Marie Hunt

Director of Research

What We Said Last Year

• “Further Yield Contraction Highly Unlikely”

• “Rental Return In The UK No Longer Self-Financing”

• “Lenders More Vigilant In Their Loan Assessments”

• “Irish Investors Less Dominant In The UK”

• “Office Sector Best-Performing Sector Of The Irish Market”

What We Said Last Year

• “Energy Performance Of Buildings Increasingly Topical”

• “Conditions In The Retail Sector More Competitive”

• “Securing Anchor Retail Deals Very Challenging”

• “Duty Of The Development Community To Adopt A Realistic

Approach & Put The Brakes On Development Of New Homes”

ECONOMIC CONDITIONS

FUNDINGSUPPLY

& DEMAND

CONFIDENCE

Property Market

Performance

Sectors & Sub-Sectors

The OccupierMarkets

The New Homes &

Development Land

Market

New Homes Market

Occupier Markets

Investment Market

Development Land Market

Irish Investment

• Caution Will Prevail In The First Half Of 2008

• Yields Will Come Under Pressure

• Many Transactions Will Be Conducted Off-Market

• Huge Focus On Redevelopment Of Prime Assets

• Total Returns Will Moderate

• Stock Selection More Important Than Ever

• Confidence The Vital Ingredient!

Overseas Investment

• Investment Appetite Strong But Investors More Cautious

• Availability & Cost Of Finance Will Dictate Pace In 2008

• Good Buying Opportunities Emerging

• Value Resurfacing In The UK

• More Focus On Established Markets

• Increasing Appetite For Emerging Locations

• Active Spending Expected Although Caution Will Prevail

Offices• Strong Levels Of Activity Expected Although Down On 2007

• Less Reliance On The Financial Sector

• More Forward-Funding Transactions Emerging

• Energy Efficiency & Sustainability Coming To The Fore

• No Significant Increase In Rental Levels In 2008

• Improving Demand For Suburban Offices

• Landlords More Flexible On Lease Terms

• Oversupply Needs To Be Monitored Very Carefully

Retail• Consumer Spending Expected To Ease In 2008

• No Impact On Expansion Plans Of Irish Or Overseas Retailers

• Very Few New Shopping Centres Due To Open This Year

• More Focus On Redeveloping Older Facilities

• Landlords More Flexible On Leasing Terms

• Possibility Of More Turnover-Based Transactions

• Good Anchor, Good Design & Appropriate Tenant Mix Crucial

• Fundamentals To Remain Favourable But Some Casualties As

Competition Intensifies

Industrial

• Healthy Levels Of Take-up Expected In 2008

• Occupiers Continuing To Re-Locate To New ‘Hotspots’ Along New &

Upgraded Road Networks

• Supply Unevenly Distributed

• Retail Sector A Bigger Driver Of Demand

• Demand For Larger Units Increasing

• No Significant Uplift In Rental Values Expected

• Land Values To Remain Stable

Hotels• Pick-Up in Transactional Activity in 2008

• Pent-Up Demand For Quality & Established Hotels

• Pace Of Activity Dependent On Availability Of Funding

• Purchasers Primarily Existing Operators

• More Focus On Core Fundamentals

• Existing Hotel Assets More Efficient Route Into Business

• Profitability & Competitiveness Being Eroded

• Hotel Business Fundamentally In A Very Strong Position

Pubs• Reduction In Number Of Developers Buying Pubs In 2008

• Strong Prices For Well-Located Properties With Established

Turnover Figures & Future Trading Potential

• Existing Pub Operators Will Dominate Purchasing Activity

• Trading Conditions Will Put Some Under Financial Pressure

• Adapting To Changing Market Conditions Vital

• A High Margin Business That Can Be Very Profitable

• Availability Of Bank Funding & Realistic Price Expectations Will

Dictate The Pace Of Sales Activity

New Homes• Buyer Apathy Yet To Dissipate

• Stamp Duty Changes In Budget 2008 Welcome

• Further Decline In Annual Completions Expected This Year

• Considerable Backlog Of Unsold Inventory To Be Absorbed

• Developers Unlikely To Commence New Schemes Until 2009

• Prices Stable In 2008 - Some Uplift Possible In 2009

• Fundamentals Remain Positive

• Pace Of Activity Wholly Dependent On Confidence

Development Land• Increased Transactional Activity Following 2007 Price Falls

• Increase In Off-Market Transactions

• Demand From Opportunistic Developers For Well-Located Sites

• Demand For Provincial Land Will Remain Relatively Weak

• Lenders Need To Obtain Independent Advice

• Knowledge Of Existing And Proposed Transport Links Vital

• Some Irish Developers Focussing Overseas

• An Active Year For Experienced Players Taking A Long-Term View

Summary

• The Irish Property Market Will Weather The Storm Well In 2008

• The Irish Economy Is Better Positioned Than Most

• Activity In Each Sector Will Vary Considerably

• Shrewd Investors Will Seek Out Buying Opportunities

• Occupier Markets Healthy Albeit Rental Growth More Subdued

Summary

• Pent-up Demand For Good Hotel & Pub Opportunities

• Significant Increase In Transactional Activity In Development Land

Sector If The Market Accepts Price Adjustments

• New Homes Sector Will Rebound But Slowly

• A Challenging Year But Good Opportunities For Those Taking A Long-

Term View

• Availability & Cost Of Funding And Confidence Vital

ECONOMIC CONDITIONS

FUNDINGSUPPLY

& DEMAND

CONFIDENCE

Property Market

Performance