ffice OFFICE MARKET REPORT FIRST SEMESTER 2013 Other Office Branchs

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1 ffice1-213 FIRST SEMESTER 213 Sede - Sede - Viale F. Restelli, 3/7 Piazza Maestri del Lavoro, Milano 263 Cernusco sul Naviglio (MI) Tel Fax Other Office Branchs Asia / Asia / 亚洲 NorthAmerica / North America / 北美 South America / South America / 南美 Nord Europa / North Europe / 欧洲北部 Est Europa / East Europe / 欧洲东部 Pechino / Beijing / 北京 New York / New York / 纽约 San Paolo - Sao Paolo - Londra / London / 伦敦 Praga / Prague / 布拉格 Shanghai / Shanghai / Buenos Aires / Buenos Aires / 布宜诺斯艾利斯 Berlino / Berlin / 柏林 Mosca / Moscow / research@worldcapital.it

2 Office1-213 INDEX Office market - Italy Lease Yields Vacancy rate Rent/yield Commercialized office space Average vacancy time Investments National Local Office market - Milano Statistics and values Lease Office market- Grate Milano Office market - Global Rental prices - variation rates Rental prices Vacancy rate Predictions

3 Office1-213 Italian office market 45 RENTS In The last 6 months of 212, Italian office real estate market did not face an Impressive changes almost same as other European countries due to the current economic situation which is affecting both users and investors. In general the rental price, maximum and minimum, has slightly dropped down specially the minimum price and particularly in peripheries. year Rents-maximum price 8,5 8, 7,5 7, 6,5 6, 5,5 5, Yield Rents-minimum price September 212 DECEMBER Discount rate applied to the rental values September 212 DECEMBER 212 Rent/Yield From this number of our report we are going to have a new approach towards rent and yield provide in a graph of rent/yield. This graph is a tool helping to distinguish areas with higher yield and lower rent price which could be a better choice for both investors and users. 35 CENTRE centre semicentre Periphery EUR Rome 3 year ,7 5,8 5,9 6, 6,1 6,2 6,3 6,4 6,5 6,6 6,7 6,8 6,9 7, 7,1 7,2 7,3 7,4 7,5 1

4 Office1-213 As you can see in the graphs of Market cuts, there is a shrinking trend in the choice over amount of office areas, due to the users increasing understanding of better use of space. This shrinkage is most visible in the cities like Milan and Rome as they have the highest rental price. The medium vacancy period has increased,although, there was a slightly decrease on rental prices. These changes can be only explained by the fact that we are passing through a tough economic period and the vacancy period is not effecting the most by rental price, specially in this economic period. Commercialised office space (centre) Commercialised office space Commercialised office space (periphery) September 212 DECEMBER 212 Average vacancy rate Month Average vacancy rate Months September 212 DECEMBER 212 Investments- National situation In the last six month we have seen a noticeable increase of investments in office market after the downward trend seen since 28. While Italy is experiencing such a difficult economic time the level of notion towards foreign investments has considerably increased and resulted by higher degree of market openness to foreign investors. As you can see in the graph, in general, the major percentages of investments was in northern part of Italy followed by Centre and south. In north the investment trend in office sector has been almost stable since 21 on 22-25%, Centre of Italy after the dramatic drop in office investment percentage in 211; it has been recovered by 8% of ratio increase. Like the previous years in south the investment ratio was constant on 4%. 6% 5% 4% 3% 2% 1% % Investments in office use properties - Italy Investments in office use properties - North Italy Investments in office use properties - Centre Italy Investments in office use properties - South Italy 2

5 Office1-213 Investments- Locale situation Based on the historic market trend, investors were always interested in the northern cities based on their economic background. Big portfolio holders have their headquarters located mainly on north and above all in Milan. But if we go in depth about our analysis on the city scale, as shown in the graph, you can see that Rome wins the first place among the other cities such as Milan, Torino or bologna. This could be simply explained by the fact that Rome is the capital and most of the national and international Bureaucratic activities are taking place in this city and relatively the higher level of demand for office space. 1% Napoli 34%,3%,1% Roma Bologna Firenze National and Local Investments percentages Centre 4% South and islands 12% Milano Torino Padova North 48% 3% 4%,2% The office real estate market in Italy is fundamentally conditioned by its "two" capital, Rome as the political and institutional, and Milan as economic one. From the graphs, it is evident the influence of these two metropolitan areas on the total investment in the sector. The global economic situation will not affect these markets the next semester but it will not even provide a significant increases in investments. For Milan, the next Expo is definitely an important variable that could reverse the latest reductions in investments. % Milano Roma Year Investment percentages in Rome and Milan North Milan Centre Rome Milan office market Value and statistics By comparing the data on the office buildings values of the various areas of Milan, this semester the competition between peripheral locations and those in the central was very strong. Of course, we refer to spaces located in the centre and / or served by metro lines. The users target on savings makes suburbs a strong competitor of central zones in relation with their new and evolved buildings rented at lower prices. Both for sale and for lease, we can see that the values evolution trend of office properties are very similar in all areas. It was the same for the lease market although it has seen decrease in values with a few percentage. 3 Euro/mq Euro/mq Trend of sales values Trend of Lease values Centre 1st Ring 2nd Ring Periphery

6 Office1-213 Leasing trend- Milano The market for office properties in Milan this last period was strongly affected by the international market. We can say that we are in a situation of stabilization after a period of decrease in prices for both sale and lease. We still can find many areas, in which the trend is towards value decreasing, while in major parts it is not visible anymore which could overall be considered as positive. By having a look in to the details, central areas as usual have substantially stable values, while going further from the centre values drop down very slightly, which in particular areas of the periphery a significant impact on values is visible. As exceptions to this fact, there are areas apart from the centre, that maintain a close value, thanks to the quality of the services offered. We report a slight increase in investments linked to investors 'classics' as well as retail investors, lured by yields of good quality. METROPOLITAN LINE 5 /mq 45 /mq 4 /mq 32 /mq 3 /mq 26 /mq Min annual rental price 45 /mq 4 /mq 3 /mq 25 /mq 2 /mq 15 /mq 14 /mq 13 /mq 9 /mq 8 /mq 7 /mq City centre /sqm Bastioni ring /sqm Circonvallazione ring /sqm Other /sqm /mq 22 /mq 21 /mq 2 /mq 18 /mq Max annual rental price Great Milan office market In this part of our report we tried to analyse the office real estate market of Milan and its province based on a new approach, different from the usual Concentric zone model. In the old approach Milan has been considered a core and the other zones where located by an specific distance from the centre; by order semi-centre, periphery and hinterland. But as you can find on the next page, map of Great Milan, prices are not affected only by the office distance from the city centre, Actually it depends also on its accessibility. It depends if the office location is accessible by public transportation or high way and their quality as it will affect the commuters Centre Very high trip. As evidence of this fact we can mention municipalities such as Sesto San Giovanni, Vimodrone, Cernusco sul Naviglio and cologno Monzese on eastern part of the city or Pero on north-west and San Donato Milanese on south-east of Milan. In this municipalities the average rent price is higher than what is expected by the Concentric model as they are in the hinterland zone. Semi centre Periphery Hinterland High Average Low Public transport Province of Milano - Rental price Centre Periphery 2 15 BASIANO BELLINZAGO LOMBARDO BUSSERO CARUGATE CASSANO D'ADDA CASSINA DE' PECCHI CERNUSCO SUL NAVIGLIO GESSATE GORGONZOLA INZAGO LISCATE MASATE MEDIGLIA MELZO PANTIGLIATE PAULLO PESCHIERA BORROMEO PESSANO CON BORNAGO PIOLTELLO POZZO D'ADDA POZZUOLO MARTESANA RODANO SEGRATE SETTALA TREZZANO ROSA TREZZO D'ADDA TRUCCAZZANO VAPRIO D'ADDA VIGNATE VIMODRONE ARCONATE ARLUNO BAREGGIO BUSCATE BUSTO GAROLFO CASOREZZO CASTANO PRIMO CORBETTA CORNAREDO CUGGIONO CUSAGO DAIRAGO INVERUNO MAGENTA MAGNAGO MARCALLO CON CASONE MESERO NOSATE OSSONA ROBECCHETTO CON INDUNO SANTO STEFANO TICINO SEDRIANO SETTIMO MILANESE TURBIGO VANZAGHELLO VITTUONE 1 5 4

7 Office1-213 GREAT MILANO - annual rental prices PEDEMONTANA LOMBARDA HIGHWAY COMO - SVIZZERA MALPENSA A8 A8 A4 VENEZIA TANGENSIALE EST MILAN BRE.BE.MI TORINO A4 LEGEND A1 PREZZI MEDI DEI CANONI/ANNUI OFFICE CENTRE MALPENSA AIRPORT LINATE AIRPORT ACTUAL INFRASTRUCTURE INFRASTRUCTURE UNDER CONSTRUCTION A7 GENOVA PIACENZA 17 /mq 14 /mq 11 /mq 9 /mq 7 /mq METROPOLITAN RAILWAY LINE Province of Milano - Rental price Centre Periphery 2 ARESE BARANZATE BOLLATE BRESSO cologno Monzese cinisello Balsamo CESATE CORMANO CUSANO MILANINO GARBAGNATE NOVATE PADERNO DUGNANO SENAGO SOLARO sesto san giovanni DRESANO LOCATE TRIULZI MELEGNANO OPERA PIEVE EMANUELE SAN DONATO MILANESE SAN GIULIANO MILANESE SAN ZENONE AL LAMBRO ABBIATEGRASSO ALBAIRATE ASSAGO BASIGLIO BINASCO BUCCINASCO CESANO BOSCONE CISLIANO CORSICO GAGGIANO LACCHIARELLA ROSATE ROZZANO QUINTO STAMP TREZZANO VERMEZZO ZELO SURRIGONE ZIBIDO SAN GIACOMO CANEGRATE CERRO MAGGIORE LAINATE LEGNANO NERVIANO PARABIAGO PERO POGLIANO MILANESE PREGNANA MILANESE RESCALDINA RHO SAN GIORGIO SU LEGNANO SAN VITTORE OLONA VANZAGO

8 Office1-213 GLOBAL MARKET rental prices- variation rates The last six months, it has been seen a growth of 1.4% in rental values. In comparison with 5.3% in 211, office market has seen its lowest annual growth since 21. Among the major markets we can mention increases in Beijing (+19.7%) and Sao Paulo (+17.5%), the contrary noticeable drop in Hong Kong (-11.1%), Paris (-7.2%), Madrid (-5.8%) and Brussels (-5%). Beijing 2 Sao Paulo BRIC COUNTRIES 15 1 Stockholm 5 New York shanghai London Dubai Frankfurt Milano Roma -5 Moscow Barcelona Bruxeless Madrid -1 Paris -15 Hung Kong Rental prices U.S.$/sq.ft/year $ BRIC COUNTRIES Sao Paulo Rio de Janeiro San Francisco Bogota Vancover Lima London Bruxelles Moscow Paris Milano Frankfurt Warsaw Madrid Prague Budapest Hong Kong Tokyo Beijing Delhi Singapore Shanghai Sydney Mumbai Melbourn Kuala Lumpur Seoul Vacancy rate The global office vacancy rate remained unchanged at 12.9 %. Falls in vacancy in North America and Europe were counterbalanced by increases in Asia Pacific and Latin America. The vacancy rate is falling fastest in the U.S., down to 16.5.% The vacancy rate in Canada falls to 7.1%. In Europe the vacancy rate declined marginally to 9.6% in last six months. Demand for modern office space in prime locations is being quickly absorbed; however, vacancy levels are being impacted by the release of second-hand space. The decline in vacancy rates is supported by low levels of new completions as debt for speculative development remains tight. The Asia-Pacific vacancy rate rose to 11% from 1.6% in last six months. In south America, the office market in cities like Sao Paulo and Mexico City has witnessed historically high levels of new office deliveries even so, net absorption remains robust in both markets and, so far, it has kept pace with supply, although Sao Paulo is facing the greater challenge as its pace of demand growth slows. In order to complete the frame we can mention that the market in Buenos Aires has maintained relative stability, despite economic volatility. Vacancies in Dubai's prime CBD remain high at around 31%. Non-CBD locations have even higher vacancy levels, as much as 8% in some sub-markets. % 2 31% BRIC COUNTRIES Sao Paulo Rio de Janeiro San Francisco Bogota Vancover Lima London Bruxelles Moscow Paris Milano Frankfurt Warsaw Madrid Prague Budapest Hong Kong Tokyo Beijing Delhi Singapore Shanghai Sydney Mumbai Melborn Kuala Lumpur Seoul 6

9 Office1-213 Previsioni Office2-213 Milano The Italian economic has experienced a difficult period especially in the last two semester. But it is interesting to note that in Italy, where about them 8% of the population is the property owners, we are witnessing a grate tendency towards purchase of almost all Italian assets, equity and the real estate, starting from January 213 (source Norsik). Titles like Consumer stable (+53%) and IGD (+47%) recorded significant increases. This dynamic was a result of "burning hunting". This means, investor believe that in Italy prices have reached a stable level which could be followed by a positive growth. We believe that the period will be characterized by a high stability in property prices. At the same time there are two notable trends which we can call them properties "border line", where the value of a real estate property is no longer "fit" to accommodate advanced tertiary activities and those of higher quality will experience significant increases. Regarding to Milan, it is also important to consider that an international event like Expo 215 will have a significant effect on market demand. This effect would be visible both before and during the Expo period, where there would be more than 12 countries as participants and the flow direct and indirect businesses and investments in different sectors. Italia In relation with what has been shown for investment, in Italy, the office sector will not have significant changes in prices both in sales well as the rental prices. We could Declare that for sure the stock of non- adoptable products, to the new method of activities putting in to practice by the end users, would increase and as a consequence the rental and sales prices of these properties would decrease. This mechanism could mislead observers to a decrease in market prices, while it is not true. This drop down in prices would be seen in products which are not suitable anymore for the end users activities. As a mater of fact new products located in strategic locations can record slight increases in their prices, and we estimate that the poor marketing of new products may affect the market positively. Global VACANCY RATE Next semester is expected to see the global rate edge down below 12.9%, largely due to further falls in markets like US Global office completions are projected to total 12.5 million square metres in 213, representing a 25% increase on 212 levels, but still well below the media since 28 (at 14 million square metres). In Europe New office completions are increasing but, given the subdued economic outlook for 213, there are likely to be cancellations or postponements. Nevertheless, new supply in 213 is expected to increase by 25% on 212 volumes, driven by Construction activity in Moscow, London and Paris. Much of this is already pre-let, but with few occupiers expanding their space needs, vacancy levels are forecast to increase slightly in following semester. In Asia New supply it is expected an increase of 2% by about 1 million square metres due the supply increase in China, India and emerging South East Asian markets. As a consequence, further increases in the regional vacancy rate are anticipated in 213, potentially rising to over 1% by year-end. GROWTH RATE In general growth in 213 is expected to match 212 rates at around 3%, with the majority of major markets predicted to register single-digit prime rental growth over the next year. San Francisco is projected to show the strongest performance of 213, exceeding 8% growth. Hong Kong, Tokyo and London are also forecast to register rental growth above the global average (at 5-1%). In contrast, Madrid should see the largest rental decline in 213, While in Latin American markets; Sao Paulo is also likely to be in negative territory up to a maximum of 4%. With signs of increasing activity in the Dubai leasing market, prime rental growth is anticipated to return for the first time in five years in

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