ASIA PACIFIC HEAD OF RESEARCH

NICHOLAS HOLT

15TH OCTOBER 2015

AGENDA

MACROECONOMIC BACKDROP

CAPITAL MARKETS TRENDS

HOW THE OFFICE IS CHANGING

INFRASTRUCTURE

THE EMERGING MARKETS SLOWDOWN

RECENT GROWTH DRIVERS

Emerging Market

Commodity exporting

Manufacturing led

FUTURE GROWTH DRIVERS

Advanced economies

Commodity importing

Services / Tech led

US GROWTH ENGINE

3.9% GDP Growth

(year to Q2)

CAPITAL MARKETS TRENDS

Some emerging markets to see drop in outbound capital

More proactive US buyers

European opportunist money

More interest in specialist sectors

Deregulation

PRIME OFFICE YIELDS (END ‘15 ESTIMATE)

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%

Beng

aluru

Mumb

aiDe

lhiMe

xico C

itySh

angh

aiBe

ijing

Melbo

urne

Sydn

eyCh

icago

Was

hingto

n DC

Los A

ngele

sFra

nkfur

tSa

n Fran

cisco

New

York

City

Madr

idTo

kyo

Singa

pore

Lond

onPa

risHo

ng Ko

ng

Source: Knight Frank / Newmark Grubb Knight Frank

CROSS BORDER INVESTORS PROMINENT IN INDIA, SG AND MALAYSIA INVESTMENT INTO REAL ESTATE H1 ‘15 ($M)

Source: Knight Frank / Real Capital Analytics

H1 2015 Domestic Foreign % Foreign US $777,728 $42,456 5% UK $169,691 $38,710 19% CHINA $106,011 $17,902 14% JAPAN $104,284 $3,800 4% AUSTRALIA $74,919 $5,575 7% HONG KONG $6,872 $1,560 18% NEW ZEALAND $6,121 $1,170 16% SINGAPORE $2,954 $2,259 43% SOUTH KOREA $1,903 $842 31% MALAYSIA $1,005 $1,454 59% THAILAND $1,468 $175 11% INDIA $493 $998 67%

TOP TEN OFFICE RENTAL GROWTH TO 2018

Source: Knight Frank / Newmark Grubb Knight Frank

1 6

2 7

3 8

4 9

5 10

22% 14%

21% 13%

20% 12%

16% 10%

16% 9%

MADRID LONDON

MUMBAI LOS ANGELES

SAN FRANCISCO HONG KONG

MELBOURNE PARIS

BENGALURU CHICAGO

HOW THE OFFICE IS CHANGING

COOL OFFICES

Courting ‘Millennials’

Desks out / sofas in

Growing fast in popularity

IMPACT ON DENSITIES? Typical space allocation per worker

Source: Knight Frank / Newmark Grubb Knight Frank

SHANGHAI NEW YORK PARIS LONDON SYDNEY MUMBAI

160 150 150 120 120

75

100

SINGAPORE

INFRASTRUCTURE 1: TRANSPORT

Airport: Dubai, Beijing, Singapore, Hong Kong Intercity rail: Japan, SE Asia Metro: Across most markets

INFRASTRUCTURE 2: INDIA

Delhi / Mumbai Industrial Corridor

920 miles long, 186 miles wide

New rail, sea ports, airports, and 100 smart cities

INFRASTRUCTURE 3: ONE BELT ONE ROAD

China : One Belt One Road

New Silk Road Economic Belt

21st-Century Maritime Silk Road

SUMMARY

Growth shifting from emerging to mature markets with global cities to continue to attract significant investment capital

Office markets are changing in terms of tenant profile, design and fit-out, responding to the needs of businesses and employees

Infrastructure is supporting the development of the Global Cities and will provide opportunities for investment going forward

PRIME YIELDS: INDIAN CITIES AHEAD OF NEW YORK & LONDON

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%

Beng

aluru

Mumb

aiDe

lhiMe

xico C

itySh

angh

aiBe

ijing

Melbo

urne

Sydn

eyCh

icago

Was

hingto

n DC

Los A

ngele

sFra

nkfur

tSa

n Fran

cisco

New

York

City

Madr

idTo

kyo

Singa

pore

Lond

onPa

risHo

ng Ko

ng

Source: Knight Frank / Newmark Grubb Knight Frank

CURRENT RENTALS: MUMBAI AND DELHI ARE LOWER THAN THE 2007 PEAK

Source: Knight Frank / Newmark Grubb Knight Frank

-60.0%-40.0%-20.0%

0.0%20.0%40.0%60.0%80.0%

Beijin

g

San F

rancis

co

Melbo

urne

Sydn

ey

Lond

on

Was

hingto

n DC

Beng

aluru

Mexic

o City

Shan

ghai

Los A

ngele

s

Frank

furt

Hong

Kong

New

York

City

Chica

go

Paris

Mumb

ai

Delhi

Toky

o

Madr

id

Singa

pore

FUTURE RENTAL GROWTH: MUMBAI & BENGALURU AMONG TOP 5

Source: Knight Frank / Newmark Grubb Knight Frank

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%Ma

drid

Mumb

ai

San F

rancis

co

Melbo

urne

Beng

aluru

Lond

on

Los A

ngele

s

Hong

Kong

Paris

Chica

go

Was

hingto

n DC

Sydn

ey

Shan

ghai

New

York

City

Toky

o

Delhi

Frank

furt

Mexic

o City

Beijin

g

Singa

pore

DMIC AMONGST THE TOP 5

Source: Knight Frank / Newmark Grubb Knight Frank

Tripling industrial output and quadrupling exports in the next 5 years Global IT majors to help transformation of Smart Cities on this corridor Delhi to become an economic anchor of North India

CAPITAL FLOWS

Foreign investment in Indian Real Estate double of the domestic flow REIT to give a further push to commercial real estate; Could attract investments worth $100 bn in the next few years

ROBUST OUTLOOK FOR COMMERCIAL REAL ESTATE

Strong demand from e-commerce and start-ups High yields and rental growth a perfect combination for investment Heightened foreign interest coupled with improving regulatory landscape Robust economic growth, focus on infrastructure and ease of doing business