% 6,5 6,0 % 5,5 % 5,0 % 45% 4,5 4,0 % 3,5 % 3,0 % 25% 2,5 2,0 % 1,5 % 1,0 % Source: DnBNOR / Central Bank of Norway Construction order backlogs Order backlog, new buildings nationwide, 2001-2013; Quarterly index, 2005=100 def lated by the total production cost index 275 250 Value index x for backlog 225 200 175 150 125 100 75 National index, all new and existing b ildi buildings iincll rehab h b projects j t New residential buildings 50 Other new buildings (mainly commercial) 25 2004K1 2005K1 2006K1 2007K1 2008K1 2009K1 2010K1 2011K1 2012K1 2013K1 o o From Q1 2010 the order backlog for new buildings have been growing A decline d li is i expected t d ffrom 2H 2013 d due tto a d decline li iin new h home sales l Source: Statistics Norway Construction costs for commercial property Estimated construction cost 2005-2014E Average turnkey cost for standard new Oslo office space space, ex VAT 22 000 20 000 18 000 Forecast: 10% decline until June 2014 16 000 14 000 Observed construction cost 12 000 Estimated future construction cost 10 000 jul. 14 jan.14 jul. 13 jan.13 jul. 12 jan.12 jul. 11 jan.11 jul. 10 jan.10 jul.0 09 jan.0 09 jul.0 08 jan.0 08 jul.0 07 jan.0 07 jul.0 06 jan.0 06 jul.0 05 8 000 jan.0 05 Costs perr m² C 24 000 Source: Akershus Eiendom The Central Bank of Norway’s lending survey B k ' lending Banks l di practices ti (t (total) t l) Banks' lending to commercial real estate 30,0 20,0 10,0 0,0 -10,0 -20,0 -30,0 -40 0 -40,0 -50,0 -60,0 -70,0 20,0 0,0 -20,0 -40,0 60 0 -60,0 Actual 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 2013:1 2012:4 2012:3 2012:2 2012:1 2011:4 2011:3 2011:2 2011:1 2010:4 2010:3 2010:2 2010:1 2009:4 2009:3 2009:2 2009:1 2008:4 2008:3 2008:2 2008:1 2007:4 -80,0 -100,0 Expected Actual Lending margins Actual Expected Equity requirements Commisions/ Fees 80,0 60,0 80,0 60,0 50,0 60,0 40,0 40,0 40,0 20,0 30,0 20,0 0,0 20,0 -20,0 10,0 -10,0 Q3 11 update: Actual 00 0,0 -20,0 -40,0 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 0,0 -60,0 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 -40,0 Expected Expected Actual 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 60,0 40,0 20,0 0,0 -20,0 -40,0 , -60,0 -80,0 -100,0 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1 2013:2 Non-financial corporate demand for lending Actual Expected Expected ◦ Demand for credit is still increasing among corporations ◦ Banks’ credit standards are more tightened ◦ Lending to the commercial property sector is more tightened • increasing margins • Increasing commissions/fee’s • shorter maximum loan maturities Explanation of the survey: Banks participating in the survey answer using a scale from 1 to 5, Large changes get twice the weight as small changes Answers are weighted with respect to the participant participant’ss share of the household and business lending market Net numbers appear on a scale from -100 % and 100 % Source: Norges Bank’s lending survey jan. 05 apr. 05 jul. 05 okt. 05 jan. 06 apr. 06 jul. 06 okt. 06 jan. 07 apr. 07 jul. 07 okt. 07 jan. 08 apr. 08 jul. 08 okt. 08 jan. 09 apr. 09 jul. 09 okt. 09 jan. 10 apr. 10 jul. 10 okt. 10 jan. 11 apr. 11 jul.11 okt.11 jan.12 apr.12 jul.12 okt.12 jan.13 apr.13 jul.13 Consumpttion volume e index 127 12% 121 10% 8% 115 6% 109 4% 103 2% 97 0% -2% 91 -4% 85 -6% Consumption year-on-year growth Con nsumption yyear-on-yea ar growth Consumption growth has slowed down Index of household consumption of goods, 2005-2013 season adjusted volume index, 2005=100 Total commodity consumption Source: Statistics Norway, Retail spending has levelled out Norwegian retail volume index, 2005-2012 135 14% 130 12% 125 10% 120 8% 115 6% 110 4% 105 2% 100 95 jan. 05 Kilde: SSB 0% Retail year-on--year gro owth Retail vo olume ind dex season adjusted volume index, 2005=100 -2% jan. 06 jan. 07 jan. 08 jan. 09 Retail year-on-year growth jan. 10 jan.11 jan.12 Retail volume index Source: Statistics Norway, 18 Agenda Introduction to Akershus Eiendom The Norwegian economy Oslo leasing market The investment market Oslo: main types of property Ullevål Ull ål Oslo outer west SinsenNydalenStoroKjelsås KjelsåsGrefsen Oslo outer east Office Økern Majorstuen Skøyen Inner city west Inner city north y y Helsfyr-Bryn CBD Inner city east Lysaker Ryen Oslo outer south Fornebu 20 Office and retail Logistics Combination Mostly residential Oslo office areas and volumes, 2013 Oslo outer west Ullevål Ull ål SinsenNydalenStoroKjelsås KjelsåsGrefsen Oslo outer east Alna-Ulven Økern Majorstuen Skøyen Inner city west Inner city north 50.000 m2 y y Helsfyr-Bryn CBD Inner city east m2 250.000 5 Lysaker Ryen Oslo outer south 500.000 m2 Fornebu 21 Oslo office rents, various segments 4 500 Oslo office rents,1986-2013 (Nominal NOK) 4 000 Prime High std CBD NOK K/m²/year 3 500 3 000 Newer space CBD 2 500 Good std CBD 2 000 High i h std d Skøyen k 1 500 1 000 High std west fringe 500 1 1985 H2 1986 H2 1 1987 H2 1 1988 H2 1 1989 H2 1 1990 H2 1 1991 H2 1 1992 H2 1 1993 H2 1 1994 H2 1 1995 H2 1 1996 H2 1 1997 H2 1 1998 H2 1 1999 H2 1 2000 H2 2 2001 H2 2 2002 H2 2 2003 H2 2 2004 H2 2 2005 H2 2 2006 H2 2 2007 H2 2 2008 H2 2 2009 H2 2 2010 H2 2 2011 H2 2 2012 H2 2 - Kilde: Dagens Næringsliv/Akershus Eiendom Siste tall tilgjengelig: November 12 High std east fringe Older, p ineffective space 22 Rent levels, real NOK 1986-2012 OFFICE RENTS1986-2013 (Real 2013 NOK) 5 000 Prime 4 500 High std CBD 4 000 NO OK/m²/year 3 500 Newer space CBD 3 000 2 500 Good std CBD 2 000 1 500 High std west fringe 1 000 500 1985 H2 1986 H2 1987 H2 1988 H2 1989 H2 1990 H2 1991 H2 1992 H2 1993 H2 1994 H2 1995 H2 1996 H2 1997 H2 1998 H2 1999 H2 2000 H2 2 2001 H2 2 2002 H2 2 2003 H2 2 2004 H2 2 2005 H2 2 2006 H2 2 2007 H2 2 2008 H2 2 2009 H2 2 2010 H2 2 2011 H2 2 2012 H2 2 - 23 Source: Dagens Næringsliv/Akershus Eiendom High Hi h std td eastt fringe Older, ineffective p space European Office Property Clock Q3 2013 Source: Jones Lang LaSalle IP/Akershus Eiendom 24 Office rents, October 2013 Ullevål Oslo outer west Majorstuen Rent in NOK/m2: SinsenStoroNydalen Kjelsåsj Grefsen Inner city north Oslo outer east Alna-Ulven Økern Normal high standard / Top standard / new space 3 500 / 4 000 2 800 / 3 300 2 300 / 2 800 Skøyen Helsfyr-Bryn Inner city west 1 800 / 2 300 CBD Inner city east 1 550 / 2 000 Lysaker Ryen 1 300 / 1 900 Fornebu Oslo outer south 1 000 / 1 650 Top 10 new lease contracts De 10 største i hele 2012 De 10 største så langt i 2013 Government, Kongens gate 8/18 18.000 m2 Aker Solutions, Fornebuporten 26.000 m2 Kværner, Drammensveien 264 16.000 m2 Orkla (sublease), Nedre Skøyen vei 26 18.600 m2 KLIF G KLIF, Grensesvingen i 7 12.000 m2 G Government, t Akersgata Ak t 64-68 6 68 18.000 8 m2 Statoil F&R, Schweigaards gate 16 10.500 m2 Lundin, Strandveien 4-8 13.500 m2 Aller Media, Hasle Linje 9.400 m2 Technip, Lysaker Polaris 13.200 m2 Statens Pensjonskasse, Drammensv. 134 9.200 m2 Wiersholm, Stranden 1 11.000 m2 Oslo Kommune, Storgata 51 8.500 m2 Sweco, Drammensveien 260 10.200 m2 Opera Software, Gjerdrums vei 19 7.000 m2 NAV, Økernveien 94 10.000 m2 NAV, Waldemar Thranes gate 84-98 7.000 m2 Bymiljøetaten, Hasle Linje 9.500 m2 Lindorff, Hoffsveien 70B 6.000 m2 Kværner, Fornebuporten 8.000 m2 New Oslo office projects, confirmed, 2013-2016 Siemens New for 2013 Bymiljøetaten Aller Media USA’s embassy OCCI SSB Silurveien 2 Drammensveien 134 Lysaker Polaris PGS BT 1 Fornebuporten Bygg B Bygg A Accenture Yara Storgata 14-18 R.S. Platou YS/ Tine Fredrik Selmers vei 4 New for 2014 SFR NSB Deloitte DNB Del 3 Østensjøvn 27 Gjensidige Ryensvingen 5-7 y g 5 7 Confirmed for 2015-16 Schneider Electric 2013: 147.000 m² 2014: 61.000 m² 2015: 133.000 m² Light colours indicate vacant space p Oslo office development, 2002-2013 Office development, greater Oslo, 2002 2002-2012 2012 including known projects 2013-2015 Asker/Bærum Other Oslo west CBD 300 000 250 000 Oslo East Fornebu 200 000 150 000 100 000 50 000 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 0 2005 New con struction of officce space, m2 350 000 Oslo office vacancy: 7,0 % as of October 2013 Ullevål SinsenNydalen StoroKjelsås KjelsåsGrefsen Oslo outer east <20% Alna-Ulven Økern Oslo outer west <17,5% <15% Majorstuen Skøyen >20% Inner city west Inner city north <12,5% Helsfyr-Bryn Helsfyr Bryn Sentrum <10% <7,5% Inner city east <5% Lysaker Fornebu Ryen Oslo outer south <2,5% Oslo office vacancy, 2002-2017E 1 000 000 Office Vacancy in Oslo measured in m² and % 13 % 900 000 13 % 800 000 11 % M2 offfice 700 000 9 % 600 000 500 000 7 % 400 000 300 000 200 000 88 % % 4,5 ,5 % 4 % 8 % 7 % 6,5 % 7 % 6 % 5 5 % % 6,5 % 6,5 % 100 000 02 03 04 05 06 07 08 09 2010 11 12 actual 13 14E 15E 16E 17E Forecast Vacancy level by the start of the year Net new office space added Change in demand (absorbed space) Kilde: Akershus Eiendom Oslo office vacancy 2002-2017E 1 000 000 Office Vacancy in Oslo measured in m² and % 13 % 900 000 13 % 800 000 11 % M2 offfice 700 000 9 % 600 000 500 000 200 000 88 % % 7 % 400 000 300 000 Forecast as of October 2012 4,5 ,5 % 4 % 8 % 7 % 7 % 6,5 6 % % 5 5 % % 5 % 100 000 02 03 04 05 06 07 08 09 2010 11 12 13E actual 14E 15E 16E 17E Forecast Vacancy level by the start of the year Net new office space added Change in demand (absorbed space) Kilde: Akershus Eiendom Oslo office vacancy, 2002-2017E 1 000 000 Office Vacancy in Oslo measured in m² and % 13 % 900 000 13 % 800 000 11 % M2 offfice 700 000 9 % 600 000 500 000 7 % 400 000 300 000 200 000 88 % % 4,5 ,5 % 4 % 8 % 7 % 6,5 % 7 % 6 % 5 5 % % 6,5 % 6,5 % 100 000 02 03 04 05 06 07 08 09 2010 11 12 actual 13 14E 15E 16E 17E Forecast Vacancy level by the start of the year Net new office space added Change in demand (absorbed space) Kilde: Akershus Eiendom Oslo: historic growth and forecast 2011-2014E 2011 2012 Annual nominal rental growth +10-20% +5-10% +0-5% Forecast 2013 33 Forecast 2014 33 Agenda Introduction to Akershus Eiendom The Norwegian economy Oslo leasing market The investment market Transactions 2002-2013 Transaction volume of commercial properties (deals larger than NOK 50 million) 60 000 40 000 30 000 20 000 10 000 2012 2011 2010 Commercial land plots Hotels Of f ice buildings 20 013YTD Residential projects Logistics / industrial properties Retail properties 2009 2008 2007 2006 2005 0 2004 Mill NO OK 50 000 Kilde: Akershus Eiendom 35 Buyers and sellers in 2012 O Owner occupier 4% Closed-end funds 16 % g Remaining 13 % Private P i t investors 18 % Property companies 35 % Property companies 37 % Remaining 19 % Buyers Sellers Foreign investors 4% Insurance / P Pension i funds 14 % Private investors 8% Insurance / P Pension i funds 13 % Foreign F i investors 19 % Prime yield transactions (office properties on long l leases) ) Interest rates and prime transaction yields 2002-2012 8,00 % 7 50 % 7,50 7,00 % 6,50 % 6 00 % 6,00 5,50 % 5,00 % 4,50 , % 4,00 % 3,50 % 10Y Pr ime yield curve 3,00 % 10 SWAP 10y 2,50 % 10y Gov.B ond 2,00 % Transactio n yield jan. 13 3 jul. 12 2 jan. 12 2 jul. 11 jan. 11 1 jul. 10 0 jan. 10 0 jul. 09 9 jan. 09 9 jul. 08 8 jan. 08 8 jul. 07 7 jan. 07 7 jul. 06 6 jan. 06 6 jul. 05 5 jan. 05 5 jul. 04 4 jan. 04 4 jul. 03 3 jan. 03 3 jul. 02 2 jan. 02 2 1,50 % Property value has moved sideways since 2009 Value, all Norwegian commercial property, 2005-2012 125 Index 2005=100. Real values, average of all segments nationwide -11% 11% 120 Index 1999= =100 23% -1% 4% 115 110 105 100 2005 2006 2007 2008 2009 2010 2011 2012 Our own indexes show flat value development Akershus Eiendom’s value indexes for commercial property IIndex: Shar re of value m measured b by end of 20 007 100 95 90 85 Rising rents 80 75 70 65 Higher refurb costs Tight i h financing fi i Oslo office, 10-year lease Oslo office, 2-4-year lease Larger shopping centres, Norwegian cities Greater Oslo logistics, logistics 10-15-year 10 15 ear lease 60 2006 2007 2008 2009 2010 2011 2012 2013 Takk for oppmerksomheten www.akershuseiendom.no research@akershuseiendom.no