October 5, 2006

The Current State of the Office Market in the CEE Region

October 5, 2006October 5, 2006Presented by: Adam Sherriff-Scott

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WHO WE AREWHO WE ARE““We accelerate your success by We accelerate your success by

making our making our KnowledgeKnowledge your your PropertyProperty

Colliers International Colliers International A Global PartnershipA Global Partnership

Established in 1898, Colliers is one of the leading commercial real estate organizations in the world. Our partners bring strong, stable local ownership and entrepreneurial and creative solutions together throughout the world. 

Over 9,000 employees worldwide in 241 offices in 54 countries on 6 continents (130 in the Americas, 65 in Europe, Middle East and Africa (EMEA) and 46 in Greater Asia)

Colliers completed 31,394 leasing transactions in 2005 with a value of $18 billion.

Colliers completed 8,685 sales transactions in 2005 with a value of $37 billion.

Colliers has 595,725,580 square feet under management.

Annual revenues exceeding $1.4 billion

Established in 1991 – Budapest

Established in 1994 - Czech Republic

Leading real estate services provider in the region

Services We Provide:- Investment Sales- Office Leasing- Industrial Leasing- Valuation & Consulting

250 employees 14 regional offices

COLLIERS INTERNATIONAL CENTRAL AND EASTERN EUROPE

(CEE)

COLLIERS INTERNATIONAL CORPORATE SERVICES

Integrated Real Estate Solutions

COLLIERS INTERNATIONAL- CEE REGION

SELECTED CLIENT LIST

Providing service to satisfied clients in the Czech Republic for over ten years

ECONOMIC OVERVEWECONOMIC OVERVEW

7.3%5.8%

19.7%10.2%17.8%

12.2%

Czech RepublicHungaryPolandRomaniaSlovakia

AVERAGE

…growing economies = declining unemployment

Source: Experian

2002

Country: 2003

2004

8.1%5.9%

19.9%7.6%

15.2%

11.3%

8.2%6.0%

19.6%6.8%

14.3%

10.9%

2005 2006UNEMPLOYMENT FIGURES FOR CEE

REGION

7.8%7.1%

18.2%6.5%

11.6%

10.2%

7.9%7.6%

17.6%6.8%11%

10.0%

…GDP growth in the Czech Republic & the CEE Region

Czech Republic:

Poland

Hungary

Romania

Bulgaria

2006*

2004

2005

2007*

2008*

*Figures are forecasted

Source: Experian

4.0%

5.3%

4.0%

8.3%

5.7%

6.0%

3.2%

4.1%

4.1%

5.5%

5.0%

4.5%

4.3%

5.0%

5.1%

4.3%

4.8%

3.8%

4.8%

5.1%

4.5%

4.6%

3.9%

5.0%

4.3%

GDP GROWTH IN THE CEE REGION

….positive economic fundamentals=A STRONG INVESTMENT CLIMATE

*Source: Czech National Bank, December 2005

CountryCountry Standard & Standard & Poor’sPoor’s

Moody’sMoody’s Fitch-IBCAFitch-IBCA

Czech RepublicCzech Republic A-A- A1A1 AAHungaryHungary A-A- A1A1 BBB+BBB+

PolandPoland BBB+BBB+ A2A2 BBB+BBB+RomaniaRomania BBB-BBB- Ba1Ba1 BBB-BBB-SlovakiaSlovakia AA A2A2 AA

Investment Risk Ratings in the CEE Region are Strong Across the Board

CZECH REPUBLICCZECH REPUBLICMARKET SUMMARYMARKET SUMMARY

CZECH REPUBLIC – LOCATION MAP

BERLIN340 km

MUNICH385 km

VIENNA250 km

BUDAPEST450 km

WARSAW750 km

PRAHA

Czech Republic: Located in the heart of Central Europe!!

PRAGUE - GENERAL LOCATION OVERVIEW

Snapshot of the ten districts that make up Prague

NOTABLE STATISTICS Prague= 10% of CZ population and 20% of GDP 3.5% unemployment compared to 7.9% overall in Czech Republic Average monthly wages of 18,297-20,036 CZK compared to 14 500 CZK nationwide

LARGEST CITIES POPULATION• Prague: 1 200 000• Brno: 400 000• Ostrava: 320 000• Plzen: 164 000• Olomouc: 106 000• Hradec Kralove: 100 000• Ceske Budejovice: 98 000

OFFICE MARKET OFFICE MARKET OVERVEWOVERVEW

SubmarketSubmarket Office Stock Office Stock (m²)(m²)

VacancyVacancy 1Q 2006 Take-Up1Q 2006 Take-Up(m(m²)²)

2Q 2006 Take-Up2Q 2006 Take-Up(m²)(m²)

Mid-Year Subtotal Take-UpMid-Year Subtotal Take-Up(m²)(m²)

City CenterCity Center 406,938406,938 9.3%9.3% 31,71231,712 8,9988,998 40,71040,710

Inner CityInner City 942,278942,278 13.3%13.3% 18,67218,672 64,50264,502 83,17483,174

Outer CityOuter City 547,139547,139 8.4%8.4% 18,46118,461 16,50216,502 34,96334,963

TOTALTOTAL 1,896,3551,896,355 11.0%11.0% 68,84568,845 90,00290,002 158,847158,847

2Q 2006 Office Market Snapshot2Q 2006 Office Market SnapshotPraguePrague

*Source: Prague Research Forum

Key 2Q 2006 Stats – Prague Office Market

2Q 2006 Office Market Snapshot2Q 2006 Office Market SnapshotCzech RepublicCzech Republic

The Office market has stabilized in The Office market has stabilized in Czech Republic, especially in Czech Republic, especially in Prague.Prague.

Declining vacancy rates solidify Declining vacancy rates solidify strong demand from both new strong demand from both new foreign demand and organic growth foreign demand and organic growth of existing companies, even with of existing companies, even with many new developments.many new developments.

Strong office construction activity in Strong office construction activity in Prague could lead to a temporary Prague could lead to a temporary flattening in vacancy rates for the flattening in vacancy rates for the immediate future due to increased immediate future due to increased demand.demand.

LocationLocation Class AClass A Class BClass B

PraguePragueCity City CenterCenterInner CityInner CityOuter CityOuter City

18.0-19.018.0-19.014.5-15.514.5-15.513.0-14.513.0-14.5

14.0-15.014.0-15.011.0-12.011.0-12.010.0-11.510.0-11.5

BrnoBrno 12.0-14.012.0-14.0 10.5-11.510.5-11.5

PlzenPlzen 9.0-12.09.0-12.0 6.0-8.06.0-8.0

OstravaOstrava 9.0-11.09.0-11.0 5.0-9.05.0-9.0

Office Market - Average Rent (€/m²/month)

Sources: CBRE, Prague Research Forum

Major Office Deals in Prague - 2006Major Office Deals in Prague - 2006

Larger leases are being signed: overall average leased space in Prague for 2Q 2006 increased to 1,168 m², from 734 m² in 2005.

PROJECTPROJECT LOCATIONLOCATION SIZE SIZE (m(m²)²)

TENANTTENANT CLIENTCLIENT AGENCYAGENCY

CTPark SlapaniceCTPark Slapanice BrnoBrno 16,60016,600 CSADCSAD CTP InvestCTP Invest N/AN/A

CEZ BuildingCEZ Building Prague 1Prague 1 23,10023,100 Prague City HallPrague City Hall N/AN/A N/AN/A

Katerinksa Business CentreKaterinksa Business Centre Prague 2Prague 2 7,8007,800 PWCPWC Merrion PropertyMerrion Property N/AN/A

The ParkThe Park Prague 4Prague 4 1,4871,487 InbevInbev AIG LincolnAIG Lincoln DTZDTZ

Palac KrizikPalac Krizik Prague 5Prague 5 2,6002,600 Seznam.czSeznam.cz Smichov Terrasse s.r.o.Smichov Terrasse s.r.o. Colliers InternationalColliers International

Office Park Nove ButoviceOffice Park Nove Butovice Prague 5Prague 5 2,1182,118 Lease PlanLease Plan N/AN/A N/AN/A

Nile HouseNile House Prague 8Prague 8 1,2301,230 FordFord EuropolisEuropolis Cushman & WakefieldCushman & Wakefield

Palac KarlinPalac Karlin Prague 8Prague 8 1,5001,500 PanasonicPanasonic CEE Property InvestCEE Property Invest Knight FrankKnight Frank

Zirkon Office CenterZirkon Office Center Prague 8Prague 8 2,8042,804 ABBABB BACABACA N/AN/A

Vysocanksa PointVysocanksa Point Prague 9Prague 9 9,3359,335 Ministry of LabourMinistry of Labour N/AN/A N/AN/A

Podebradska 55Podebradska 55 Prague 9Prague 9 4,3774,377 AutocontAutocont N/AN/A N/AN/A

CTPark PlzenCTPark Plzen PlzenPlzen 2,0002,000 BodycoteBodycote CTP InvestCTP Invest Colliers InternationalColliers International

TOTALTOTAL 74,95174,951Source: CiJ – September 2006

Office development…on the riseOffice development…on the rise

Project NameProject Name DistrictDistrict Office Space Office Space (m²)(m²)

StatusStatus DeveloperDeveloper

Diamond PointDiamond Point Prague 8Prague 8 18,23118,231 CompletedCompleted KarimpolKarimpol

Luxembourg PlazaLuxembourg Plaza Prague 3Prague 3 23,94923,949 CompletedCompleted Orco Property GroupOrco Property Group

Carrefour EdenCarrefour Eden Prague 10Prague 10 6,4886,488 CompletedCompleted CarrefourCarrefour

Korunni DvurKorunni Dvur Prague 10Prague 10 4,1534,153 CompletedCompleted Africa Israel InvestmentAfrica Israel Investment

Novodvorska PlazaNovodvorska Plaza Prague 4Prague 4 5,0005,000 CompletedCompleted Plaza CentersPlaza Centers

The Park Building 8The Park Building 8 Prague 4Prague 4 8,0008,000 CompletedCompleted AIG LincolnAIG Lincoln

Andel City Phase IIAndel City Phase II Prague 5Prague 5 9,4009,400 CompletedCompleted UBMUBM

The Smichov GateThe Smichov Gate Prague 5Prague 5 10,00010,000 Completed Completed (opening 3Q 2006)(opening 3Q 2006)

ImmoconsultImmoconsult

Palac KrizikPalac Krizik Prague 5Prague 5 14,00014,000 CompletedCompleted CecopraCecopra

E PointE Point Prague 6Prague 6 7,1507,150 Under ConstructionUnder Construction ViterraViterra

RokytkaRokytka Prague 8Prague 8 4,0004,000 Under ConstructionUnder Construction SkanskaSkanska

““Nestle” CentrumNestle” Centrum Prague 4Prague 4 15,00015,000 Under ConstructionUnder Construction SEKYRA Group, a.s.SEKYRA Group, a.s.

BB Centrum GamaBB Centrum Gama Prague 4Prague 4 26,65026,650 Under ConstructionUnder Construction PasserinvestPasserinvest

South PointSouth Point Prague 4Prague 4 6,4476,447 PlannedPlanned AMA Development s.r.o.AMA Development s.r.o.

Office Park Nove Butovice/COffice Park Nove Butovice/C Prague 5Prague 5 6,8736,873 Planned (2008)Planned (2008) PDPPDP

TOTAL m² 165,341TOTAL m² 165,341

Major Projects in Prague - 2006

Key Market TrendsKey Market Trends

1.1. Regional secondary office market growth due to Regional secondary office market growth due to higher demand, lower rental rates, ample labor higher demand, lower rental rates, ample labor supply and lower wagessupply and lower wages

2.2. Institutional investors and developers looking to Institutional investors and developers looking to negotiate longer-term lease contracts, while negotiate longer-term lease contracts, while National and International companies are looking National and International companies are looking for more flexible opportunitiesfor more flexible opportunities

3.3. Larger-sized leases being signed in 2006 Larger-sized leases being signed in 2006

4.4. Development of brownfields in Prague is Development of brownfields in Prague is gradually changing the face of the citygradually changing the face of the city

12-Month Forecast12-Month Forecast

• Increased office supply across the Prague region could Increased office supply across the Prague region could potentially create a slight increase in vacancy rates.potentially create a slight increase in vacancy rates.

• Foreign investment money will continue pouring into the Foreign investment money will continue pouring into the CEE Region for the foreseeable futureCEE Region for the foreseeable future

• Strong absorption, continued economic growth and job Strong absorption, continued economic growth and job creation will add to demand for new construction in growing creation will add to demand for new construction in growing secondary markets like Brno and Plzen.secondary markets like Brno and Plzen.

• Adoption of the Euro will likely be delayed until 2012 or Adoption of the Euro will likely be delayed until 2012 or 2013, which could benefit the Czech economy and lead to 2013, which could benefit the Czech economy and lead to further strengthening of the Czech crown.further strengthening of the Czech crown.

Adam Sherriff-ScottAdam Sherriff-ScottDirector, Office Leasing & Tenant RepresentationDirector, Office Leasing & Tenant [email protected]@colliers.cz

Tomas FenclTomas FenclSenior Consultant, Office Leasing & Tenant RepresentationSenior Consultant, Office Leasing & Tenant [email protected]@colliers.cz

Mark ForwardMark ForwardSenior Consultant,Tenant RepresentationSenior Consultant,Tenant [email protected]@colliers.cz

Meagan CaldwellMeagan CaldwellMarketingMarketingmeagan.caldwell@[email protected]

Filip RerkoFilip [email protected]@colliers.cz

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