Invesco Real Estate House View - H2 2020 Asia Pacific country summaries

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Invesco Real Estate House View - H2 2020 Asia Pacific country summaries
Invesco Real Estate House View
                                                        H2 2020 Asia Pacific country summaries

Image: Tsing Ma Bridge, Hong Kong.

This document is for Professional Clients and Qualified Investors (as specified in the important information), for Institutional Investors only in the United States, Australia
and Singapore, for certain specific sovereign wealth funds and/or Qualified Domestic Institutional Investors approved by local regulators only in the People’s Republic
of China, for certain specific Qualified Institutions and/or Sophisticated Investors only in Taiwan, for Qualified Professional Investors in Korea, for certain specific
institutional investors in Brunei, for Qualified Institutional Investors and/or certain specific institutional investors in Thailand, for certain specific institutional investors in
Malaysia upon request, for qualified buyers in the Philippines, and for Professional Investors only in Hong Kong and in Japan as defined under the Financial Instruments
and Exchange Law of Japan. In Canada, the document is intended only for accredited investors as defined under National Instrument 45–106. It is not intended for and
should not be distributed to, or relied upon by, the public or retail investors. Please do not redistribute this document.
Invesco Real Estate House View - H2 2020 Asia Pacific country summaries
Key to tables: 3-year forecast (2020-22)
Supply growth
hh        New supply expressed as a percentage of total stock in the previous year, > +2.0% per annum (pa)
h         New supply expressed as a percentage of total stock in the previous year, in the range +0.5% to +2.0% pa
n         New supply expressed as a percentage of total stock in the previous year, in the range ±0.5% pa
i         New supply expressed as a percentage of total stock in the previous year, in the range –0.5% to –2.0% pa
ii        New supply expressed as a percentage of total stock in the previous year, < –2.0% pa
Rental growth
hh        Net effective rental growth, > +5.0% pa
h         Net effective rental growth, in the range +2.0% to +5.0% pa
n         Net effective rental growth, in the range ±2.0% pa
i         Net effective rental growth, in the range –2.0% to –5.0% pa
ii        Net effective rental growth, < –5.0% pa
Yield shift
hh        Yields rising by > 25 bps pa
h         Yields rising in the range 10 to 25 bps pa
n         Yields moving within ±10 bps pa
i         Yields falling in the range 10 to 25 bps pa
ii        Yields falling by > 25 bps pa
Capital value growth
hh        Capital value growth, > +5.0% pa
h         Capital value growth, in the range +2.0% to +5.0% pa
n         Capital value growth, in the range ±2.0% pa
i         Capital value growth, in the range –2.0% to –5.0% pa
ii        Capital value growth, < –5.0% pa
Australia and New Zealand
Our strategic considerations:                                                                                                        Market performance:
Core                                                                                                                                 + Economic growth has turned negative, led by contractions in
+ Logistics: build-to-core prime quality assets in supply-constrained                                                                  household consumption and strict lockdowns. Australia’s GDP
  locations in east coast cities benefitting from infrastructure                                                                       contraction in Q2 was the largest quarterly fall on record and
  investment and better connectivity.                                                                                                  is now in a recession for the first time in 29 years.
+ Residential: En-bloc transactions for completing new projects in                                                                   + The Australian and New Zealand governments have provided
  Sydney and Melbourne with low pre-sales and strong fundamentals.                                                                     significant fiscal and monetary stimulus to support a recovery,
                                                                                                                                       but risks to the outlook persist.
Higher return                                                                                                                        + Office face rents are holding; however, incentives have risen quite
+ Funding gap: Development finance as banks continue to decrease                                                                       rapidly over H1 2020, resulting in negative effective rental growth.
  exposure to commercial real estate, including preferred equity and                                                                 + Structural tailwinds and flight to efficiency are supporting demand
  mezzanine positions.                                                                                                                 for the prime logistics sector.
+ Office: Repositioning of secondary assets in CBD and suburban                                                                      + Retail sector continues to face pressure from declining foot traffic,
  locations in Melbourne, Brisbane and Perth as pricing and demand                                                                     increases in store closures and rising vacancy. Rents are under
  for secondary weakens.                                                                                                               pressure and yields continue to soften across CBD and dominant
+ Hotels: Monitor for debt or equity as distress increases. Melbourne                                                                  mall categories.
  may witness more distress due to the high supply and lockdown                                                                      + Residential sector is experiencing short-term weakness amidst
  measures.                                                                                                                            a weaker economic backdrop. Medium-term benefits includes the
                                                                                                                                       low interest rate environment, population growth and expected
                                                                                                                                       undersupply.

Market    outlook
Income (rental) growth: Australia                                                                                                    Capital value cycle: Australia
Income (rental) growth                                                                                                               Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                                                       The outlook for capital values in 2021 for select markets
                                               Office                   Industrial                Retail

                                                                                                                                           Declining                                                                                                                      Recovering
Rental                                                                                                                      Rents
growth slowing                                                                                                             falling                                                                                                                               Office: Auckland, Sydney
                                                                                                                                                                                     Retail: Sydney Regional                               Office: Brisbane
                                                                                                                                                                                                                Industrial: Brisbane, Melbourne, Sydney
                                                                                                                                           Retail: Perth Regional
                                                                                                                                                                                                                                                      Office: Perth
                                                                                                                                                                                                                                 Industrial: Perth
                                                 Sydney
                                                                                                                                                                Retail: Brisbane Regional,
                                                                                                                                                                Melbourne Regional
                                           Melbourne                                Perth Regional
                                                                                   Sydney Regional
                                                                                 Brisbane Regional, Melbourne Regional

                                                       Brisbane
                                                                                                    Sydney                                                   ■ Declining
                                                                                                                                                             ■ Stabilizing/Peaking                     Office: Melbourne
                                                                                                                                                             ■ Recovering
                                                                      Perth                                                 Rental
Rents rising                                                                                                       decline slowing
                                                             Brisbane, Perth         Auckland, Melbourne
                                                                                                                                     XXX-PPT-1 MM/YY (6pt)

Source: Invesco Real Estate as of September 2020.                                                                                    Source: Invesco Real Estate as of September 2020.

                                                                                                                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)
    Source: Invesco Real Estate as of September 2020                                                                                                     Source: Invesco Real Estate as of September 2020

1                                                                                                                                      2

                                                                                    Current rent                    Current yield1                                       Supply                             Rental growth              Yield shift                CV growth
    Local standards                                                              (per sqm per year)                      (%)                                             growth                               forecast                  forecast                   forecast
    Office
    Sydney                                                                               AUD 814                          4.50                                                 J                                  n                          n                          n
    Melbourne                                                                            AUD 399                          4.76                                                 h                                  h                          n                          n
    Brisbane                                                                             AUD 287                          5.63                                                 J                                  h                          n                          n
    Perth                                                                                AUD 280                          6.75                                                 J                                  h                          n                          n
    Auckland                                                                             NZD 464                          5.00                                                 J                                  n                          n                          n
    Retail
    Sydney                                                                            AUD 1,649                           5.00                                                  —                                 n                          h                           i
    Melbourne                                                                         AUD 1,433                           5.25                                                  —                                 n                          h                           i
    Brisbane                                                                          AUD 1,355                           4.88                                                  —                                 n                          h                           i
    Perth                                                                             AUD 1,631                           5.75                                                  —                                 n                          n                           i
    Logistics
    Sydney                                                                               AUD 127                          4.88                                                  —                                 n                          n                          n
    Melbourne                                                                             AUD 79                          5.00                                                  —                                 h                          n                          n
    Brisbane                                                                             AUD 120                          5.50                                                  —                                 n                          n                          n
    Perth                                                                                 AUD 92                          6.13                                                  —                                 n                          n                          n
CV=capital value
1 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent.
Source: Invesco Real Estate, JLL, June 2020.
Chart 1: GDP growth outlook                                                                                                                                                                                              Chart 2: Employment outlook
            Economic and demographic drivers
            Chart 1: GDP growth outlook                                                                                                                                                                                                                                      Chart 2: Employment outlook
             Real annual GDP growth (y/y): Australia and New Zealand                                                                                                                                                                                                        Total employment growth rate (y/y): Australia and New Zealand
               8%                                                                                                                                                                                                                                                                        5%
                                                                                                                                                                                              Forecast                                                                                                                                                                                                                                                                                               Forecast
               6%                                                                                                                                                                                                                                                                        4%

                                                                                                                                                                                                                                                                                         3%
               4%
                                                                                                                                                                                                                                                                                         2%
               2%                                                                                                                                                                                                                                                                        1%

               0%                                                                                                                                                                                                                                                                        0%

                                                                                                                                                                                                                                                                             -1%
              -2%
                                                                                                                                                                                                                                                                             -2%
              -4%
                                                                                                                                                                                                                                                                             -3%
              -6%                                                                                                                                                                                                                                                            -4%

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        Chart 3: Population growthAustralia                                                                       New Zealand                                                                                                 Chart 4: Bond rates and inflation
                                                                                                                                                                                                                                                          Australia outlook
                                                                                                                                                                                                                                                                     New Zealand

                                                                                                                                                                                                                                         XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  XXX-PPT-1 MM/YY (6pt)
            Chart 3: Population growth                                                                                                                                                                                                                                       Chart 4: Bond rates and inflation outlook
              Average annual population growth rate (y/y): Australia and New Zealand
        Source: Oxford Economics as of September 2020, f=forecast, e=estimate
                                                                                                                                                                                                                                                                                  10-year government bond yield and inflation rate: Australia and New Zealand
                                                                                                                                                                                                                                                                     Source: Oxford Economics as of September 2020, f=forecast, e=estimate
    3                                                                                                                                                                                                                        4
              3.0%                                                                                                                                                                                                                                                                  7%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Forecast
                                                                                                                                                                                                                                                                                    6%
              2.5%
                                                                                                                                                                                                                                                                                    5%
              2.0%
                                                                                                                                                                                                                                                                                    4%

              1.5%                                                                                                                                                                                                                                                                  3%

              1.0%                                                                                                                                                                                                                                                                  2%

                                                                                                                                                                                                                                                                                    1%
              0.5%
                                                                                                                                                                                                                                                                                    0%

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   2021f

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              0.0%
                              Australia           New Zealand                          Sydney                    Brisbane                  Melbourne                        Perth               Auckland
                                                                                       2011-2015                 2016-2020                 2021f-2023f                                                                                                                                                                  Australia bond yield                                   Australia CPI                          New Zealand bond yield                                                New Zealand CPI

            Source: Oxford Economics as of September 2020, f=forecast, e=estimate

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                                                                                 XXX-PPT-1 MM/YY (6pt)

        Chart 5: Commercial real estate transaction volume                                                                                                                                                                                    Chart 6: Yield spread by sector and city
            Real estate capital markets and fundamentals trackers
             Source: Oxford Economics as of September 2020, f=forecast                                                                                                                                                                           Source: Oxford Economics as of September 2020, f=forecast, e=estimate

        5                                                                                                                                                                                                                     6

            Chart 5: Commercial real estate transaction volume                                                                                                                                                                                                               Chart 6: Yield spread by sector and city
             Transaction activity by sector: Australia and New Zealand                                                                                                                                                                                                                   Yield/cap rate spreads to 10-year government bond yields: Australia and New Zealand
                     $40
                                                                                                                                                                                                                                                                                                                                   Office                                                              Retail                                                                Industrial
                                                                                                                                                                                                                                                                                         7%
                     $35
                                                                                                                                                                                                                                                                                         6%
                     $30
                                                                                                                                                                                                                                                                                         5%
                     $25
            US$ bn

                                                                                                                                                                                                                                                                                         4%
                     $20
                                                                                                                                                                                                                                                                                         3%
                     $15
                                                                                                                                                                                                                                                                                         2%
                     $10                                                                                                                                                                                                                                                                 1%
                     $5                                                                                                                                                                                                                                                                  0%
                                                                                                                                                                                                                                                                                                                                    Auckland
                                                                                                                                                                                                                                                                                                                 Brisbane

                                                                                                                                                                                                                                                                                                                                                                                                    Brisbane

                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Brisbane
                                                                                                                                                                                                                                                                                                                                                                      Sydney

                                                                                                                                                                                                                                                                                                                                                                                                                                           Sydney

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Sydney
                                                                                                                                                                                                                                                                                                 Perth

                                                                                                                                                                                                                                                                                                                                                                                      Perth

                                                                                                                                                                                                                                                                                                                                                                                                                                                           Perth
                                                                                                                                                                                                                                                                                                                                                      Melbourne

                                                                                                                                                                                                                                                                                                                                                                                                                      Melbourne

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Melbourne
                      $-
                                 2010         2011                2012                2013            2014             2015           2016           2017              2018               2019               2020
                                                                                                                                                                                                             YTD*

                                                          Office                    Retail               Industrial                  10-year historic average                                                                                                                                                                                  Current spread                             Long-term average                                    +/-1 Std. deviation
   Note: YTD* Year to date                                                                                                                                                                                                       Note: Current spread is calculated using Q2 yield property prime yields and bond yields as
Chart
   10-year     7: historic
                      Vacancy          rate outlook
                                   average-2010-2019                                                                                                                                                                         Chart
                                                                                                                                                                                                                                 of Q28:2020.    Rent growth outlook
                                                                                                                                                                                                                                                         XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          XXX-PPT-1 MM/YY (6pt)
 Note:YTD* Year to date                                                                                                                                                                                                       Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020
   Source:
 10-year             Real Capital Analytics as of September 2020.
         historic average-2010-2019                                                                                                                                                                                              Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
        *Source: Real Capital Analytics as of September 2020                                                                                                                                                                                  Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

        7
            Chart 7: Vacancy rate outlook                                                                                                                                                                                                     8
                                                                                                                                                                                                                                                                             Chart 8: Rent growth outlook
              Vacancy rate by city and sector: Australia and New Zealand                                                                                                                                                                                                            Rent growth rate by sector and city: Australia and New Zealand
                                                                    Office                                                                                           Retail                                                                                                                                                        Office                                                                Retail                                                             Industrial
             25%                                                                                                                                                                                                                                                                         8%
                                                                                                                                                                                                                                                                                         6%
             20%
                                                                                                                                                                                                                                                                                         4%

             15%                                                                                                                                                                                                                                                                         2%
                                                                                                                                                                                                                                                                                         0%
             10%                                                                                                                                                                                                                                                                   -2%
                                                                                                                                                                                                                                                                                   -4%
               5%
                                                                                                                                                                                                                                                                                   -6%
               0%                                                                                                                                                                                                                                                                  -8%
                                                                                                                                                                                                                                                                                                                                                      Auckland
                                                                                                                                                                                                                                                                                                                 Brisbane

                                                                                                                                                                                                                                                                                                                                                                                  Brisbane
                                                                                                                                                                                                                                                                                                                                                                                  Regional

                                                                                                                                                                                                                                                                                                                                                                                                                 Regional

                                                                                                                                                                                                                                                                                                                                                                                                                                     Regional

                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Brisbane
                                                                                                                  Auckland

                                                                                                                                                                                                    Perth Regional
                                               Brisbane

                                                                                                                                     Brisbane
                                                                                                                                     Regional

                                                                                                                                                          Regional

                                                                                                                                                                                                                                                                                                                                                                      Sydney

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Sydney
                                                                                                                                                                                                                                                                                                                                    Perth

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Perth
                                                                        Melbourne

                                                                                                                                                                              Melbourne

                                                                                                                                                                                                                                                                                                 Melbourne

                                                                                                                                                                                                                                                                                                                                                                                                 Melbourne

                                                                                                                                                                                                                                                                                                                                                                                                                                                       Melbourne
                                                                                             Sydney
                              Perth

                                                                                                                                                          Sydney

                                                                                                                                                                                                                                                                                                                                                                                                                                     Sydney
                                                                                                                                                                                                                                                                                                                                                                                                 Regional
                                                                                                                                                                              Regional

                                                                                                                                                                                                                                                                                                                                                                                                                  Perth

                                         Q2 2020                          10-year historic average                             2023f               10-year min. and max.                                                                                                                                                                              10-year historic average                                 3-year forecast average

            Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                                                                                         Source: Invesco Real Estate based on data from JLL as of September 2020.
                                                                                                                                                                                                                              XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                XXX-PPT-1 MM/YY (6pt)

            f=forecast
                                                                                                                                                                                                                             3-year forecast average-2021-2023
Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                                                          Source: Invesco Real Estate based on data from JLL as of September 2020

9                                                                                                                                                                                                                            10
China
Our strategic considerations:                                                                                              Market performance:
Core                                                                                                                       + COVID-19 is largely contained; economy is stabilizing and trending
+ Modern warehouses in primary logistics hubs and their satellite cities                                                     towards a new normal – protracted geopolitical tensions, slower
  with commitment from anchor tenants.                                                                                       growth and with strong emphasis on digital economy.
                                                                                                                           + Structural drivers (urbanization, infrastructure and consumption)
Higher return                                                                                                                have not derailed and are strengthening, but take time to adjust
+ Development of modern warehouses in the satellite cities of                                                                and gain solid footing.
  primary logistics hubs with commitment from anchor tenants.                                                              + Property sectors are riding on structural drivers to recover sooner;
+ Data centers in the Tier 1 cities and consider satellite and Tier                                                          office market has higher supply risk.
  2 cities only with pre-commitment.                                                                                       + Reasonable liquidity with stable yields and foreign investors remain
                                                                                                                             active in China.
                                                                                                                           + The more resilient property sectors are non-bonded warehouses
                                                                                                                             and data centers.

Market
Income    outlook
       (rental) growth: China                                                                                              Capital value cycle: China
Income (rental) growth                                                                                                     Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                                          The outlook for capital values in 2021 for select markets

                                             Office          Industrial      Residential        Retail

                                                                                                                           Declining                                                                                                                      Recovering
Rental                                                                                                            Rents
growth slowing                                                                                                   falling

                                                                                                                                                                                                                                             Retail: Shanghai

                                       Beijing, Shanghai                                                                                                                                                                           Industrial: Shanghai
                                                                                                                                                                                                                               Industrial: Beijing
                                                          Beijing
                                                       Shanghai                                                                                    Residential: Beijing

                                                                                Beijing, Shanghai

                                                                                                                                                                Retail: Beijing
                                                                                                                                                                                           Office: Beijing Residential: Shanghai
                                                                                                                                              ■ Declining
                                                                                                                                              ■ Stabilizing/Peaking
                                                                                                                                              ■ Recovering         Office: Shanghai
                                                                                                                  Rental
Rents rising                                                                     Beijing, Shanghai       decline slowing

Source: Invesco Real Estate as of September 2020.                                                                          Source: Invesco Real Estate as of September 2020.

                                                                                                                                                                                                                                                                       XXX-PPT-1 MM/YY (6pt)
                                                                                                                           XXX-PPT-1 MM/YY (6pt)

    Source: Invesco Real Estate as of September 2020                                                                                    Source: Invesco Real Estate as of September 2020

1                                                                                                                          2

                                                                             Current rent                 Current yield1                                     Supply                        Rental growth                  Yield shift                     CV growth
    Local standards                                                       (per sqm per year)                   (%)                                           growth                          forecast                      forecast                        forecast
    Office
    Beijing                                                                  CNY 6,291                          5.21                                             n                                   n                             n                            n
    Shanghai                                                                 CNY 5,112                          6.82                                             J                                   n                             n                            n
    Retail
    Beijing                                                                 CNY 10,907                          6.37                                             J                                   n                             n                            n
    Shanghai                                                                CNY 17,066                          4.53                                             J                                   n                             n                            n
    Logistics
    Beijing                                                                     CNY 594                         6.70                                             J                                   h                             n                            h
    Shanghai                                                                    CNY 537                         6.82                                             J                                   h                             n                            h
    Residential
    Beijing                                                                  CNY 1,703                          2.51                                             J                                   n                             n                            n
    Shanghai                                                                 CNY 1,624                          2.04                                             h                                   n                             n                            n
CV=capital value
Source: Invesco Real Estate, JLL, June 2020.
1 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent before
   operating expense.
Chart 1: GDP growth outlook                                                                                                                                                                                              Chart 2: Employment outlook
    Economic and demographic drivers
    Chart 1: GDP growth outlook                                                                                                                                                                                               Chart 2: Employment outlook
     Real annual GDP growth (y/y): China                                                                                                                                                                                            Total employment growth rate (y/y): China
     16%                                                                                                                                                                                                                            4.0%                                                                                                                                                                                 Forecast
                                                                                                                                                                                    Forecast
     14%                                                                                                                                                                                                                            3.0%

     12%                                                                                                                                                                                                                            2.0%

     10%                                                                                                                                                                                                                            1.0%

       8%                                                                                                                                                                                                                           0.0%

       6%                                                                                                                                                                                                                           -1.0%

       4%                                                                                                                                                                                                                           -2.0%

       2%                                                                                                                                                                                                                           -3.0%

       0%                                                                                                                                                                                                                           -4.0%

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                                                                2007

                                                                       2008

                                                                               2009

                                                                                       2010

                                                                                                  2011

                                                                                                          2012

                                                                                                                 2013

                                                                                                                        2014

                                                                                                                                   2015

                                                                                                                                          2016

                                                                                                                                                 2017

                                                                                                                                                          2018

                                                                                                                                                                   2019
Chart 3: Population growth                                                                           China                                                                                                Chart 4: Bond rates and inflation outlook
                                                                                                                                                                                                                                             China

                                                                                                                                                                                                                                                                                                                                                                                                                                                      XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)
    Chart 3: Population growth                                                                                                                                                                                                Chart 4: Bond rates and inflation outlook
     Average          annual
      Source: Oxford Economics        population
                               as of September               growth
                                               2020, f=forecast, e=estimate rate (y/y): China and select markets                                                                                                         4
                                                                                                                                                                                                                                    10-year
                                                                                                                                                                                                                                     Source: Oxford government
                                                                                                                                                                                                                                                    Economics as of September bond         yield
                                                                                                                                                                                                                                                                              2020, f=forecast,        and inflation rate: China
                                                                                                                                                                                                                                                                                                e=estimate
3
     4.5%                                                                                                                                                                                                                            7%
                                                                                                                                                                                                                                                                                                                                                                                                                         Forecast
     4.0%                                                                                                                                                                                                                            6%

     3.5%                                                                                                                                                                                                                            5%
     3.0%                                                                                                                                                                                                                            4%
     2.5%                                                                                                                                                                                                                            3%
     2.0%                                                                                                                                                                                                                            2%
     1.5%                                                                                                                                                                                                                            1%
     1.0%                                                                                                                                                                                                                            0%
     0.5%                                                                                                                                                                                                                           -1%
     0.0%
                                                                                                                                                                                                                                    -2%
                          China                                 Beijing                             Shanghai                              Shenzen                           Guangzhou

                                                                                                                                                                                                                                                                                                                                                                                                                        2021f

                                                                                                                                                                                                                                                                                                                                                                                                                                 2022f

                                                                                                                                                                                                                                                                                                                                                                                                                                              2023f
                                                                                                                                                                                                                                                                                                                                                                                                               2020e
                                                                                                                                                                                                                                            2001

                                                                                                                                                                                                                                                      2002

                                                                                                                                                                                                                                                              2003

                                                                                                                                                                                                                                                                      2004

                                                                                                                                                                                                                                                                               2005

                                                                                                                                                                                                                                                                                        2006

                                                                                                                                                                                                                                                                                                2007

                                                                                                                                                                                                                                                                                                          2008

                                                                                                                                                                                                                                                                                                                   2009

                                                                                                                                                                                                                                                                                                                           2010

                                                                                                                                                                                                                                                                                                                                     2011

                                                                                                                                                                                                                                                                                                                                             2012

                                                                                                                                                                                                                                                                                                                                                    2013

                                                                                                                                                                                                                                                                                                                                                            2014

                                                                                                                                                                                                                                                                                                                                                                    2015

                                                                                                                                                                                                                                                                                                                                                                           2016

                                                                                                                                                                                                                                                                                                                                                                                     2017

                                                                                                                                                                                                                                                                                                                                                                                            2018

                                                                                                                                                                                                                                                                                                                                                                                                   2019
    -0.5%

                                                                       2011-2015                  2016-2020              2021f-2023f                                                                                                                                                             China bond yield                                     China CPI

    Source: Oxford Economics as of September 2020. f=forecast, e=estimate

                                                                                                                                                                                                                                                                                                                                                                                                                                                                      XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)

Chart 5: Commercial real estate transaction volume                                                                                                                                                            Chart 6: Yield spread by sector and city
5
    Real estate capital markets and fundamentals trackers
    Source: Oxford Economics as of September 2020, f=forecast

                                                                                                                                                                                                          6
                                                                                                                                                                                                                                    Source: Oxford Economics as of September 2020, f=forecast, e=estimate

    Chart 5: Commercial real estate transaction volume                                                                                                                                                                        Chart 6: Yield spread by sector and city
    Transaction activity by sector: China                                                                                                                                                                                           Yield/cap rate spreads to 10-year government bond yields: China
             $45                                                                                                                                                                                                                                              Office                                               Retail                                        Industrial                               Residential
                                                                                                                                                                                                                                    4%
             $40
                                                                                                                                                                                                                                    3%
             $35
                                                                                                                                                                                                                                    2%
             $30
                                                                                                                                                                                                                                    1%
    US$ bn

             $25
                                                                                                                                                                                                                                    0%
             $20
                                                                                                                                                                                                                                    -1%
             $15
                                                                                                                                                                                                                                    -2%
             $10
                                                                                                                                                                                                                                    -3%
                                                                                                                                                                                                                                                   Shanghai

                                                                                                                                                                                                                                                                                                                              Shanghai

                                                                                                                                                                                                                                                                                                                                                      Shanghai

                                                                                                                                                                                                                                                                                                                                                                                                                                  Shanghai
                                                                                                                                                                                                                                                                             Beijing

                                                                                                                                                                                                                                                                                                       Beijing

                                                                                                                                                                                                                                                                                                                                                                              Beijing

              $5                                                                                                                                                                                                                                                                                                                                                                                     Beijing

              $0
                      2010           2011          2012                 2013           2014               2015           2016              2017              2018          2019             2020
                                                                                                                                                                                            YTD*
                                                   Office                     Retail                Industrial                    10-year historic average
                                                                                                                                                                                                                                                                                        Current spread                              Long-term average                      +/-1 Std. deviation
    Note: YTD* Year to date                                                                                                                                                                                Note: Current spread is calculated using Q2 yield property prime yields and bond yields as of
Chart
 10 Year7:historic
           Vacancy      rate outlook
                   average-2010-2019                                                                                                                                                                      Chart
                                                                                                                                                                                                           Q2 2020.     8: Rent growth outlook
                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  XXX-PPT-1 MM/YY (6pt)
Note: YTD* Year to date                                                                                                                                                                                   Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020
    Source: Real Capital Analytics as of September 2020.
10 Year historic average-2010-2019                                                                                                                                                                         Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
Source: Real Capital Analytics as of September 2020                                                                                                                                                           Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

7
    Chart 7: Vacancy rate outlook                                                                                                                                                                             8
                                                                                                                                                                                                                              Chart 8: Rent growth outlook
     Vacancy rate by city and sector: China                                                                                                                                                                                         Rent growth rate by sector and city: China
                                     Office                                                              Retail                                                    Industrial                                                                                   Office                                              Retail                                        Industrial                              Residential
      30%                                                                                                                                                                                                                           10%

      25%                                                                                                                                                                                                                            8%

      20%                                                                                                                                                                                                                            6%

      15%                                                                                                                                                                                                                            4%

      10%                                                                                                                                                                                                                            2%

        5%                                                                                                                                                                                                                           0%

        0%                                                                                                                                                                                                                          -2%
                                                                                                                                                                                                                                                                             Shanghai

                                                                                                                                                                                                                                                                                                       Shanghai

                                                                                                                                                                                                                                                                                                                                                                               Shanghai

                                                                                                                                                                                                                                                                                                                                                                                                      Shanghai
                                                                                                                                                                                                                                                   Beijing

                                                                                                                                                                                                                                                                                                                                  Beijing

                                                                                                                                                                                                                                                                                                                                                       Beijing

                                                                                                                                                                                                                                                                                                                                                                                                                                   Beijing
                                                     Shanghai

                                                                                       Shanghai

                                                                                                                                                        Shanghai
                         Beijing

                                                                                                                        Beijing

                                                                                                                                                                                      Beijing

                                       Q2 2020                         10-year historic average                          2023f                   10-year min. and max.                                                                                                                    10-year historic average                             3-year forecast average

    Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                                                  Source: Invesco Real Estate based on data from JLL as of September 2020.
                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  XXX-PPT-1 MM/YY (6pt)

    f=forecast
                                                                                                                                                                                                          3-year forecast average-2021-2023
Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                                       Source: Invesco Real Estate based on data from JLL as of September 2020

9                                                                                                                                                                                                         10
Hong Kong
Our strategic considerations:                                                                                          Market performance:
Core                                                                                                                   + Severely hit by COVID-19, US-China crossfire and lingering
+ Build-to-suit data center with master lease to operators.                                                              social unrest.
                                                                                                                       + Property fundamentals continue to deteriorate with broad-base
Higher return                                                                                                            downgrade. The recovery path is expected to be lengthened.
+ For-lease residential targeting specific demand segments and                                                         + Very few risk-rewarding opportunities – yields have softened but
  located in submarkets benefit from infrastructure improvement.                                                         not enough to compensate risks.
                                                                                                                       + Relatively resilient sectors and submarkets are data center and
                                                                                                                         office submarket benefiting from decentralization trend and
                                                                                                                         infrastructure improvement.

Market    outlook
Income (rental) growth: Hong Kong                                                                                      Capital value cycle: Hong Kong
Income (rental) growth                                                                                                 Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                                      The outlook for capital values in 2021 for select markets

                                             Office      Industrial       Residential       Retail

                                                                                                                       Declining                                                                                                           Recovering
Rental                                                                                                        Rents
growth slowing                                                                                               falling

                                                                                                                                                                                   Retail: Hong Kong

                                                                                        Hong Kong Central
                                                                                                                                                                                          Industrial: Hong Kong
                                                       Hong Kong                                                                                                                            Office: Hong Kong Residential: Hong Kong

                                                                                Hong Kong
                                                                                                                                     ■ Declining
                                                           Hong Kong                                                                 ■ Stabilizing/Peaking
                                                                                                                                     ■ Recovering
                                                                                                              Rental
Rents rising                                                                   Hong Kong             decline slowing

Source: Invesco Real Estate as of September 2020.                                                                      Source: Invesco Real Estate as of September 2020.

                                                                                                                                                                                                                                                        XXX-PPT-1 MM/YY (6pt)
                                                                                                                           XXX-PPT-1 MM/YY (6pt)

    Source: Invesco Real Estate as of September 2020                                                                            Source: Invesco Real Estate as of September 2020

1                                                                                                                      2
                                                                          Current rent               Current yield1                                Supply                           Rental growth                 Yield shift          CV growth
    Local standards                                                    (per sqm per year)                 (%)                                      growth                             forecast                     forecast             forecast
    Office                                                                HKD 8,127                         2.78                                      hh                                     n                        n                   n
    Retail                                                               HKD 15,985                         4.83                                      hh                                     n                        n                   h
    Logistics                                                             HKD 1,627                         3.86                                        h                                    n                        n                   n
    Residential                                                           HKD 5,242                         1.23                                        h                                    h                        n                   h
CV=capital value
1 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent.
Source: Invesco Real Estate, JLL, June 2020.
Chart 1: GDP growth outlook                                                                                                                                                                               Chart 2: Employment outlook
        Economic and demographic drivers
        Chart 1: GDP growth outlook                                                                                                                                                                                              Chart 2: Employment outlook
        Real annual GDP growth (y/y): Hong Kong                                                                                                                                                                                   Total employment growth rate (y/y): Hong Kong
         10%                                                                                                                                                                                                                           6.0%
                                                                                                                                                                      Forecast                                                                                                                                                                                                                            Forecast
           8%
                                                                                                                                                                                                                                       4.0%
           6%
           4%                                                                                                                                                                                                                          2.0%
           2%
                                                                                                                                                                                                                                       0.0%
           0%
         -2%                                                                                                                                                                                                                      -2.0%

         -4%                                                                                                                                                                                                                      -4.0%
         -6%
                                                                                                                                                                                                                                  -6.0%
         -8%
        -10%                                                                                                                                                                                                                      -8.0%

                                                                                                                                                                                                                                                                                                                                                                                                        2021f

                                                                                                                                                                                                                                                                                                                                                                                                                 2022f

                                                                                                                                                                                                                                                                                                                                                                                                                          2023f
                                                                                                                                                                                                                                                                                                                                                                                               2020e
                                                                                                                                                                                                                                                   2001

                                                                                                                                                                                                                                                           2002

                                                                                                                                                                                                                                                                   2003

                                                                                                                                                                                                                                                                           2004

                                                                                                                                                                                                                                                                                   2005

                                                                                                                                                                                                                                                                                           2006

                                                                                                                                                                                                                                                                                                   2007

                                                                                                                                                                                                                                                                                                          2008

                                                                                                                                                                                                                                                                                                                  2009

                                                                                                                                                                                                                                                                                                                         2010

                                                                                                                                                                                                                                                                                                                                2011

                                                                                                                                                                                                                                                                                                                                       2012

                                                                                                                                                                                                                                                                                                                                              2013

                                                                                                                                                                                                                                                                                                                                                     2014

                                                                                                                                                                                                                                                                                                                                                            2015

                                                                                                                                                                                                                                                                                                                                                                   2016

                                                                                                                                                                                                                                                                                                                                                                          2017

                                                                                                                                                                                                                                                                                                                                                                                 2018

                                                                                                                                                                                                                                                                                                                                                                                        2019
                                                                                                                                                                    2021f

                                                                                                                                                                            2022f

                                                                                                                                                                                    2023f
                                                                                                                                                            2020e
                   2001

                          2002

                                 2003

                                        2004

                                               2005

                                                      2006

                                                             2007

                                                                    2008

                                                                            2009

                                                                                    2010

                                                                                           2011

                                                                                                   2012

                                                                                                          2013

                                                                                                                 2014

                                                                                                                        2015

                                                                                                                               2016

                                                                                                                                      2017

                                                                                                                                             2018

                                                                                                                                                    2019
    Chart 3: Population growth                                                              Hong Kong                                                                                       Chart 4: Bond rates and inflation outlook
                                                                                                                                                                                                                               Hong Kong

                                                                                                                                                                                                                                                                                                                                                                                                                                   XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                             XXX-PPT-1 MM/YY (6pt)
        Chart 3: Population growth                                                                                                                                                                                               Chart 4: Bond rates and inflation outlook
        Average           annual
        Source: Oxford Economics          population
                                 as of September 2020, f=forecast,growth
                                                                  e=estimate rate (y/y): Hong Kong                                                                                                        4
                                                                                                                                                                                                                                10-year         government
                                                                                                                                                                                                                                 Source: Oxford Economics                  bond
                                                                                                                                                                                                                                                          as of September 2020,         yield
                                                                                                                                                                                                                                                                                f=forecast,         and inflation rate: Hong Kong
                                                                                                                                                                                                                                                                                            e=estimate
3
        0.9%                                                                                                                                                                                                                            8%
                                                                                                                                                                                                                                                                                                                                                                                                          Forecast
        0.8%
                                                                                                                                                                                                                                        6%
        0.7%
                                                                                                                                                                                                                                        4%
        0.6%

        0.5%                                                                                                                                                                                                                            2%
        0.4%
                                                                                                                                                                                                                                        0%
        0.3%

        0.2%                                                                                                                                                                                                                           -2%

        0.1%
                                                                                                                                                                                                                                       -4%

                                                                                                                                                                                                                                                                                                                                                                                                         2021f

                                                                                                                                                                                                                                                                                                                                                                                                                  2022f

                                                                                                                                                                                                                                                                                                                                                                                                                           2023f
                                                                                                                                                                                                                                                                                                                                                                                                2020e
                                                                                                                                                                                                                                                 2001

                                                                                                                                                                                                                                                          2002

                                                                                                                                                                                                                                                                  2003

                                                                                                                                                                                                                                                                          2004

                                                                                                                                                                                                                                                                                  2005

                                                                                                                                                                                                                                                                                          2006

                                                                                                                                                                                                                                                                                                  2007

                                                                                                                                                                                                                                                                                                          2008

                                                                                                                                                                                                                                                                                                                 2009

                                                                                                                                                                                                                                                                                                                         2010

                                                                                                                                                                                                                                                                                                                                2011

                                                                                                                                                                                                                                                                                                                                       2012

                                                                                                                                                                                                                                                                                                                                              2013

                                                                                                                                                                                                                                                                                                                                                     2014

                                                                                                                                                                                                                                                                                                                                                            2015

                                                                                                                                                                                                                                                                                                                                                                   2016

                                                                                                                                                                                                                                                                                                                                                                          2017

                                                                                                                                                                                                                                                                                                                                                                                 2018

                                                                                                                                                                                                                                                                                                                                                                                        2019
        0.0%
                                                                                            Hong Kong
                                                                     2011-2015               2016-2020              2021f-2023f
                                                                                                                                                                                                                                                                                                    Hong Kong bond yield                               Hong Kong CPI
        Source: Oxford Economics as of September 2020. f=forecast, e=estimate

                                                                                                                                                                                                                                                                                                                                                                                                                                                   XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                               XXX-PPT-1 MM/YY (6pt)

Chart 5: Commercial real estate transaction volume                                                                                                                                                                  Chart 6: Yield spread by sector and city
    5
        Real estate capital markets and fundamentals trackers
        Source: Oxford Economics as of September 2020, f=forecast

                                                                                                                                                                                            6
                                                                                                                                                                                                                                       Source: Oxford Economics as of September 2020, f=forecast, e=estimate

        Chart 5: Commercial real estate transaction volume                                                                                                                                                                       Chart 6: Yield spread by sector and city
        Transaction activity by sector: Hong Kong                                                                                                                                                                                       Yield/cap rate spreads to 10-year government bond yields: Hong Kong
              $30
                                                                                                                                                                                                                                                                  Office                                         Retail                              Industrial                                Residential
                                                                                                                                                                                                                                        5%
              $25
                                                                                                                                                                                                                                        4%

              $20                                                                                                                                                                                                                       3%
    US$ bn

              $15                                                                                                                                                                                                                       2%

                                                                                                                                                                                                                                        1%
              $10
                                                                                                                                                                                                                                        0%
                $5
                                                                                                                                                                                                                                       -1%
                $0
                          2010          2011          2012          2013            2014            2015         2016           2017          2018           2019            2020                                                      -2%
                                                                                                                                                                             YTD*                                                                            Hong Kong                                     Hong Kong                                 Hong Kong                                 Hong Kong

                                                        Office              Retail                Industrial            10-year historic average                                                                                                                                           Current spread                       Long-term average                    +/-1 Std. deviation
        Note: YTD* Year to date                                                                                                                                                                            Note: Current spread is calculated using Q2 yield property prime yields and bond yields
Chart 7: historic
 10-year Vacancy       rate outlook
                  average-2010-2019                                                                                                                                                                       Chart
                                                                                                                                                                                                           as of Q2      8:2020.
                                                                                                                                                                                                                               Rent growth outlook
                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 XXX-PPT-1 MM/YY (6pt)
Note:YTD* Year to date                                                                                                                                                                                    Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020
        Source: Real Capital Analytics as of September 2020.
10-year historic average-2010-2019                                                                                                                                                                         Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
Source: Real Capital Analytics as of September 2020                                                                                                                                                                 Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

7
        Chart 7: Vacancy rate outlook                                                                                                                                                                               8
                                                                                                                                                                                                                                 Chart 8: Rent growth outlook
        Vacancy rate by sector: Hong Kong                                                                                                                                                                                          Rent growth rate by sector: Hong Kong
                                 Office                                    Retail                                Industrial                            Residential                                                                                                 Office                                         Retail                               Industrial                               Residential
        16%                                                                                                                                                                                                                             7%

        14%                                                                                                                                                                                                                             6%

                                                                                                                                                                                                                                        5%
        12%
                                                                                                                                                                                                                                        4%
        10%
                                                                                                                                                                                                                                        3%
         8%
                                                                                                                                                                                                                                        2%
         6%
                                                                                                                                                                                                                                        1%
         4%                                                                                                                                                                                                                             0%
         2%                                                                                                                                                                                                                            -1%

         0%                                                                                                                                                                                                                            -2%
                            Hong Kong                               Hong Kong                                    Hong Kong                                 Hong Kong                                                                                         Hong Kong                                      Hong Kong                                 Hong Kong                                 Hong Kong

                                               Q2 2020               10-year historic average                       2023f              10-year min. and max.                                                                                                                                      10-year historic average                     3-year forecast average

        Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                                                 Source: Invesco Real Estate based on data from JLL as of September 2020.
                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)

        f=forecast
                                                                                                                                                                                                          3-year forecast averag-2021-2023
Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                                       Source: Invesco Real Estate based on data from JLL as of September 2020

9                                                                                                                                                                                                         10
Japan
Our strategic considerations:                                                                                             Market performance:
Core                                                                                                                      + Deep GDP contraction is expected in 2020 due to the global
+ Logistics: Quality assets in the three major metropolitan                                                                 pandemic. The escalating US-China tension brings in structural
  prime clusters or regional hub areas.                                                                                     uncertainty on economic recovery.
+ Residential: Tokyo and gateway cities, prefer submarkets                                                                + BOJ confirmed to persist yield-curve-control manipulation and
  with solid population inflow fundamentals.                                                                                monetary easing policy in the foreseeable future until the 2%
+ Office: Selective tech/innovation hubs in prime locations                                                                 inflation hurdle cleared.
  and assets which are appropriately priced.                                                                              + Most occupier markets are entering into deteriorating phase
                                                                                                                            while logistics and residential sectors stand in better position with
Higher return                                                                                                               solid structural or diversified demand support.
+ Logistics: Property renewal at prime logistics clusters,                                                                + Increasing wait-and-see investors and declined transaction
  development at regional hub locations.                                                                                    volume suggest possible valuation shift going forward, but more
+ Residential: Development forward commitment, lease-up                                                                     fundamental factor driven as yield protected by the central bank.
  of new completions in core locations.
+ Repriced core-like assets.

Market    outlook
Income (rental) growth: Japan                                                                                             Capital value cycle: Japan
Income (rental) growth                                                                                                    Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                                         The outlook for capital values in 2021 for select markets

                                             Office     Industrial       Residential           Retail

                                                                                                                          Declining                                                                                                         Recovering
Rental                                                                                                           Rents
growth slowing                                                                                                  falling
                                                                                                                                         Retail: Tokyo                                                                         Office: Nagoya, Osaka, Tokyo5
                                                                                                                                                                                          Office: Fukuoka Residential: Tokyo
                                                                                                                                                                                                     Industrial: Tokyo
                                                       Tokyo                           Nagoya, Tokyo5

                                                                                          Fukuoka, Osaka

                                                                      Tokyo

                                                                        Tokyo                                                 ■ Declining
                                                                                                                              ■ Stabilizing/Peaking
                                                                                                                              ■ Recovering
                                                                                                                 Rental
Rents rising                                                                                            decline slowing

Source: Invesco Real Estate as of September 2020.                                                                         Source: Invesco Real Estate as of September 2020.
    Source: Invesco Real Estate as of September 2020                                                                          Source: Invesco Real Estate as of September 2020

1                                                                                                                         2

                                                                        Current rent1                    Current yield2                         Supply                           Rental growth            Yield shift                CV growth
    Local standards                                                  (per sqm per year)                       (%)                               growth                             forecast                forecast                   forecast
    Office
    Tokyo 5 wards (Grade A)                                           JPY 101,723                              2.60                                  J                                i                         n                          i
    Tokyo 5 wards (Grade B)                                            JPY 65,700                              3.10                                  h                                i                         n                          i
    Tokyo 23 wards (All grade)                                         JPY 85,196                              3.50                                  h                                i                         n                          i
    Osaka 2 wards (Grade A)                                            JPY 60,854                              2.90                                  J                                n                         n                          i
    Osaka City (All grade)                                             JPY 53,361                              3.80                                  h                                n                         n                          n
    Nagoya (All grade)                                                 JPY 50,457                              4.50                                  h                                n                         n                          n
    Fukuoka (All grade)                                                JPY 60,004                              4.10                                  J                                n                         n                          n
    Yokohama                                                           JPY 60,294                              4.20                                  J                                n                         n                          h
    Retail
    Tokyo                                                             JPY 242,407                              2.60                                   —                               n                         n                          n
    Residential
    Tokyo                                                               JPY 63,231                             4.10                                   —                               n                         n                          n
    Logistics
    Greater Tokyo                                                       JPY 11,918                             3.90                                  J                                n                         n                          n

1 Inclusive of management fees
2 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent.
CV=capital value
Tokyo 5 wards consist of Chiyoda-ku, Chuo-ku, Minato-ku, Shibuya-ku and Shinjuku-ku. Osaka 2 wards consist of Kita-ku and Chuo-ku.
Source: Invesco Real Estate, KEN, JLL, CBRE, Japan Real Estate Institute, J-REIT DB, as of June 2020.
Chart 1: GDP growth outlook                                                                                                                                                                       Chart 2: Employment outlook
        Economic and demographic drivers
        Chart 1: GDP growth outlook                                                                                                                                                                      Chart 2: Employment outlook
        Real annual GDP growth (y/y): Japan                                                                                                                                                              Total employment growth rate (y/y): Japan
           6%                                                                                                                                                                                            2.5%
                                                                                                                                                                       Forecast                                                                                                                                                                                                          Forecast
           4%                                                                                                                                                                                            2.0%

                                                                                                                                                                                                         1.5%
           2%
                                                                                                                                                                                                         1.0%
           0%                                                                                                                                                                                            0.5%

          -2%                                                                                                                                                                                            0.0%

                                                                                                                                                                                                         -0.5%
          -4%
                                                                                                                                                                                                         -1.0%
          -6%                                                                                                                                                                                            -1.5%

          -8%                                                                                                                                                                                            -2.0%

                                                                                                                                                                                                                                                                                                                                                                                     2021f

                                                                                                                                                                                                                                                                                                                                                                                             2022f

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                                                                                                                                                                                                                                                                                                                                                                             2020e
                                                                                                                                                                                                                    2001

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                                                                                                                                                                                                                                                                                                       2011

                                                                                                                                                                                                                                                                                                               2012

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                                                                                                                                                                                                                                                                                                                                                        2017

                                                                                                                                                                                                                                                                                                                                                               2018

                                                                                                                                                                                                                                                                                                                                                                      2019
                                                                                                                                                                     2021f

                                                                                                                                                                               2022f

                                                                                                                                                                                       2023f
                                                                                                                                                             2020e
                   2001

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                                           2004

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    Chart 3: Population growth                                                                     Japan                                                                                             Chart 4: Bond rates and inflation Japan
                                                                                                                                                                                                                                       outlook

        Chart 3: Population growth                                                                                                                                                                       Chart 4: Bond rates and inflation outlook
        Average annual population growth rate (y/y): Japan and select markets
    Source: Oxford Economics as of September 2020, f=forecast, e=estimate
                                                                                                                                                                                                         10-year          government
                                                                                                                                                                                                          Source: Oxford Economics                  bond
                                                                                                                                                                                                                                   as of September 2020,         yield
                                                                                                                                                                                                                                                         f=forecast,         and inflation rate: Japan
                                                                                                                                                                                                                                                                     e=estimate
                                                                                                                                                                                                  4
3
         0.8%                                                                                                                                                                                            3.0%
                                                                                                                                                                                                                                                                                                                                                                                             Forecast
                                                                                                                                                                                                         2.5%
         0.6%
                                                                                                                                                                                                         2.0%

         0.4%                                                                                                                                                                                            1.5%
                                                                                                                                                                                                         1.0%
         0.2%
                                                                                                                                                                                                         0.5%

         0.0%                                                                                                                                                                                            0.0%
                                                                                                                                                                                                         -0.5%
        -0.2%                                                                                                                                                                                            -1.0%

        -0.4%                                                                                                                                                                                            -1.5%
                                                                                                                                                                                                         -2.0%

                                                                                                                                                                                                                                                                                                                                                                                         2021f

                                                                                                                                                                                                                                                                                                                                                                                                 2022f

                                                                                                                                                                                                                                                                                                                                                                                                         2023f
                                                                                                                                                                                                                                                                                                                                                                                 2020e
                                                                                                                                                                                                                    2001

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                                                                                                                                                                                                                                                              2006

                                                                                                                                                                                                                                                                      2007

                                                                                                                                                                                                                                                                              2008

                                                                                                                                                                                                                                                                                        2009

                                                                                                                                                                                                                                                                                                2010

                                                                                                                                                                                                                                                                                                        2011

                                                                                                                                                                                                                                                                                                                  2012

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                                                                                                                                                                                                                                                                                                                                          2015

                                                                                                                                                                                                                                                                                                                                                   2016

                                                                                                                                                                                                                                                                                                                                                          2017

                                                                                                                                                                                                                                                                                                                                                                 2018

                                                                                                                                                                                                                                                                                                                                                                          2019
        -0.6%
                                      Japan                            Tokyo Prefecture                             Osaka City                               Nagoya City

                                                                                                                                                                                                                                                                     Japan bond yield                                                               Japan CPI
                                                         2011-2015               2016-2020                   2021f-2023f

        Source: Oxford Economics as of September 2020. f=forecast, e=estimate

Chart 5: Commercial real estate transaction volume
        Source: Oxford Economics as of September 2020, f=forecast
                                                                                                                                                                                                 Chart 6: Yield spread by sector and city
        Real estate capital markets and fundamentals trackers
                                                                                                                                                                                                           Source: Oxford Economics as of September 2020, f=forecast, e=estimate
    5                                                                                                                                                                                                6

        Chart 5: Commercial real estate transaction volume                                                                                                                                               Chart 6: Yield spread by sector and city
        Transaction activity by sector: Japan                                                                                                                                                            Yield/cap rate spreads to 10-year government bond yields: Japan
              $50
                                                                                                                                                                                                                                                               Office                                                                  Retail                  Industrial            Residential
                                                                                                                                                                                                         6%
              $45
              $40
                                                                                                                                                                                                         5%
              $35
              $30
     US$ bn

                                                                                                                                                                                                         4%
              $25
              $20
                                                                                                                                                                                                         3%
              $15
              $10
                                                                                                                                                                                                         2%
                $5
                                                                                                                                                                                                                                                    Nagoya

                                                                                                                                                                                                                                                                                                              Tokyo5
                                                                                                                                                                                                                                                                               Osaka

                                                                                                                                                                                                                                                                                                                                         Tokyo

                                                                                                                                                                                                                                                                                                                                                                  Tokyo

                                                                                                                                                                                                                                                                                                                                                                                             Tokyo
                                                                                                                                                                                                                           Fukuoka

                $0
                          2010             2011          2012          2013          2014           2015           2016          2017          2018           2019             2020
                                                                                                                                                                               YTD*
                                                                Office                                              Retail                                                                                                                                   Current spread                           Long-term average                          +/-1 Std. deviation
    Note: YTD*: Year to date Industrial                            10-year historic average
                                                                                                                                                                                                   Note: Current spread is calculated using Q2 yield property prime yields and bond yields as of
  Chart
    10-year7:historic    Vacancy        rate outlook
                                   average-2010-2019                                                                                                                                           Chart
                                                                                                                                                                                                   Q2 2020.  8: Rent growth outlook
Note: YTD* : Year to date                                                                                                                                                                       Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020
    Source:
10-year               Real Capital Analytics as of September 2020.
        historic average-2010-2019                                                                                                                                                                 Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
Source: Real Capital Analytics as of September 2020                                                                                                                                              Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

7
        Chart 7: Vacancy rate outlook                                                                                                                                                            8
                                                                                                                                                                                                         Chart 8: Rent growth outlook
         Vacancy rate by city and sector: Japan                                                                                                                                                          Rent growth rate by sector and city: Japan
                                                                                Office                                                                           Residential                                                                                   Office                                                                  Retail              Industrial                Residential
        16%                                                                                                                                                                                               6%
        14%                                                                                                                                                                                               5%
                                                                                                                                                                                                          4%
        12%
                                                                                                                                                                                                          3%
        10%                                                                                                                                                                                               2%
          8%                                                                                                                                                                                              1%
                                                                                                                                                                                                          0%
          6%
                                                                                                                                                                                                         -1%
          4%                                                                                                                                                                                             -2%
          2%                                                                                                                                                                                             -3%
                                                                                                                                                                                                         -4%
          0%
                                                                                                                                                                                                                                                                               Nagoya

                                                                                                                                                                                                                                                                                                              Tokyo5

                                                                                                                                                                                                                                                                                                                                         Tokyo

                                                                                                                                                                                                                                                                                                                                                                  Tokyo

                                                                                                                                                                                                                                                                                                                                                                                             Tokyo
                                                                                                                                                                                                                                                    Osaka
                                                                                                                                                                                                                           Fukuoka
                                                                  Nagoya

                                                                                                                                    Tokyo5
                                                                                                    Osaka

                                                                                                                                                                       Tokyo
                                 Fukuoka

                                           Q2 2020                 10-year historic average                        2023f            10-year min. and max.                                                                                                    10-year historic average                           3-year forecast average

        Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                         Source: Invesco Real Estate based on data from JLL as of September 2020.
        f=forecast
                                                                                                                                                                                               3-year forecast average-2021-2023
    Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                        Source: Invesco Real Estate based on data from JLL as of September 2020
Singapore
Our strategic considerations:                                                                                     Market performance:
Core                                                                                                              + Singapore’s GDP contracted by 13% in Q2 2020, the sharpest
+ Office: Pricing remains tight and rental growth is moderating.                                                    quarterly contraction on record, due to private consumption and
  Select opportunities only.                                                                                        investment suffering in the COVID-19 shutdowns.
+ Logistics: High spec facilities and business park assets that are                                               + With the containment of the outbreak now advanced domestically,
  likely to benefit from high value-add user demand and intra-                                                      the economy is likely to gradually reopen. However, the pace of
  regional/domestic trade demand.                                                                                   recovery in mobility and trade suggests overall risks remain to the
                                                                                                                    downside amid the ongoing pandemic.
Higher return                                                                                                     + Significant government stimulus has been introduced to aid
+ Office: Uncertainty may provide investment opportunity and                                                        domestic demand, and support the retail and hospitality sectors
  repricing of secondary stock. Focus on secondary and lease                                                        which are the most vulnerable to the COVID-19 situation.
  up opportunities in the CBD and CBD fringe.                                                                     + Office rent growth has turned negative, however capital value
+ Hotel: Monitor for distress in the market amidst tourism recovery                                                 pricing for prime has held steady. A bright spot in demand includes
  and low supply environment.                                                                                       technology sector tenants.
                                                                                                                  + Logistics sector remains a two-tier market, with high spec logistics
                                                                                                                    and business park sectors benefitting from government directives
                                                                                                                    toward more high-value and innovative manufacturing.
                                                                                                                  + Limited transaction activity is expected as uncertainty in the global
                                                                                                                    market persists, although pricing stability is expected to remain for
                                                                                                                    prime assets.

Market    outlook
Income (rental) growth: Singapore                                                                                 Capital value cycle: Singapore
Income (rental) growth                                                                                            Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                                 The outlook for capital values in 2021 for select markets

                                               Office         Industrial               Retail

                                                                                                                  Declining                                                                                                   Recovering
Rental                                                                                                   Rents
growth slowing                                                                                          falling

                                                                       Singapore                                                                       Retail: Singapore

                                                                                                                                     ■ Declining                                                  Industrial: Singapore
                                                                                                                                     ■ Stabilizing/Peaking             Office: Singapore
                                                        Singapore                                                                    ■ Recovering
                                                                                                         Rental
Rents rising                                                               Singapore            decline slowing

Source: Invesco Real Estate as of September 2020.                                                                 Source: Invesco Real Estate as of September 2020.

                                                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)
                                                                                                                  XXX-PPT-1 MM/YY (6pt)

    Source: Invesco Real Estate as of September 2020                                                                           Source: Invesco Real Estate as of September 2020

1                                                                                                                 2
                                                                          Current rent           Current yield1                                 Supply                            Rental growth     Yield shift           CV growth
    Local standards                                                    (per sqm per year)             (%)                                       growth                              forecast         forecast              forecast
    Office                                                                   SGD 1,096                 3.42                                          hh                                h                  n                  h
    Retail                                                                   SGD 3,649                 3.80                                           n                                n                  n                  i
    Logistics                                                                   SGD 132                6.88                                           h                                n                  n                  n
CV=capital value
1 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent.
Source: Invesco Real Estate, JLL, June 2020.
Chart 1: GDP growth outlook                                                                                                                                                                 Chart 2: Employment outlook
         Economic and demographic drivers
         Chart 1: GDP growth outlook                                                                                                                                                                                           Chart 2: Employment outlook
         Real annual GDP growth (y/y): Singapore                                                                                                                                                                                     Total employment growth rate (y/y): Singapore
          20%                                                                                                                                                                                                                        12%
                                                                                                                                                                      Forecast                                                                                                                                                                                                                       Forecast
                                                                                                                                                                                                                                     10%
          15%
                                                                                                                                                                                                                                     8%
          10%
                                                                                                                                                                                                                                     6%

             5%                                                                                                                                                                                                                      4%

                                                                                                                                                                                                                                     2%
             0%
                                                                                                                                                                                                                                     0%
           -5%
                                                                                                                                                                                                                                     -2%

         -10%                                                                                                                                                                                                                        -4%

                                                                                                                                                                                                                                                                                                                                                                                                 2021f

                                                                                                                                                                                                                                                                                                                                                                                                         2022f

                                                                                                                                                                                                                                                                                                                                                                                                                   2023f
                                                                                                                                                                                                                                                                                                                                                                                         2020e
                                                                                                                                                                                                                                              2001

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                                                                                                                                                                                                                                                                                 2006

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                                                                                                                                                                                                                                                                                                        2009

                                                                                                                                                                                                                                                                                                                2010

                                                                                                                                                                                                                                                                                                                        2011

                                                                                                                                                                                                                                                                                                                                2012

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                                                                                                                                                                                                                                                                                                                                                                    2017

                                                                                                                                                                                                                                                                                                                                                                           2018

                                                                                                                                                                                                                                                                                                                                                                                  2019
                                                                                                                                                                    2021f

                                                                                                                                                                            2022f

                                                                                                                                                                                    2023f
                                                                                                                                                            2020e
                       2001

                              2002

                                     2003

                                            2004

                                                   2005

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                                                                                                                                                     2019
    Chart 3: Population growth                                                                 Singapore
                                                                                                                                                                                                    Chart 4: Bond rates and inflation   outlook
                                                                                                                                                                                                                                    Singapore

         Chart 3: Population growth                                                                                                                                                                                            Chart 4: Bond rates and inflation outlook

                                                                                                                                                                                                                                                                                                                                                                                                                                   XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                 XXX-PPT-1 MM/YY (6pt)
         Average annual population growth rate (y/y): Singapore
    Source: Oxford Economics as of September 2020, f=forecast, e=estimate                                                                                                                                                    10-year government bond yield and inflation rate: Singapore
                                                                                                                                                                                                                                     Source: Oxford Economics as of September 2020, f=forecast, e=estimate
                                                                                                                                                                                            4
3
         2.0%                                                                                                                                                                                                                        7%
                                                                                                                                                                                                                                                                                                                                                                                                         Forecast
         1.8%                                                                                                                                                                                                                        6%

         1.6%                                                                                                                                                                                                                        5%
         1.4%                                                                                                                                                                                                                        4%
         1.2%                                                                                                                                                                                                                        3%
         1.0%                                                                                                                                                                                                                        2%
         0.8%                                                                                                                                                                                                                        1%
         0.6%                                                                                                                                                                                                                        0%
         0.4%                                                                                                                                                                                                                   -1%
         0.2%
                                                                                                                                                                                                                                -2%

                                                                                                                                                                                                                                                                                                                                                                                                      2021f

                                                                                                                                                                                                                                                                                                                                                                                                                 2022f

                                                                                                                                                                                                                                                                                                                                                                                                                           2023f
                                                                                                                                                                                                                                                                                                                                                                                             2020e
                                                                                                                                                                                                                                             2001

                                                                                                                                                                                                                                                     2002

                                                                                                                                                                                                                                                            2003

                                                                                                                                                                                                                                                                   2004

                                                                                                                                                                                                                                                                          2005

                                                                                                                                                                                                                                                                                 2006

                                                                                                                                                                                                                                                                                        2007

                                                                                                                                                                                                                                                                                                 2008

                                                                                                                                                                                                                                                                                                         2009

                                                                                                                                                                                                                                                                                                                 2010

                                                                                                                                                                                                                                                                                                                         2011

                                                                                                                                                                                                                                                                                                                                 2012

                                                                                                                                                                                                                                                                                                                                          2013

                                                                                                                                                                                                                                                                                                                                                 2014

                                                                                                                                                                                                                                                                                                                                                         2015

                                                                                                                                                                                                                                                                                                                                                                2016

                                                                                                                                                                                                                                                                                                                                                                       2017

                                                                                                                                                                                                                                                                                                                                                                              2018

                                                                                                                                                                                                                                                                                                                                                                                     2019
         0.0%
                                                                                              Singapore
                                                                           2011-2015                 2016-2020                  2021f-2023f                                                                                                                                       Singapore bond yield                                                          Singapore CPI

         Source: Oxford Economics as of September 2020. f=forecast, e=estimate

                                                                                                                                                                                                                                                                                                                                                                                                                                                           XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                             XXX-PPT-1 MM/YY (6pt)

Chart 5: Commercial real estate transaction volume
        Source: Oxford Economics as of September 2020, f=forecast
                                                                                                                                                                                                            Chart 6: Yield spread by sector and city
         Real estate capital markets and fundamentals trackers
                                                                                                                                                                                                                                      Source: Oxford Economics as of September 2020, f=forecast, e=estimate
    5                                                                                                                                                                                               6

         Chart 5: Commercial real estate transaction volume                                                                                                                                                                    Chart 6: Yield spread by sector and city
         Transaction activity by sector: Singapore                                                                                                                                                                                   Yield/cap rate spreads to 10-year government bond yields: Singapore
                 $20                                                                                                                                                                                                                                               Office                                                      Retail                                                Industrial
                                                                                                                                                                                                                                     7%
                 $18
                 $16                                                                                                                                                                                                                 6%
                 $14
                                                                                                                                                                                                                                     5%
                 $12
        US$ bn

                                                                                                                                                                                                                                     4%
                 $10
                  $8                                                                                                                                                                                                                 3%

                  $6                                                                                                                                                                                                                 2%
                  $4
                                                                                                                                                                                                                                     1%
                  $2
                  $0                                                                                                                                                                                                                 0%
                              2010          2011          2012          2013          2014          2015          2016          2017          2018           2019            2020                                                                              Singapore                                                  Singapore                                                  Singapore
                                                                                                                                                                             YTD*
                                                          Office                                             Retail                                                                                                                                                               Current spread                         Long-term average                      +/-1 Std. deviation
                                                          Industrial                                         10-year historic average

         Note:YTD* Year to date                                                                                                                                                                                                Note: Current spread is calculated using Q2 yield property prime yields and bond yields
    Chart
     10-year7:historic
                Vacancy     rate outlook
                                                                                                                                                                                            XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  XXX-PPT-1 MM/YY (6pt)
Note:YTD* Year to date average-2010-2019
10-year historic average-2010-2019
                                                                                                                                                                                                         Chart   8:2020.
                                                                                                                                                                                                          as of Q2  Rent growth outlook
                                                                                                                                                                                                            Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020

         Source: Real Capital Analytics as of September 2020.
Source: Real Capital Analytics as of September 2020                                                                                                                                                                            Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
                                                                                                                                                                                                            Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

7                                                                                                                                                                                                           8

         Chart 7: Vacancy rate outlook                                                                                                                                                                                         Chart 8: Rent growth outlook
         Vacancy rate by city and sector: Singapore                                                                                                                                                                                  Rent growth rate by sector: Singapore
                                            Office                                              Retail                                               Industrial                                                                                                     Office                                                      Retail                                               Industrial
         14%                                                                                                                                                                                                                         8%
                                                                                                                                                                                                                                     7%
         12%
                                                                                                                                                                                                                                     6%
         10%                                                                                                                                                                                                                         5%
                                                                                                                                                                                                                                     4%
           8%
                                                                                                                                                                                                                                     3%
           6%
                                                                                                                                                                                                                                     2%

           4%                                                                                                                                                                                                                        1%
                                                                                                                                                                                                                                     0%
           2%
                                                                                                                                                                                                                                     -1%
           0%                                                                                                                                                                                                                        -2%
                                       Singapore                                              Singapore                                              Singapore                                                                                                  Singapore                                                  Singapore                                                 Singapore
                                                                                                                                                                                                                                                                                               10-year historic average                                 3-year forecast average
                                              Q2 2020                   10-year historic average                  2023f                10-year min. and max.

         Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                                              Source: Invesco Real Estate based on data from JLL as of September 2020.
                                                                                                                                                                                                           XXX-PPT-1 MM/YY (

                                                                                                                                                                                                                                                                                                                                                                                                                                                                XXX-PPT-1 MM/YY (

         f=forecast
                                                                                                                                                                                                         3-year forecast average-2021-2023
    Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                                  Source: Invesco Real Estate based on data from JLL as of September 2020
South Korea
Our strategic considerations:                                                                                  Market performance:
Core                                                                                                           + GDP is expected to contract in 2020 with a severe demand plunge
+ Modern Logistics: Prime location modern property in Greater                                                    caused by COVID-19.
  Seoul, frequent round-trip delivery locations preferred.                                                     + BOK’s rate cuts, government fiscal spending packages are expected
+ Office: Grade A office in tech/innovation hub location, i.e.                                                   to support a U-shaped rebound from late 2021.
  Seoul GBD.                                                                                                   + Office occupier market benefits from persisting upgrade and
                                                                                                                 consolidation demand; short-term COVID-19 impact is estimated
Higher return                                                                                                    to materialize in the next 12 months.
+ Logistics development at prime locations in Greater Seoul; cold                                              + Logistics occupiers’ market is holding firm due to robust structural
  storage/delivery center conversion/redevelopment opportunity.                                                  demand on the way in the medium term.
+ Reposition of under-performing assets, emerging specialty sector;                                            + Investment demand by strong domestic institutional continue
  i.e. data centers.                                                                                             to support pricing, however short-term attention on sentiment
                                                                                                                 fluctuations needed.
                                                                                                               + Yields are expected to hold flat in near term, under the pressure
                                                                                                                 of flattened yield curve.

Market    outlook
Income (rental) growth: South Korea                                                                            Capital value cycle: South Korea
Income (rental) growth                                                                                         Capital value cycle
The outlook for income (rental) growth in 2021 for select markets                                              The outlook for capital values in 2021 for select markets
                                                               Office   Retail

                                                                                                               Declining                                                                                                     Recovering
Rental                                                                                                Rents
growth slowing                                                                                       falling

                                                                                                                                                                                                                   Retail: Seoul
                                                                                                                                                                                                             Office: Seoul

                                                                Seoul

                                                                                                                                 ■ Declining
                                                       Seoul                                                                     ■ Stabilizing/Peaking
                                                                                                                                 ■ Recovering
                                                                                                      Rental
Rents rising                                                                                 decline slowing

Source: Invesco Real Estate as of September 2020.                                                              Source: Invesco Real Estate as of September 2020.
                                                                                                               XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                          XXX-PPT-1 MM/YY (6pt)
    Source: Invesco Real Estate as of September 2020                                                                        Source: Invesco Real Estate as of September 2020

1                                                                                                              2
                                                                           Current rent       Current yield1                                 Supply                            Rental growth   Yield shift            CV growth
    Local standards                                                     (per sqm per year)         (%)                                       growth                              forecast       forecast               forecast
    Office                                                                   KRW 614,501            4.28                                           J                                n              n                         n
    Retail                                                                KRW 3,794,655             3.67                                           —                                n              n                         n
CV=capital value
1 Current yield reflects the income returns to investment net of transaction costs, assuming full occupancy and that the current income being paid is the market effective rent.
Source: Invesco Real Estate, JLL, June 2020.
Chart 1:GDP growth outlook                                                                                                                                                                    Chart 2: Employment outlook
     Economic and demographic drivers
     Chart 1: GDP growth outlook                                                                                                                                                                                      Chart 2: Employment outlook
     Real annual GDP growth (y/y): South Korea                                                                                                                                                                        Total employment growth rate (y/y): South Korea
        9%                                                                                                                                                                                                                     3.5%
                                                                                                                                                                    Forecast                                                                                                                                                                                                                       Forecast
        8%                                                                                                                                                                                                                     3.0%
        7%
                                                                                                                                                                                                                               2.5%
        6%
                                                                                                                                                                                                                               2.0%
        5%
        4%                                                                                                                                                                                                                     1.5%

        3%                                                                                                                                                                                                                     1.0%
        2%                                                                                                                                                                                                                     0.5%
        1%
                                                                                                                                                                                                                               0.0%
        0%
                                                                                                                                                                                                                         -0.5%
       -1%
                                                                                                                                                                                                                         -1.0%
       -2%

                                                                                                                                                                                                                                                                                                                                                                                                 2021f

                                                                                                                                                                                                                                                                                                                                                                                                          2022f

                                                                                                                                                                                                                                                                                                                                                                                                                   2023f
                                                                                                                                                                                                                                                                                                                                                                                        2020e
                                                                                                                                                                                                                                          2001

                                                                                                                                                                                                                                                 2002

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                                                                                                                                                                                                                                                                        2005

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                                                                                                                                                                                                                                                                                                2008

                                                                                                                                                                                                                                                                                                        2009

                                                                                                                                                                                                                                                                                                               2010

                                                                                                                                                                                                                                                                                                                      2011

                                                                                                                                                                                                                                                                                                                             2012

                                                                                                                                                                                                                                                                                                                                    2013

                                                                                                                                                                                                                                                                                                                                           2014

                                                                                                                                                                                                                                                                                                                                                   2015

                                                                                                                                                                                                                                                                                                                                                          2016

                                                                                                                                                                                                                                                                                                                                                                 2017

                                                                                                                                                                                                                                                                                                                                                                         2018

                                                                                                                                                                                                                                                                                                                                                                                2019
                                                                                                                                                                  2021f

                                                                                                                                                                          2022f

                                                                                                                                                                                  2023f
                                                                                                                                                          2020e
                   2001

                          2002

                                 2003

                                        2004

                                               2005

                                                      2006

                                                             2007

                                                                    2008

                                                                           2009

                                                                                  2010

                                                                                         2011

                                                                                                 2012

                                                                                                        2013

                                                                                                                2014

                                                                                                                       2015

                                                                                                                              2016

                                                                                                                                     2017

                                                                                                                                            2018

                                                                                                                                                   2019
Chart 3: Population growth                                                               South Korea
                                                                                                                                                                                          Chart 4: Bond rates and inflation
                                                                                                                                                                                                                         Southoutlook
                                                                                                                                                                                                                              Korea

                                                                                                                                                                                                                                                                                                                                                                                                                             XXX-PPT-1 MM/YY (6pt)
     Chart 3: Population growth                                                                                                                                                                                       Chart 4: Bond rates and inflation outlook

                                                                                                                                                                                              XXX-PPT-1 MM/YY (6pt)
     Average annual population growth rate (y/y): South Korea and Seoul                                                                                                                                               10-year         government bond yield and inflation rate: South Korea
                                                                                                                                                                                                                       Source: Oxford Economics as of September 2020, f=forecast, e=estimate
        Source: Oxford Economics as of September 2020, f=forecast, e=estimate                                                                                                                 4
3
      0.6%                                                                                                                                                                                                                     8%
                                                                                                                                                                                                                                                                                                                                                                                                    Forecast
      0.4%                                                                                                                                                                                                                     7%

      0.2%                                                                                                                                                                                                                     6%

                                                                                                                                                                                                                               5%
      0.0%
                                                                                                                                                                                                                               4%
     -0.2%
                                                                                                                                                                                                                               3%
     -0.4%
                                                                                                                                                                                                                               2%
     -0.6%
                                                                                                                                                                                                                               1%
     -0.8%
                                                                                                                                                                                                                               0%

                                                                                                                                                                                                                                                                                                                                                                                                  2021f

                                                                                                                                                                                                                                                                                                                                                                                                           2022f

                                                                                                                                                                                                                                                                                                                                                                                                                     2023f
                                                                                                                                                                                                                                                                                                                                                                                         2020e
                                                                                                                                                                                                                                       2001

                                                                                                                                                                                                                                              2002

                                                                                                                                                                                                                                                     2003

                                                                                                                                                                                                                                                               2004

                                                                                                                                                                                                                                                                       2005

                                                                                                                                                                                                                                                                               2006

                                                                                                                                                                                                                                                                                       2007

                                                                                                                                                                                                                                                                                               2008

                                                                                                                                                                                                                                                                                                       2009

                                                                                                                                                                                                                                                                                                               2010

                                                                                                                                                                                                                                                                                                                      2011

                                                                                                                                                                                                                                                                                                                             2012

                                                                                                                                                                                                                                                                                                                                    2013

                                                                                                                                                                                                                                                                                                                                           2014

                                                                                                                                                                                                                                                                                                                                                   2015

                                                                                                                                                                                                                                                                                                                                                          2016

                                                                                                                                                                                                                                                                                                                                                                 2017

                                                                                                                                                                                                                                                                                                                                                                         2018

                                                                                                                                                                                                                                                                                                                                                                                 2019
     -1.0%
                                                 South Korea                                                                            Seoul

                                                              2011-2015              2016-2020                 2021f-2023f
                                                                                                                                                                                                                                                                               South Korea bond yield                                         South Korea CPI

     Source: Oxford Economics as of September 2020. f=forecast, e=estimate

                                                                                                                                                                                                                                                                                                                                                                                                                                                     XXX-PPT-1 MM/YY (6pt)
                                                                                                                                                                                                       XXX-PPT-1 MM/YY (6pt)

Chart 5: Commercial real estate transaction volume
     Source: Oxford Economics as of September 2020, f=forecast
                                                                                                                                                                                               Chart 6: Yield spread by sector and city
     Real estate capital markets and fundamentals trackers
                                                                                                                                                                                                                               Source: Oxford Economics as of September 2020, f=forecast, e=estimate
5                                                                                                                                                                                         6

     Chart 5: Commercial real estate transaction volume                                                                                                                                                               Chart 6: Yield spread by sector and city
     Transaction activity by sector: South Korea                                                                                                                                                                         Yield/cap rate spreads to 10-year government bond yields: South Korea
             $30
                                                                                                                                                                                                                                                                                Office                                                                                  Retail
                                                                                                                                                                                                                          3.5%
             $25
                                                                                                                                                                                                                          3.0%

             $20                                                                                                                                                                                                          2.5%
    US$ bn

             $15                                                                                                                                                                                                          2.0%

                                                                                                                                                                                                                          1.5%
             $10
                                                                                                                                                                                                                          1.0%
              $5
                                                                                                                                                                                                                          0.5%

              $0                                                                                                                                                                                                          0.0%
                          2010          2011          2012          2013          2014           2015           2016          2017           2018          2019             2020                                                                                                Seoul                                                                                   Seoul
                                                                                                                                                                            YTD*
                                                  Office                   Retail                Industrial                   10-year historic average                                                                                                                          Current spread                        Long-term average                    +/-1 Std. deviation

     Note:YTD*: Year to date                                                                                                                                                                                          Note: Current spread is calculated using Q2 yield property prime yields and bond yields as of
Chart
 10-year7:historic
            Vacancy     outlook
                                                                                                                                                                                                 XXX-PPT-1 MM/YY (6pt)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                        XXX-PPT-1 MM/YY (6pt)
                   average-2010-2019
Note:YTD* : Year to date
10-year historic average-2010-2019
                                                                                                                                                                                               Chart 8: Rent growth outlook
                                                                                                                                                                                                Q2 2020.
                                                                                                                                                                                               Note: Current spread is calculated using Q2 yield property prime yields and bond yields of Q2 2020

     Source: Real Capital Analytics as of September 2020.
Source: Real Capital Analytics as of September 2020                                                                                                                                                                   Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020.
                                                                                                                                                                                               Source: Invesco Real Estate based on data from JLL and Oxford Economics as of June 2020

7                                                                                                                                                                                              8

     Chart 7: Vacancy rate outlook                                                                                                                                                                                    Chart 8: Rent growth outlook
     Vacancy rate by city and sector: South Korea                                                                                                                                                                        Rent growth rate by sector: South Korea

                                                                                            Office                                                                                                                                                                             Office                                                                                   Retail
     16%                                                                                                                                                                                                                 1.8%

                                                                                                                                                                                                                         1.6%
     14%
                                                                                                                                                                                                                         1.4%
     12%
                                                                                                                                                                                                                         1.2%
     10%
                                                                                                                                                                                                                         1.0%
       8%
                                                                                                                                                                                                                         0.8%
       6%                                                                                                                                                                                                                0.6%
       4%                                                                                                                                                                                                                0.4%

       2%                                                                                                                                                                                                                0.2%

       0%                                                                                                                                                                                                                0.0%
                                                                                                Seoul                                                                                                                                                                           Seoul                                                                                   Seoul

                                          Q2 2020                   10-year historic average                    2023f                10-year min. and max.                                                                                                                             10-year historic average                                   3-year forecast average

     Source: Invesco Real Estate based on data from JLL as of September 2020.                                                                                                                                         Source: Invesco Real Estate based on data from JLL as of September 2020.
                                                                                                                                                                                                 XXX-PPT-1 MM/YY (

                                                                                                                                                                                                                                                                                                                                                                                                                                                                        XXX-PPT-1 MM/YY (

     f=forecast
                                                                                                                                                                                               3-year forecast average-2021-2023
Source: Invesco Real Estate based on data from JLL as of September 2020, f=forecast                                                                                                            Source: Invesco Real Estate based on data from JLL as of September 2020
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