INVEST IN MADRID October 2016

INVEST IN MADRID October 2016

The Region of Madrid A BUSINESS-FRIENDLY ECONOMY 2

5 REASONS TO INVEST AND OPERATE IN MADRID 1 2 ECONOMIC DRIVER OF SPAIN GEOSTRATEGIC LOCATION AND WORLD CLASS INFRASTRUCTURE 3 4 5 EXCEPTIONAL HUMAN CAPITAL LEADERS IN INNOVATION UNIQUE QUALITY OF LIFE 3

1 ECONOMIC DRIVER OF SPAIN 4

1 Economic driver of Spain Key figures SIZE 8,030 km 2 (1.6% of Spain) POPULATION (2016) 6.46 million (13.9% of Spain) GDP (2015) 203,626 million (18.8% of Spain) GDP PER CAPITA (2015) 31,812-1 st region in Spain 36.6% higher than the national average GDP BY SECTOR 2015 5

1 Economic driver of Spain Madrid, an economic powerhouse, is the main financial hub and decision-making centre in Spain. MADRID LEADS SPANISH GROWTH Source: FUNCAS 6

1 Economic driver of Spain MAIN FINANCIAL HUB OF SPAIN Madrid is home to the operational head offices of the main Spanish banks (Santander, BBVA, Popular, Bankinter, Bankia) and foreign banks, as well as the head offices of the leading investment funds in Spain. All the main national and international financial institutions in Spain are located in Madrid: Madrid Stock Exchange, IBEX, Latibex, The National Securities Market Commission, Spain Financial Center, Inter-American Development Bank, European Investment Bank, IOSCO, etc. Financial centre operating on a global level: Santander and BBVA are among the top banks in the Eurozone in terms of market capitalisation (1 st and 3 rd respectively). 6th European market in terms of market capitalisation (after the London Stock Exchange, Euronext, Deutsche Börse, SIX Swiss Exchange and NASDAQ OMX Nordic Exchange). 7

1 Economic driver of Spain LEGISLATIVE & REGULATORY DECISION-MAKING CENTRE The vast majority of Spain s governmental and regulatory institutions and organisations are based in Madrid: Office of the Head of State, Central Government, Congress of Deputies, Senate, statewide ministries and public companies, Constitutional Court, Supreme Court, National Markets and Competition Commission, etc. BUSINESS DECISION-MAKING CENTRE There are over 561,000 businesses registered in Madrid, accounting for almost 16% of all businesses in Spain in 2016. There are 4,045 foreign businesses in Madrid, accounting for 39.1% of all foreign businesses in Spain. The Spanish head offices of all the large law firms, engineering companies, international consultancy firms and estate agencies are based in Madrid: PricewaterhouseCoopers, Deloitte, Accenture, KPMG, EY, Garrigues, Cuatrecasas, JLL, Aguirre Newman, etc. 8

1 Economic driver of Spain BUSINESS DECISION-MAKING CENTRE 3 rd city in the European Union (after London and Paris) with the most operational head offices of multinational companies, according to the 2015 FORTUNE 500 list (Santander, Telefónica, Repsol, ACS and Mapfre). Madrid is home to the head offices of the majority of the leading Spanish companies: almost 3 out of every 4 Spanish companies on the Forbes 2000 Global companies list are based in Madrid (19 of 26). 73% of the largest companies in Spain are in Madrid Source: Forbes 2016 9

1 Economic driver of Spain Leader in securing Foreign Direct Investment (FDI). For investments in Spain, Madrid is the 1 st choice. SPAIN RECEIVES MORE FDI THAN ALL OTHER EUROZONE ECONOMIES 10

1 Economic driver of Spain Leader in securing Foreign Direct Investment (FDI). For investments in Spain, Madrid is the 1 st choice. 6 OF EVERY 10 INVESTED IN SPAIN ARRIVE IN MADRID 11

1 Economic driver of Spain Solid base in industry and exports. Excellent services provision. INDUSTRY WITH HIGH ADDED VALUE The Region of Madrid is the second region in Spain in terms of industrial production and the third in terms of exports volume. Production with a high technological content: The Region of Madrid is the centre of the aerospace sector in Spain: EADS-AIRBUS, BOEING, BOMBARDIER and others. 30% of the national ICT market and 45% of the head offices of all ICT companies in Spain. Science and biopharmaceutical companies: the Region of Madrid is home to 35% of all scientific production in Spain. It also has a number of powerful clusters in the automotive sector, the publishing industry and in renewable energy, among others. Madrid is the national leader in engineering: 39% of companies 75% of revenue 47% of total employment in this sector. 12

1 Economic driver of Spain THE LARGEST SERVICES PLATFORM IN SPAIN Nearly 80% of all people living in Madrid work in the service sector. 7 groups with head offices in Madrid are among the 50 top international building companies (Top 225 International Contractors): FCC, ACS, Sacyr, Técnicas Reunidas, Ferrovial, Isolux and OHL. The Region of Madrid is an international benchmark for the granting of administrative concessions and Public-Private Partnership (PPP) funding projects. SPAIN LEADS THE GLOBAL TOURISM SECTOR In 2015, Spain was said to have the most competitive tourism sector in the world, according to the World Economic Forum. 3 rd global market in terms of revenue from tourism (just after the USA and China). 3 rd country in the world in terms of number of tourists (after France and the USA), with 68,1 million visitors in 2015. 74 million tourists are expected for 2016. 13

1 Economic driver of Spain MADRID: AN INTERNATIONAL TOURISM CENTRE Madrid had 11.17 million visitors in 2015 (+8.6% year on year). Madrid is the world's 3 rd most popular conference destination, according to the prestigious rankings of the International Congress and Convention Association (ICCA), after Paris and Vienna. Madrid is the 2 nd best shopping destination in Europe, according to the Globe Shopper City Index Europe. 14

2 GEOSTRATEGIC LOCATION AND INFRASTRUCTURE 15

2 Geostrategic location and infrastructure

2 Geostrategic location and infrastructure Prime location between Europe, Africa and Latin America MADRID: LEADING AIRPORT IN THE SOUTH OF EUROPE 1 st Spanish airport and 5 th in Europe for passenger and cargo traffic. Named best airport in the south of Europe. The T4 terminal is the 3 rd best terminal in the world (behind T5 at Heathrow and T3 at Singapore Changi). (1) Capacity for 70 million passengers a year. Large margin for additional traffic with no risk of congestion. Exceptional intermodal connectivity: the airport is 12 km from the city centre (20 mins). The Metro and Cercanías trains and the bus network connect the airport to the city of Madrid and the surrounding metropolitan area. Source: (1) Skytrax 2015

2 Geostrategic location and infrastructure MADRID: LEADING AIRPORT IN THE SOUTH OF EUROPE Barajas is the central hub of the national airport network and the leading European airport for flights to Latin America: 1/5 of connections between Europe and Latin American run from Madrid. 202 DIRECT FLIGHT DESTINATIONS FROM MADRID 135 (Europe) 13 (US & Canada) 10 (Middle East) (Asia) 6 30 (Latam) 18 (Africa)

2 Geostrategic location and infrastructure MADRID: NERVE CENTRE OF THE SPANISH MARKET Madrid is the origin and centre of the national transport network. Madrid is a maximum of 6 hours by road from all other major cities and towns in Spain. Two high-capacity roads cross the border with France and there are highspeed rail connections with the rest of Europe. Madrid is the main hub of the 2 nd most extensive high-speed rail system in the world (covering 3,000 km), second only to China. NATIONAL RAIL NETWORK More high-speed lines now available New high-speed lines in 2015 An extensive regional network of motorways connects the towns in the Region of Madrid to the national network, forming the backbone of the territory and ensuring access to the rest of the peninsula from anywhere in the Region.

2 Geostrategic location and infrastructure MADRID, PENINSULAR LOGISTICS CENTRE Logistics in Madrid cover an area of 38 million m 2, the largest area dedicated to this sector in Spain. 75% of logistics companies operating in Spain (both Spanish and international) have their head offices in Madrid. The Dry Port in Coslada (bonded warehouse) is 10 minutes from the airport. It connects Madrid in just a few hours with the country's leading ports (Algeciras, Valencia, Barcelona, Bilbao) and is a very cost-effective system. The main logistics corridors in the Region are located around the A-2 and the A-4 motorways. The main attraction of these areas is their close proximity to Madrid and the availability of sites that are suitable for almost any type of activity.

EXCEPTIONAL HUMAN CAPITAL 21

3 Exceptional human capital An open, diverse and talented society HIGHLY QUALIFIED PEOPLE Workforce of over 3.4 million people. 1 st region in Spain in terms of activity (64.2% compared to 59.3% average across Spain). 46% of the workforce has a university degree (28.5% in the EU-28, according to Eurostat). CULTURAL DIVERSITY 26% of all people living in the Region of Madrid come from other areas of Spain. 12.2% are foreign-born, representing over 180 different nationalities.

3 Exceptional human capital AVAILABILITY OF TALENT Madrid has 15 universities. 3 of the best business schools in the world are based in Madrid: IE Business SchooI, IESE and ESADE. Availability of speakers of European languages

3 Exceptional human capital COMPETITIVE AND COST-EFFECTIVE WORKFORCE

3 Exceptional human capital COMPETITIVE AND COST-EFFECTIVE WORKFORCE The moderation of wages is making it possible for Spain to maintain its competitivity, while costs continue to increase significantly throughout the rest of the European Union.

3 Exceptional human capital LEADER FOR SHARED SERVICE CENTRES Madrid has been particularly successful in recent years in attracting and growing Shared Service Centres: 26

3 Exceptional human capital LEADER FOR CUSTOMER SUPPORT AND BPO CENTRES Also regarding captive Customer Support Centres and BPO Centres with a wide geographical and process scope. 27

LEADERS IN INNOVATION 28

4 Leaders in innovation Madrid: national centre of innovation DYNAMIC ENTREPRENEURIAL ECOSYSTEM Madrid is home to 21.1% of all companies established in Spain in 2015 and 49.1% of the total capital subscribed by these new companies. More businesses are established each year in the city of Madrid than in Barcelona, Valencia, Seville and Zaragoza put together. Largest national concentration of high-growth, high-potential start-ups. 20% of total. Madrid is one of the European cities with the highest number of business accelerator and incubator schemes for entrepreneurs. Thanks to its innovation-friendly environment, Google has opened an Entrepreneur Campus in Madrid, the 2nd in Europe after the London Campus. 29

4 Leaders in innovation ADVANCED BUSINESS ENVIRONMENT Leading Spanish region for technological exports. (1) 2nd region in the EU-28 for technology-related employment: 220,000 professionals working in hightech industrial and services sectors (35.3% of Spanish high-tech jobs). (2) Source: (1) DATACOMEX 2015; (2) EUROSTAT 2015 30

4 Leaders in innovation Madrid: Spain's leading R&D centre R&D INVESTMENT DRIVE 1st Spanish region for spending on R&D: 3,435 million euros, 1.75 % of GDP (Spain allocates 1.24%). (1) Madrid is home to 43 of the 135 National R&D Centres. (2) 25 Madrid 43 23 11 31

4 Leaders in innovation LEADER FOR PRIVATE CENTRES OF R&D EXCELLENCE A large number of multinationals have located their centres of excellence in Madrid in order to carry out important research work: 32

UNIQUE QUALITY OF LIFE 33

5 Unique quality of life Madrid: an exceptional place to live WARM AND SUNNY CLIMATE Madrid has 2,679 hours of sunlight a year. ONE OF THE SAFEST CAPITAL CITIES Madrid is one of the safest cities in Europe, standing with a very low crime rate. FIRST RATE EDUCATION AND HEALTHCARE Bilingual education in over 600 public schools and education centres. Wide range of private international schools. The healthcare system in Madrid is universal and highly advanced. Over 80 public and private hospitals across the Region, boasting some of the highest quality standards in Europe. 34

5 Unique quality of life EXCELLENT URBAN INFRASTRUCTURE Madrid has a highly sophisticated, competitive and efficient transport system. The Madrid Metro (300 km and 301 stations) is modern, safe, clean and efficient providing fast and cost-effective transport across the city and its metropolitan area. Madrid is one of the capital cities with the least congestion in the world, with much less traffic than the majority of European cities. Increase in overall travel times Versus free-flowing traffic 35

5 Unique quality of life THE BEST GASTRONOMY & CULTURE Madrid has one of the best-preserved historic quarters in Europe, with extensive pedestrianised areas complemented by a broad range of tourist attractions, cafes, bars, restaurants and shops. One of Madrid's biggest attractions is its abundance of bars, restaurants and terraces, always very busy from mid-morning to nightfall. There are 9 UNESCO World Heritage Sites within two hours of Madrid: Aranjuez, Alcalá de Henares, San Lorenzo del Escorial, Toledo, Cuenca, Segovia, Ávila, Salamanca and Córdoba. Paseo del Arte: 3 of the most important museums in the world (Prado, Thyssen and Reina Sofía) are all within 10 minutes of each other in Madrid. The Prado Museum has an exceptional collection of work by Velázquez, Goya and El Greco. The Reina Sofía Museum is home to Guernica by Picasso and a wide selection of art from the 19th century to modern day (Miró, Kandinsky, Dalí) The Thyssen Museum has a fascinating collection ranging from Gothic and Renaissance masterpieces to Modern Art by artists such as Hopper or Bacon. 36

5 Unique quality of life MADRID: 2 ND BEST SHOPPING DESTINATION IN EUROPE 37

5 Unique quality of life UNBEATABLE SPORTS Madrid is one of the most attractive destinations in the world for sports fans. The Region has 4 first-division teams in the Spanish football league "La Liga": Real Madrid, Atlético de Madrid, Rayo Vallecano and Getafe. The locals are also really passionate about basketball, thanks to the big first-division teams in the city such as Estudiantes or Real Madrid. The Region of Madrid offers ample opportunity to take part in any number of sports such as tennis, hiking, climbing, skiing, cycling and many more. Madrid offers golf courses catering to all preferences and levels, where you can both improve your golfing skills or simply get yourself started with this relaxing sport 38

A unique quality of living Madrid has consistently shown, year after year, a strong performance in cost and quality of living rankings. Spain as a country places 2 nd on the OECD WORK-LIFE BALANCE INDEX. 39

A unique quality of living Madrid offers one of the lowest costs of living in Western Europe: Out of the 120 cities that were analised, Madrid ranked 61 st, making it one of the most affordable European capital cities 40

A unique quality of living Out of the 35 most important European cities for business, Madrid would hold a very competitive ranking (22 nd ) as one of the most affordable cities, offering a significantly lower cost of living than London, Paris, Dublin, Amsterdam, Frankfurt, Milan, Rome and even Barcelona. 41

A unique quality of living According to the following index, if we were to take Madrid as a benchmark (=100), the cost of living would be 14.7% higher in Rome, 35.5% in Paris and 37.7% in London. The cost of living in Swiss cities are double that than the cost in Madrid. Rank City Cost of Living Index 1 Zurich, Switzerland 215,8 2 Geneva, Switzerland 215,5 3 Basel, Switzerland 214,1 4 Bern, Switzerland 196,6 5 Oslo, Norway 162,0 6 Copenhagen, Denmark 144,7 7 Stockholm, Sweden 137,8 8 London, United Kingdom 137,7 9 Paris, France 135,5 10 Dublin, Ireland 130,9 11 Helsinki, Finland 127,4 12 Amsterdam, Netherlands 125,8 13 Brussels, Belgium 123,7 14 Frankfurt, Germany 121,9 15 Hamburg, Germany 121,8 16 Milan, Italy 121,2 17 Munich, Germany 120,4 18 Rome, Italy 114,7 19 Vienna, Austria 110,5 20 Marseille, France 103,5 21 Barcelona, Spain 103,3 22 Madrid, Spain 100 42

SUMMING UP: 5 REASONS FOR CHOOSING MADRID ECONOMIC POWERHOUSE AND MAIN DECISSION CENTER IN SPAIN INNOVATIVE AND DYNAMIC BUSINESS ECOSYSTEM ACCESS TO MARKETS: STRATEGIC LOCATION AND EXCELLENT INFRASTRUCTURE HIGH QUALITY OF LIFE AND AFFORDABLE COST OF LIVING QUALIFIED AND COST-EFFICIENT LABOUR FORCE 43

What more could you want? MORE INSTITUTIONAL SUPPORT: A regional government that is dedicated to improving the business climate and in tune with investor needs LESS BUREAUCRACY : A government committed to removing red tape and administrative obstacles LESS FISCAL BURDEN: Madrid has the lowest fiscal pressure among the Spanish regions MORE ECONOMIC FREEDOM: Madrid is the only region in Spain that offers retailers the freedom to set their commercial opening hours according to their needs and preferences. Sales and discount periods are also de-regulated. The individual stores and shopping centers determine their own schedule, not the government. 44

Services provided by Invest in Madrid invest in MADRID is the public agency for foreign investors, it serves as a one-stop shop offering the following services: STRATEGIC CONSULTATION ESTABLISHMENT OF COMPANIES LOCALIZATION INVESTMENT PROJECTS RECRUITMENT INTERMEDIATION WITH INSTITUTIONS AFTER CARE AND EXPANSION SECTORS OF INTEREST ENERGY HEALTH LAND-BASED TRANSPORT SPACE TECHNOLOGY AEROSPACE INDUSTRIAL TECHNOLOGY WATER ADVANCED MATERIALS BIOTECHNOLOGY AND PHARMACEUTICALS NANOSCIENCE NETWORKS AUDIO-VISUAL SECURITY SOFTWARE GRAPHIC ARTS 45

SUCCESS STORIES... a few examples... 46

Recently announced investment projects Investment company Temasek acquires 6% of Repsol ( 1,000 million ). March 2013. Blackstone purchases apartments in Madrid worth 125 million. July 2013. Bill Gates buys 6% of FCC ( 155 million ). October 2013. Apollo acquires Santander Real Estate ( 664 million ). January 2014. The Mexican group ADO buys the transport company Avanza ( 600 million ). The Chinese company Dalian Wanda purchases "Edificio España" for 265 million. Capital Group, one of the largest investment management organisations, opens its Madrid office in 2014. Mondelez (Kraft foods) moves its Spanish office to Madrid (from Barcelona). CostCo opens an office in Getafe (Madrid). IDI Gazeley (Logistics Brookfield Properties) builds a 23,000-m 2 logistics centre in Torrejón de Ardoz for Carrefour. 47

UST GLOBAL, a company with roots in India and the USA, is a leading provider of end-to-end ICT services and solutions for companies on the Global 1000 list. Net profit: 700 million euros Employees: 7,500 USA, Canada, Mexico, Panama, Costa Rica, Brazil, India, Philippines, Singapore, Malaysia, UK, Germany and Poland Source Competition Need Invest in Madrid Action Result Forecast Background Barcelona, Zaragoza To provide services to clients on the Global 1000 list. Search for companies (to potentially acquire), analysis of the competition, search for locations and financial support for recruitment acquisition (440 employees) and 100 jobs created in Creation of a campus to improve service provision in Europe and North Africa. 48

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Source Background DEALZ, a subsidiary of the British group Poundland, is a retail distribution chain with over 600 stores in the UK and Ireland. It offers a broad range of over 3,000 products from leading brands at a blanket price of 1.50. Net profit: 1,536 million euros Employees: 14,000 Competition Need Invest in Madrid Action Result Andalusia and the Autonomous Region of Valencia To open new stores. Licences. Hiring new staff. Search for locations. Institutional agenda (Training plan, employment, launches) Administrative processes and licences Implantation, 120 jobs created, 4 stores UK, Ireland and Spain. Forecast To open 10 stores 50

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Origin Background Norwegian Airlines is the second largest airline company in Scandinavia and the third largest low-cost airline in Europe. Net profit: 2,574 million euros Employees: 2,700 Competition Need Catalonia and central regions of Spain To open a fixed operating base at the Madrid Barajas Airport Invest in Madrid Action Result Scheduling of meetings etc with institutions: AENA and the regional government Investment: 60 million euros Employment: 69 workers Fixed base of operations opened at Madrid Airport with 64 weekly flights (London, Oslo, Warsaw, Stockholm, Hamburg, Malta and Helsinki) 52

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Origin Background Created by the IOC to manage coverage and broadcasting of sporting events and the summer and winter Olympic Games. Net profit: 30 million euros Employees: 150 Competition Need Invest in Madrid Action Result European countries and the United Arab Emirates Risk of relocation, search for new location Scheduling of meetings etc with institutions and selection of and visits to public and private buildings Investment: not provided Employment: 160 jobs to be maintained Forecast Creation of 100 new jobs 54

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THANK YOU INVEST IN MADRID C/ General Díaz Porlier 35-1ª 28001 Madrid Email: investinmadrid@investinmadrid.com Tel: +34 91 310 5990 www.investinmadrid.com 56