CBRE

MarketView Asia Pacific Capital Markets www.cbre.com/research

Q1 2012

OVERVIEW

Quick Stats Change from Q4 11 Q1 11

Office Total Turnover Capital Values Yields

• Investment volume slides by 42% q-o-q as sentiment remains downbeat Market sentiment remained subdued in Q1 2012 although concern over the impact of the Eurozone debt crisis on the global economy eased to a certain extent. Investment volume in Asia Pacific totaled US$11.6 billion during the period, a fall of 42% q-o-q. The slow start to the year was due in part to the New Year holiday in January and the high investment volume witnessed in H2 2011 which removed many assets from the market. Hong Kong bucked the downward trend with investment volume surging by 100% q-o-q thanks to the improved lending environment.

Rents

Retail Total Turnover Capital Values Yields

• Asian REITs and domestic private investors head buying activity Deals completed by Asian REITs, domestic private investors and end-users comprised 55% of total investment turnover, up from 44% recorded in Q4 2011. Many individual investors acquired strata-titled space or small sized buildings, a trend most evident in Hong Kong and Singapore. State-owned Enterprises (SOEs) in China acquired several office properties for self-use whilst another noteworthy trend was the return of Australian superannuation funds to their domestic market.

Rents

Industrial Total Turnover Capital Values Yields

• Core office assets lose appeal as occupier market weakens Investors continued to shift their focus away from core office assets on account of the slowing leasing market, lack of quality product for sale and more attractive yields available in other sectors. Investment volume for office assets was just half of that recorded in Q4 2011. Whilst investment volume in the retail sector declined by 4% q-o-q, demand for such assets continue to increase as internal consumption grows and international retailers expand across the region.

Rents

Total Commercial Real Estate Investment Turnover in Asia Pacific Asia

• Many developers in India and China remain short of cash and continue to seek alternative financing from private equity funds or asset disposals

Pacific

Rolling 4 quarter total (rhs)

20

80 70

15

50 40

10

US$ billion

60 US$ billion

30 20

5

10 0

Source: CBRE Note: US$10 million and above, office, retail, industrial and mixed use property only

2012.1

2011.4

2011.3

2011.2

2011.1

2010.4

2010.3

2010.2

2010.1

2009.4

2009.3

2009.2

2009.1

2008.4

2008.3

2008.2

2008.1

2007.4

2007.3

2007.2

2007.1

2006.4

0 2005.4

• Despite the weak investment sentiment and slower rental growth, capital values generally remain firm, with selected asset classes recording a slight uptick

90

25

2006.3

• Australia remains the preferred destination for non-Asia Pacific investors, accounting for 94% of purchases during the period

2006.2

• The tight lending environment in Asia Pacific begins to alleviate as central banks across the region adjust monetary policy

2006.1

Hot Topics

• Market expected to turn more active despite slower economic growth Investment volume is expected to pick up over the coming months and there is a sizable pipeline of deals in key markets. Japan is seeing renewed interest from foreign buyers whilst China and Australia will retain their status as preferred destinations for investors wanting to invest abroad. Domestic capital will continue to account for the majority of deals and Singaporean investors are set to remain key players in cross-border investment. Global funds and investors from the West will stay on the sidelines on account of the current low yields.

© 2012, CBRE Group, Inc.

The short-term outlook will continue to be affected by sluggish export demand, Asia’s relatively high credit exposure to the Eurozone and the potential for economic growth in China to weaken further. However, domestic demand remains positive and this, combined with the region’s healthy banking system and falling rate of inflation, should cushion the Asia Pacific from a dramatic downturn. Growth will continue to ease moderately and consensus figures estimate regional real GDP growth will decline from 6.7% y-o-y in 2011 to 6.4% y-o-y in 2012, excluding the low base recovery of Japan.

2012F

9

2013F

8 7 6 5 4 3 2 1

Japan

New Zealand

Thailand

Australia

World

South Korea

Philippines

Taiwan

Asia Pacific

Malaysia

Hong Kong

Vietnam

Singapore

Indonesia

India

0 China

Global trading conditions continued to deteriorate during the period, resulting in slower regional growth. Export growth in Asia Pacific decelerated from 8.8% yo-y in Q4 2011 to just 4.4% y-o-y in Q1 2012 amid weak demand from the West. The regional labour market was subdued as employers remained cautious about adding new headcount. Retail sales growth excluding Japan began to lose steam, slowing to 11.6% y-o-y in Q1 2012 compared to 13.7% in Q4 2011, and is likely to moderate further to a more steady growth track over the remainder of the year.

10

(%) y-o-y

Economic growth in Asia Pacific weakened further in Q1 2012 as the slow recovery in the United States and the unresolved Eurozone debt crisis impacted export demand for goods manufactured in the region. Excluding the low base recovery of Japan, real GDP growth fell to 5.7% y-o-y compared to 6.1% y-o-y in Q4 2011.

GDP Growth by Country

Source: Oxford Economics

Asia Pacific GDP Growth vs. Japan 15% 10%

(%) y-o-y

MarketView Asia Pacific Capital Markets

ECONOMIC OUTLOOK

5% 0% Japan Asia-Pacific Asia-Pacific (ex. Japan)

-5%

LENDING ENVIRONMENT

Banks in Hong Kong adopted a more relaxed attitude towards property lending which resulted in a strong rebound in investment turnover. Many local banks sped up the approval of loans submitted in 2011 and adopted a more optimistic view towards valuations while keeping borrowing rates largely unchanged. Numerous developers in India and China remained cash strapped and continued to seek alternative sources of financing. In recent months many have either raised capital from equity markets, obtained funding from private equity funds or begun to dispose of assets in an attempt to improve their balance sheets.

2012 Q1

2011 Q2

2010 Q3

2009 Q4

2009 Q1

2008 Q2

2007 Q3

2006 Q4

2006 Q1

2005 Q2

2004 Q3

2003 Q4

2003 Q1

2002 Q2

2001 Q3

2000 Q4

2000 Q1

-10%

The tight lending environment in Asia Pacific began to alleviate in Q1 2012 as a number of central banks across the region adjusted monetary policy. India and China reduced their bank reserve ratios during the quarter and Australia cuts its policy rate by 50 basis points in May. Other central banks across the region may follow suit as they seek to provide cheaper lending to stimulate economic growth.

Source: IHS Global Insight

Typical Commercial Property Lending Terms LTV

Reference rate

Spread

50-70%

Official Cash Rate: 4.25%*

200-250 bps

China

50%

1-year base lending: 6.56%

60-200 bps

Hong Kong

50%

3M HIBOR: 0.38%

220-300 bps

Japan

50-70%

3M TIBOR: 0.34%

50-200 bps

Singapore

50-60%

3M SIBOR: 0.39%

150-300 bps

50%

3M CD: 3.54%

200-300 bps

60-70%

1-year deposit: 1.36%

60-120 bps

Australia

South Korea Taiwan

Q1 2012

Data as of the end of March 2012 * Revised to 3.75% on 1 May 2012 Source: CBRE, various Central Banks and Monetary Authorities

Page 2 © 2012, CBRE Group, Inc.

Market

Country

Prime Office (%)

Adelaide

Australia

Brisbane

Change on Qtr

Prime Retail (%)

Change on Qtr Prime Industrial (%) Change on Qtr

7.75

7.00

8.81

Australia

7.56

6.56

8.58

Canberra

Australia

7.75

6.25

8.58

Melbourne

Australia

6.79

4.75

8.23

Perth

Australia

7.78

7.88

8.50

Sydney

Australia

6.43

6.13

8.76

Auckland

New Zealand

7.75

6.65

7.94

Wellington

New Zealand

8.33

7.06

9.04

Beijing

China

4.75

5.00

6.50

Shanghai

China

4.25

4.25

6.80

Guangzhou

China

4.91

5.23

N/A

Hong Kong

China

2.76

3.54

4.63

Taipei

Taiwan

2.35

2.70

2.60

Tokyo

Japan

3.50

4.00

5.50

Seoul

South Korea

5.64

N/A

9.25

Singapore

Singapore

4.06

5.00

5.15

Bangkok

Thailand

6.25

6.25

8.75

Manila

Philippines

10.00

N/A

N/A

Kuala Lumpur

Malaysia

6.50

6.50

N/A

New Delhi

India

7.25

8.50

10.50

Mumbai

India

11.00

13.00

13.50

Bangalore

India

8.00

N/A

N/A

MarketView Asia Pacific Capital Markets

Asia Pacific Indicative Prime Yields, Q1 2012

Source: CBRE

© 2012, CBRE Group, Inc.

Q1 2012

Page 3

Investor sentiment remained downbeat in Q1 2012 although concern over the potential impact of the Eurozone debt crisis on global economy eased to a certain extent. Investment volume in Asia Pacific totaled US$11.6 billion during the period, a fall of 42% q-o-q. The slow start to the year was due in part to the Chinese New Year holiday in January and the high investment volume witnessed in H2 2011 which removed many assets from the market. The only market to buck the downward trend was Hong Kong, where investment volume surged by 100% q-o-q thanks to the improved lending environment. Despite the general lack of deals, several markets including Australia, China, Japan and Malaysia continued to witness strong interest for quality assets. Investor focus appeared to be shifting away from the office sector, however, amid weak occupier demand and more attractive yields available in other sectors. Domestic capital continued to drive the market during Q1 2012, accounting for almost 86% of total investment volume. Deals completed by Asian REITs, domestic private investors and end-users comprised 55% of total investment turnover, up from 44% recorded in Q4 2011. Many individual investors focused on acquiring strata-titled spaces or small sized buildings, a trend most evident in Hong Kong and Singapore. Singaporean buyers retained a strong appetite for assets outside their home market whilst several SOEs from China purchased quality office properties for self-use. Another noteworthy trend was the return of Australian superannuation funds to their domestic market. Investors from outside the region continued to dispose of properties at a gain.

Asia Pacific Acquisitions by Investor Type 90% 80% 70% % as total volume

MarketView Asia Pacific Capital Markets

INVESTMENT MARKET ACTIVITY

60% 50% 40% 30% 20% 10% 0% 2007 Domestic investors

2010

2011

Asia Pacific-based investors

2012 Q1

Non-Asia Pacific based investors

Asia Pacific Acquisitions by Market, Q1 2012 vs Q4 2011 Japan Hong Kong Australia China Singapore South Korea Malaysia Taiwan India New Zealand

2011.4 2012.1

Thailand

Source: CBRE

2

4

6

US$ billion

Cross-border Net Acquisitions in Asia Pacific (Rolling 4Qs) 14 12 Asia Pacific-based investors

10

Non-Asia Pacific investors

US$ Billions

8 6 4 2 0 (2) (4) (6)

2007.1 2007.2 2007.3 2007.4 2008.1 2008.2 2008.3 2008.4 2009.1 2009.2 2009.3 2009.4 2010.1 2010.2 2010.3 2010.4 2011.1 2011.2 2011.3 2011.4 2012.1

Despite the weak investment sentiment and slower rental growth, capital values generally remained firm, with selected asset classes recording a slight uptick. The key reason for the hard pricing is the strong investment interest among private individuals and occupiers who appear to be undeterred by the already high price levels.

2009

Source: CBRE

0

Cross-border acquisitions continued to slide in Q1 2012 - falling by 69% q-o-q to US$1.6 billion – and accounted for just 14% of total investment volume during the period. Capital from within the region accounted for the bulk of such deals with real estate conglomerates from Singapore continuing to increase their exposure to offshore markets in search of quality commercial assets with better yields. Japan saw a jump in interest from overseas investors during the period, with a particularly strong focus on logistics facilities. Australia remained the preferred destination for non-Asia Pacific investors, accounting for 94% of such deals. The limited availability of quality assets and hard asset pricing meant investors from the United States and Eurozone did not make any purchases in Asia during the quarter.

2008

Source: CBRE

Q1 2012

Page 4 © 2012, CBRE Group, Inc.

Japan Hong Kong Australia China Singapore South Korea Malaysia Taiwan

Non-Asia Pacific based investors

India

Asia Pacific-based investors

New Zealand

Domestic investors

Thailand 0

1

2 US$ billion

Source: CBRE

3

4

Office, Retail & Industrial Capital Value Indices Capital Value Indices (Q4 2005 = 100)

200

Retail Industrial Office

180 160 140 120 100

2011.4

2011.2

2010.4

2010.2

2009.4

2009.2

2008.4

2008.2

2007.4

2007.2

2006.4

2006.2

2005.4

80

Source: CBRE

Capital Value Change (Q-o-Q, %) Office

Retail

Industrial

0.5%

4.7%

0.4%

Pacific

0.9%

-0.5%

0.2%

Asia Pacific

0.6%

3.5%

0.3%

Asia

Source: CBRE

Office, Retail & Industrial Yield Indices Retail Industrial Office

140 130

Yield Indices

120 110 100 90

Source: CBRE

2011.4

2011.2

2010.4

2010.2

2009.4

2009.2

2008.4

2008.2

2007.4

2007.2

2006.4

2006.2

2005.4

80

The CBRE Asia Pacific Office Capital Value Index increased slightly by 0.5% q-o-q in Q1 2012 as capital values in key markets in the Pacific and Greater China firmed thanks to steady demand and rental performance. In Australia capital values continued to trend upwards on the back of solid demand for prime office assets from foreign institutional investors and domestic superannuation funds. Tier I cities in China continued to witness strong demand from domestic capital which acted to push up capital values and compress yields. Rents in Hong Kong softened further but the rise in investment activity saw capital values harden, although several deals were completed at prices lower than those originally demanded in 2011. Singapore was the only Asian market to record a decline in capital values in tandem with softer rents. Mild yield compression was observed in several cities in Australia as well as in Beijing and Hong Kong, while yields in other markets were stable. Office yields in Asia remain at the lower end of the spectrum, a trend which is inhibiting investment from institutional funds, particularly those targeting core or core-plus assets. In contrast, yields in Australia have been moving within a narrow band and have not returned to levels seen before the global financial crisis.

MarketView Asia Pacific Capital Markets

Asia Pacific Investment by Destination (Q1 2012)

The CBRE Asia Pacific Retail Capital Value Index rose by 3.4% q-o-q thanks to increased demand for prime retail space, particularly in Asia. The shortage of investable retail assets available for sale also supported the growth of capital values during the period. Private investors in Hong Kong, Singapore and Taiwan displayed a strong appetite for strata-titled retail assets, a trend which resulted in price growth in these markets and minor compression in yields. Retail capital values in the Pacific held firm in most markets aside from Adelaide and Perth which both recorded a correction. Retail yields were largely unchanged across the region except in Hong Kong, Singapore and Taiwan. Retail assets in Asia will remain highly soughtafter by investors as internal consumption grows in the medium-to long-term and international retailers expand across the region. Capital values and yields in the Logistics sector were largely unchanged on a q-o-q basis. Whilst the industrial sector remained affected by weaker export demand and slower industrial production growth, investors continued to seek investment opportunities in markets providing high yields or favourable demandsupply conditions. In Brisbane and Sydney the demand and supply imbalance for quality warehouses drove capital values upward whilst in Japan modern logistics assets were the subject of strong demand from both domestic and foreign investors as occupier demand continued to rebound following the March 2011 earthquake and tsunami. In Hong Kong private investors continued to focus on acquiring strata-titled industrial units given the steady growth of industrial rents and falling supply resulting from the redevelopment and/or conversion of older buildings.

© 2012, CBRE Group, Inc.

Q1 2012

Page 5

MarketView Asia Pacific Capital Markets

MARKET SUMMARIES GREATER CHINA China witnessed a quiet Q1 2012 as banks remained cautious towards providing financing for real estate and the cost of funding remained high. Investors ne ve rthele ss retained a strong appetite for quality commercial assets, particularly in sectors which continue to benefit from the growth of internal consumption, such as retail and logistics. Interest should remain firm and cash-rich domestic buyers without need for financing will dominate the market. Activity in Beijing remained subdued with very few transactions recorded due to the limited volume of assets available for sale. Office capital values surged by over 40% compared to a year previously. Hard asset pricing prevented foreign investors from making acquisitions but domestic corporations continued to seek quality assets. The office sector is likely to see further rental growth given the lack of new supply and will therefore continue to attract investor interest. Shanghai was quiet with sales activity mainly driven by SOEs acquiring office properties for self use. Investment sentiment was nevertheless upbeat and several deals should be completed in Q2 2012. The rebound in home sales after Chinese New Year following price cuts from developers combined with revised lending policies for first time buyers in March boosted owners’ confidence and ensured prices held firm. Yields remained compressed, forcing foreign investors to stay on the sidelines. The investment market in Guangzhou was subdued in Q1 2012 with just a single strata-titled office transaction in Pearl River New City recorded during the period. Foreign investors continued to seek well located prime retail assets, however, and more deals are likely in the coming months. Office capital values remained stable over the quarter but could come under downward pressure as rents peak and sales volume declines.

Q1 2012

Hong Kong enjoyed a strong rebound following a weak Q4 2011 as activity picked up after Chinese New Year on account of the more relaxed lending environment. More flexible valuations on property loans and the gradual easing of concern over the global economic slowdown also contributed to the more buoyant market. Domestic investors continued to dominate whilst foreign property funds remained inactive. Hospitality properties and retail assets were most sought-after. Momentum should remain positive but room for further price growth is limited as investors are still apprehensive about the current high pricing.

Taipei witnessed a quiet start to the year with transaction volume falling significantly compared to Q4 2011. Sellers were unwilling to lower their asking prices which led to a shortage of investment grade properties available for sale. Domestic insurance companies retained a strong appetite for income producing assets but the persistent low yields and the uncertain economic outlook were beginning to weigh on sentiment to a certain extent. Local end-users accounted for over 50% of investment turnover during the period and were mainly focused on industrial assets in the north of the country. Most vendors remain under no pressure to liquidate their assets at a discount and pricing is likely to hold firm in the short term.

NORTH ASIA Japan saw a notable improvemen t in m arket sentiment as foreign investors shrugged off uncertainty in the global economy to complete a number of sizable transactions. Prime high street retail, logistics and business hotels with longterm leases were the subject of strong interest. Domestic investors including J-REITs, corporations and high-net-worth individuals all remained in buying mode. The lending environment remained liquid as banks continued to raise LTV ratios and began to selectively offer mezzanine debt. Large domestic developers continued to focus on acquiring prime sites for residential condominium projects. Well located high quality office properties remained the primary focus for investors in Tokyo in Q1 2012 although there continued to be a lack of product available for sale. Grade B offices in core areas with good seismic resistance features were also the subject of increased attention. Interest in industrial assets remained firm thanks to rising occupier demand following the March 2011 quake and tsunami, with Singaporean investors particularly active in this space. Transaction volume should remain stable in Q2 2012 with pricing unlikely to move to a significant extent. The real estate investment market in Korea was less active compared to Q4 2011 and most transactions were completed by domestic groups. Western investors continued to tread cautiously and feel out the market while Singaporean buyers were more actively seeking deals. Concern over the sharp increase in office supply in Seoul led investors to shift their focus away from core office assets with the exception of those with outstanding investment value or potential for conversion to other use. The wave of converting office buildings to retail or hotel use fueled demand for Grade B office buildings in core areas. Retail assets remained the subject of strong interest from investors whilst there was renewed activity in the industrial and logistics sector where yields are very attractive at present. Page 6 © 2012, CBRE Group, Inc.

Markets in India remained lacklustre in Q1 2012 as investors continued to exercise caution. Banks remained reluctant to provide financing, forcing developers in need of cash to offload stakes in projects to private equity funds. Most transactions involved private equity players acquiring stakes in residential and commercial projects in major cities, a trend which is expected to persist in the short-to medium-term. The Reserve Bank of India cut the Cash Reserve Ratio by 125 bps during the period indicating the government may shortly loosen lending policy, a move which would support the recovery of buying demand. New Delhi was quiet overall and most investment grade deals were completed in Gurgaon and Noida, with no activity at all in the CBD. Private equity funds continued to acquire stakes in residential and office projects from cash-strapped local developers. The period saw a US-based private equity fund exit an investment it made in 2006 and more of these deals are likely in the months ahead as foreign groups look to divest investments they made between 2006-2008. Demand for office and retail properties in Mumbai remained stagnant in Q1 2012. As with other major markets across the country, the majority of deals involved private equity funds acquiring positions in local developers’ residential and commercial projects. One notable deal during the period saw Morgan Stanley Real Estate Investment (MRSEI) investing in a residential project by Sheth Developers for US$90 million. Investment activity in Singapore weakened following the government’s introduction of the Additional Buyer’s Stamp Duty (ABSD) in December and the first three months of the year saw this trend continue. Investors turned more selective towards acquiring quality office properties as occupier demand, particularly from large prime space users in the financial services sector, continued to decline. Strata-titled office and industrial units remained highly sought-after by private companies, high-net-worth individuals and other investors switching from the residential sector. Financing for strata-titled deals remained easy to obtain and this sector will continue to witness plenty of activity over 2012. Private Asian buyers accounted for the bulk of demand whilst S-REITs also remained in acquisition mode. Low yield levels continued to make it difficult for foreign funds to make additional purchases in Singapore and some property funds are now looking to divest more of their existing properties, including office buildings and retail malls, to capitalise on high capital values.

Investment activity in the Philippines was quiet in Q1 2012 but investor sentiment remained positive. No major commercial property transactions were recorded although domestic developers and real estate conglomerates continued to acquire land parcels in Manila for residential development amid strong demand for high rise residential condominiums. Credit for real estate development remained easy to obtain whilst developers were also tapping funding from equity and bond markets. Thailand continued to steadily recover from the autumn floods and local private investors displayed a renewed interest in acquiring income producing assets. The period also saw a domestic property fund complete a sizable office transaction in Bangkok. The flooding continues to shift investor demand in the residential sector in terms of location and property type and there has been increased interest in areas which escaped the floods.

MarketView Asia Pacific Capital Markets

SOUTH & SOUTH EAST ASIA

Market sentiment in Malaysia remained positive in the first three months of the year although transaction volume declined due to Chinese New Year holidays. Retail assets, particularly high quality shopping malls in and around Kuala Lumpur, remained sought-after by domestic REITs and foreign funds. Foreign investors displayed a strong appetite for leased industrial properties offering yields above 7%. The period was also notable for a fresh focus on Johor as it improves infrastructure links with Singapore.

PACIFIC Australia recorded a subdued Q1 2012 in what is traditionally a quiet period of the year. Foreign property funds continued to account for the bulk of activity whilst domestic superannuation funds turned more active after being relatively quiet over the past four years. Grade A offices in Sydney, Melbourne and Brisbane continued to attract a steady flow of enquiries. There was also a jump in transactions for retail assets which accounted for US$943 million worth of deals during the period, or 40% of total sales. Market activity is expected to pick up in the coming months as a number of sizable transactions move closer to completion Owners, particularly those looking to reduce debt levels, are becoming more willing to put their assets up for sale.

Page 7

© 2012, CBRE Group, Inc.

Q1 2012

New Zealand remained quiet with just a few transactions completed. Investment sentiment was generally healthy, however, as banks continued to be reasonably aggressive in lending for property acquisitions. Domestic and foreign investors were actively sourcing deals and several major deals were moving through due diligence. The bigger players remained focused on prime office buildings with long term leases in Auckland and Wellington.

Economic growth in Asia Pacific is expected to moderate further over the remainder of the year but is unlikely to deter investment activity as it is already anticipated among investors. Indeed, as the risk of a major global slowdown eases, investor confidence in the region could improve as Asia Pacific will continue to enjoy higher growth compared to the United States and Eurozone. Domestic demand remains firm - as evidenced by robust demand for retail and logistics assets - and will continue to offset any further economic shocks from the West. On a country level, regional laggards such as Japan, Thailand and New Zealand are expected to record faster growth in 2012 as they recover from last year’s natural disasters. The lending environment improved in Q1 2012 and the trend is likely to continue. Central banks in China, India and Australia are expected to keep monetary policy loose whilst Japan is likely to retain its lax policy towards lending for the foreseeable future. The further easing of inflation will provide extra room for interest rate cuts, a move which could rejuvenate buying activity as investors are given access to lower borrowing rates. Many developers in India and China continue to suffer from liquidity problems but this will provide opportunities for investors to provide loans, acquire asset portfolios or form partnerships on development projects. Investment volume is expected to pick up over the coming months and there is a sizable pipeline of deals in key markets. Japan is seeing renewed interest from

foreign investors as the market approaches the bottom whilst China and Australia will retain their status as preferred destinations for investors wanting to invest abroad. Malaysia is the most buoyant market among the emerging South East Asian markets and will see continued interest in the retail sector. In other markets, cross-border investment interest will be driven by asset level attractiveness. The months ahead will see investors continue to shift their focus away from core office assets given the slowing leasing markets, lack of quality product for sale and more attractive yields available in other sectors. Concerns over softening rental growth in leading office markets including Hong Kong and Singapore are beginning to impact on investment demand for en-bloc office properties, a trend that was reflected in falling investment volume in Q1 2012. The persistent low yields in the office sector are also inhibiting investment.

MarketView Asia Pacific Capital Markets

MARKET OUTLOOK

Domestic capital will continue to account for the bulk of transactions and Singaporean investors will remain key players in cross-border investment. Global funds and investors from the West will remain reluctant to acquire assets in Asia on account of the current low yield levels. Many are instead opting to seek valueadded or opportunistic investment opportunities across the region. Transactions will take longer to conclude in general as investors turn more selective and price sensitive.

Asia Pacific Research Contacts Nick Axford Head of Research, Asia Pacific Hong Kong Tel: +852 2820 8198 Email: [email protected]

Kevin Stanley Executive Director, Pacific Sydney Tel: +61 2 9333 3490 Email: [email protected]

Ada Choi Director, Asia Hong Kong Tel: +852 2820 2871 Email: [email protected]

Leo Chung Research Analyst Hong Kong Tel: +852 2820 1527 Email: [email protected]

Notes and Definitions

Asia Pacific

CBRE’s investment transaction data presented in this report is based on real estate transactions valued US$10 million and above. It included real estate transactions reported in 25 major markets in 12 countries across Asia Pacific. It included office, industrial, retail and mixed use properties. Development site, hotel and residential transactions are excluded. Transactions prices are tracked in local currencies and converted to US dollars using exchange rates as recorded on the last day of the respective quarters of the year. The CBRE Asia Pacific Weighted Average Office Indices track the performance of 24 office markets throughout Asia Pacific. The CBRE Asia Pacific Weighted Average Retail Indices track the performance of 15 retail markets throughout Asia Pacific. The CBRE Asia Pacific Weighted Average Industrial / Logistics indices track the performance of 14 industrial markets throughout Asia Pacific. The indicative prime yield presented in this report is the ratio between annual net rental income (rent less non-recoverable costs) and the total amount invested (purchase price plus purchasers’ on-costs), expressed as a percentage figure, achievable in the relevant top-tier building(s) in prime location, let according to market conditions. It is based both on sale & purchase contracts concluded during a period and also on the market overview of the local investment department. No allowance is made for any future rental growth. This report was prepared by CBRE’s Asia Pacific Research Team, which forms part of CBRE Global Research and Consulting - a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. © 2012 CBRE Group, Inc. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.

© 2012, CBRE Group, Inc.

Q1 2012

Page 8