Global Research and Consulting European Investment Briefing Presented by: Michael Haddock, Director, EMEA Research & Consulting 05/10/2010

Key themes for today’s market  The downturn was syncronised –the recovery is more uneven  Uncertainty is everywhere –not least in the economic outlook  Debt is available to buy commercial real estate –but only if you don’t need it  New allocations to real estate are coming at the expense of bonds, not equities

Source: ECOWIN, Financial Times 10-year government bond yield Changes in risk free rate

Global Research and Consulting Investment Activity

Source: CB Richard Ellis € Billion Investment market turnover in Europe

Source: CB Richard Ellis H versus H Changes in investment market turnover

Global Research and Consulting Economy, Occupier Markets, Vacancy & Development

Peak to trough decline in output (% of GDP) **still in recession as at Q Source: Eurostat, CB Richard Ellis Extent of the recession

Real GDP growth Source: Consensus Forecasts Inc Future economic growth

Net absorption (rolling six months) and vacancy (% of stock) Source: CB Richard Ellis European office absorption and vacancy

‘000 Sq M Source: CB Richard Ellis Office development – Western Europe

Currently vacant office space, plus developments scheduled for completion by end 2012 As percent of Stock Source: CB Richard Ellis Office development pipeline

NB. Markets do not necessarily move along the curve in the same direction or at the same speed. The rental cycle is intended to display the trend in net effective rents As at 30th June 2010 L London City M Dublin Barcelona Berlin Rome Lisbon Lyon L Geneva G Amsterdam Milan Brussels A Prague Athens Dusseldorf Frankfurt Paris Madrid Hamburg Stockholm Copenhagen Oslo Edinburgh Munich London TV Manchester D P O B Birmingham Vienna Moscow Warsaw Zurich Helsinki M F P A C Z E V M T Budapest Bucharest D B R M H H B B B S W M B L Rental Decline AcceleratingRental Decline SlowingRental Growth AcceleratingRental Growth Slowing L London West End Office rent cycle – Q2 2010

Global Research and Consulting Capital Values and Pricing

EU-15 Offices Capital Value Growth, % per annum Source: CB Richard Ellis Drivers of capital values

Capital value change: June 09 to July 10 Source: CB Richard Ellis

UK secondary yield spreads Source: CB Richard Ellis Prime – secondary yield spread

Global Research and Consulting Summary

 Prime – Secondary dislocation is the key feature of markets everywhere in Europe  Investors –Investment activity driven by risk averse institutional style capital –Lenders have no appetite for secondary either  Occupiers –Weak net absorption –Uncertain economic outlook –Any rental growth is due to lack of development activity Conclusions

Global Research and Consulting Panel Discussion Jonathan Hull, Head of EMEA Capital Markets John Welham, Head of European Retail Investment Peter Schreppel, Head of International Investment, Germany Natale Giostra, Head of UK & EMEA Debt Advisory

Source: CB Richard Ellis Investment market – Germany 2009 Total transactions €10.45 billion H Total transactions €8.65 billion Total value of transactions by purchaser nationality

Global Research and Consulting Panel Discussion Jonathan Hull, Head of EMEA Capital Markets John Welham, Head of European Retail Investment Peter Schreppel, Head of International Investment, Germany Natale Giostra, Head of UK & EMEA Debt Advisory