CBRE Global In-Sights

Asian Commercial Property Market Review and Outlook Presentation by:

Global Research and Consulting

Andrew Ness

Executive Director, CBRE Research Asia

Dr. Raymond Torto

Global Chief Economist

The presentations are released as Podcasts and PDF files and are made available on www.cbre.com/reseach.

9 January 2009

Andrew Ness Andrew Ness is Head of CBRE Research for Asia. Andrew has direct oversight over CBRE’s research operations in the Asian region, and in ensuring that research is deployed to support the Company’s business throughout Asia with respect to promoting business development, managing of client relationships and raising corporate media exposure.

[email protected]

CB Richard Ellis | Page 2

1

Raymond Torto, PhD, CRE Ray Torto is CBRE’s Global Chief Economist. He directs CBRE’s worldwide team of commercial real estate market analysts and serves as the firm’s primary spokesperson on macro economic issues and the global commercial real estate market.

[email protected]

CB Richard Ellis | Page 3

The Asia Economy and Office Occupier Market

Global Research and Consulting

2

Asia Economic Outlook 2008 2008

3.7%

2009

-1.5%

GDP growth

2009

Clouds over growth but positive prospect Clouds over growth and dimmer prospect

JAPAN SOUTH KOREA

CHINA 9.0%

2009

6.5%

INDIA* 2008 2009

2008 2009

TAIWAN

5.0% 2008

4.0%

2009

1.0%

THAILAND VIETNAM

2009

2.0%

1.9%

2009

-2.5%

2008

3.0%

2009

-1.0%

6.4%

PHILLIPPINES

2009

3.5%

2008

3.7%

2009

2.1%

MALAYSIA INDONESIA

SINGAPORE 2.5%

2008

2008

1.5%

Recent deterioration and uncertain outlook

0.2% 1.6%

Continued deterioration

HONG KONG

6.8%

5.5%

2008

2008 2009

2008

2008

6.0%

2009

3.5%

Source: IMA Asia (January 2009) * FY starting 1 April

CB Richard Ellis | Page 5

Exports: Sharp Decline in the Fourth Quarter 50

Sep-08

Nov-08

40 30 (%, y-o-y)

20 10 0 -10 -20 -30 India

Vietnam

Thailand

Singapore

Philippines

Malaysia

Indonesia

South Korea

Taiwan

HK

China

Japan

-40

Source: IMA, corresponding statistics departments CB Richard Ellis | Page 6

3

Monetary Policy Change Since 15 Sep Change in policy rates

Policy rates

Overnight call

1.50%

Discount window

3.625%

Taiwan

-2.125%

1.50%

discount rate

3.75% 2.75%

Thailand

-1.00%

One-day repurchase

5.25%

South Korea

-2.25%

3%

Policy rate Overnight policy

7.20%

China

-1.89%

5.31%

One-year lending

9.00%

India

-3.50%

5.50%

Repo

8.00% 7.50%

Philippines

-0.50%

Overnight lending

9.00% 8.75%

Indonesia

-0.25%

Overnight rate

14.00%

Vietnam

-5.50% -5%

3.50% 3.25%

Malaysia

-0.25%

6%

8-Jan-09 3.50%

Hong Kong

-2.00%

15-Sep-08

0.50% 0.10%

Japan

-0.40%

8.50%

Base rate

-4%

-3%

-2%

-1%

0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

CB Richard Ellis | Page 7

Office Rentals Have Entered the Down Cycle CB Richard Ellis Asia O ffice Rental Index 300

250

India SE Asia (2001 Q1 = 100)

200

O verall Index Greater China

150

Japan 100

50

2008 Q3

2008 Q 1

2007 Q3

2007 Q1

2006 Q 3

2006 Q1

2005 Q 3

2005 Q1

2004 Q 3

2004 Q1

2003 Q 3

2003 Q1

2002 Q3

2002 Q1

2001 Q3

2001 Q 1

0

Source: CBRE Research CB Richard Ellis | Page 8

4

Reduction in Rents Started Office Rental Growth Q3 2008 vs Q4 2008 Q3 Q4

Kuala Lumpur Hanoi Taipei Seoul Jakarta Bangalore Bangkok Tokyo Manila Guangzhou

Over half of the markets recorded reduction in rents

Beijing Ho Chi Minh City Shanghai New Delhi Mumbai Singapore Hong Kong

-25% -20% -15% -10%

-5%

0%

5%

10%

15%

quarterly rental growth CB Richard Ellis | Page 9

Vacancy Rose at a Faster Pace Asia overall vacancy rate (2002 - Q4 2008) 16% 14% 12% 10% 8% 6% 4% 2%

Q4 08

Q 2 08

Q 4 07

Q2 07

Q4 06

Q 1 06

Q 3 05

Q1 05

Q3 04

Q 1 04

Q 3 03

Q 1 03

Q3 02

Q1 02

0%

Based on survey on 15 Asian cities. CB Richard Ellis | Page 10

5

Decline in Occupancy is Observed Over the Region (%) 20

Vacancy Rate (Q4 2008 vs Q4 2007) Q4 07

Q4 08

12 out of 17 markets recorded increase in vacancy over the past year

15

10

5

Beijing

Bangkok

Guangzhou

Jakarta

Shanghai

Hong Kong

Kuala Lumpur

Taipei

Mumbai (CBD)

Bangalore

New Delhi (CBD)

Manila (Makati)

Tokyo

Hanoi

Ho Chi Minh City

Seoul

Singapore

0

CB Richard Ellis | Page 11

Asian Office Market Rent Cycles Rental Growth Accelerating

Rental Growth Slowing JakartaJ BangaloreB Bangkok B Taipei T SeoulS Kuala Lumpur

K

As of Q4 2008 Rents Bottoming Out

Rents Falling G Manila H M N S Singapore M HCM CityH Beijing B

ShanghaiS Hanoi H

Guangzhou Hong Kong New Delhi Mumbai

T Tokyo

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

CB Richard Ellis | Page 12

6

Many Mega Projects are in the Pipeline IFC Seoul

Marunouchi Park Building, Tokyo Beijing CCTV HQ and World Trade Center III Shanghai IFC Hong Kong ICC

Singapore MBFC

Shanghai WFC

CB Richard Ellis | Page 13

New Supply (2004 -2010) 60

Manila

50

New Delhi Mumbai

(million sf)

40

Bangkok Singapore Seoul

30

Tokyo Taipei 20 Hong Kong Shanghai 10

Beijing Guangzhou

0 2004

2005

2006

2007

2008

2009 F

2010 F

CB Richard Ellis | Page 14

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The Asian Markets in Focus

Global Research and Consulting

CB Richard Ellis | Page 16

8

CHINA

Economic & Polices Issues

Economic growth – China’s economy has been dragged down significantly over the past few months fuelled by cooling consumer demand in the residential and automobile sectors, decline in external trade, as well as less construction activity and rising unemployment. The Central Government is taking all effort to meet its 2009 GDP growth target of 8%, including various stimulus packages and other fiscal policies.

Stimulus plans – A stimulus package worth RMB 4 trillion will be spent by 2010 on 10 major areas nationwide, while various provincial governments are also deploying numbers of stimulus plans to reinvigorate local economies.

Real Estate market – The overall property market cooled considerably in 2008. The government announced a number stimulus plans: RMB 7.5 billion will be spent to construct affordable housing, also reducing various property tax and exemption for purchasers. The BPOC also announced to lower the threshold for down payments and reduce the lending rates

Financial market – The PBOC has decided further relax the monetary policy to cut the 1-year RMB benchmark deposit and loan rates both by 0.27 percentage points as of December 23, 2008. Another major implementation is to ensure adequate liquidity in the financial system and stay ready to provide liquidity to financial institutions when needed.

CB Richard Ellis | Page 17

CB Richard Ellis | Page 18

9

BEIJING

PRIME OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

PRIME OFFICE RENTAL INDEX

160

25

16,000

140

14,000

15 (%)

8,000 10

6,000 4,000

5

120 100 80 60 40 20

2,000

Jianguomen (CBD)

Zhongguancun

Q1 08

Q1 07

Q1 06

Q1 05

Q1 04

Q1 03

Q1 02

Vacancy Rate

Q1 01

2008

Q1 97

Net Absorption

2007

2006

2005

2004

2003

2002

New Supply

Q1 99

0

0 2001

0

Q1 98

'000 sf

10,000

(Q1 1998 = 100)

20

12,000

Q1 00

BEJING

CHINA

Finance Street

• Market demand has dropped sharply within a short period and property owners have begun to adjust their rental quotations downwards in attempt to stimulate market demand. • Four projects were completed in the fourth quarter of 2008. Three are located in the Central Business District: World Financial Centre, Office Park, and Fosun International Centre; the fourth, Global Trade Centre, is in the Anzhen Area. The projects provide a total of 4.9 million sf of new supply, bringing the total area of the 16 prime office projects completed in 2008 to 13.5 million sf. Net absorption for the whole year was 6.34 million sf, a drop of 25% compared with 2007.

CB Richard Ellis | Page 19

Market Outlook – What Next?

BEJING

CHINA

Beijing Office Rental Movement, 1997 Q1 - 2008 Q4 140

Supply boom

Rental Index (1998 Q1 = 100)

130

Economic expansion

Financial Tsunami

?

2.51%

120 110

63.77%

64.47%

22.49%

18.5%

100 90 80

SARS outbreak

70 Accession to WTO

60 50

Bust

Recovery

Bust

Steady Recovery

Bust

40 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 20

10

CB Richard Ellis | Page 21

SHANGHAI

SHANGHAI

CHINA PRIME OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

PRIME OFFICE RENTAL INDEX

25

12,000 10,000

160 140

20

120

(%)

'000 sf

15 6,000 10 4,000 5

2,000

(Q1 1998 = 100)

8,000

100 80 60 40

Pudong

Q1 08

Q1 07

Q1 06

Q1 05

Q1 04

Q1 03

Q1 02

Q1 01

Q1 00

Q1 99

Q1 98

Vacancy Rate %

2008

2007

2006

2005

2004

Net Absorption ('000 f)

20 Q1 97

New Supply ('000 f)

2003

2002

0 2001

0

Puxi

• Average rents dropped by 8.7% q-o-q to RMB 241.8 psm (US$ 3.29 psf) per month, marking negative y-oy growth of -0.4%. • The reduction in occupied space indicates that some tenants are adopting more stringent budget controls in the wake of worsening global economic conditions. Cost-cutting measures have included relocating to decentralized areas, reducing office size, and terminating local operations. There were no new completions in the fourth quarter.

CB Richard Ellis | Page 22

11

SHANGHAI

CHINA

Market Outlook – What Next?

Shanghai Office Rental Movement, 1997 Q1 - 2008 Q4 130 Supply boom

Rental Index (1998 Q1 = 100)

120

Economic expansion, period of strong demand

Financial Tsunami

?

8.68%

110 100

136.3%

59.12%

90 Accession to WTO

80 70

SARS outbreak

60 50

Bust

Boom

Bust

40 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 23

CB Richard Ellis | Page 24

12

HONG KONG

Economic & Polices Issues

Economic growth – Hong Kong entered a recession in Q32008 attributed by a decline in retail sales and shrinking external trade. Layoffs and bankruptcies have dominated the headlines thus far over the past 6 months.

Stimulus plans – The SAR Government announced plans to help offset the impact of recession, includes the creation of more than 60,000 jobs in 2009 through expediting infrastructure projects, advancing recruitment of civil servants and creating temporary positions

Real Estate market – The property market entered a down cycle and anxiety over the economic downturn negatively impacted sentiment in both the residential and retail markets markedly. As a result, Hong Kong Mortgage Corp. announced on 11 December to lower the loan-tovalue (LTV) ratio for primary mortgage from 70% to 60% for the secondary mortgage under the Mortgage Insurance Programme, subject to an overall LTV of 90% and a maximum loan amount of HK$8 million, in a move to stabilize the sector.

Financial market – A number of measures have been put in place to stabilize the financial sector, including the pilot scheme to permit RMB settlement of foreign trade transactions in Hong Kong to certain extend; use of the Exchange Fund to guarantee repayment of all customer deposits held in all Authorized Institutions in Hong Kong until the end of 2010; and a currency swap between the PBOC and the Monetary Authority of Hong Kong to support financial stability and economic development in Hong Kong. It can provide liquidity support up to RMB 200 billion or 227 billion HK dollars.

CB Richard Ellis | Page 25

HONG KONG

HONG KONG

PRIME OFFICE RENTAL INDEX

20

120

4,000

16

100

3,000

12

2,000

8

1,000

4

0

0

40 20

Q 1 08

Q 1 07

Q 1 06

Q 1 05

Q 1 04

Q 1 03

Q 1 02

Q 1 01

Q 1 00

0 Q 1 99

Vacancy Rate %

60

Q 1 98

2008

2007

2006

2005

2004

Net Absorption ( f)

80

Q 1 97

New Supply ( f)

2003

2002

-4 2001

-1,000

(Q 1 1985 = 100)

5,000

(%)

'000 sf

HONG KONG

(CITYWIDE) GRADE A OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

• As the business environment deteriorated substantially, landlords’ attitudes began to change significantly and put securing tenants on their top priority in the fourth quarter, spurring considerable reduction in rents citywide. • Average rent for Hong Kong Grade A office buildings dropped 21.1% q-o-q in the fourth quarter, the biggest quarterly slump of the decade, closing the year with a loss of -13.59%. The rents of traditional financial districts, such as Central, Sheung Wan and Admiralty, were down even more by 21-25%. • In the fourth quarter of 2008, CBRE Research included two more sub-markets in the compiling market data for prime area Grade A office rents. The two sub-markets, Kowloon East and Island East, are rapidly maturing office districts that host considerable quantum of new Grade A buildings. CB Richard Ellis | Page 26

13

Market Outlook – What Next?

HONG KONG

HONG KONG

Hong Kong Office Rental Movement, 1997 Q3 - 2008 Q4 120 Asian Financial Crisis Sep. 1997

Rental Index (1985 Q1 = 100)

110

Dot-com boom

Economic boom

Financial Tsunami

100

?

23.6%

90 50.05%

80

39.1%

57.6%

364.4%

70 Dot-com Bubble in 2000

60 50

911 terrorist attack

40 30

Bust

Recovery

Bust

Iraq war/SARS outbreak

Boom

Bust

20 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 27

JAP AN

CB Richard Ellis | Page 28

14

JAPAN

Economic & Polices Issues

Economic growth – Japan’s economy entered a recession in Q42008, characterised by fall in export, rise in unemployment and slide in consumer sentiment as well as sharp decline in retail sales.

Stimulus plans – Stimulus package worth JPY 5 trillion, equivalent to about 1.2% of annual GDP, was announced on 30 October 2008. The package includes providing stipends to all households, ensuring SMEs can access to loans, offering tax relief on mortgages and reduce highway tolls. Another JPY 23 trillion was announced on 12 December to provide JPY 10 trillion tax breaks and public financing, and JPY 13 trillion to prop up financial markets.

Financial market - The government announced on 19 December 2008 that it will buy as much as JPY 20 trillion of shares held by banks to boost their capital holding. Real Estate - The credit crunch compelled many developers to consolidate while a rising number of real estate firms were forced to seek bankruptcy protection. As a result, the government announced a JPY 250 billion financing programme for the property sector on 15 December to assist the local real estate developers and REITs. The government also supports the housing market through lowering the interest rate offered by the Japan Housing Finance Agency as well as providing various tax relief and exemption.

CB Richard Ellis | Page 29

TOKYO PRIME OFFICE RENTAL INDEX

160

5

4,000 3,000

4 3

2,000

2

1,000

1

20

0

0

0

80 60

Q 1 08

Q 1 07

Q 1 06

Q 1 05

Q 1 04

Q 1 03

40

Q 1 02

(Q 1 1998 = 100)

100

Q 1 00

Vacancy Rate %

120

Q 1 99

Net Absorption (000 f)

140

Q 1 98

New Supply (000 f)

(%)

5,000

2008

6

2007

7

6,000

2006

7,000

2005

8

2004

8,000

2003

10 9

2002

10,000 9,000

2001

'000 sf

CENTRAL FIVE WARD GRADE A OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

Q 1 01

TOKYO

JAPAN

• Some Grade A buildings continued to experience difficulty in filling vacancies as tenants have become increasingly reluctant to take space at higher rents. • The fourth quarter saw the average prime office rent (exclusive of CAM) for Grade A buildings decline by a comparatively modest 1.0% q-o-q to JPY 51,500 per tsubo (US$15.967 psf) per month. • For the past three years Grade A vacancy has trended at the extremely low rate of just over 1%. However, the fourth quarter saw Grade A vacancy increase by a significant 160 basis points q-o-q to 3.5%, breaking through the 3.0% mark for the first time since 2004.

CB Richard Ellis | Page 30

15

Market Outlook – What Next?

TOKYO

JAPAN

Tokyo Office Rental Movement, 1998 Q2 - 2008 Q4 150

Rental Index (1998 Q1 = 100)

Financial Tsunami

Collapse of real estate and asset bubbles in the late1980s, Asian Financial Crisis & Dot-com Bubble

140

?

13.5%

130 Stock Market Rally in 2007

120 33.85%

110

105.2%

100 90 Dot-com Bubble in 2000

80 70

Bust

Boom

Bust

60 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 31

CB Richard Ellis | Page 32

16

SINGAPORE

SINGAPORE

Economic & Polices Issues

Economic growth – Singapore entered a recession in Q32008 with two consecutive quarterly fall in GDP growth (-1.4% q-o-q for Q2, -1.7% q-o-q for Q3) attributable to the drop in export, reduce tourist income and domestic demand. The property sector was hit hard and investment activity faded significantly.

Stimulus plans – Besides the guaranteed bank deposit announced earlier, the government also plans to boost the tourism sector by cutting various fees and charges

Financial market - The Monetary Authority of Singapore joined global central banks in establishing a temporary reciprocal currency swap arrangement of US$30 billion with the US Federal Reserve. The swap facilities allow the Federal Reserve to provide US dollar liquidity to financial institutions through central banks Real Estate market - The Singapore property investment market was subdued as cautious investor sentiment took hold. The tightening of credit conditions and the increased cost of funding all caused the investment climate to cool significantly. For commercial property, Singapore is poised to experience office building construction boom between 2009-2011.

CB Richard Ellis | Page 33

SINGAPORE

PRIME OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

Net Absorption

240 200 160 120 80 40 Q 1 08

Q 1 07

Q 1 06

Q 1 05

Q 1 04

Q 1 03

Q 1 02

Q 1 01

Q 1 00

Q 1 99

Q 1 98

0 Q 1 97

2008

2007

2006

2005

2004

2003

2002

2001 New Supply

PRIME OFFICE RENTAL INDEX

280

(Q 1 1993 = 100)

18 16 14 12 10 8 6 4 2 0 -2

(%)

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 -200

'000 sf

SINGAPORE

SINGAPORE

Vacancy Rate

• The fourth quarter saw prime office rents suffer their sharpest quarterly correction since records began. At the end of the review period rents stood at an average of $12.90 psf/month, down 14% year-on-year. • Grade A rents suffered a 20.2% q-o-q drop, falling to an average of $15.00 psf/month in the fourth quarter, down from $17.15 psf/month as of the fourth quarter of 2007. • Grade A vacancy hovered below the 1.0%-mark throughout the year – with the exception of the third quarter when it rose to 1.2% - before dipping again in the fourth quarter to 0.9%. CB Richard Ellis | Page 34

17

Market Outlook – What Next?

SINGAPORE

SINGAPORE

Singapore Office Rental Movement, 1996 Q3 - 2008 Q4 250 Asian Financial Crisis

Rental Index (1993 Q1 = 100)

230

Economic boom

Financial Tsunami

?

20.0%

210 190 44.44%

170

36.4%

302.5%

46.7%

Stock Market Rally in 2007

150 130

Dot-com Bubble in 2000

110 Iraq war

90 Steady Recovery

70

Bust

Recovery

Bust

Boom

Bust

50 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 96 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 35

CB Richard Ellis | Page 36

18

INDIA

Economic & Polices Issues

Economic growth – India’s GDP growth is poised to contract further this year to around 5% amidst worsening external trade (-10.9% y-o-y), there is evidence that the foreign institutional investors have been exiting the Indian market and selling out equity in real estate projects.

Stimulus plan – Government unveiled two stimulus packages (about INR 200 billion) which are aimed at speeding up infrastructure projects, introduction of export incentives, and cut various categories of value-added tax to encourage consumer spending. The monetary authority also lower the CRR rate along with relaxation of lending and financing norms to reduce cost of capital and infuse liquidity in the economy

Real Estate market – Although the government put forward an economic stimulus package towards the end of year but this did little to improve investor sentiment in the sector. The global credit crunch curtailed the flow of capital to the sector and restricted investment activity as investors generally adopted a prudent stance in anticipation of a further correction in prices.

CB Richard Ellis | Page 37

CB Richard Ellis | Page 38

19

NEW DELHI

CONNAUGHT PLACE (CBD) PRIME OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

PRIME OFFICE RENTAL INDEX

40

400

35

350

600 500 400

30

300 250 200 150

100 0 -100

10 0

50

-200

-5

0

New Supply

Net Absorption

Vacancy Rate

Connaught Place (CBD)

Q 3 08

Q 3 07 Q 1 08

Q 1 07

Q 1 06 Q 3 06

Q 3 05

Q 1 05

Q 1 04 Q 3 04

Q 3 03

Q 3 02 Q 1 03

100

Q 1 00

2008

2007

2006

2005

2004

2003

2002

2001

5

Q 1 02

15

Q 3 01

20

300 200

Q 3 00 Q 1 01

25

(Q 1 2002 = 100)

800 700

(%)

'000 sf

NEW DELHI

INDIA

Gurgaon

• With no major leasing transactions witnessed in the CBD area the decline in rentals accelerated from 1.6% in the third quarter to 11.1% in the fourth quarter. Vacancy levels in the CBD were still around 5% owing to negligible new supply. • In the peripheral market of Gurgaon most projects have been delayed and others are awaiting their completion certificates. Space take-up for both IT as well as commercial sectors was slow and the estimated vacancy in the micro market increased to around 12% from the 9% recorded in the third quarter.

CB Richard Ellis | Page 39

Market Outlook – What Next?

INDIA NEW DELHI

New Delhi (CBD) Office Rental Movement, 1998 Q2 - 2008 Q4 370 320

Rental Index (2000 Q1 = 100)

Economic expansion

Weak market momentum, Period of political uncertainty

Financial Tsunami

?

12.5%

270 300.0%

40.74%

220 170

Kargil War – May and July 1999

Dot-com Bubble in 2000

120 70 Bust

Steady Recovery

Boom

Bust

20 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 40

20

CB Richard Ellis | Page 41

MUMBAI

(CBD) PRIME OFFICE NEW SUPPLY, NET ABSORPTION & VACANCY

PRIME OFFICE RENTAL INDEX

350

35

320

300

30

280

250

25

200

20

150

15

100

10

N ew Supply

N et Absorption

80 40 Q 1 08

Q 1 07

Q 1 06

Q 1 05

0 Q 1 04

2008

2007

2006

2005

-20 2004

-200 2003

-15 2002

-10

-150 2001

-100

120

Q 1 03

-5

Q 1 02

-50

160

Q 1 01

0

200

Q 1 00

5

0

(Q 1 2000 = 100)

50

240

(%)

'000 sf

MUMBAI

INDIA

Vacancy Rate Nariman Point (CBD)

Bandra Kurla Complex

• The Mumbai office market was marked by increased hesitance and subdued sentiment in the fourth quarter, with rentals and capital values in the Central Business District and Alternate Business District correcting by 11.8% to 12.5% q-o-q, the sharpest q-o-q drop ever recorded. • Future occupiers were observed to be deferring their decisions with the expectation that the market is likely to correct further in the coming months while existing tenants reorganised their portfolios with the aim of sub-leasing their surplus space. No new supply was added within the Central Business District (Nariman Point) but some secondary stock came up for leasing, which increased the vacancy in the micro market to 6%. CB Richard Ellis | Page 42

21

Market Outlook – What Next?

MUMBAI

INDIA

Mumbai Office Rental Movement, 1997 Q4 - 2008 Q4 320

Rental Index (2000 Q1 = 100)

Weak market momentum, Period of political uncertainty

Economic expansion

Financial Tsunami

?

21.0%

270

220

55.56%

375.0%

170 Kargil War – May and July 1999

Dot-com Bubble in 2000

120

70 Bust

Boom

Bust

20 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08

CB Richard Ellis | Page 43

What next? Bull or Bear CB Richard Ellis | Page 44

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Thank You CB Richard Ellis

CBRE Global InIn-Sights

The presentations are released as Podcasts and PDF files and are made available on www.cbre.com/reseach. Notices of the releases are sent by email. To register to receive these exclusive announcements visit http://www.cbre.com/EN/Research/Global+Research/Upcoming+Events.htm Global Research and Consulting © 2009 CB Richard Ellis, Inc. We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction.

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