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REAL ESTATE MARKET OVERVIEW THE FIVE YEAR FORECAST June 2012.

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Presentation on theme: "REAL ESTATE MARKET OVERVIEW THE FIVE YEAR FORECAST June 2012."— Presentation transcript:

1 REAL ESTATE MARKET OVERVIEW THE FIVE YEAR FORECAST June 2012

2 THE BALTIC ECONOMIES ARE GAINING PACE SOUND GDP GROWTH RECOVERING SOCIAL FACTORS STRICT CONTROL OF PUBLIC FINANCES THE FULL SERVICE PROPERTY HOUSE 2

3 THE BALTIC ECONOMIES CONTINUING PROGRESS UP THE ECONOMIC LADDER 3 The Baltic countries have shown a strong recovery from the deep recession of recent years. These problems have gradually been solved through internal devaluation and increased competitiveness Exports have been the single most important engine but domestic demand is now starting to increase in importance Estonia is showing the fastest recovery due to improving competitiveness, its ability to reform and good government finances. Confidence in the countrys economic recovery was also strengthened by the adoption of the euro in 2011 Latvia and Lithuania have experienced export-led recoveries partially driven by entries to new foreign markets and are expected to keep on growing in 2012-2014 RESULTS Competitiveness is improving in the Baltic region (but the recovery will be weakened by the global downturn and the regions weak demographic development) As the internal imbalances are solved, the region is expected to continue its progress up the economic ladder.

4 WAREHOUSE AND LOGISTICS MARKET THE FULL SERVICE PROPERTY HOUSE 4 BUILT-TO-SUIT DEVELOPMENT NO MAJOR LEASE TRANSACTIONS

5 WAREHOUSE AND LOGISTICS MARKET 5 Rental growth slowing Rents falling Rental growth accelerating Rents bottoming out Vilnius Riga Tallinn Kaunas Amsterdam Frankfurt London Warsaw Paris, Madrid Lisbon Barcelona Dublin St. Petersburg Oslo Prague Moscow Stockholm Source: NEWSEC, JLL

6 Nearly 810,000 sqm of modern warehouse and logistics space is calculated in Lithuania. Overall vacancy level dropped down in 2011. Average vacancy level in Vilnius region for modern properties is 5%, in Kaunas and Klaipeda – 10%. Rental rates increased in 2011 and in Q1 2012 remained similar to ones recorded in the end of the last year. 4 projects total area 35,400 sqm were completed in 2011. 3 projects were completed in Vilnius region and 1 project – in Klaipeda region. 2 projects total area ~17,900 sqm are planned to be completed in 2012. Both of the planned projects are in Vilnius region. WLM MARKET - LITHUANIA 6

7 Nearly 470,000 sqm of modern warehouse and logistics space is in Vilnius region (~60% of total space in Lithuania). 3 projects total area 29,000 sqm (6.6% growth) completed in 2011: o Entafarma – 8,000 sqm o Transimeksa – 12,500 sqm o Ektornet Management Lithuania – 8,500 sqm 2 projects total area ~17,900 sqm (are planned to be completed in 2012: Transekspedicija – 7,000 sqm Airport Business Park stage III – total area 10,900 sqm SUPPLY GROWTH DYNAMICS IN VILNIUS 7

8 FIGURES: VILNIUS Overall vacancy level dropped down in 2011. Rental rates increased in 2011 and in 2012 Q1 remain similar to ones recorded in the end of the last year. No major lease transactions were made in the first quarter of 2012. RENT RATES, EUR/sqm/month 2011 H12011 H22012 Q1 ~ Vilnius region A Class3.4-3.93.8-4.1 ~ B-Class2.0-2.72.3-2.9 ~ VACANCY, % Vilnius region~10% ~5% ~ 8

9 WAREHOUSE AND LOGISTICS OUTLOOK TRENDS FOR 2012-2014 A class premises rent rates have increased by 5-10% during 2011. Further growth of rent rates is not expected and should stabilize for the period of 2012-2013. The demand for logistics and warehouse facilities will remain limited to built-to-suit or early pre-lease projects. Tenant migration should be seen due to expiring agreements, especially in the small scale tenants group. The demand in warehousing market follows the improvement in consumption and increased export. Logistics companies, 3PL tend to expand. There are a few large properties on sale. 9

10 THE BALTIC LOGISTICS MARKET SUFFICIENT SUPPLY AND STEADY GROWTH THROUGHOUT THE REGION 10 The demand for logistics and warehouse facilities will remain limited to built-to-suit or early pre- lease projects. Tenant migration should be seen due to expiring agreements, especially in the small scale tenants group. Landlords are expected to take their opportunity in changing risky tenants. – Similar to office and retail markets, the rentals for warehouses and logistic centres in Baltics are expected to be gradually shifting up and the are expected to be slowly shifting down and reach an average of 8% in 2016-2017

11 INVESTMENT MARKET THE FULL SERVICE PROPERTY HOUSE 11

12 12 TRANSACTION MARKET IS SWIFTLY SHIFTING UP FROM THE SILENCE IN 2009/10… Volume of investment transactions reached ~260 mEUR in 2011. Over 300 mEUR is forecasted for 2012. Transaction market is dominated by investors already present in the region. Due to desirable risk and quality balance, Baltics is an attractive destination. In 2011, yields fell due to clear signs of an economic recovery and significantly lower interest rates. Credit availability is positive for good products Private Norvegian capital is very active in doing homeworks. Source: NEWSEC Prime yield development in the Baltics Transaction volume in the Baltics

13 13 WHAT'S ON SALE IN INVESTMENT MARKET? Baltic Property Trust is exiting from one of the funds (BPT Secura) comprising of diversified portfolio with prime properties and development upside. One of the leading retail chains is planning to enter into S&L transaction concerning its discounter portfolio. Ogmios group sells Airport Business Park in Vilnius (3 stages) comprising 24,000 sqm. Good supply of B+ grade office buildings with reputable tenants and leases concluded in the very bottom. Svyturys sells warehouse in Klaipeda (9,650 sqm). Bank companies have started disposing assets taken over from distressed owners.

14 In between huge markets Transportation hub Member of international organizations REASONS WHY LITHUANIA IS AN INVESTMENT DESTINATION (1) Lithuania is located on the very crossroads of huge markets: EU markets (Western Europe and Scandinavian countries) Eastern markets (Russia and the Commonwealth of Independent States (CIS)) Lithuania is a hub and interconnection of international transport corridors (air, rail, sea and highway): 4 international airports (in Vilnius, Kaunas, Palanga and Siauliai) Northernmost ice-free seaport on the eastern shore of the Baltic Sea Transcontinental railway network linking Lithuania with markets in the Middle and Far East A good network of roads and highways Lithuania is a member of the United Nations (since 1991), European Union ( since 2004), NATO (since 2004), Schengen Zone (since 2007) and other international organizations 14

15 Qualified workforce Business incentives Ice free Port REASONS WHY LITHUANIA IS AN INVESTMENT DESTINATION (2) Qualified workforce can be found in Lithuania: 50% of the population speaks two foreign languages In 2011, the share of the population aged 25–64 having completed at least upper secondary education in Lithuania made up 92% Labor costs in Lithuania are more than twice lower than those in other EU countries and the US Lithuania welcomes foreign investors and businesses to take advantage of the special ready-for-business locations: 2 free economic zones (FEZ) 21 industrial park (IP) 5 integrated science, studies and business centers (valleys) Klaipeda State Seaport is the northernmost ice–free port on the Eastern coast of the Baltic Sea. It is very important transport hub, connecting sea, land and railway routes from East to West. 15

16 NEWSEC GROUP IN BRIEF Newsec Advice –A leading property advisor in Northern Europe with 70 professionals and access to more information than any player –Valuation value over 50 MEUR last 12 months Newsec Asset Management –The leading asset manager in Northern Europe with about 400 professionals and offices throughout the region –Manage over 1 000 properties representing over 7 million sq m Newsec Transactions –Transaction team of 30 professionals specializing in investment and corporate finance –Offering tailor-made property-related financial and strategic advisory services –A leading advisor within wind power Lease volume of over 350 000 sq m last 12 months 16

17 CONTACTS NEWSEC SWEDEN Stureplan str. 3 P.O Box 7795 SE-103 96 Sockholm Tel. +46 8 454 40 00 Lilla Bommen str. 5 P.O Box 11405 SE-404 29 Göteborg Tel. +46 31 721 30 00 Dockplatsen str. 12 SE-211 19 Malmö Tel. +46 40 631 13 00 NEWSEC ASSET MANAGEMENT Humlegårdsgatan str. 14 P.O Box 5365 SE-102 42 Stockholm Tel. +46 8 55 80 50 00 www.newsec.se NEWSEC BALTICS LITHUANIA Tel +370 5 252 6444 Saltoniskiu str. 2, LT-08126 Vilnius E-mail info@newsecbaltics.com www.newsecbaltics.com LATVIA Tel +371 6750 8400 Zala street 1, Riga, LV – 1010 E-mail info@newsecbaltics.com www.newsecbaltics.com ESTONIA Tel +372 6640 540 Roseni av. 7, Tallinn, 10111 E-mail info@rnewsecbalics.com www.newsecbaltics.com NEWSEC FINLAND Mannerheimsplatsen str. 1 A PB 52 FI-00101 Helsingfors Tel. +358 207 420 400 www.newsec.fi NEWSEC NORWAY Kronprinsens gate 3, 5. etasje Postboks 1800 Vika, NO-0123 Oslo Tel. +47 23 00 31 00 www.newsec.no 17


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