The Norwegian Commercial Property Market

Transcription

1 The Norwegian Commercial Property Market Spring 2015

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5 The Norwegian Commercial Property Market This market report is intended to provide an overview of the Norwegian property market. The report highlights important trends and gives specific examples of transactions in the leasing and investment markets, important new property developments, etc. This report is intended for general information and is based upon our own material which we believe to be reliable or material supplied to us. Whilst every effort has been made to ensure its accuracy and completeness, we cannot offer any guarantee that factual errors may not have occurred. Akershus Eiendom takes no responsibility for any damages or loss incurred owing to the inaccuracy or incorrectness of this report. This report was last edited on March 3rd For further information please contact Akershus Eiendom AS. Comments, suggestions or questions regarding the contents and presentation of this report are welcome at

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7 Table of Contents Main Points Macro Economics The Norwegian Economy The Oslo Office Market Overview of the Market Rent Levels Survey of Relocation Patterns Vacancy Development The Investment Market Regional Property Markets International Office Markets The Retail Market The Hotel Market The Logistic Market The Residential Market Definitions Akershus Eiendom

8 Main Points 8 Main Points After a modest 2014 GDP growth at 2.1 %, expectations for 2015 have taken a toll from the oil marked decline and now stands at 1.6 % as a consensus estimate. Employment growth has been revised down and is now expected to be close to zero for the coming two years. Office rents in Oslo have been stable or rising in 2014, but the outlook for 2015 is stable in the prime and CBD segments and somewhat declining in the fringe areas. The major trend has been a low volume of new contracts, although at solid rent levels. The results from our annual survey of moving patterns across Oslo show similar trends as the average of earlier years: the West side retains almost all its tenants when they physically relocate, whilst the East side loses a significant share to the CBD. However, almost 40 % of moving CBD tenants moved to fringe areas during 2014, the second-largest share registered in our 10-year study. New office development in Oslo is at above-average volume for 2015, while the next couple of years have smaller confirmed volumes of new projects. Construction costs are expected to edge slightly down due to lower overall construction. Oslo office vacancy is at 8 %, versus 7 % one year ago, due to the slowdown in new leases. As the employment outlook is stable, and the volume of conversion and demolition is still high, we do not expect vacancy to go any higher for the next two years. There has been a record year in the property investment market, with close to NOK 59 billion in volume, plus the IPO of Entra at an additional NOK 28 billion. This has exceeded expectations, as has the share of international investors, at more than one-quarter of investments. Our prime yield estimate is now at 4.5 %. It is obvious that fringe office buildings also have experienced reduction in sales yields, in some instances even more than the CBD area. Thus, the difference between CBD and fringe yields is stable or decreasing. Stavanger, Bergen and Trondheim all now see a weaker leasing market compared to early For Stavanger especially, this is due to the reduced activity in the oil and gas sector; for Bergen and Trondheim. However, the market has a large volume of new office buildings for The transaction volumes have exceeded expectations for all cities. The 2014 retail growth in Norway was close to 2.7 %, and expectations for future consumption growth have been reduced

9 along with the expected GDP growth. Retail properties was a small share of the transaction market, at lower volumes than , and there were no real portfolio deals such as seen in previous years. Norwegian hotel guest night volume was 3.4 % higher in 2014 compared to 2013, while RevPAR increased by 1.1 %. The outlook is more uncertain due to an expected slowdown in business travel growth, but the volume of new hotels under construction is not high. where new construction is falling, but most buyers see lower lending rates and thus are tempted to pay more. Overall sales are up after the temporary decline in late 2013 and early 2014, so construction is expected to rise somewhat in the short term. The logistics leasing market is still very stable with low vacancy and good demand. The logistics transaction market was the second best seen ever, with close to NOK 10 billion in property value, mostly bought by domestic investors; most were large units with long leases. After several years of solid growth, residential prices are now uncertain; most expect 2-5 % price growth in a market

10 Macro Economics 10 The Norwegian Economy According to Statistics Norway, the Norwegian economy expanded by 2.2 % in 2014 with a growth in 4Q with 0.9 % up from 0.5 % in 3Q. Estimates for 2015 are 1.6 % growth of GDP, according to DNB and Statistics Norway. In the fall of 2014, the consensus forecast was for a 2015 growth of 2.1 %. Thus the expectations for growth are significantly reduced. Most economists now expect a slowdown lasting for two years, but it is very likely that the general growth in other industrialized countries is the main driver for future growth. Traditional export increased with 2.9 % in Expected traditional export growth for 2015 and 2016 is 3.2 %, with an increase to 3.4 % expected in The lower NOK exchange rate has contributed to competiveness and profitability for companies in all non-oil/gas export sectors. The 2014 household savings rate was 9.1 %, slightly up from The growth in debt was 6.5 % year over year in October 2014, 0.7 % lower than a year ago. The growth in debt is still higher than the growth in disposable income, but the growth slowed during the past year. In the second quarter of 2014 the ratio was 210 % at records high. Residential prices are expected to rise 2.1 % in The investments in the petroleum sector were even before the sharp fall in oil price in late 2014 expected to decline in The decline in oil investments over the coming three years is now estimated to a drop of 30 %, with half of the decline occurring during The oil investments will be 6 % of GDP, a 3 %-point drop from After the major decline in oil prices, the estimates have been revised the most. Norwegian unemployment has been mostly unchanged during The level of unemployed (AKU) in 2015 and 2016 are estimated by Statistics Norway to be 3.9 % and 4.3 %, respectively. Last year it was estimated that 2015 and 2016 would be 3.7 % and 3.6 %. The total employment is expected to stay flat for the coming two years. Nominal wages are expected to increase by 3.1 % in 2015, last year s increase was about 3.5 % with a price rise of 2 % the real wage growth was 1.5 %. The utilization of the capacity in the mainland economy has been slightly lower the past year and it has become easier to find qualified workers, according to Norges Bank. CPI adjusted for tax changes and excluding energy products (CPI-ATE) were in January 2.4 % and CPI before adjustments 2.0 %. Oslo Stock Exchange (OSEBX) has so far in 2015 (mid-february) increased by 6.4 %.

11 Macro Economics Key Economic Indicators Level NOKm Annual Change(%) 2014* * 2013* 2014F 2015F 2016F 2017F Gross domestic product 3,151,483-1,6 0,6 1,0 2,7 0,7 2,2 0,5 1,6 2,1 GDP mainland Norway 2,529,694-1,6 1,8 1,9 3,8 2,3 2,6 1,0 2,2 2,7 Consumption in households etc. 1,229,688 0,0 3,8 2,3 3,5 2,1 2,1 1,4 2,4 2,6 General government consumption 688,455 4,1 2,2 1,0 1,6 1,7 3,1 2,5 2,3 2,0 Gross fixed investment 753,066-6,8-6,6 7,4 7,6 6,8 1,3-2,8 1,1 3,5 Exports 1,197,587-4,1 0,7-0,8 1,4-3,0 1,0 0,8 1,4 1,9 Crude oil and natural gas 539,731-1,6-6,9-5,6 0,5-7,6-0,8-0,8-0,5-0,4 Traditional goods 344,041-8,0 3,3-0,1-0,2 1,0 2,9 3,1 3,9 4,5 Imports 932,063-10,0 8,3 4,0 3,1 4,3 2,8 1,8 2,0 1,5 Traditional goods 547,467-12,1 9,2 4,6 2,6 3,2 0,8-0,5 3,3 4,2 Prices CPI 2,1 2,5 1,2 0,8 2,1 2,1 2,6 2,0 1,7 CPI-ATE 2,6 1,4 0,9 1,2 1,6 2,5 2,8 2,0 1,7 Housing Prices 1,9 8,3 8,0 6,7 4,1 2,3 0,2 2,5 1,3 Employment Unemployment rate (% of work force) 3.5 3,2 3,6 3,3 3,2 3,5 3,5 3,9 4,0 3,7 Employed persons (percentage change) 2,619-0,5-0,5 1,5 2,1 1,2 1,1 0,2 0,2 1,1 Participation rate (level) 72,8 71,9 71,4 71,5 71,2 70,6 70,3 69,9 69,8 Interest rates 6.feb year Government Bond rate (%) (Feb. 6) 1,28 3,95 3,73 2,51 2,13 3,00 1,28 Money market rate (level) (3M NIBOR) 1,66 2,5 2,5 2,9 2,2 1,8 1,7 1,3 1,2 1,4 Statistics Norway As of December 2014

12 Macro Economics Key Interest Rates % 7% 6% 5% 4% 3% 2% 1% 0% E 2015E 2016E 2017E Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 NIBOR 3 months SWAP 10 years 10 year Gov. Bond Norges Bank, Sight deposit rate DNB Markets 03 Change in Total Employment Employees, thousands Change, % 3.5% 4.1% 3.3% 4% Norway E % 0.7% 1.9% 2.0% 1.7% 2.9% 2.7% 0.9% 0.6% 0.3% 0.4% -1.2% 0.5% 1.3% -0.4% -0.5% 1.6% 2.2% 1.2% 1.1% 0.2% 0.2% 1.1% 3% 2% 1% 0% % 800-2% National employment change %, right axis Employment change %, SSB forecast 10 year Total employed Norway, thousands, left axis Total employed, SSB forecast Statistics Norway

13 Macro Economics Main Indices Oslo and London Index, 2004 = Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Oslo Stock Exchange (OSEBX) London Stock Exchange (FTSE 100) Yahoo Finance/Oslo Børs 05 Exchange Rates Index, 2005 = Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 14 USD/NOK EUR/NOK Norges Bank

14 The Oslo Office Market 14 Overview of the Market The Oslo office building stock, including Lysaker/Fornebu, today stands at around 8.4 million m². Of the total volume, roughly 3.3 million m² are situated within the city centre, from Solli Plass in the west to Bjørvika in the east, marked in the map as seven areas/circles. Since 2007, the city centre has seen major urban redevelopment. Two new neighbourhoods at the waterfront, Tjuvholmen and Bjørvika, have been developed to become mixed residential and commercial areas. Bjørvika still has potential for further large development projects, and in the longer term, Filipstad just west of Tjuvholmen will be available for redevelopment. Generally, Oslo has a great deal of urban sprawl, and the built-up area covers a lot of land compared to its population size. Most of the office building stock is concentrated in densely built areas, and this is visible in the map. Office zones outside the Central Business District are generally found along the outer ring road from Lysaker through Nydalen, Økern and Helsfyr-Bryn to Ryen. All areas have seen new development over the last 10 years, and Fornebu and Nydalen have seen the highest activity. The area between the CBD and the outer ring road (in the map, seen as the Inner City West, North and East) is mostly in use for residential, education and retail purposes. The west of Oslo contains highend residential areas with low density. The north-eastern corner of Oslo is the core area in all of Norway for logistical purposes, with many distribution centres for retail, wholesale and third-party logistics companies. Eastern and southern areas mainly consist of residential areas with varying degrees of density.

15 The Oslo Office Market The Oslo Office Area Oslo Outer West Majorstuen Ullevål Sinsen Storo Kjelsås Grefsen Nydalen Inner City North Økern Oslo Outer East Alna-Ulven Skøyen Inner City West CBD Inner City East Helsfyr-Bryn Lysaker Ryen Oslo Outer South Fornebu m² m² m² Akershus Eiendom

16 The Oslo Office Market 16 Rent Levels status The Oslo rental market has experienced an uneventful 2014 measured by volume, with fewer lease contracts and smaller tenants compared to previous years. The rents, however, have either stayed put or grown somewhat during The slowdown in new leases seems to be disconnected from most tenants current need for space. In short, many of the tenants in the pipeline seem to have extended their current contract for shorter periods in lieu of signing new space until the economic outlook becomes more stable. In December, the consensus rent estimates from Dagens Næringsliv for the second half of 2014 were released (see figure 09 and 10). This shows a relatively limited to flat annual development in rents in all segments. Prime, CBD and Skøyen has seen a growth between 1-2 %, whereas the remaining areas have seen limited to no growth over the past year. Despite the decrease in signed contracts, rent levels have not been significantly affected. Since our last report, Skanska has signed a contract to move into 7,500 m² brand new offices in Lakkegata 55 in Oslo CBD, a development project it also owns 50 % of along with Entra. Bouvet is taking up 4,500 m² at Sørkedalsveien 8 located at Majorstuen (inner west fringe), and Google is moving into newly renovated premises owned by NPRO at Bryggegata 8, Prime CBD. TRENDS As of February, around 325 companies are actively seeking just over 650,000 m² of office space in Oslo. The ten largest of these companies are seeking almost 150,000 m² of office space, equivalent to almost 25 % of the total active search. Of the top ten, 65 % are government or municipal agencies with contracts expiring within the next three years. The forecast for the rest of 2015 is that rent levels in the fringe areas will experience a drop of between 2 % and 10 % from today s levels, while the CBD rents will remain at their current levels. The continuing oil price uncertainty has resulted in a slowdown in the oil and offshore industry, and employee cutbacks have already started happening. Thus, we believe we will see an increase in subletting in the west fringe areas where the oil & offshore clusters are located. Several large tenants have become more careful with regards to future need for space and when to move. Also, a surplus of available sites and properties in the fringe areas in combination with falling yields has created some downward pressure, as lower yields are incentivising landlords to lower rents in order to fill their properties or new projects. As a result, we believe the rental market will reflect the business sector s somewhat sober outlook for 2015.

17 The Oslo Office Market Oslo Office Rents March 2015 Nydalen Sinsen Storo Kjelsås Grefsen Oslo Outer East The map shows office rent levels for high-standard units larger than 500 m² in different parts of Oslo, as of February Oslo Outer West Majorstuen Ullevål Inner City North Økern Alna-Ulven Skøyen Inner City West CBD Inner City East Helsfyr-Bryn Lysaker Ryen Fornebu Oslo Outer South Rent, NOK/m²: General high standard / Top standard and new space Akershus Eiendom 3,600 / 4,200 2,800 / 3,350 2,350 / 2,800 1,800 / 2,400 1,600 / 2,150 1,400 / 1,950 1,000 / 1, Oslo Office Leasing Examples Property/location Owner Tenants Floor space m² Area Haakon VII's gate 1 Blystad HitecVision 600 Prime Bryggegata 8 NPRO Google 2,500 Prime Munkedamsveien 53 Aberdeen Asset Management NæringsEiendom 600 Prime Torggata 5 Olav Thon Økonor 1,200 CBD Brugata 19 DNB Livsforsikring ASA Viken Fiber 800 CBD Fridtjof Nansens plass 4 Eiendomsspar Golar LNG 1,200 CBD Rosenkrantz gate 22 Lene AS AIG 1,000 CBD Schweigaards gate 16 Entra Eiendom Dinamo 1,500 CBD Lakkegata 55 Entra/Skanska Skanska 7,500 CBD Verkstedveien 1 NPRO Sektor Gruppen 1,800 Skøyen Verkstedveien 1 NPRO PA Consulting Group 1,300 Skøyen Karenslyst Allé 20 Sparebank 1 Livsforsikring Capgemini 3,500 Skøyen Sørkedalsveien 8 Blystad Bouvet ASA 4,500 Majorstua Essendrops gate 3 NRP Finans Help Forsikring 3,800 Majorstua Fridtjof Nansens vei 17 Furuholmen Eiendom AS Samordna Opptak 2,400 Majorstua Gullhaugveien 12 NPRO Oslo University Hospital 3,200 Nydalen Lysaker torg 15 Storebrand Norwegian Broker 2,000 Lysaker Smeltedigelen 1 OBOS Berendzen 1,000 Inner City East Sandvika Business Center Attivo Eiendomsutvikling AS Regional Tax office, Sandvika 3,000 Sandvika Grenseveien 92 Entra Eiendom Skala 1,500 Helsfyr

18 The Oslo Office Market Year-End Rent Levels The figure shows rent levels based on signed contracts; both new signings and renegotiations Prime 1,950 2,100 2,700 3,900 3,750 2,700 2,850 3,100 3,400 3,750 3,800 High std CBD 1,550 1,700 1,900 2,300 2,300 2,200 2,350 2,550 2,850 2,900 2,900 Newer space CBD 1,700 1,900 2,000 2,600 2,600 2,500 2,550 2,650 2,850 2,900 2,900 Good std CBD 1,250 1,300 1,400 1,900 1,900 1,850 1,900 2,250 2,250 2,400 2,450 High std Skøyen 2,450 2,650 2,700 High std west fringe 1,300 1,400 1,750 2,200 2,200 1,900 1,900 1,900 1,900 2,100 2,100 High std east fringe 1,100 1,150 1,300 1,550 1,650 1,550 1,650 1,650 1,700 1,800 1,800 Older, ineffective space Sources: Dagens Næringsliv Akershus Eiendom 10 Office Rents NOK / m 2 / year Nominal NOK The figure shows rent levels based on signed contracts, both new signings and renegotations H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H2 Prime High std CBD Newer space CBD Good std CBD High std Skøyen High std west fringe High std east fringe Older, ineffective space Sources: Dagens Næringsliv Akershus Eiendom

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20 The Oslo Office Market 20 Survey of Relocation Patterns RELOCATION PATTERNS FOR 2014 Akershus Eiendom annually collects and analyses a representative sample of recently signed lease contracts to map tenants relocation patterns across Oslo. This year s sample consists of 65 tenants occupying m² (excluding renegotiated contracts and extensions), to produce the annual relocation statistics shown in figure 11, seen on the next page. Some of the largest individual contracts signed in late 2014 are listed in the recent market activity chapter. Total volume of signed leases is down compared to earlier years, and this is, as mentioned, due to the lack of large lease contracts and a generally slow leasing market in CONCLUSIONS FROM THE 2014 SURVEY Staying within the same greater area is still the typical trend for tenants relocating. During 2014 very few decided to move out of their area, with the share staying for all areas being 69 % of the total data sample. As earlier years, tenants located in the western part of Oslo decided to stay in the same area as opposed to moving elsewhere. The net effect for Oslo west is positive, and significantly higher than the other areas. Tenants who chose to relocate within the CBD areas have decreased slightly during 2014 compared to earlier years. 62 % of all relocating tenants in the area decided to stay, whereas the tenants relocating from CBD were quite equally divided between eastern and western parts of Oslo, however slightly favouring the western locations. The net effect for the CBD area is mildly negative for Based on historical behaviour, tenants relocating from eastern Oslo tend to favour western locations over Oslo CBD. This is mainly due to rent levels. Surprisingly this year, there is significantly more volume relocating to the CBD areas compared to western Oslo. This is driven by two larger lease contracts taking up almost 65 % of the total moving volume for the tenants relocating to Oslo CBD. IMPLICATIONS FROM THE TEN YEAR RESULTS OF THE SURVEY Ten-year results of our relocation survey are shown in the bottom graphs. Tenants relocating from CBD to eastern areas seem to stabilize around its five year average of 20 %. However, the trend from the initiation of this survey in 2005 is positive. Western Oslo tenants are still reluctant to move eastwards, and the area continues to hold the highest percentage of tenants staying within the same area. Only 54 % of the eastern Oslo tenants chose to stay, whereas 36 % chose to relocate to CBD. This is the highest figure registered since 2010.

21 The Oslo Office Market Relocation trends 2014 The map shows the moving patterns of tenants who signed new contracts for office space during 2014, as represented by their volumes m² Staying 94% Oslo m m 1600m² Staying 54% m The CBD is limited in the west at Solli plass and in the east at Bjørvika. The tenants will physically move between 2014 and m m² Staying 62% 1500 m Oslo CBD m Oslo West Oslo East Oslo West Net effect: m Oslo CBB Net effect: m Oslo East Net effect: m Akershus Eiendom 12 Moving trends From CBD, West and East All tenants included in the survey: Have signed a new lease contract, It is not a condition that the company has physically moved during the year. Will occupy more than 500 m² of office space in their new location. 100% 90% 80% 70% 60% 50% 40% 30% 20% Share of office space 10% 0% Moving from CBD Moving to CBD Moving to West Moving to East Moving from West Moving from East Akershus Eiendom

22 The Oslo Office Market 22 Vacancy status Oslo office vacancy measured as floor space available now or within 3 months stands at 8 % as of January 2015, or 655,000 m². This is up 0.5 % since last quarter, and 1 % up from one year ago. Vacancy in the CBD areas is on average 6.0 %, slightly higher than the average 2014 level of closer to 5.0 %. More office space was converted into other purposes during 2014 compared to what was constructed and completed over the same period. As can be seen from the graph, net office supply was thus negative. Seen in isolation, this should suggest a decrease in vacancy. However, due to the low volume of new signed leases the past year, the demand of space did not keep pace with the new vacancies becoming available during the year. As employment has increased during 2014, this is mainly due to tenants' uncertainty about the future and the resulting reluctance to commit to new lease contracts. Lysaker, inner city east and Økern are the areas with the highest vacancy rates, all above 13.5 %. The CBD areas vacancy currently stands at 6 %, whereas prime CBD is up from 4 % last January to 6.3 % this year. Despite this increase it is still considered being at a low level, as the demand for premises in this area is high. The largest vacant spaces as of January were Østre Aker vei 90 at Økern with 27,000 m² vacant and Nydalsveien 28 with 20,000m² vacant located in Nydalen. As of January, 13 premises larger than 10,000 m² were vacant. trends Our Oslo office vacancy forecast (see graph 14) is mainly based on future expected employment, our own surveys and estimates for new constructions and demand, as well as macro analysts forecasts for economic activity. Preliminary figures show that for the period , between 85,000 and 120,000 m² of new office space will enter the market each year. Our estimate of office space being converted into other purposes still remains at 65,000 m² every year, which gives a very modest net supply of office space throughout the next years. A known volume of large lease contracts expiring during the years , as well as positive forecasts for long-term employment growth, are drivers for increased absorption of space over the coming years. Taking this into account, we believe future vacancy will decrease slightly after being stable throughout Vacancy for the CBD areas are expected to stay 2-3 % lower than the market average.

23 The Oslo Office Market Oslo Office Vacancy, January 2015 This map shows vacancy in the various office areas of Oslo in January Space counted is available at the latest by march 31. Oslo Outer West Ullevål Majorstuen Nydalen Inner City North Sinsen Storo Kjelsås Grefsen Økern Oslo Outer East Alna-Ulven Skøyen Inner City West Sentrum Inner City East Helsfyr-Bryn Lysaker Ryen Fornebu Oslo Outer South < 17,5 % < 15 % < 12,5 % < 10 % < 7,5 % < 5 % < 2,5 % Akershus Eiendom 14 Oslo Office Vacancy, E m² office space The columns show how vacancy changes due to demand. The forecasts of new demand and supply are based on knowledge about spesific office developments and the official estimates for employments growth. The office vacancy will develop relatively flat for the coming years given today s knowledge of supply and expectations of future demand E 2017E 2018E 13.0% 13.0% 11.0% 4.0% 9.0% 7.0% 4.5% 5.0% 8.0% 8.0% 7.0% 6.5% 7.0% 8 % 8 % 8 % 7,5 % Actual Forecast Vacancy level by the start of the year Net new office space added Change in demand (absorbed space) Sources: Akershus Eiendom Various developers

24 The Oslo Office Market Vacancy risk, The map shows the risk of future vacancy within each sub-area in Oslo in the coming two years until January 2017, based on known volumes of office space entering the market during the period, either through new vacant buildings or because the tenant has signed to move out. The analysis does not take into account the effects of tenants moving between sub-areas; it is solely a supply-side risk analysis. Oslo Outer West Lysaker Skøyen Ullevål Majorstuen Inner City West Nydalen Inner City North Sentrum Sinsen Storo Kjelsås Grefsen Økern Inner City East Oslo Outer East Helsfyr-Bryn Ryen Alna-Ulven Fornebu Oslo Outer South High risk Medium risk Low risk Akershus Eiendom

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26 The Oslo Office Market 26 Development new office construction New office developments were completed in Only 43,000 m² of new office space entered the market, compared to 147,000 m² in New office space being finalised in 2015 is expected to be 160,000 m² and only 20 % of the new stock is speculative. For 2016 and 2017 the volume of known new supply is 82,000 m² and 44,000 m² respectively. The new projects locations and status are depicted in figure 16. There have been few new office buildings initiated since our last report. Dronning Eufemias gate 42 and Dronning Eufemias gate 6b are expected to be completed in Both projects are speculative and contain about 4,000 m² office space each. Much of the ongoing development is concentrated to the area around the central station and the eastern part of the city centre. The largest project in this area is Sundt-kvartalet comprising nearly 28,000 m² office premises. It is a collaboration between Entra Eiendom and Skanska, and Skanska will move into the new office building upon completion in the end of % of the building is vacant. The new head office for Statoil Fuel and retail in Schweigaards gate 16 will soon be completed, and Entra Eiendom has recently signed a leasing contract with Dinamo for 1,500 m² of the vacant space. Since the last report, Norwegian Property has signed a new leasing contract with Sektor Gruppen for one floor in Verkstedveien 1 at Skøyen. The project will be completed in September, and half of the floor space is still vacant. Schage Eiendom will soon start the demolishing of the existing building in Drammensveien and are planning to finalize the zoning process and start the construction of 25,000 m² new office space in August. Another large development site in Oslo is HasleLinje at Økern in the northeast, where it is possible to build a total of 100,000 m² office space. The two first construction stages will be completed in 2015 and the third will be finished in summer Construction of new space at Fornebu, except for the Fornebuporten project, is expected to slow down until the new metro line is ready, which is now expected to happen in Trends With a slowdown in the GDP growth, we do not expect to see much activity for opening up new areas for development in the coming couple of years. A number of large tenants might choose new buildings during 2015, for completion in As the price difference between the fringe areas in general and the CBD is now record high, the announcements of any new project will signal which area has an advantage, and whether the difference will stay or change. Construction costs As can be seen in graph 21, the order backlog

27 for the total construction industry has decreased by 5 % during the third quarter of While the reserve of orders in civil engineering decreased by 12 % during this period, the reserve of building orders increased by 1 %. Despite the decrease in the order backlog of the construction industry, it is still 2 % higher than in the third quarter of The backlog of residential projects has decreased significantly during the last year, and the activity is likely to decline somewhat in The activity within the commercial sector has increased in the same period. Akershus Eiendom s estimated turnkey cost for new office buildings in Oslo, shown in graph 20, is currently at NOK 20,000 per m² office space, which is unchanged from our last report. Our estimate is changed from a flat development to a slight decline, about 5 %, in building costs over the next 12 months.

28 The Oslo Office Market New office buildings : 167,000 m² 2016: 94,000 m² 2017: 43,000 m² The map shows the location, year of completion, leasing/vacancy situation and relative size of the ongoing or in other ways confirmed office construction projects in Oslo. The names are either the address, project name, or tenant name where the project has one major tenant. American Embassy Bymiljøetaten OCCI Fr. Nansens vei 16 Aller Media Cowi Verkstedveien 1 Storgata Silurveien 2 Sundtkvartalet Drammensvn 147 DEG 6B SFR R.S Platou DEG 42 Lysaker Polaris Diagonale Fornebuporten Building B Building A Occupied Vacant New buildings 2015 New buildings 2016 New buildings Akershus Eiendom 17 Available Land Plots for Office Development in Oslo Potential size, floor space m²: m² m² m² m² Available now or within 4 years Long-term development potential Akershus Eiendom

29 The Oslo Office Market 29 New major Oslo office projects, Property/building Floor space m² Area Completion Developer Fornebuporten - building B 30,000 Fornebu 2015 Aker Verkstedveien 1 26,500 Skøyen 2015 Norwegian Property Ullernchausseen 56 20,000 Outer city west 2015 OCCI AS Lysaker Polaris 18,000 Lysaker 2015 NCC Property Development Hasle Linje (City park/environment office) 16,000 Økern 2015 Höegh Eiendom Schweigaards gate 16 (Statoil Fuel & Retail) 13,000 CBD East 2015 Entra Eiendom Silurveien 2 9,500 Outer city west 2015 Selvaag Hasle Linje (Aller Media) 9,400 Økern 2015 Höegh Eiendom Fridtjof Nansens vei 16 8,100 Majorstuen 2015 Reimers family American Embassy Huseby 5,000 Outer city west 2015 United States of America Munkedamsveien 62 5,000 Prime 2015 ROM Eiendom Fornebuporten - building A 29,500 Fornebu 2016 Aker Sundtkvartalet 27,600 CBD North-East 2016 Entra Eiendom / Skanska Hasle Linje (Cowi) 12,500 Økern 2016 Höegh Eiendom Storgata ,500 CBD North-East 2016 Olav Thon Gruppen Dronning Eufemias gate 42 4,200 CBD East 2016 Oslo S Utvikling Drammensveien ,000 Skøyen 2017 Schage Eiendom Diagonale 15,200 CBD East 2017 HAV Eiendom / Olav Thon Dronning Eufemias gate 6b 4,000 CBD East 2017 Watrium 19 New office space m 2 Completed new office space in Oslo (including Fornebu). Only certain new buildings is included in the figures E 2015E 2016E 2017E 2018E West East CBD Estimate (all areas) Akershus Eiendom

30 The Oslo Office Market Estimated Turnkey Cost NOK / m 2 Akershus Eiendom s official estimate of turnkey cost is based upon information from recent initiated projects and input from valuations Q1 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 jan 13 jul 13 Jan 14 Jan 15 Jul 15 Jan Value index for backlog Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 Jul 14 Estimated future construction cost Observed construction cost Akershus Eiendom 21 Order Backlog New Buildings Nationwide Quarterly index The graph shows the order back log for new buildings. The graph has been deflated by the total production index to remove effects of changes in building costs (basic component costs) and changes in margins to contractors National index, all new and existing buildings incl rehab projects New residential buildings Other new buildings (mainly commercial) Statistics Norway

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32 The Investment Market 32 The Investment Market Commercial property transactions totalled NOK 87 billion in 2014, a record-high volume in Norway and an increase of 133 % compared to Previous record was in 2006 with a volume of NOK 58 billion. However, the figures include the IPO of Entra Eiendom which counted for almost NOK 28 billion in total property value. The remainder, however, is still a record high volume at NOK 59 billion. After a relatively slow start of 2014, Akershus Eiendom observed very high activity from May/June throughout the rest of the year. Not since 2006/2007 have we seen similar activity in the investment market. The main reason for this is the steep decrease in long term interest rates over the last year, and the banks increased lending activity. At the beginning of Y SWAP was 3.3 %. In February 2015 it is 1.8 %, a significant decline of 1.5 %-points. At the same time banks have lowered their margins for solid players making total funding costs for investors record-low. Since our last report we have changed our Prime yield from 5.00 % to 4.5 % due to the reduction in both interest rates and margins, supported by transactions observed in the market. City Finansiering has acquired Bolette Brygge 1 at Tjuvholmen from Union Eiendomskapital at a record low yield, 4.5 %. Bolette Brygge 1 was built in 2007 and has a total area of 3,969 m2. KLP Eiendom bought Schweigaards gate from Rom Eiendom. The properties are located in CBD east and have highly reputable tenants in Gjensidige and NSB (Norwegian railway). The sales price was NOK 1,750 million, corresponding to a yield of 4.75 %. Starwood Capital Group, a global private investment firm, has agreed to purchase DnB NOR Eiendomsinvest I in Norway. In conjunction with the transaction, Starwood will also acquire SveaReal Fastigheter in Sweden. The overall deal is valued at around NOK 11,000 million, which is the single largest property transaction in Scandinavia in Another foreign investor, Meyer Bergman, acquired their first property in Norway when they bought Grensen 17 in Oslo for NOK 260 million (EUR 30 million) from a venture between Søylen and Madison International Realty. Genesta Nordic Baltic Real Estate has sold Karl Johans gate 14 and Kirkegata in Oslo to a subsidiary of AVA EiendomsPartner for NOK million, corresponding to a yield of around 5 %. After having been almost absent for the last couple of years, several large logistics transactions took place in 2014 details are given in the corresponding chapter. Total transaction volume for logistic properties in 2014 ended at more than NOK 10 billion, an increase of 176 % compared to 2013.

33 The Investment Market 33 The one segment with decrease in activity was retail; however, this was after several years when major players acquired key shopping centres and thus large volumes changed hands. A trend we have seen over the last years in the Norwegian commercial real estate market is that there are significantly more buyers than sellers. This trend, of course, drives the prices upwards. As a consequence of low interest rates, investors consider the return in commercial real estate as attractive relative to the risk. Even after the yield compression we have seen lately.

34 The Investment Market Transaction Volume of Commercial Properties Only deals larger than NOK 50 million are incuded in the graph. Volume in 2014 ended close to NOK 87.5 billion Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 jul 13 jan 14 jul 14 jan Residential projects Commercial land plots Logistics / industrial properties Hotels Retail properties Office buildings Akershus Eiendom 23 Interest Rates and Prime Transaction Yields The curve indicates the 10-year government bond rate and the 10-year SWAP rate. The triangles represent time and sales yield for large Oslo office transactions since Jan % 7.00 % 6.50 % 6.00 % 5.50 % 5.00 % 4.50 % 4.00 % 3.50 % 3.00 % 2.50 % 2.00 % 1.50 % 1.00 % Jan 03 Transaction Yield 10Y SWAP 10Y Gov. Bond Akershus Eiendom

35 The Investment Market Sellers and Buyers of Commercial Property % 6% 6% 5% 29% 41% 5% 17% 7% 15% 29% 2% 7% 13% 8% 14% 13% % 10% 37% 7% 8% 35% 12% 22% 13% 24% Buyers Sellers Property companies Listed property funds Government Closed-end funds Insurance/Pension funds Property funds Foreign investors Private investors Owner occupier Remaining Akershus Eiendom 25 Oslo Office Transactions Property/location Floor space m² Price NOK million Seller Sannergata 2 20,000 <700 Closed-end fund (Pareto Project Finance) Hemfosa Grenseveien 95 10,500 DNB Næringseiendom Aberdeen Norge I Karl Johans gate 13 1,950 Aberdeen Norge II Søylen Eiendom Haslevangen 45/47 15, Closed-end fund (Platou Real Estate) Økernveien 94 18,500 Nordisk Areal 1 AS Closed-end fund (Pareto Project Finance) Lysaker Polaris 26, NCC Property Development Storebrand Eiendomsfond Norge KS Karl Johansgt. 14 / Kirkegt , ,5 Genesta Nordic Baltic Real Estate AVA Eiendomspartner Drammensveien ,000 Egil Stenshagen Closed-end fund (DTZ) Bolette Brygge 1 4,000 Closed-end fund (Union) City Finansiering Schweigaards gate ,000 1,750 ROM Eiendom KLP Eiendom Økernveien , Closed-end fund (DTZ) Bergen Kommunale Pensjonskasse Økernveien 9 12, Closed-end fund (DTZ) Closed-end fund (NRP) Lørenveien 37 7, Nortura SA Ragde Eiendom Hans Møller Gasmanns vei 9 25, Anthon B Nilsen Eiendom Bulk Eiendom/Akershus Energi Lørenveien 68 11, Storebrand Eiendomsfond Oslo Pensjonsforsikring Lilleakerveien 4A 9, Lilleakerveien 4 ANS Mustad Eiendom Haslevangen 15 10, Marienlyst Eiendom Møller Eiendom Christian Kroghs gate 32 11,000 Aberdeen Property Nordic Fund I SICAV-FIS Anthon B Nilsen Eiendom/OBOS Forretningsbygg Buyer

36 Regional Property Markets 36 Regional Property Markets BERGEN TRONDHEIM STAVANGER Total transaction volume in Bergen ended at approximately NOK 3 billion, which is among the highest volumes on record in the region. The high activity is expected to continue in Prime yields are seen in the area 5.75 % % and up to 7.25 % for good objects. Vacancy at the end of 2014 was about 8.0 %, and is expected to increase in 2015 due to a challenging leasing market with several new office buildings, large moving processes and staff reductions, especially within the oil/offshore/engineering segment. Rent levels for new office buildings with CBD locations are seen at levels between NOK 2,200 2,500 per m², and are expected to be stable at these levels going forward. Existing office buildings with good standard are expected to experience a slight decrease. Older and inefficient office buildings are difficult to rent out, and might be converted to other purposes than office in the future. Sublease contracts can affect the rental level in the short and medium term. Total transaction volume in Trondheim for 2014 ended at about NOK 4 billion, and the active transaction market is expected to continue in Yield levels are stable, and prime yield is now between 5.5 % and 6.0 % while normal yield is in the area 7.5 % %. Office vacancy is today at about 7.1 %, which is an increase since the last report. The increase can mainly be explained by new buildings at Grilstad as well as subletting from Aker Solutions. Vacancy within the retail segment is still increasing, and even space with good location can stay vacant over a longer period of time. Office rent levels in Trondheim are stable at NOK 1,000 2,200 per m². About 44,800 m² of new office space is expected to enter the market during As of today, about 32,500 m² of new office space is planned in was an active year in the transaction market, and total transaction volume in Stavanger ended close to 5 billion in The high activity in the transaction market is expected to continue going forward. Rent levels are still stable in the Stavanger region, but some areas and segments are experiencing some downwards pressure. The highest rent levels are seen in the Stavanger CBD area. Overall, vacancy is still low in this region and total vacancy is today at 4.3 %. This can mainly be explained by few available spaces within the retail and combination segments. Vacancy in office buildings has increased from 7 % to 8 %, which indicates an imbalance between supply and demand. The vacancy is expected to increase going forward, especially for office buildings. Yield levels for prime objects are unchanged at 6.5 % to 7.5 %, and are expected to stay at these levels going forward.

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38 Regional Property Markets Year-End Office Rents Bergen 1,100 1,225 1,400 1,550 1,475 1,475 1,475 1,475 1,475 1,475 Trondheim 1,200 1,350 1,650 1,650 1,600 1,600 1,650 1,700 1,700 1,750 Stavanger - CBD 1,300 1,500 1,650 1,700 1,600 1,600 1,700 1,900 1, Stavanger - Oil 1,050 1,200 1,350 1,400 1,300 1,300 1,350 1,450 1,525 1,450 Kristiansand 1,200 1,350 1,525 1,550 1,425 1,400 1,400 1,375 1,400 1,400 Tromsø 1,000 1,000 1,300 1,300 1,300 1,450 1,450 1,500 1,675 1,650 Dagens Næringsliv 27 Regional Office Rents NOK/m 2 /year Nominal NOK H H H H H H H H H H H H H H H H H H H H H H H H H H2 Bergen Trondheim Stavanger - CBD Stavanger - Oil (Forus) Kristiansand Tromsø Dagens Næringsliv

39 Regional Property Markets Office Rents February Office rent, NOK per m 2 Bergen Trondheim Stavanger The columns show lower and higher rents for different areas within the three cities. Bergen rents are more uniform than Stavanger and Trondheim CBD Fringe CBD Fyllingsdalen Sandsli CBD Fringe CBD East South CBD Forus Tananger Best rent levels Lower rent levels Sources: Eiendomsmegler1 Midt-Norge Eiendomsmegler1 Rogaland Kyte Næringsmegling 29 Regional Office Vacancy % 10% 8% 6% 4% 2% 0% 03 Oct 04 Feb 05 Jan 05 Sept 06 Feb 06 Sept 07 Jan 07 Aug 08 Jan 08 Aug 09 Jan 09 Aug 10 Jan 10 Aug 11 Jan 11 Aug 12 Jan 12 Aug 13 Jan 13 Sept 14 Jan 14 Sept 15 Jan Bergen Trondheim Stavanger Sources: Eiendomsmegler1 Midt-Norge Eiendomsmegler1 Rogaland Kyte Næringsmegling

40 Regional Property Markets Leasing Property / location Floor space m² Rent / m² Tenant Owner Stavanger Professor Olav Hanssens vei 10 3,900 n.a Norwegian Mapping Authority Entra Trondheim Grilstad Marina 3,500 Office / 1,750 Kongsberg Maritime Grilstad Marina 3,000 Production Beddingen 14 2,200 n.a IF Forsikring Aberdeen Kongens gate 2 1,775 n.a BN Bank Sparebank 1 SMN Bergen Jonsvollskvartalet 1,100 2,500 Sparebanken Vest Jonsvoll Utleie AS Kanalveien ,450 Expoline Aberdeen Sandviksboder 66 1,130 1,465 Swire Seabed Gjensidigegårde AS 31 Sales Property / location Floor Price Buyer space m² NOK million Trondheim Residencekvartalet 11, PS Platou Sparebank 1 Oslo Akershus Sluppenveien 14 25, Heglund Holding Posten Norge Haakon VIIs gate NorInvest Prora Eiendom Haakon VIIs gate 14 9, Koteng Bolig Skifte Eiendom Bergen Kong Olav V's Plass 4 1, Bara Olav KyrresgT 41/Vaskerelven 39 4, EGD Damsgårdsveien , Aberdeen Torget Thore Arild Økland Invest Kløver Eiendom Seller Stavanger Nykirkebakken 2 12, Union Schibsted Verksgata 1 10, Union DNB Næringseiendom Apply HQ, Forus 660 WP Carey Apply Tollboden 4, Camar Eiendom Entra Aker Solution, Hinna Park 66,000 1,550 NIAM Several owners Fluid Controll, Sola 160 DNB syndikat Stavangerske Investeringsselskap Maersk, Forus 6, DNB Syndikat Base Property

41 32 New Building / Rehabilitation Floor space m² Completion Developer Tentant Trondheim Sluppenveien 17BC 12, Kjeldsberg Eiendom AS Statkraft Verftsgata 2 15, Prora AS Adresseavisen Bassengbakken 2 7, Kjeldsberg Eiendom AS Evry Vestre Rosten 69 1, Hent AS Hent AS Heimdal Eiendom Trondheim Maritime Senter n.a 2015 Trondheim Havn/Koteng Trapphuset 4, ROM Eiendom Abels Hus 15, KLP Stavanger Forus Vest 38, Forus parkering Vest Various Forus Vest 10, Base/Håkull Proserv Buøy 7, Buøy Invest Bergen group Bjergsted 10, Veritas Centrica Project Gullfaks - Hinna Park 18, Wintershall Sandes Sentrum 4, Stavangerske Investeringsselskap Sandnes Sparebank Bergen Jonsvollskvartalet 19, Jonsvollskvartalet AS Sparebanken Vest et al Bergen Stasjon 14, ROM Eiendom KLP et al Nygårdsgaten , Odfjell Eiendom Statens vegvesen et al Kokstadvegen 23 15, Ferd Aibel Nestunbrekka Næringspark 10, Backer Various Sandsliåsen 50 14, EGD Choice Kokstadflaten 19, Odfjell Drilling Odfjell Drilling Haukås 4, Haukås Handelspark Kverneland Langarinden (Åsane) 10, EGD Solberg & Andersen Kronstadparken 14, Bara C. Sundtsgate (Grieg Gaarden) 5, Grieg Property Grieg et al Marineholmen 8, Marineholmen DNV GL Fantoftvegen 14 18, Helmers AS Sweco et al Kronstadparken - "Vinkelbygget" 13, /2017 Bara TV2, NRK among others Media City 40, Entra/OPF

42 International Office Markets 42 International Office Markets International Office Markets During 2014, the vacancy rate in Stockholm CBD has increased, while it has decreased or remained unchanged in other Stockholm sub-markets. Overall, the vacancy rate in Stockholm has remained unchanged at 9.1 % during 2014, which is the lowest vacancy rate recorded since The total transaction volume in Stockholm during 2014 amounted to SEK 57.1 billion (approx. EUR 6 billion), including 12 cross-border transactions. Prime rents have remained stable in all sub-markets throughout 2014; however rents are expected to increase slowly going forward, due to increased demand for prime office space. Prime yield has remained unchanged at 4.25 %. The demand for prime office investments in Copenhagen has been a lot higher than the supply during 2014, thus the prime yield has decreased to 4.75 %, down 25 bps from Overall vacancy rates remain high at 10.3 %; however, the vacancy rate in and around the CBD have decreased. The demand for office space is focused on modern and efficient properties, thus the prime rent has remained stable the last three years, while rents for less efficient office space has fallen. The prime rent currently stands at DKK 1,750 per m². The investment market experienced an upturn during This was mostly because of an increase in demand for office as an investment class due to reasonable return compared to assets such as stocks and bonds. Helsinki experienced a rental decline during the second half of 2014, as it did in the first half. The overall vacancy rate declined by 0.1 %, after having increased over the last two years. However, this was mostly due to conversion of modern office space for residential use. The Helsinki CBD has actually seen an increase in vacancy as tenants move to new office buildings outside the city centre. The Helsinki prime rent has been stable the last three years, while the prime yield has steadily declined since 2008, and is now at 5 %. European office markets The Jones Lang LaSalle Office Clock describes the European market situation by plotting development in prime rents for major cities. The clock illustrates the market movements for the different cities over 6 months. The rental growth in Stockholm is still positive, but is moving towards a slower growth compared to 6 months ago, rents in Helsinki have peaked out and are now falling, while the rents in Copenhagen are unchanged during the 2nd half of 2014.

43 International Office Markets JLL Office Property Clock Main European Cities Q4, 2014 Lyon Cologne Berlin, Frankfurt, Gothenburg, Stuttgart, Hamburg, Oslo, Malmö Helsinki St.Petersburg Munich Rental Growth Slowing Rents Falling Moscow Dusseldorf London WE Stockholm, Dublin, London City Luxembourg Rental Growth Accelerating Rents Bottoming Out Kiev Geneva, Zurich Manchester Edinburgh Warsaw Amsterdam, Milan, Madrid Barcelona, Paris CBD Athens, Brussels, Rome, Bucharest, Budapest, Prague, Copenhagen, Istanbul, Lisbon JLL Akershus Eiendom 34 Key Information Nordic Cities Q4, 2014 Key Data Oslo Stockholm Copenhagen Helsinki Gothenburg Inflation 2014 (%) Prime Yield (%) (CBD) Yield grade B properties (%) (CBD) Prime Rent (Local Currency / Euro / m²) (CBD) 4,200 / 490 4,500 / 475 1,750 / ,600 / 283 B grade Rent (Local Currency / Euro / m²) (CBD) 2,500 / 290 2,500-3,100 / ,200 / ,800-2,300 / Office Space (m2) (Total) 8.3 mil 11.6 mil 11.8 mil 8.6 mil 3.3 mil Completions (m²) (Total) 60, , ,000 65,000 24,800 Completions (m²) (Total) 167,000 68, ,000 90,000 60,200 Vacancy rate (%) (Total) Sources: JLL Akershus Eiendom

44 International Office Markets Nordic Office Rent Development /m 2 /year % 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Oslo prime rent Helsinki prime rent Stockholm prime rent Copenhagen prime rent JLL Akershus Eiendom 36 Nordic Vacancy Development Oslo vacancy rate Helsinki vacancy rate Stockholm vacancy rate Copenhagen vacancy rate JLL Akershus Eiendom

45 International Office Markets Nordic Yield Development 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% Oslo prime yield Helsinki prime yield Stockholm prime yield Copenhagen prime yield JLL Akershus Eiendom 38 Prime Value Index /m 2 Prime rent/prime yield Oslo value Helsinki value Stockholm value Copenhagen value JLL Akershus Eiendom

46 The Retail Market 46 The Retail Market status Retail sales volumes have been good during 2014 after a longer period with consumption growth weaker than expected; lower interest rates appear to have worked against a weaker employment outlook. In December 2014, consumer confidence reached its lowest levels since 2008, but has risen marginally in January With consumer confidence at low levels, wages stagnating, and the savings rate increasing, most observers expect slow consumption growth going forward. Retail sales volume (excluding motor vehicles) is up by 2.7 % year-on year. Statistics Norway has reduced the estimate for future consumption spending based on the current economic situation, the weakening krone and reduction in real wage growth will hold consumption growth in households back. Going forward, an improved economic condition is expected to push consumption growth up from 2017 onwards. The retail investment market Retail transactions amounted to close to NOK 5.7 billion in 2014 which is close to 7 % of the total transaction volume in Norway including the IPO of Entra, and close to 10 % excluding Entra. This is considered low compared to 2013 and 2012, when retail transactions amounted to about 20 % and 30 % of the total transaction volume, respectively. However, there have been a few interesting transactions with new, international players entering the Norwegian market during Oslo in particular is currently experiencing an inflow of foreign capital within the retail segment. Madison International Realty increased its exposure in Steen & Strøm Magasin by acquiring a 50 % equity stake from Schage Eiendom, Meyer Bergman purchased Grensen 17 in Oslo as their first acquisition in Norway, and Deka Immobilien, one of Germany s biggest investment fund providers, entered the Norwegian market when they acquired Bekkestua Senter located right outside Oslo. In addition, Swedish Genesta sold Karl Johans gate 14 and Kirkegata to a subsidiary of AVA Eiendom Partners, and Aberdeen Eiendomsfond Norge II sold the shopping centre Jærhagen located at Klepp outside Stavanger to a company owned by Coop Klepp SA. In recent years, the investment market for retail property has been very selective with strong appetite for larger centres with good track record. The shopping centre segment has experienced a high degree of consolidation with few large players dominating the market. As a large share of the top 50 largest centres in Norway has been acquired by large players with continuous appetite, we expect few of the largest centres to enter the market in the near future.

47 The Retail Market Norwegian Retail Volume Index Season adjusted volume index, 2005=100 Retail volume index Retail year-on-year growth % % % 120 8% Retail sales has increased lately and is up 2.7% year-on-year % 110 4% 105 2% 100 0% 95-2% 90-4% Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 jan 13 Jul 13 jan 14 Jul 14 jan 15 Retail year-on-year growth Retail volume index Statistics Norway 40 Norwegian Consumption Volume Index season adjusted volume index, 2005=100 Consumption of goods measured in volume has shown a positive trend and is up 2.9% over the last twelve months. Consumption volume index Consumption year-on-year growth % % 95 10% 5% 90-5% % Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Consumption year-on-year growth Consumption volume index Statistics Norway

48 The Retail Market Retail Construction m 2 /year Annual 4 quarter moving average. Q Q Permitted retail construction have picked up in both Oslo and Norway as a whole. Started retail construction have picked up in Oslo while continued to decline in Norway as a whole Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 Permitted Norway Started Norway Completed Norway Permitted Greater Oslo Started Greater Oslo Completed Greater Oslo Statistics Norway

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50 The Hotel Market 50 The Hotel Market hotel occupancy and room rates In 2014, the hotel market has performed slightly better than in According to Statistics Norway, the number of guest nights increased by 3.4 % to a total of million guest nights for the year in total with revenues of NOK billion, an increase of 2.7 %. Revenue per available room (RevPAR) also increased slightly to NOK 468, up by 1.1 % from The Oslo market had a positive development compared to The number of guest nights was MNOK 4.01 and the total revenue in NOK 2.52 billion, up 6.9 % and 3.4 % respectively. However, the average number of rooms in Oslo increased by as much as 9.5 % to 12,651. Thus, the average RevPAR for the year decreased by 0.8 % to NOK 599, down from an average of 604 in Hotel construction As can be seen from graph 44, there has been a significant upswing in the number of permitted and completed hotel square meters in 2014, both in Oslo and Norway as a whole. On the other hand, the volume of started square meters are almost in line with the development we saw during 2013, a relatively low level. Hence, the completion rate should decrease for the coming couple of years. hotel transactions Hotel transactions during the second half of 2014: Eiendomsspar acquired Karl Johans gate 33 (Magnusgården) in September, along with Rosenkrantz gate 11. The property houses Best Western Karl Johan which offers 114 rooms. The hotel was fully renovated in 2008 and 2009, and the price was NOK 460 million. In September, Thon and Reitan acquired Britannia Hotel in Trondheim. The hotel has 247 rooms and is run by Thon Hotels. The price was approximately NOK 400 million. A hotel property in Lagårdsveien 61 in Stavanger was sold by KLP to an unknown buyer in December for NOK 160 million. The current tenant is Carlson Rezidor Hotel Group and the lease expires The property will then most likely be converted into apartments, due to the property s location in the city center of Stavanger and the building s renovation needs.

51 The Hotel Market Volume of Guest Nights in Norwegian Hotels No. of guest nights per month in thousands (1 000) The graph shows the split between the volume of foreign and domestic guest nights in all hotels of Norway. Figures are seasonally adjusted Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan Domestic guests Foreign guests Statistics Norway 43 Real RevPAR RevPAR The graph shows the development in real RevPAR in today s values. All figures are seasonally adjusted Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan Oslo Norway Statistics Norway

52 The Hotel Market Hotel Construction m 2 /year annualized 4-quarter total There has been a sharp increase in completed hotels in Norway and in the greater Oslo region Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 Permitted Norway Started Norway Completed Norway Permitted Greater Oslo Started Greater Oslo Completed Oslo Statistics Norway

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54 The Logistics Market 54 The Logistics Market The logistics property market Since our previous report published in October 2014, we have not changed our view on rent levels. The different rent levels can be seen in the map, where prime rent still stands at 1,200 NOK/m²/year. Observed rent levels are high from Berger to Vinterbro, as these hubs are very popular. Their closeness to effective intersections with the main highway E6, short driving distance to Oslo and the availability of vacant land plots make these hubs a good alternative to the relatively fully developed area around the Alnabru national cross dock terminal (Alna/Nyland). Vacancy in the greater Oslo region measured as floor space available now or within 3 months, stands at 4.5 % as of December 2014, down 1.0 %-points since our previous report. The different regions in the market have had a somewhat different development. The vacancy within the Oslo city limits has decreased with 2.0 %-points, and the vacancy level is at 6 %. This is due to substantially lower vacancy in the secondary geographical locations within the larger northeastern Groruddalen area. At the same time the vacancy level in the greater Oslo North and West region has decreased with respectively 1 %-point and 2.8 %-points, levels are now at 2.2 % and 3.8 %. The vacancy level has decreased within almost all smaller clusters. The Greater Oslo south region has had a somewhat different development. The vacancy rate has increased with 1 %-point to 6 %, due to increasing vacancy in the smaller Mastemyr-Sofienmyr cluster. The transaction activity has been very high in 2014, and the registered number of deals has been higher than what we have seen for the last three years. The transaction volume is thus almost at record high levels, coming in at just above NOK 10.1 billion. The only year the transaction volume has been higher was in 2006 with NOK 12.3 billion in volume. The transaction volume contains several A-grade investment properties, among others the Arcus production/storage facility at Gjelleråsen, the COOP logistics complex at Gardermoen, a portfolio of seven newly constructed properties acquired from BULK Eiendom, and two properties on long leases in Ski Næringspark. Based on recent market activity, we have lowered our estimate for prime yield with another 25 bps and our estimate is now 6.0 % for a 10-year investment grade property. The yield estimate is relevant for properties within the prime and secondary areas, from Berger to Vinterbro. The yield estimate for investment grade properties with substantially longer leases, within the same geographical region, is slightly lower.

55 The Logistics Market Logistics/Industrial: Indicative Rents March 2015 Gardemoen Kløfta Berger Lillestrøm Groruddalen Oslo West Other Other Oslo Regnbuen / Berghagan Ski Vestby Rent NOK/m² for prime standard and normal standard: Akershus Eiendom

56 The Logistics Market Prime Rent for Warehouse/Logistics Greater Oslo region NOK/m 2 /year Prime rent, seen in the central parts of Groruddalen close to the Alnabru rail terminal, is still NOK 1,200 per m² m 2 /year Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 Akershus Eiendom 47 Logistics Construction Annualized 4-quarter total There has been an increase in permitted and started projects nationwide over the last two years. Permitted Norway Started Norway Completed Norway Permitted Greater Oslo Started Greater Oslo Completed Greater Oslo Statistics Norway

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58 The Residential Market 58 The Residential Market residential prices According to Real Estate Norway, the increase in the residential prices slowed down during the second half of However, on a year-on-year basis, prices are up 8.5 % from January 2014, where January 2015 contributed with an increase of 2.9 %. On average, prices in 2014 were 2.1 % higher than in 2013, and the prices so far in 2015 are 4.8 % higher than in All the largest cities experienced increases in housing prices. Once again, Tromsø had the highest growth with prices, 16.9 % higher than at the same time last year. Larger cities also experienced strong growth with prices increasing 10.3 % in Oslo and Bergen, and 8.2 % in Trondheim. Moreover, prices in Kristiansand increased by 6.8 %, while the price increase in Stavanger was only 3.1 %. Stavanger might now see the beginning of a slowdown in the market due to the fall in oil related activity. In recent years we have seen a negative trend in the money market rates. According to Norges Bank s projections, the key policy rate is expected to fall during 2015 before stabilising and slowly start to increase again towards the end of We expect the mortgage rates to follow this development, falling somewhat during This, combined with a low construction rate, might put even more upwards pressure on the housing prices going forward. Residential construction The number of residential units under construction has been falling throughout 2014 and the construction volume is now almost 4 % down compared to the end of Most observers cite the slow sales in 2013 as the reason for this. As can be seen from the graph, the construction volume is still at solid levels compared to the last ten years, as the completion rate was at a similar level in , and the volume in production is still higher than the previous peak in Meanwhile, the housing prices have increased during the same period, and total turnover in the housing market for new units was 5 % higher in 2014 compared to This amounts to a growth of more than 4,000 dwellings per year and has continued into the first quarter. The expected volume of new units going into construction is expected to rise in 2015 compared to 2014 due to the increase in sales. This is likely to keep construction at a solid level throughout the year although still a bit lower than 2013.

59 The Residential Market Residential Prices Average sales price, NOK/m 2 % annual price change % % Nominal values Residential prices increased by an annual 8,1 % from December 2013 to December % 20% 15% 10% % 0 0% % % % Volume of residential units Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jul 13 Jan 13 Jan 14 Jul 14 Jan 15 Year-on-year change, by month, % Average residential price NOK/m² Sources: Econ Pöyry Finn.no Norwegian Assosiation of Real Estate Agents (NEF) 49 Residential Construction in Norway Both units under contstruction and completed dwellings have declined slightly during the second half of Residential units under construction Completed residential units, last 12 months Statistics Norway

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61 Definitions 61 Definitions Area definitions Abbreviations BTA BRA P-rom BYA NAV CBD CPI NOK SSB Gross area Usable area Living area residential Foot print of the building Norwegian Labour and Welfare Agency Central Business District Consumer Price Index Norwegian Krone Norwegian National Bureau of Statistics Taxes and depreciation Depreciation Office buildings 2% Warehouse/industrial 4% Shopping centres 2% Hotels 4% Investments 10% Document tax (stamp duty) 2.5% of transaction value Property tax Depends on the county, many currently have a zero rate.

62 Akershus Eiendom 62 Akershus Eiendom AS Akershus Eiendom AS is an independent property advisor focusing on commercial property; offices, warehouse facilities, shops/shopping centres, hotels, land, and related types of property. Akershus Eiendom advises its clients on sales, leasing, development, research, valuations and other areas of commercial property business. Akershus Eiendom has during the past five years handled sales transactions for properties of a total value of more than NOK 37 billion, and has handled leasing of more than m² of office space. Akershus Eiendom is associated with Kyte Næringsmegling in Bergen, Eiendomsmegler1 in Trondheim and Stavanger, and JLL internationally. Manager Transactions Research/valuation Per Kumle Petter Nylend Roar Sandnes Jørgen Haga Christian Valdem Rune Unsgård Knut Berget Jacob A. L'Orsa Cecilie Ragner Marte Overå Sofia Hariz Ragnar Eggen Erik André Bratt Karin Manengen Ole Fredrik Vartomten Birgitte Heskestad Ellingsen Andreas Egset Tor-Øyvind Skjelvik Lasse Bjørndahl Adam Ingwall Leasing Tenant representation Administration Board of directors Ole Christian Iversen Rune Arvesen Anders Heffermehl Ole-Jacob Leirskar Stig Basing Jonas Myhre Remi Olsen Morten Buøen Lise Kaupang Vigdis Sundvoll Lars Føyen Kinserdal Brith Hoel Vigdis Sundvoll Hilde Bang Roar Sandnes Geir Saastad Jørgen Haga Ragnar Eggen Petter Nylend Per Kumle Ole Christian Iversen

63 Akershus Eiendom 63 Haakon VII s gate 5 P.O. Box 1739 Vika NO-0121 Oslo Reg.no T: F: W: akershuseiendom.no In Cooperation with Lästmakargatan 20 P.O. Box 1147 SE Stockholm T: F: W: jll.com Bankgaten 8 P.O. Box 7999 NO-5020 Bergen T: F: W: kyte.no Søndre gate 4 P.O. Box 433 Sentrum NO-7404 Trondheim T: F: W: eiendomsmegler1.no Petroleumsveien 6 P.O. Box 114 NO-4065 Stavanger T: F: W: eiendomsmegler1.no

64 Photography: Sveinung Bråthen Design: Anti

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