Investment Opportunity on Income-generating Commercial Real Estate in Europe Real Estate market in Europe comprises 40% of the world total. Currently, prices in certain areas are at a historic record low. For Investors, some countries represent a safe heaven while others mean a big opportunity, but for those specialized buyers with strong local knowledge.

1. Pan
European
Real
Estate
Investment
Opportunity
on
Income-­‐genera8ng
Commercial
Real
Estate
in
Europe
Jamison
Group
Real
Estate

2. Market
Opportunity
Real
Estate
market
in
Europe
comprises
40%
of
the
world
total.
Currently,
prices
in
certain
areas
are
at
a
historic
record
low.
For
Investors,
some
countries
represent
a
safe
heaven
while
others
mean
a
big
opportunity,
but
for
those
specialized
buyers
with
strong
local
knowledge.
Why
Real
Estate?
Real
Estate
financing
is
shi/ing,
with
the
majority
of
European
Real
Estate
investors
predic<ng
a
shi/
from
tradi<onal
bank
lending
to
other
sources
of
capital.
“There
is
a
change
in
percep<on
that
is
likely
to
boost
sen<ment.
Why
Europe?
The
Eurozone
sovereign
debt
crisis,
which
was
previously
seen
as
undermining
real
estate
investment,
is
now
viewed
as
a
poten<al
s<mulus
for
ac<vity.”*
The
absence
of
an
Euro
breakup,
a
historically
low
prices
and
recent
changes
in
regula<ons
is
making
Europe
a
prime
investment
op8on
in
Real
Estate.
Why
now?
The
Real
Estate
yield
gap
between
European
Core
markets
and
Peripherals
is
now
at
PRE-­‐EURO
levels.
Core
Markets
are
facing
a
steady
price
recovery,
mainly
in
the
Commercial
Real
Estate
market.
Interna<onal
Investors
are
increasingly
ac<ve
in
core
ci<es
but
with
an
increasing
appe<te
for
the
peripherals,
mainly
due
to
the
combina<on
of
high
yield
(currently
at
EM
levels)
and
lower
risk.
2013-­‐2014
forecast.
The
European
office
market
is
seeing
a
recovery
in
confidence,
with
aLrac<ve
yields
during
the
laLer
half
of
2013.
Also,
there
are
incen<ves
for
the
best
space
gradually
being
scaled
back,
an
increase
in
demand
during
2014
for
primary
markets,
and
a
stabiliza<on
in
those
markets
most
affected
by
the
euro
zone
crisis.
(Source:
Cushman
&
Wakefield)
Few
Facts.
ü European
countries
are
aLrac<ve
investment
des<na<ons.
Offering
investors
surety
of
ownership,
transparency
and
enforceability
of
contracts.
ü UK,
is
one
of
the
hoLest
markets
today
as
a
safe
heaven
while
Spain
and
Ireland
are
countries
with
records
low
prices
and
high
yields.
ü Markets
like
London
and
Paris
also
offer
good
liquidity
ü PorZolios’
offering
is
increasing
which
means
an
opportunity
to
acquire
assets
at
low
rates.
ü The
market
has
started
to
stabilizes,
with
significant
growth
poten<al
in
the
near
future.*
ü Foreign
investors
represent
more
than
40%
of
RE
investments
only
in
2013
ü Main
Interna<onal
Investors
has
started
Funds
specifically
for
European
Real
Estate
*
Source:
Ernst
&
Young
Real
Estate

3. Rental
Growth
Slowing
Rents
Falling
Rents
BoQoming
Out
Rental
Growth
Accelera8ng
Amsterdam,
Paris
CBD,
Warsaw
Helsinki,
Lyon
Oslo,
Stockholm,
StuLgart
Berlin,
Cologne,
Düsseldorf
Copenhagen,
Hamburg,
Moscow
Munich
London
City
,
London
West
End
Istanbul,
Luxembourg,
St.Petersburg
Manchester
Bucharest,
Brussels,
Edinburgh,
Frankfurt,
Kiev,
Prague
Barcelona,
Dublin
Budapest,
Madrid,
Rome
Athens,
Lisbon
Milan,
Zürich
Geneva
Key
Markets
In
order
to
achieve
a
risk-­‐return
balanced
porZolio,
investments
will
be
spread
between
London,
Dublin,
Paris,
Madrid,
Barcelona,
Brussels
and
Lisbon

4. European
Real
Estate
Market

5. Current
Situa8on
The
general
business
environment
has
changed
posi<vely
for
Europe.
For
some
of
the
Big
Four
advisors,
Europe
has
started
the
path
of
recovery.
Besides
there
is
a
way
to
go,
Europe
is
“at
the
start
of
the
second
act”*.
As
a
consequence
of
the
current
crisis,
the
market
has
changed.
Nowadays,
capital
con<nues
being
global
but
returns
required
local
specializa<on
and
exper<se.
“…AccepAng
more
risk
requires
more
rigour
–
and
this
is
where
those
who
are
specialized,
who
have
detailed
local
knowledge,
and
who
can
create
networks
in
regional
markets
will
prosper.”*
Core
markets
in
Europe,
such
as
London,
Paris,
Nordics
and
Germany,
are
in
the
spotlight
this
year.
However,
Southern
Europe
(Dublin,
Madrid,
Barcelona,
Lisbon,
and
Milano)
have
also
captured
aLen<on.
Investors
are
taking
posi<ons
and
preparing
their
structures
to
be
ready,
expec<ng
for
a
2H
2013
&
2014
with
an
vigorous
deal
flow.
“Banks
were
holding
on
to
in
the
hope
of
a
value
recovery,
but
now
assets
are
being
more
aMracAvely
priced
“*
Facts
ü Banks
and
lenders
have
started
to
sell
ü Business
environment
is
at
it
best
since
2008
ü New
regula8ons
to
aLract
foreign
investment
ü Prices
are
at
historical
low
ü Rents
are
steady
ü Vacancy
has
started
to
cease
*
Source:
PwC
RE
Best
Targets
Prime
Office
Buildings
Luxury
Shopping
Centers
e-­‐commerce
stores
Recyclable
Commercial
Buildings

6. News
&
Press
The
following
press
releases
and
news
refer
to
the
period
of
2013
Savills:
Cross-­‐border
investors
dominate
ac8vity
in
Europe’s
peripheral
markets.
InternaAonal
players
have
dominated
Europe’s
peripheral
investment
markets
in
H1
2013
accounAng
for
almost
60%
of
transacAonal
acAvity
in
Italy,
Spain
and
Ireland
compared
to
40%
in
2012
UK
Commercial
Property
Values
Increase
-­‐
WORLD
PROPERTY
CHANNEL
Global
News
Center.
Capital
values
for
commercial
property
increased
by
0.2
percent,
represenAng
three
consecuAve
months
of
growth,
according
to
the
latest
report
from
Investment
Property
Databank
Blackstone
has
targeted
a
$5
billion
European
real-­‐estate
investment
fund.
Blackstone,
one
of
the
biggest
investors
in
Real
Estate
is
selling
its
50
percent
stake
in
Broadgate
office
complex
in
London
to
GIC,
Singapore's
sovereign
wealth
fund,
among
other
assets,
to
build
its
European
Real
Estate
Fund.
€140
million
Ulysses
Por_olio
up
for
sale
in
Dublin.
Ulysses
Poreolio
is
a
high
yielding
mixed-­‐use
poreolio
within
Dublin
city
with
the
majority
of
income
aMributable
to
Government
/
Semi-­‐State
tenants.
The
properAes
comprise
a
mix
of
single
and
mulA-­‐
let
offices,
a
variety
of
retail
units
and
apartments
(let
on
full
repairing
and
insuring
leases)
and
is
being
offered
either
as
a
single
lot,
or
as
three
individual
lots.
Kennedy
Wilson
and
Varde
purchase
por_olio
of
eight
UK
shopping
centers
for
£250
million
(UK)
Seven
of
the
eight
centers
have
transferred,
with
the
final
center
due
to
close
subject
to
customary
closing
condiAons.
The
total
equity
contribuAon
was
£110
million
(approx.
€130.75
million),
including
£34
million
(approx.
€40.41
million)
from
Kennedy
Wilson,
and
£163
million
(approx.
€193.75
million)
of
financing
was
provided.
Forecasts
for
the
commercial
real
estate
market
in
Spain
improve
|
Europe
|
News.
Although
Spain
conAnues
to
be
affected
by
the
uncertainty
that
has
impacted
the
country
over
the
past
five
years,
an
economic
recovery
does
now
appear
to
be
closer
and
forecasts
for
the
real
estate
market
have
improved.
According
to
the
latest
Spanish
Commercial
Property
Market
Review
from
real
estate
analysts
Knight
Frank
covering
the
first
half
2013
it
is
possible
that
some
form
of
recovery
in
the
sector
will
be
seen
by
the
end
of
2013.
GDP
forecasts
for
2014
indicate
that
growth
will
be
close
to
0.5%,
boosted
by
an
expected
improvement
in
the
global
economy.
The
outlook
will
also
be
aided
by
the
measures
taken
by
the
European
Central
Bank
(ECB)
to
stabilize
and
ensure
the
survival
of
the
Euro.

7. The
Team

8. Mariano
Marc
More
than
15
years
in
the
Asset
Management
field.
Specialized
in
Distressed
Asset
Management.
Have
co
founded
Asset
Management
Companies
in
Europe
and
La<n
America.
He
has
directly
managed
more
than
US$600M
in
RE
backed
loans
and
acquired
+US$1,5bn
in
distressed
assets.
In
2010,
he
designed
and
structured
the
Consumer
Finance
arm
for
a
leading
Insurance
Co
in
La<n
America.
Bertrand
François
Guillot
25yrs
investment
banking
in
UK,
US,
France
and
Spain
with
Ci<group,
AIG,
ANZ
Investment
Bank.
Bertrand
was
responsible
for
AIG-­‐GE
Capital,
U$1bn
private
equity
fund
as
well
as
AIG’s
direct
investments
(U$150m)
in
La<n
America.
Bertrand
was
board
member
of
several
companies
including
Axtel,
Mexico’s
2nd
largest
telecom
operator
and
Cablemas,
Mexico
leading
cable
TV
operator
,
genera<ng
3.4
and
1.6
cashflow
mul<ple
return
and
addi<onal
U
$46m
in
fees.
As
founder
and
head
of
Ci<bank’s
CEMEA
project
finance
team
for
media
and
telecom
he
structured
over
U$2bn
in
numerous
transac<ons.
He
has
been
directly
responsible
for
the
origina<on
and
due
diligence
of
distressed
assets
(including
real
estate)
in
Spain
and
Portugal
for
over
€1bn
in
face
value
Ali
Fakhri
Ali
Fakhri
has
worked
in
London
and
the
GCC
including
Saudi
Arabia
property
market
for
more
than
20
years.
His
experience
has
been
gained
from
working
at
various
large
corporate
establishments
among
them,
CB
Hillier
Parker
and
Dubai
Proper<es.
20
years
real
estate
expert,
10
years
presence
in
the
Middle
East.
Ali
has
substan<al
experience
in
asset
acquisi<on
($480m)
and
disposal
($430m)
together
with
asset
management
experience
gained
while
working
in
a
number
of
asset
owner
organisa<ons
total
assets
under
management
(
Over
$1b).
Partners

9. Ci8es
London
Paris
Dublin
Madrid
Barcelona

10. London,
UK
London
Momentum.
The
Total
Commercial
Development
Ac<vity
Index
–
a
net
balance
monitoring
the
overall
performance
of
the
UK
commercial
property
sector
–
recorded
+26.7%
in
August,
up
from
July’s
+20.1%.
The
latest
reading
pointed
to
the
strongest
growth
rate
since
March
2007.
Grade
A
office
rents,
rates
and
service
charges
showed
the
biggest
increase
in
Swindon,
Wiltshire,
with
a
12%
rise
to
£23
per
sq
/,
followed
by
WaZord,
HerZordshire,
which
recorded
a
9%
increase
to
£37
per
sq
/.
Dynamics
of
the
supply
side.
Technology,
media
and
telecoms
sectors
will
con<nue
to
fill
a
propor<on
of
the
demand
gap
created
by
the
banking/financial
services
sector.
Prime
office
rents
for
well
located
refurbished
and
new
Grade
A
space
in
Central
London
will
rise
by
an
average
of
5-­‐10%
by
2015.
It
is
likely
that
during
the
second
half
of
2013
rent
free
periods
throughout
most
of
the
prime
and
good
secondary
office
loca<ons
in
Central
London
will
narrow
by
1
-­‐
2
months,
based
on
5
–
10
year
leases.
Key
Data
Popula<on:
63,2
Million
GDP*:
€1.800bn
(+0,6%)
Debt
to
GDP:
90%
Consumer
Indicators
Infla<on:
+2.8%
(Steady)
CSI
(2012-­‐2013)
-­‐1,5%
Unemployment:
7.8%
(-­‐0.1%yoy)
CRE
Market
Yield:
5%
Prime
city
rents:
+22%**
£
by
sqm:
£95-­‐110
Improved
demand:
+25%**
*
2013
yoy
Source:
Moodys’
**since
2009
Take-­‐up
reached
238,000
sq
/,
bringing
the
year-­‐to-­‐date
total
to
403,000
sq
/,
this
is
63%
down
on
average
for
the
first
two
months
of
the
year.

11. Paris,
France
The
Commercial
Real
Estate
Market
in
Paris.
For
several
years
Paris
has
been
the
most
important
real
estate
investment
market
in
con<nental
Europe,
with
overall
investment
volumes
of
€
8-­‐10
Billion
each
year.
Paris
is
the
second
most
popular
des<na<on
in
Europe
for
interna<onal
real
estate
investment.
One
third
of
Fortune
500
companies
have
their
headquarters
in
Paris,
the
second
most
popular
loca<on
for
these
companies
a/er
Tokyo.
The
largest
office
market
in
Europe.
The
Paris
Region
is
home
to
the
largest
office
market
in
Europe
with
around
52
million
square
metres
(sqm).
It
is
the
second
largest
in
the
world
a/er
New
York.
On
average
over
the
last
10
years,
the
Paris
Region
lezng
market
has
seen
2.2
million
sqm
of
take-­‐up
yearly.
This
places
it
at
the
top
of
all
European
markets
in
terms
of
demand.
Yields.
In
the
golden
triangle
area
(around
the
Champs
Elysées),
the
best
proper<es
sell
at
yields
of
between
4.50-­‐5.00
%
(as
at
Q3
2012).
Prime
yields
in
La
Défense
are
posi<oned
around
6.00-­‐6.50
%
and
around
5.75-­‐6.25
%
in
the
Western
Crescent
submarkets.
TOP
Compe88ve
advantages
of
Paris
●
A
stable
poli<cal,
economic
and
legal
environment.
●
Diversified
and
interna<onal
occupier
base.
●
A
large
diversity
in
business
sectors
and
in
the
size
of
occupiers.
●
A
wide
offer
of
proper<es
with
varying
architecture,
technical
characteris<cs,
energy
performance
and
occupa<onal
costs.
●
A
stable
stock
of
office
space
limi<ng
any
oversupply
phenomenon
and
overall
vacancy
rates.
●
2nd
largest
investment
market
in
Europe
with
the
highest
level
of
transparency.
●
Liquid
investment
market
with
50%
interna<onal
investors.
●
Index-­‐linked
rental
increases
providing
stable
growth
of
income
returns.
●
Stable
capital
values
with
less
vola<lity
than
its
main
compe<tor
London.
Key
Data
Popula<on:
65
Million
GDP:
€
2.028.000
bn
Debt
to
GDP:
90.2%
Consumer
Indicators
Infla<on:
1%
(Steady)
Unemployment:
11%
CRE
Market
Yield:
4.5%
Prime
Prime
city
rents:
xxxx
€
by
sqm:
€795
Prime
Vacancy
rate:
6%
Prime.
Total
supply:
52M
sq
m

12. Dublin,
Ireland
The
crea<on
of
NAMA
in
Ireland
three
years
ago
has
clearly
helped
the
credibility
of
the
government
and
property
market
with
investors.
Rental
values
in
the
Irish
office
market
have
grown
by
0.2%
for
the
first
<me
in
five
years,
according
to
IPD/ICSI
Ireland
Quarterly
Property
Index.
This
e
growth
is
the
first
sign
of
recovery
in
the
occupier
market,
which
has
seen
rental
values
wriLen
down
by
over
48%
since
December
2008.
A
number
of
'big
name'
interna<onal
tenants
have
moved
to
Ireland
over
the
last
two
years,
aLracted
by
improved
Irish
compe<veness,
low
corpora<on
tax,
a
well-­‐educated
young
workforce
and
heavily
discounted
rents
–
and
this
has
started
to
be
reflected
in
the
occupier
market.
140
foreign
Co.
expanded
or
launched
opera<on
in
2012,
mainly
in
Dublin.
Investments
in
CRE.
€436M
office
investment
in
2012,
of
which
over
50%
in
Q4
alone.
Total
investment
volume
transacted
€640M
against
€180M
in
2011.
+51,000
sq
m
of
space
was
transacted
in
the
Dublin
office
market
in
the
last
quarter
of
2012.
1Q
2013.
The
momentum
experienced
in
the
commercial
property
sector
during
the
laLer
half
of
2012
has
con<nued
this
year.
More
than
€336
million
of
investment
proper<es
of
more
than
€1
million
in
value
traded
in
the
Irish
market
during
the
1Q
2013.
In
total,
21
investment
transac<ons
of
more
than
€1
million
were
completed
in
the
Irish
market
during
Q1
2013.
This
quarterly
spend
compares
with
€545
million
invested
in
Irish
commercial
real
estate
in
the
en<re
year
last
year
and
is
significantly
higher
than
that
invested
in
each
of
the
previous
three
years.
Notable
investment
transac8ons
completed
in
the
first
quarter
of
2013
the
sale
of
the
Bishop’s
Square
office
building
in
Dublin
2
to
US
investor
for
€65
million,
at
a
9.8%
yield;
the
sale
of
a
porZolio
of
four
office
buildings
in
the
Irish
Airlines
Pension
Fund
and
the
sale
of
two
adjoining
buildings
on
Gra/on
Street.
Key
Data
Popula<on:
4.7
Million
GDP:
€163bn
Debt:
€192bn
(117%
vs
GDP)
Consumer
Indicators
Infla<on:
+0.5%
(Steady)
CSI
(2012-­‐2013)
0.5%
Unemployment:
0%
yoy
14.1%
overall
CRE
Market
Yield:
+9%
€
by
sq.m:
€32.3
Vacancy/occupa<on:
20.2%

13. Madrid,
Spain
The
market
has
started
to
move
forward.
The
first
quarter
of
2013
closed
with
the
highest
quarterly
Madrid
office
take-­‐
up
recorded
since
2008
at
approximately
160,000
sq
m,
represen<ng
a
179%
year-­‐on-­‐year
rise,
from
58,000
sq
m
in
Q1
2012.
European
players,
par<cularly
German
investors,
are
showing
renewed
interest
in
the
Madrid
office
market
whilst
La<n
American,
US
and
Asian
buyers
returned
to
the
market
at
the
close
of
2012.
Country’s
posi<ve
results
are
coming
from
the
trade
balance,
which
has
dropped
by
70%
since
the
top
of
the
market
in
2007,
which
helps
boos<ng
the
compe<<veness
of
the
Spanish
economy.
The
falling
inter
annual
deficit
figure,
which
was
at
6.98%
in
2012,
coupled
with
the
aliena<on
of
the
need
for
a
bailout,
mean
that
the
forecast
for
the
upcoming
quarters
could
poten<ally
suggest
tenta<ve
and
yet
sustained
economic
improvement.
This
is
then
expected
to
stabilize
in
2014
and
show
clear
signs
of
growth
from
2015
onwards.
Key
Data
Popula<on:
47
Million
(2012)
GDP:
€260bn
(-­‐1.8%)
Consumer
Indicators
Infla<on:
+2.4%
(Steady)
CSI
(2012-­‐2013)
+1.5%
Unemployment:
-­‐1.9%
Q42012
26%
overall
CRE
Market
Yield:
6%
Prime
7,5%
Key
Hubs
Prime
city
rents:
Stable
€
by
sqm:
€14avge-­‐
€24Prime
Vacancy
rate:
13%global,
6,3%
Prime.
Total
supply:
1,7M
sq
m
Strong
1Q
2013
sqm
Nºofdeals
Q100
Q101
Q102
Q103
Q104
Q105
Q106
Q107
Q108
Q109
Q110
Q112
Q113
Q111
Historic CRE trend in demand
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
Take-up Nº of deals
300
250
200
150
100
50
0

14. Barcelona,
Spain
The
average
vacancy
rate
in
Barcelona
remained
almost
stable
at
13.8%.
There
are
already
very
few
built
op<ons
in
the
market
for
the
substan<al
exis<ng
demand.
Developers
are
not
currently
planning
specula<ve
construc<on,
so
this
situa<on
could
intensify
in
the
coming
years.
In
2012,
a
total
of
199,000m²
of
office
space
was
taken
up,
down
26%
on
the
figure
for
2011.
In
fact,
2012
saw
the
lowest
take-­‐up
figure
for
the
last
15
years
(since
1997).
Key
Data
CRE
Market
Yield:
6.75%
Prime
Prime
city
rents:
€18
p
sq.
m
Vacancy
rate:
13.8%global
Source:
JJL
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
10yr AverageSupply
and
Vacancy
Rates
VacancyRate %
16
14
12
10
8
6
4
2
0
Vacancy Rate
000s sqm
1,000
800
600
400
200
0
Vacancy Total
Market
Areas
Q4
2012
was
the
most
ac<ve
quarter
of
the
year,
with
4
deals
for
€143
million.
This
takes
the
total
volume
for
the
Barcelona
office
investment
market
in
2012
to
€265
million.
This
represents
a
38%
increase
on
the
€192
million
registered
in
2011