Caracas, July 2006 REAL ESTATE Executive Resume Get the complete version at www.conapri.org Virtual Store

Table of contents Advantages offered investors Legal Framework: Tax System: Income Tax Law (ISLR – Ley de Impuestos Sobrel a Renta), Aggregate Value Law (IVA - Ley de Impuesto al Valor Agregado ), Organic Law against trafficking with and consumption of illegal drugs and narcotics (LOCTICSEP - Ley orgánica contra tráfico ilícito y el consumo de sustancias estupefacientes), and Organic Law of Science, Technology and Innovation (LOCTI: Ley Orgánica de Ciencia, Tecnología e Innovación). Regulation of Foreign Investment Agreement for the Promotion and Protection of Investments Investment Incentives Investment Procedures How to build a company? Legal Reliability Contracts Business and Integration Agreements

Advantages offered investors

Legal Framework:

Tax System: Income Tax Law (ISLR – Ley de Impuestos Sobrel a Renta), Aggregate Value Law (IVA - Ley de Impuesto al Valor Agregado ), Organic Law against trafficking with and consumption of illegal drugs and narcotics (LOCTICSEP - Ley orgánica contra tráfico ilícito y el consumo de sustancias estupefacientes), and Organic Law of Science, Technology and Innovation (LOCTI: Ley Orgánica de Ciencia, Tecnología e Innovación).

Regulation of Foreign Investment

Agreement for the Promotion and Protection of Investments

Investment Incentives

Investment Procedures

How to build a company?

Legal Reliability Contracts

Business and Integration Agreements

Characteristics of Venezuelan Real Estate Sector. Figures for Venezuelan Real Estate Sector: Distribution of real estate market 2005 Participation % of domestic real estate market 2004 / 2005 Percentage balance for apartments between 2004 and 2005 per region Commercial area in square meters Apartment unit prices - Bs/Mts2 Total Nº of houses that have been completed Housing deficit for 2005: approx. 1,600,000 housing units Development according to Units Completed (U.T.) (State of Lara) Development according to housing units (State of Lara) Housing unit offer for Maracaibo (January 2006) Distribution of housing unit Offer for Monagas (January 2006) Valencia – operations agreed on Legal Framework for the Real Estate Sector: National Constitution, Civil Code, Laws on Public Registry and Notaries, Town and Land Planning, Decentralization, Delimitation and Transfer of Competencies of State Power, Municipal Power, Condominium Property, Real Estate Leases, Sales of Lots, Housing and Habitat Credit System, Protection to Mortgage Debtor and from Expropriation due to public and social convenience, other laws . Table of contents

Characteristics of Venezuelan Real Estate Sector.

Figures for Venezuelan Real Estate Sector:

Distribution of real estate market 2005

Participation % of domestic real estate market 2004 / 2005

Percentage balance for apartments between 2004 and 2005 per region

Commercial area in square meters Apartment unit prices - Bs/Mts2

Total Nº of houses that have been completed

Housing deficit for 2005: approx. 1,600,000 housing units

Development according to Units Completed (U.T.) (State of Lara)

Development according to housing units (State of Lara)

Housing unit offer for Maracaibo (January 2006)

Distribution of housing unit Offer for Monagas (January 2006)

Valencia – operations agreed on

Legal Framework for the Real Estate Sector: National Constitution, Civil Code, Laws on Public Registry and Notaries, Town and Land Planning, Decentralization, Delimitation and Transfer of Competencies of State Power, Municipal Power, Condominium Property, Real Estate Leases, Sales of Lots, Housing and Habitat Credit System, Protection to Mortgage Debtor and from Expropriation due to public and social convenience, other laws .

Apartments in Caracas – Commercialized M2 between 1997 / 2005 Variation in the composition of the Primary Market vs. the Secondary Market No. of apartments per sale in Caracas. Primary and secondary sales. Average area in M2 of commercialized apartments Apartment operations with and without the Law on Housing Policies (LPH) in Caracas Market with LPH financing in Caracas N° of operations executed for apartments in primary sales with the LPH in Caracas between 1986 / 2004 Apartment operations per Municipalities Percentage importance of the N° of operations per municipality in Caracas between 1997 / 2005 M2 commercialized in 2005 – apartments in Caracas Average size of apartments in M2 in Caracas - 2005 Weighted Average Price 2005 (Bs / M2) Areas with highest number of operations during 2005 (apartments) Figures for real estate sector of the Caracas Metropolitan Area (CMA) : Average Percentage of total operations per type of real estate in Caracas (1986 – 2005) Square meters sold between 1997 – 2005 Apartments Sold Evolution of Real End Prices Evolution of Prices in US $ Table of contents

Apartments in Caracas – Commercialized M2 between 1997 / 2005

Variation in the composition of the Primary Market vs. the Secondary Market

No. of apartments per sale in Caracas. Primary and secondary sales.

Average area in M2 of commercialized apartments

Apartment operations with and without the Law on Housing Policies (LPH) in Caracas

Market with LPH financing in Caracas

N° of operations executed for apartments in primary sales with the LPH in Caracas between 1986 / 2004

Apartment operations per Municipalities

Percentage importance of the N° of operations per municipality in Caracas between 1997 / 2005

M2 commercialized in 2005 – apartments in Caracas

Average size of apartments in M2 in Caracas - 2005

Weighted Average Price 2005 (Bs / M2)

Areas with highest number of operations during 2005 (apartments)

Figures for real estate sector of the Caracas Metropolitan Area (CMA) :

Average Percentage of total operations per type of real estate in Caracas (1986 – 2005)

Square meters sold between 1997 – 2005

Apartments Sold

Evolution of Real End Prices

Evolution of Prices in US $

Table of contents Figures for the business establishments real estate sector in the CMA : Business Establishments Sold in Caracas Evolution of Weighted Average Prices for business establishments Unit price for business establishments in US $ per M2 and its variation in % in Caracas between 1986 / 2005 Business Establishments Sold by Municipality in Caracas Commercialized Area - 2005 Average size of business establishments in Caracas in M2 Prices of business Establishments in Caracas Figures for the real estate sector – offices in the CMA : Offices Sold in Caracas Evolution of Weighted Average Prices for offices Prices of Offices in Caracas Offices Sold in Caracas per Municipality Commercialized Area Weighted Average Price - 2005 (Bs / M2) - offices Estimated figures for the office market. The golden Mile

Figures for the business establishments real estate sector in the CMA :

Business Establishments Sold in Caracas

Evolution of Weighted Average Prices for business establishments

Unit price for business establishments in US $ per M2 and its variation in % in Caracas between 1986 / 2005

Business Establishments Sold by Municipality in Caracas

Commercialized Area - 2005

Average size of business establishments in Caracas in M2

Prices of business Establishments in Caracas

Figures for the real estate sector – offices in the CMA :

Offices Sold in Caracas

Evolution of Weighted Average Prices for offices

Prices of Offices in Caracas

Offices Sold in Caracas per Municipality

Commercialized Area

Weighted Average Price - 2005 (Bs / M2) - offices

Estimated figures for the office market.

The golden Mile

Government plans for housing development : Performance of the public sector between 1997 / 2005 – housing completed (national level) Replacement of Shacks for Houses (SUVI) Planejes (Nucleus Plans) New Towns – Closing of Cycle Transbarrios: Transformation of ‘Barrios’ Nude: Habitat and Housing Projects Lots with Utilities Services Mandatory Savings Fund Emergency Plan Program VIII Civil Housing Organization (OCV) Table of contents Convenio Venezuela – China Convenio Venezuela - Irán Créditos Banavih Y Créditos Mixtos Housing and Habitat Emergency Plan - 2005: Execution Summary

Government plans for housing development :

Performance of the public sector between 1997 / 2005 – housing completed (national level)

Replacement of Shacks for Houses (SUVI)

Planejes (Nucleus Plans)

New Towns – Closing of Cycle

Transbarrios: Transformation of ‘Barrios’

Nude: Habitat and Housing Projects

Lots with Utilities Services

Mandatory Savings Fund

Emergency Plan

Program VIII

Civil Housing Organization (OCV)

Convenio Venezuela – China

Convenio Venezuela - Irán

Créditos Banavih Y Créditos Mixtos

Housing and Habitat Emergency Plan - 2005: Execution Summary

COUNTRY PROFILE and the legal system

No restrictions to participation of private capital, whether foreign or domestic, except in the case of iron, a sector reserved for the state. Freedom of repatriation of capital and earnings, following compliance with requirements governing purchase of foreign exchange. Signing of international treaties for protection and promotion of foreign investment. Value Added Tax exemption for imports of goods and services during the pre-operational stage of mining projects geared towards exports. Geographical location favoring access to main markets. Participation in a variety of commercial integration arrangements: Andean Community, G-3 and CARICOM, among others. (*) Venezuela has given notice of termination of the G-3 Agreement. Customs Preferences will be maintained for at least six (6) months. (**) Venezuela has withdrawn from the CAN. Customs Preferences are to be maintained for five (5) years. Advantages available to the investor

No restrictions to participation of private capital, whether foreign or domestic, except in the case of iron, a sector reserved for the state.

Freedom of repatriation of capital and earnings, following compliance with requirements governing purchase of foreign exchange.

Signing of international treaties for protection and promotion of foreign investment.

Value Added Tax exemption for imports of goods and services during the pre-operational stage of mining projects geared towards exports.

Geographical location favoring access to main markets.

Participation in a variety of commercial integration arrangements: Andean Community, G-3 and CARICOM, among others.

(*) Venezuela has given notice of termination of the G-3 Agreement. Customs Preferences will be maintained for at least six (6) months.

(**) Venezuela has withdrawn from the CAN. Customs Preferences are to be maintained for five (5) years.

Advantages available to the investor Source: Yearbook 2005. Institute of Management Development (IMD). In the past two years, Venezuela has been one of the countries whose economy has demonstrated a high rate of recovery, becoming first country in the world in terms of domestic growth during that period. The recovering is reflected on the consumption of the Venezuelan, where food reachs 52% of total comsumption.

In the past two years, Venezuela has been one of the countries whose economy has demonstrated a high rate of recovery, becoming first country in the world in terms of domestic growth during that period.

The recovering is reflected on the consumption of the Venezuelan, where food reachs 52% of total comsumption.

Obtain a visa Incorporate the company Register company with tax authorities Register company’s investment Register company with social security agency Register company with INCE Business Visitor’s Visa Investor Visitor’s Visa Decide on type of company Name the company Pay in minimum required capital File with Mercantile Registry Publish incorporation papers Banking Oil and gas Insurance Mining Other sectors Draw up articles of incorporation and bylaws General Legal Framework

CHARACTERISTICS OF THE SECTOR IN VENEZUELA

El mercado inmobiliario comprende la construcción, remodelación y comercialización de bienes muebles. En tal sentido, este sector está dividido en los siguientes sub sectores: Housing Goverment plans for housing of social interest Private developments (media-class neighborhoods) Housing secondary market Housing, commerce and services are the areas that offer more opportunities, regarding to the size of their markets Characteristics of the sector Commerce / Services Malls and commercial areas Products and services comercialization Commerce and services secondary market Corporative Companies offices Corporate buildings Offices secondary market

Tourist Facilities Hotels and resorts Casinos Tourist attractions However, Venezuelan real estate sector also offers opportunities in the areas of tourism, entertainment and social services, due to the great need for investment in these sectors in order to increase their competitive potential . Characteristics of the sector Entertainment Movies/ Theaters Restaurants Nightclubs Social Schools and other educational centers Sports and cultural facilities Hospitals, clinics and other health centers

Distribution of real estate market - 2005 The Capital region is the only market in which apartments have the lead in the real estate development. In the Central and Guyana region it is offices that lead the market, while in the Plains, the Andes and the Midwest single family homes are the most important in the market. Domestic Indicators Source: Miguel Chacón & Asociados Región Capital Central Los Andes Centro Occidental Oriental Zuliana Insular Guayana Los Llanos Region Peso %

The Capital region is the only market in which apartments have the lead in the real estate development.

In the Central and Guyana region it is offices that lead the market, while in the Plains, the Andes and the Midwest single family homes are the most important in the market.

Participation % of domestic real estate market 2004 / 2005 Domestic Indicators Year 2005 Operaciones Area en m² Monto (US$) OFFICES 841 78.409 46.277.000 COMMERCE 3.186 369.978 487.586.000 APARTAMENTOS 38.383 3.549.765 2.277.716.000 TOTAL 42.410 3.998.152 2.811.578.999 Año 2004 Operations M² Area Amount (US$) OFFICES 1.330 135.000 105.000.000 COMMERCE 3.700 370.000 260.000.000 APARTMENTS 32.600 3.000.000 1.400.000.000 TOTAL 37.630 3.505.000 1.765.000.000 Number of Operaciones: 12,70% m² sold: 14,70% MM US$ comercialized: 59,30% Variation % 2004- 2005:

Percent Average of total operations per type of real estate in Caracas1986 – 2005) Square feet sold 1986 - 2005 Indicators Sources:

Apartments Sold There seems to be a slow recovery in the number of apartments commercialized since 2002. This trend will hopefully continue at least until 2007. Sources: Indicators

There seems to be a slow recovery in the number of apartments commercialized since 2002.

This trend will hopefully continue at least until 2007.

Offices Sold in Caracas The office market has been reactivating in the past years as a result of good macroeconomic conditions, the excess of liquidity in the market, financing options, among others. Moreover, we see some peaks in sales associated to moments in which real estate prices were low as a result of the difficult economic situation. Sources: Offices Indicators

The office market has been reactivating in the past years as a result of good macroeconomic conditions, the excess of liquidity in the market, financing options, among others.

Moreover, we see some peaks in sales associated to moments in which real estate prices were low as a result of the difficult economic situation.

Establishments Sold in Caracas There is a drop in the number of business establishments since 2000. this behavior can be the result of the reduced offer in relation to this sector. Beginning in 2005 and so far in 2006, we have seen a revival in the construction of shopping malls, although the business model in these new projects is directed mostly to leasing the establishments, rather than selling them. Business Establishment Indicators Sources:

There is a drop in the number of business establishments since 2000. this behavior can be the result of the reduced offer in relation to this sector.

Beginning in 2005 and so far in 2006, we have seen a revival in the construction of shopping malls, although the business model in these new projects is directed mostly to leasing the establishments, rather than selling them.

GOVERMENT PLANS

The Ministry of Housing and all its Offices will build 10,467 housing units in 2006, the initial phase of what is known as Plan Caracas. In order to carry out this plan the Government estimates an investment of 2.02 billion bolivars. The Housing Office will build 2,938 units, for which it will spend 303.7 billion bolívars. The Ministry of Environment will execute 1,978 solutions for 193.7 billion bolivars, and the Ministry of Basic Industries will build 1,472 units with an investment of 121.3 billion bolivars. The land in the metropolitan area to be used for these developments were adjudicated by Infrastructure, Housing, environment and Basic Industries. The lots turned over are located in: El Poliedro, La Rinconada, Las Mayas, Las Acacias, Valle Abajo, Terrazas de Lomas del Avila, Maca, Coliseo de La Urbina, Carpintero, El Cerrito, Guaicoco, Minas de Baruta, La Trinidad, La Esmeralda and Los Naranjos. Government Plans

The Ministry of Housing and all its Offices will build 10,467 housing units in 2006, the initial phase of what is known as Plan Caracas.

In order to carry out this plan the Government estimates an investment of 2.02 billion bolivars.

The Housing Office will build 2,938 units, for which it will spend 303.7 billion bolívars. The Ministry of Environment will execute 1,978 solutions for 193.7 billion bolivars, and the Ministry of Basic Industries will build 1,472 units with an investment of 121.3 billion bolivars. The land in the metropolitan area to be used for these developments were adjudicated by Infrastructure, Housing, environment and Basic Industries. The lots turned over are located in: El Poliedro, La Rinconada, Las Mayas, Las Acacias, Valle Abajo, Terrazas de Lomas del Avila, Maca, Coliseo de La Urbina, Carpintero, El Cerrito, Guaicoco, Minas de Baruta, La Trinidad, La Esmeralda and Los Naranjos.

Goverment. Houses finished - 1997 / 2005 Goverment Plans Average = 30,573 houses Houses Years Source: Ministerio para la Vivienda y Hábitat

Making contact Web site htttp://www.conapri.org Phone: +58 212 953 1946 Fax : +58 212 953 3915 Address Calle Guaicaipuro Torre Forum Planta B aja, O ficina LC-A El Rosal Caracas 1060, Venezuela