TOURISM SWEDISH STYLE www reag-aa com Tourism

TOURISM “SWEDISH STYLE" www. reag-aa. com

Tourism “Swedish style” – why does the country attract so many tourists as well as investors? Elena Zanlorenzi, Head of Research European R&D Office REAG 26. 06. 2009 Stockholm, Sweden

INDEX 1. SWEDEN - A MIDSUMMER NIGHT’S DREAM 2. INVESTMENT 3. TOURISM 4. LEISURE PROJECTS IN PIPELINE

1. SWEDEN – A MIDSUMMER NIGHT’S DREAM What comes to one’s mind when people think of Sweden? • Vikings • Nordic Skiing • ABBA • IKEA • Ingmar Bergman • Pippi Longstocking • Social equality • High standard of living • Volvo • Excellent alternative energy programs • Cell phones • Midnight sun • Highly developed technology • Crisp bread • Traditional red houses • H&M

1. SWEDEN – A MIDSUMMER NIGHT’S DREAM Outstanding accomodations The Swedish hotel sector offers a wide range of unique accommodation styles that bring the country to be considered an unforgettable vacation. Its outstanding ideas of lodging can easily compete with most prime locations in the whole world. • Ice-hotel • Underwater hotel • Tree-house • Jumbo-jet hostel • Authentic 19 th century prison • Monastery from 1420 • Floating hotel • Historic underground silvermine • Traditional forest hut in the woods • Lighthouse • Several castles • A hotel with en-suite ice fishing and a view to the northern lights

2. INVESTMENT Gateway to invest in Scandinavia The Scandinavian property market comprises stable countries with sizeable investment markets, high liquidity and transparency. Sweden, the largest country, is the natural base for investment in the region. Stockholm is the natural hub of Scandinavia, thanks to its financial centre and its reputation to have the most culture offerings per capita in the world. Voices about Sweden: • “EU’s most innovative nation”; • “Most interesting country for FDI”; • “The world’s most networked economy”; • “On top-3 list for international trade”; • “A world competitiveness leader”.

2. INVESTMENT Overview ü Four of Europe’s ten most innovative regions are Swedish; ü Europe’s 3 rd-largest real estate investment market in 2008; ü Europe’s 5 th-largest cross-border investment location; ü Total real estate investment reached € 13. 6 billion in 2008; ü Investment by international players fell by 47% to € 3. 9 billion; ü Opportunistic investors left the market but national institutional investors ensure high liquidity even in difficult times; ü Investment focus towards Stockholm, Goeteborg and Malmoe; ü Some € 30 billion is being invested in strategic city development and infrastructure projects in the Stockholm region (until 2030).

2. INVESTMENT Direct property investment volume in Scandinavia and cross-border investment in Sweden 10. 0 9. 0 8. 0 billion € 7. 0 6. 0 5. 0 4. 0 3. 0 2. 0 1. 0 0. 0 Sweden Norway Source: REAG work-out on different sources Denmark Finland

2. INVESTMENT European comparison of real estate investment volume by city and country Largest European investment markets by total transactions 2008 Top 10 European cities Volume in € billion London 11, 402 Paris 3, 696 Stockholm 2, 610 Berlin 2, 063 Copenhagen 1, 960 Munich 1, 831 Hamburg 1, 605 Brussels 1, 577 3% 4% 3, 081 Moscow 23% 8, 499 Madrid 19% Source: REAG work-out on different sources 5% 18% 6% 10% UK Germany Sweden 12% France Netherlands Spain Norway Finland Others

2. INVESTMENT Investment by investor type and destination Source: REAG work-out on different sources

2. INVESTMENT Why Sweden? Key features: • Smooth and reliable transaction process; High quality of local advisors Use of Standards (IFRS) Low costs for transferring assets • Easy access to extensive and reliable market information; • Uncomplicated taxation structure; • Minimal transaction risks; • The legal system is well-suited for cross-border property investments. High transparancy Documentation is in English Short lead times to deal conclusions Simple handling of mortgages

3. TOURISM Overview ü Swedish tourism has grown steadily for the past decade and is one of the fastest growing industries in Sweden; ü Since 2002, Sweden’s international tourism revenues more than doubled; ü Visitor volumes increased faster than the European average; ü The Swedish tourism industry grew to a total turnover of € 20. 4 billion in 2008, an annual increase by 10%, while foreign tourists expenditure in Sweden raised by almost 20% to € 7. 1 billion; ü Swedish municipalities are printing 4 -colored marketing brochures for € 75. 9 million a year; ü Sweden is investing in tourism development all over the country - everything from building the worlds biggest wooden moose to indoor rapids, restored viking villages and witch hotels.

3. TOURISM International comparison of tourism industry’s percentage of GDP and share of national GDP of some Swedish industries Tourism has a lower impact on the Swedish economy compared to other countries with a fluctuation between 2. 6% and 2. 9% from 1995 until now. This shows though that the tourism industry’s share remains relatively constant. Spain 11. 0 Austria 6. 5 France 6. 4 Norway 4. 7 Ireland 4. 0 Netherlands 3. 5 Germany 3. 2 Sweden 2. 9 Denmark 2. 8 Finland 2. 4 Canada 2. 3 USA 2. 2 0. 0 2. 0 4. 0 Source: Nutek SCB & ETC 6. 0 % 8. 0 10. 0 12. 0

3. TOURISM Tourism industry in brief (annual variation) ü Total number of international nights spent: up 2. 3%, from which is - Europe (without Scandinavia): up 1. 0% - Scandinavia (without Sweden): up 2. 4% - Sweden: up 2. 0% - Non-European countries: up 6. 4% ü Total turnover of the travel industry grew by over 10%; ü Since 1993, the total number of nights spent has grown by almost 60%; ü Since 1995, the tourism industry has supplied about 50, 000 new full-time jobs (47% growth); ü In Stockholm, hotel guests spent on average € 210 per day, while business travellers spent on average € 265 per day in 2008.

3. TOURISM Annual tourism data in Scandinavia tourist arrivals 3, 500 3, 000 thousands 2, 500 2, 000 1, 500 1, 000 500 0 Sweden Source: OECD, Ikanen Norway Finland Denmark

3. TOURISM Nights spent from abroad and type of accommodation in Sweden type of accomodation 35% 52% 6% 7% hotels Source: Nutek SCB holliday villages youth hostels camp sites

3. TOURISM Tourism turnover and consumption ü Total turnover in the Swedish tourism industry has increased by over 90% at current prices since 1995; ü Domestic tourism consumption in Sweden has increased by 65% in the same time; ü Foreign visitor’s consumption in Sweden has increased by 165%. ü Swedish leisure travellers account for over 2/3 of total domestic tourism consumption. participation of total turnover in the Swedish tourism industry 35% 45% 20% domestic leisure travellers domestic business travellers foreign visitors Source: Nutek SCB

3. TOURISM Top 5 counties by number of nights spent (left) and accommodation revenue (right) Norrbotten 3. 5% Dalarna 7. 8% Dalarna 4. 3% Stockholm 19. 2% Vaestra Goetaland 15. 8% Vaestra Goetaland 16. 2% Skane 9. 6% Stockholm 32. 6% Kalmar 5. 4% Skane 9. 8% Forecast: • WTO predicts a 12% global increase in international travelling until 2010 and 73% up until 2020; • For Europe, until 2010 there will be an increase of 10% and 50% until 2020; • Sweden is outperforming Europe and is following international trends.

3. TOURISM Major hotel transactions in Scandinavia – single asset transactions Property Location Rooms Sale price in € Buyer Investor type Sokos Hotel Helsinki Finland 202 42, 000 Exilion Capital Finnish real estate equity fund Copenhagen Marriott Denmark 395 63, 000 Blackstone Group International private equity company Rica Hotel Bodo Norway 113 10, 730, 580 Norgani Hotels ASA Norwegian public hotel property company Clarion Collection Hotel Bastion Norway 99 16, 176, 256 Norgani Hotels ASA Norwegian public hotel property company Quality Hotel Mastemyr Norway 152 17, 500, 000 Home Properties AB Swedish public hotel property company Park Inn Oslo Norway 118 21, 990, 000 Norgani Hotels ASA Norwegian public hotel property company Radisson SAS Hotel Sweden 91 11, 037, 295 Warimpex Austrian public investment company Source: HVS (2007 – 2008)

3. TOURISM Major hotel transactions in Scandinavia – portfolio transactions Properties Location Rooms (Number of properties) Sale price in € Northern European Properties Portfolio Sweden 6, 477 (39) 805, 000 Best Western & Quality Park Hotel Sweden 375 (2) Norgani Hotels Scandinavia Remmen Hotels Denmark Source: HVS (2007 – 2008) Buyer Investor type Cap. Man Danish private equity company 13, 700, 000 Pandox AB Swedish public investment company 12, 488 (73) 87, 454, 500 Norwegian Property ASA Norwegian public investment company 367 (3) 100, 000 Nordic Partners Icelandic private investment company

4. LEISURE PROJECTS IN PIPELINE Opportunities ü The travel industry offers a range of investment opportunities for: - hotel owners and operators - theme park operators - service and infrastructure providers ü Potential exists both in cities as well as in the countryside; ü There is a real potential foreign investors on the Stockholm hotel scene, especially as Stockholm continues to grow as a tourist destination; ü Currently, there are few economy class hotel chains established in the Swedish capital and there are opportunities for more players on the Stockholm hotel and leisure scene; ü Its location, reliability and affordability has developed Stockholm also into a popular meeting and conference destination.

4. LEISURE PROJECTS IN PIPELINE Interesting investments coming up Stockholm: ABBA Museum Solna: Arena City Upplands Vaesby: Villundaparken Upplands Vaesby: Infra City Uppsala: Travel Center Stockholm: Ullna Ski Resort Stockholm: Hagelby Experience Park Stockholm: Waterfront Complex

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