Real Estate Leasing in Europe - 2009

Session Leaseurope 2
The real estate leasing industry – State of play
Overview of commercial real estate

in Europe
Daniela Percoco - Head of Real Estate
Eurofinas and Leaseurope Annual Convention - Prague, 05/10/2009

Agenda
Macroeconomic trends and forecasts in Europe

The investments in constructions
The real estate market
Investment flows
Cross border vs domestic
Nationality profile of investors and sellers
Deal size
Yields and rents trends
Focus on segments: office, retail and industrial
Overview of commercial real estate in Europe Prague, 05/10/2009 1

Macroeconomics trends and forecasts in Europe
Bank lending to households and to the non-financial

corporate sector
Source: ECB

Global GDP Growth
Source: IMF

GDPQuarter on-quarter growth rates, EU
Source: ECB

GDP growth and Economic Sentiment Indicator, EU
Source: Commission services.

Annual GDP forecast (%, y-o-y)

2009
May 2009 September 2009
Germany -5.4 -5.1
Spain -3.2 -3.7
France -3.0 -2.1
Italy -4.4 -5.0
Netherlands -3.5 -4.5
Euro area -4.0 -4.0
Poland -1.4 1.0
United Kingdom -3.8 -4.3
EU27 -4.0 -4.0
Source: European Commission
Overview of commercial real estate in Europe Prague, 05/10/2009

Annual GDP forecast (%, y-o-y)

2010
World 2.5
Advanced economies 0.6
Euro area 0.0*
Germany -0.6
France 0.4
Italy 0.2*
Spain -0.8
United Kingdom 0.2
CEE 1.0
* September 2009
Source:IMF, July 2009

Construction output and GDP in Europe
6,0
4,0 3,9
2,0 2,6
1,6 1,7 1,6
0,0
-1,0
%
-2,0
-3,1
-4,0
-6,0
-8,0 -7,5
-10,0
2004 2005 2006 2007 2008 2009 2010 2011
Years
GDP Construction output

Source: Euroconstruct

2009 2010 2011
AT -1.0 -2.0 0.0
CONSTRUCTION
BE -2.2 -2.2 0.2
SECTOR
DK -8.2 2.3 4.1
FORECASTS 2009-2011
FI -13.3 -8.0 -2.5
FR -5.5 0.6 1.5
DE -3.7 1.8 0.3
IE -34.6 -16.0 -7.2
IT -7.5 1.1 0.3
NO -5.8 -6.5 3.2
PT -10.0 -7.8 1.2
ES -18.7 -6.1 2.7
SE -2.9 4.2 3.1
CH 1.6 0.9 -0.3
NL -5.8 -9.0 -0.6
UK -7.5 -1.6 1.6
Western Europe (EC-15) -8.0 -1.5 1.0

CZ -3.2 0-3 3.1
HU -3.2 2.5 6.2
PL 5.5 10.2 15.4
SK -4.3 6.0 4.9
Eastern Europe (EC-4) 1.2 6.3 10.5 Source: Euroconstruct

Euroconstruct countries (EC-19) -7.5 -1.0 1.6

RESIDENTIAL SECTOR (2009: -15%)
Turbulence in financial market
Limitation of the mortgage loans to households for purchasing flats
Freezing of new housing starts and slowing down of developments
surpassing the most pessimistic forecasts
Decrease in prices
Slowdown repairs in existing stock, but performing better than new
developments

NON RESIDENTIAL SECTOR (2009: -8%)
Difficulties with financing projects for public non residential
construction
Difficulties in financing and lack of new investment transaction
caused stop or delay of many constructions in private sector
Freezing of new project especially in industrial sector
Slowdown repairs in existing stock

INFRASTRUCTURE SECTOR (2009: +1,6%)
Sector usually financed by public sources and supported by
national governments is more resistant to the crisis and anti-cyclical
Civil engineering remains substantially steady
Slowdown repairs in existing stock

Change in the construction production by segment

(2004-2009)
100%
80% 47,8 48,1 47,3 45,3 43,4 43,4
60%
40% 30,9 30,7 31,5 32,7 32,5 31,4
20%
21,3 21,2 21,2 22 24,1 25,2
0%
2004 2005 2006 2007 2008 2009
Years
Civil engineering Non residential construction Residential construction

Total European Transaction Volumes

(€ billions)
Source: Jones Lang LaSalle

Investment Volumes by Investors Type

Cross-Border Investment by Buyer Nationality, H1 2009
Source:CB Richard Ellis

Net Investment by Investor Source of Capital

Turnover by Deal Size, H1 2009

Average prime yields per sector
Source: Savills research

Average prime annual rental growth

Office market
European Office rental cycle, Q2 2009
Source: Jones Lang La Salle

Retail market
European Consumer Confidence Index, June 2009
Source: Ecowin

Retail market
Retail sentiment, June 2009
Source: Ecowin

Retail market
Retail Investment share of the market
Retail Investment (LHS) Share of the Total Market (RHS)
35.000 40%
30.000
25.000 30%
€ million
20.000
20%
15.000
10.000 10%
5.000
0 0%
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009

Retail market
Shopping Centre vs All Other Retail Investment (€ m)
Source: CB Richard Ellis

Industrial market
Industrial & Logistics Investment Turnover, Europe (€ m)
Source: CB Richard Ellis

Industrial market
Warehousing Market Rental cycle

Thank You for Your attention!
Contacts:
Daniela Percoco
Nomisma Real Estate
daniela.percoco@nomisma.it
www.nomisma.it

Real Estate Leasing in Europe - 2009

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Session Leaseurope 2

The real estate leasing industry – State of play

Overview of commercial real estate

Eurofinas and Leaseurope Annual Convention - Prague, 05/10/2009

Macroeconomic trends and forecasts in Europe

Focus on segments: office, retail and industrial

Overview of commercial real estate in Europe Prague, 05/10/2009 1

Bank lending to households and to the non-financial

Overview of commercial real estate in Europe Prague, 05/10/2009 2

Global GDP Growth

Overview of commercial real estate in Europe Prague, 05/10/2009 3

GDPQuarter on-quarter growth rates, EU

Overview of commercial real estate in Europe Prague, 05/10/2009 4

GDP growth and Economic Sentiment Indicator, EU

Source: Commission services.

Overview of commercial real estate in Europe Prague, 05/10/2009 5

Annual GDP forecast (%, y-o-y)

Source: European Commission

Overview of commercial real estate in Europe Prague, 05/10/2009

Annual GDP forecast (%, y-o-y)

Overview of commercial real estate in Europe Prague, 05/10/2009

Construction output and GDP in Europe

GDP Construction output

Overview of commercial real estate in Europe Prague, 05/10/2009 8

FR -5.5 0.6 1.5

DE -3.7 1.8 0.3

IE -34.6 -16.0 -7.2

IT -7.5 1.1 0.3

NO -5.8 -6.5 3.2

PT -10.0 -7.8 1.2

ES -18.7 -6.1 2.7

SE -2.9 4.2 3.1

CH 1.6 0.9 -0.3

NL -5.8 -9.0 -0.6

UK -7.5 -1.6 1.6

Western Europe (EC-15) -8.0 -1.5 1.0

HU -3.2 2.5 6.2

PL 5.5 10.2 15.4

SK -4.3 6.0 4.9

Eastern Europe (EC-4) 1.2 6.3 10.5 Source: Euroconstruct

Overview of commercial real estate in Europe Prague, 05/10/2009 9

RESIDENTIAL SECTOR (2009: -15%)

Turbulence in financial market

Limitation of the mortgage loans to households for purchasing flats

Freezing of new housing starts and slowing down of developments

surpassing the most pessimistic forecasts

Slowdown repairs in existing stock, but performing better than new

Overview of commercial real estate in Europe Prague, 05/10/2009 10

NON RESIDENTIAL SECTOR (2009: -8%)

Difficulties with financing projects for public non residential

Difficulties in financing and lack of new investment transaction

caused stop or delay of many constructions in private sector

Freezing of new project especially in industrial sector

Slowdown repairs in existing stock

Overview of commercial real estate in Europe Prague, 05/10/2009 11

INFRASTRUCTURE SECTOR (2009: +1,6%)

Sector usually financed by public sources and supported by

national governments is more resistant to the crisis and anti-cyclical

Civil engineering remains substantially steady

Slowdown repairs in existing stock

Overview of commercial real estate in Europe Prague, 05/10/2009 12

Change in the construction production by segment

80% 47,8 48,1 47,3 45,3 43,4 43,4