Real Estate & Construction Industry - 27 February 2012

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Real Estate & Construction Industry

27 February 2012
Presentation Plan

               Global Commercial Real Estate Investments
               Global Residential Market Trends
               Global Office Market Trends

© 2012 Grant Thornton International Ltd. All rights reserved.
Global commercial direct real estate investment totalled USD
411 billion in 2011 an increase of 28% over 2010

         Commercial real estate projects continues to attract capital from investors with investments seen in cross-border as well. The 2012
         investment levels are projected to match 2011 levels although euro-zone crisis is expected to have a negative impact on global
         investments.

         Direct Commercial Real Estate Investment, 2005 – 2012(E)
   350                                                                                       350
                                                    2005        2006       2007       2008
   300                                                                                       300                                Americas     EMEA     Asia Pacific
                                                    2009        2010       2011       2012
   250                                                                                       250

   200                                                                                       200

   150                                                                                       150

   100                                                                                       100

    50                                                                                        50

     0                                                                                        0
                 Americas                    EMEA                      Asia Pacific                2005   2006   2007   2008   2009   2010     2011      2012

   • The Americas region investments volumes were up about 60% in 2011 over 2010.
   • EMEA region was up 20% in 2011 over 2010.
   • The Asia-Pacific region investment levels remained same in 2010 and 2011

                                                                       Sources
© 2012 Grant Thornton International Ltd. All rights reserved.          1 – Link
Investments in Asian market remain stable while European
region exceeds expectations. US market sees maximum
investment
All figures in USD billion              46,4                                                                                                       164,8
                                 43                                                                                       154,8

            37,2 37,4                                                                                                                      137,7

                                                                                                                  97,4
                                                                                                                                                                               90,9
                                                                                              Q3 2011                                                                 85,4                  FY 2010
                                                    21,7 22,4
                                                                                              Q4 2011                                                                                       FY 2011

            Americas              EMEA              Asia Pacific                                                      Americas               EMEA                    Asia Pacific

            34,1
       32                                                                              Q3 2010                 34,1
                                                                                                           32,3
                                                                                       Q4 2011
                                                                                                                                                                                              Q4 2010
                                                                                                                                                                                              Q4 2011
                                                                                                                        15
                   12,7 12,6                                                                                              12,6
                                  9,3     8,9 8,2                                                                                    9,3
                                                                                                                                  7,2      7,5 8,2         7
                               5,5                       5               4,8 3,9                                                                               5   4,3 4        3,93,9
                                                     3          2,8 4               2 2,5      3,3
                                                                                                     1,8                                                                                 1,92,5   2,41,8

       US           UK     France Germany           China    Australia   Japan     Russia     Canada        US          UK        France Germany       China       Australia    Japan    Russia   Canada

                                                                                   Sources
© 2012 Grant Thornton International Ltd. All rights reserved.                      1 – Link
The US rental apartment market continues to be strong and
remains in favour with investors; Europe and Asian market to
witness slow residential growth
                                                                   Residential Market Trends

   Americas
   • The US apartment vacancy rate declined by 100 basis points through the first three quarters of 2011.
   • The vacancies are projected to fall further to under 5% in 2012 as the employment growth improves.
   • Rents in 2012 are expected to have steady growth with modest acceleration in H1 2012.
   Europe
   • In most of the European countries price fall in residential property will be of about 2-6% per year. However home prices in Germany
        and France will rise strongly to about 7% and 8% respectively.
   •     Prices in Spain are expected to fall down 8% per year while in Ireland the decline will be even more at 14% per year.
   Asia
   • Residential real estate sale slowed further across Asia in 2011, with fewer new projects.
   • Shanghai and Singapore both experienced negative growth, although Manila and Jakarta remained unaffected.
   • Growth of 3.8% and 2.8% seen in Jakarta and Beijing respectively due to ongoing corporate expansion.
   • In the Middle-Eastern region, the residential market in Dubai is expected to see mixed performance in 2012.

                                                                Sources
© 2012 Grant Thornton International Ltd. All rights reserved.   1 – Link
Global office leasing volume remains resilient; Demand
continues to be strong in China, India, Brazil, the CEE* region,
Germany, the Nordics, Canada and Australia
                                                            Global Office Net Absorption 2011
   Asia Pacific:
   • For the entire year 2011, net absorption in Asia-
       Pacific increased by 20% as compared to 2010.
       However in Q4 2011 the leasing volume was down
       due to decreased business activity.
   • For 2012, it is expected that the leasing demand
       will weaken due to slower corporate hiring.
   Europe:
   • In 2011, net absorption in Europe increased by 5%
       as compared to 2010.
   • In 2012, it is expected that the overall leasing
       volumes in Europe will be similar to 2011 levels.
   The US:
   • The office sector in the US posted 7 consecutive
       gains with the last 2 quarters showing maximum
       rate of increase.
   • In Q4 2011, a total of 10.6 million square feet of
       space was absorbed.
   • The occupancy gains have been mainly from the
       technology and energy sector.
                                                                Sources
© 2012 Grant Thornton International Ltd. All rights reserved.   1 – Link                        * Central & Eastern Europe
Global office vacancy rates continue to decline across all the
three regions, with further falls expected in 2012

                                                  Office Vacancy Rates - Major Markets Q4 2011
   Asia Pacific:
   • Across the Asia-Pacific mixed performance was
       seen in vacancy levels.
   • The occupancy rates across North Asia (Japan and
       South Korea) improved due to affordable office
       rents.
   • Vacancy rates increased marginally in Hong Kong
       and Singapore.
   Europe:
   • Due to increase in net absorption rate, the
       European office vacancy rate declined to 9.9%.
   • It is projected that European vacancy rate will fall
       further in 2012.
   • Moreover, uncertain business conditions will result
       in postponements in expansion.
   Americas:
   • The total vacancy rate across the US dipped to
       16.7%, lowest since Q2 2009.
   • In Brazil, the overall demand for office space
       remains strong.
                                                                Sources
© 2012 Grant Thornton International Ltd. All rights reserved.   1 – Link
During Q4 2011, office rental growth remained slow in some
of the major regions

                                                                           Office Rental Trends
   Asia Pacific:
   • In most of the regions across Asia Pacific the office
        rental growth slowed in 2011.
   • In Hong Kong, the rates declined for the second
        consecutive quarter. Singapore also saw decline in
        rate for first time since Q1 2010.
   Europe:
   • In Europe the office rents mostly remained
        unchanged in Q4 2011.
   • However it is expected that rental will increase in
        2012 due to shortage of office space in key
        regions.
   The US:
   • Office rents in the US is expected to increase in
        2012 with the recovery in economy.
   • Technology, energy and healthcare industry is
        expected to drive the majority of growth.

                                                                Sources
© 2012 Grant Thornton International Ltd. All rights reserved.   1 – Link
According to JLL*, from 2012 to 2014 global office real estate
industry will shift in favour of landlords from tenants

                                                       Global Office Market Conditions Matrix

                     Americas                                                      EMEA                                          APAC
        City         2012       2013       2014                       City       2012       2013   2014              City       2012    2013    2014

      Chicago                                                       Brussels                                        Beijing

        Los                                                                                                          Hong
                                                                   Frankfurt
      Angeles                                                                                                        Kong

     New York                                                       London                                         Mumbai

      Toronto                                                       Madrid                                        Singapore

       Mexico
                                                                      Paris                                         Sydney
        City

     Sao Paulo                                                       Dubai                                          Tokyo

                                  Tenant Favourable                        Neutral Market                 Landlord Favourable

                                                                Sources
© 2012 Grant Thornton International Ltd. All rights reserved.   1 – Link                                                        * JLL – Jones Lang LaSALLE
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 © 2012 Grant Thornton International Ltd. All rights reserved.
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