2006.3 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3 2015.1 2015.3 2016.1 Europe Capital Markets, Q1 2016 CRE investment weakens in Q1 2016 as investors struggle to find product in prime markets -39.3% -16.9% 15.0% -41 bps CBRE recorded total CRE investment transactions of 50.3 billion in Q1 2016, down 16.9% on Q1 2015, but still the third best first quarter on record. The biggest year-on-year increases were seen in Russia, Netherlands and Finland, all with turnover up by more than 1 billion. The UK followed by France and Germany were the markets where market activity was down by the greatest margin compared to Q1 2015. The industrial sector bucked the trend, with investment up 58% on Q1 last year. Investment fell back in all other sectors, though this was less marked in office than in retail and hotels. Retail investment slowed most significantly, down 40% on Q1 2015. Cross-border investment remained strong, representing 43% of the market this quarter. As usual London and Paris filled the top two spots in the table of most liquid markets in Europe in Q1 2016. Copenhagen has moved up the city rankings into third place driven by a high volume of cross-border investment. Large transactions in Moscow and Birmingham propelled these cities into the top ten list. German cities slipped in the rankings, however three cities are still in the top ten markets in Europe, more than any other country. Figure 1: European Investment Turnover ( bn) 90 80 70 60 50 40 30 20 10 0 300 250 200 150 100 50 0 Quarterly Total(LHS) Rolling 12 Mo.Total(RHS) Q1 2016 CBRE Research 2016 CBRE Ltd. 1
USA Germany Asia UK Middle East France Switzerland Sweden Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 CROSS-BORDER INVESTMENT Figure 2: Cross-border Investment, Europe ( bn) 90 80 70 60 50 40 30 37% 32% 41% 36% Cross-border Purchasers Local Purchasers 37% 33% 47% 42% 40% 39% 42% 43% 46% 40% 44% 47% 49% 46% 42% 45% 43% 20 10 0 Figure 3: Cross-border Investment, Q1 2016: By Buyer Nationality (%) 5 4 3 2 1 0-1 -2-3 -4 Purchases Sales Q1 2016 CBRE Research 2016 CBRE Ltd. 2
BUYER TYPE Figure 3: Buyer Mix by Value (%), Q1 2016 Institutional Fund Property Company (Listed/REIT) Property Company (Other) Collective Vehicles Private Other DEAL SIZE Figure 9: Distribution of Major Transactions (number over 100m) Q2 2015 Q3 2015 Q4 2015 Q1 2016 United Kingdom 51 43 54 48 Germany 28 36 31 13 France 7 25 37 9 Sweden 6 8 8 7 Denmark 1 4 5 6 Italy 6 4 9 5 Netherlands 4 4 11 5 Finland 4 3 2 4 Spain 5 4 2 4 Belgium 0 3 1 3 Portugal 2 1 1 3 Europe 126 148 196 117 Q1 2016 CBRE Research 2016 CBRE Ltd. 3
London Paris (IDF) Copenhagen Moscow Birmingham Stockholm Munich Hamburg Helsinki Berlin TOP 10 INVESTMENT MARKETS Figure 4: Ten Largest Investment Markets in Europe Turnover Q1 2016 million Change on Q1 2015 (%) % of European Market* London 6,574-22 17 Paris (IdF) 2,034-50 5 Copenhagen 1,205 50 3 Moscow 1,145 112 3 Birmingham 1,132 155 3 Stockholm 1,056 9 3 Munich 1,046-7 3 Hamburg 923 16 2 Helsinki 831 40 2 Berlin 783-35 2 * Excluding indivisible multi-city portfolios Figure 5: Source of Investment in Europe s Major Markets; Q1 2016 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Domestic Asia North America Other European Middle East Other Q1 2016 CBRE Research 2016 CBRE Ltd. 4
EUROPEAN INDICATIVE PRIME YIELDS, Q1 2016 Figure 6: Prime Yields (%) Country Market Prime Office Change on Quarter Prime Retail Change on Quarter Prime Industrial Austria Vienna 4.15 3.78 6.00 Belgium Brussels 5.20 3.00 6.25 Bulgaria Sofia* 8.50 9.00 11.50 Change on Quarter Croatia Zagreb* 8.05 8.00 9.25 Czech Republic Prague* 5.50 5.25 6.50 Denmark Copenhagen 4.10 3.40 6.25 Finland Helsinki 4.20 4.00 6.00 France Paris 3.25 3.00 6.00 Germany Berlin 4.00 3.90 5.20 Germany Frankfurt 4.40 3.90 5.20 Germany Munich 3.65 3.50 5.20 Hungary Budapest* 7.00 6.75 8.50 Ireland Dublin 4.65 3.25 5.75 Italy Milan 4.00 3.50 6.50 Italy Rome 4.00 3.50 6.50 Netherlands Amsterdam 4.40 3.30 5.45 Netherlands Rotterdam 5.00 3.80 5.45 Poland Warsaw* 5.50 5.50 6.00 Portugal Lisbon 5.25 5.00 7.00 Romania Bucharest* 7.50 7.25 8.75 Russian Federation Moscow* 10.00 10.25 12.75 Serbia Belgrade* 9.00 8.00 11.50 Slovakia Bratislava* 6.90 6.00 7.75 Spain Barcelona 4.80 3.50 6.50 Spain Madrid 4.25 3.50 6.50 Sweden Stockholm 3.75 3.75 5.75 Switzerland Zurich 3.20 3.10 5.50 Ukraine Kyiv* 13.50 13.50 16.00 United Kingdom London 4.00/3.50 2.25 4.50 United Kingdom Birmingham 5.25 4.25 5.25 United Kingdom Edinburgh 5.25 4.75 6.00 United Kingdom Manchester 5.00 4.50 5.50 Q1 2016 CBRE Research 2016 CBRE Ltd. 5
Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 YIELDS Figure 7:EMEA Average Prime Yields (12-month yield shift, bps) Shops Offices Industrial Shopping Centre 120 100 80 60 40 20 0-20 -40-60 -80 DEBT MARKET Figure 8: Key Lending Terms* end-march 2016 Senior Lending, Top Quality Real Estate and Tenant Market Max Loan** Max LTV Margin*** Germany 350m 75% 100 bps Ireland 150m 70% 200 bps Italy 100m 65% 225 bps Netherlands 500m 85% 115 bps Spain 100m 65% 175 bps UK 250m 80% 135 bps Market Trend *New 5-year loan based on the maximum underwriting capacity of a single lender **Maximum ticket from a single lender ***Margin over EURIBOR/LIBOR Swap Q1 2016 CBRE Research 2016 CBRE Ltd. 6
MARKET ANALYSIS Figure 9: Investment Activity by Country Market Turnover( m) Q1 2016 Q1 2015 Change on Quarter(%) Q1 on Q4 Change on Year (%) Q1 on Q1 UK 18,402 25,750-19 -29 Germany 8,230 9,600-51 -14 France 3,052 4,923-72 -38 Sweden 2,938 2,269-33 30 Netherlands 2,344 1,184-57 98 Spain 2,312 3,132 0-26 Finland 1,811 799 68 127 Denmark 1,780 1,478-13 20 Italy 1,768 1,892-42 -7 Belgium 1,094 837 25 31 Norway 1,072 2,273-77 -53 Other Western Europe 2,794 4,476-46 -38 Russia 1,715 555 107 209 Poland 504 398-77 27 Czech Republic 452 903 125-50 Other CEE 646 582 64 11 Europe* 50,269 60,468-39 -17 Source: CBRE Research & Property Data, Q1 2016 Q1 2016 CBRE Research 2016 CBRE Ltd. 7
MARKET ANALYSIS BY COUNTRY Q1 2016 CBRE Research 2016 CBRE Ltd. 8
2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Basis Points ATTRACTIVE PRICING OUTSIDE CORE MARKETS Figure 10: European Property Yields: Spread between Markets Spread (rhs) Office prime (lhs) 9 8 7 6 5 4 Office secondary (lhs) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 3 - Figure 11: Pan-Europe IPD Income Returns (year-on-year %) Residential Office Other Industrial Retail 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% Source: CBRE Research & IPD, Q1 2016 Q1 2016 CBRE Research 2016 CBRE Ltd. 9
Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Percent MARKET OUTLOOK Figure 12: Eurostat Economic Sentiment Indicator Croatia Hungary Cyprus Malta Sweden Slovenia Italy Spain Czech Republic Portugal Germany Lithuania United Kingdom EU Bulgaria Luxembourg Euro Area Romania Netherlands Poland Latvia Slovakia France Belgium Denmark Estonia Austria Finland Greece -10-5 0 5 10 15 20 Difference from long-run average Feb-Apr 2016 Feb-Apr 2015 Figure 13: Trends in Prime Yields, CBRE Index UK Key Markets EMEA Eurozone 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 Q1 2016 CBRE Research 2016 CBRE Ltd. 10
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