Quarter 2015 MACROECONOMIC OUTLOOK: RUSSIA MOSCOW SAINT PETERSBURG

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2 Quarter 015 MACROECONOMIC OUTLOOK: RUSSIA MOSCOW SAINT PETERSBURG

3 Bln. rub. Quarter 015 GDP The official GDP decline forecast remains the same F Russia Source: Rosstat, Petrostat, Mosgorstat 3

4 % to the previous year Quarter 015 PHYSICAL VOLUME OF GDP The physical volume of GDP in 1Q 015 amounted to 97,8% of 1Q 014 (current decline to 1,9%). The decline is predicted to get slowed in Q 015 and to get stable further in % 110% 105% 100% 100,1% 100,0% 95% 97,0% 90% 85% Russia Source: Rosstat, Petrostat, Mosgorstat 4

5 % Quarter 015 INDUSTRIAL PRODUCTION INDEX IPI has been reduced in Russia and but it shows a positive dynamics in. 110% 105% 101,7% 103,8% 100% 97,7% 95% 9,1% 9,8% 90% 87,5% 85% 80% 75% Jan-May 014 Jan-May 015 Jan-May 014 Jan-May 014 Russia Source: Rosstat, Petrostat, Mosgorstat Jan-May 014 Jan-May 014 5

6 Quarter 015 UNEMPLOYMENT RATE 10% 9% The labor market in Russia has remained stable over the quarter, but the unemployment rate in has risen dramatically compared to 1Q 15. 8,8% 8% 7% 6% 5% 4% 6,% 4,1% 7,3% 6,5% 5,5% 5,5% 5,% 5,7% 0% 5,7% 3% % 1% 0%,0% 0,90%,80%,6% 1,80%,0% 1,40% 1,1% 0,80% 1,70% 1,50% 1,5% 1,4% 1,9%,5% 1,80% 1,80% Q 015 April-May 015 Russia Source: Rosstat, Petrostat, Mosgorstat 6

7 for the end of December 14 Quarter 015 CONSUMER PRICE INDEX 116% CPI decreased to 8-9% in the first half of the year. The inflation rate forecast remains the same. 115,0% 114% 11% 113,3% 111,7% 114,0% 113,5% 110% 109,4% 109,1% 111,4% 108% 108,8% 106,1% 107,3% 106,7% 106% 104% 106,4% 106,6% 105,9% 106,1% 106,5% 106,% F Russia Source: Rosstat, Petrostat, Mosgorstat 7

8 For the end of 1Q 15 Quarter 015 CONSUMER PRICE INDEX 9% The inflation remained low in the period of April-May 15. Current reduction of fluctuations of the exchange rate may contribute to the maintenance of low inflation. 8,4% 8% 7% 6,% 7,8% 7,% 6% 5% 4% 3% % 1% 0% 3,0%,7%,7%,6%,3%,4% 1,4% 1,0% 0,7% 5,0% 4,8% 1,% 0,9% 0,6% 1 кв. 014 кв кв кв кв. 015 апрель-май 015 Russia Source: Rosstat, Petrostat, Mosgorstat 8

9 Mln. USD Quarter 015 FOREIGN TRADE TURNOVER Q 15 showed the continuing downward FTT trend, this index is the most sensitive to the external economic impact ,5% ,4% импорт Import экспорт Export 0-31% -4,1% Москва Source: Petrostat, Mosgorstat Санкт-Петербург -39% -46% 9

10 Warehouse St. Petersburg Retail Office Quarter 015 CAPITALIZATION RATE 15% 14,90% 13% 11% 9% 10,50% 9,90% 9,75% 11,50% 11,50% 10,60% 10,60% 7% Q 015 Q % 15,0% 13% 11% 9% 7% 11,70% 11,70% 10,30% 11,50% 10,70% 10,70% 9,60% Q 015 Q % 15% 13% 11% 9% 7% 17,50% 13,40% 13,40% 13,0% 1,5% 1,70% 1,70% 1,00% Q 015 Q 015 Source:Internal NAI Becar data 10

11 Quarter 015 Q 015 INVESTMENT MARKET OUTLOOK (MOSCOW AND SAINT PETERSBURG)

12 Quarter 015 INVESTMENT KEY MARKET INDICATORS Q 015 commercial real estate investment structure Q 015 total investment $893,6 mln. $19,4 mln. Investment dynamics compared to 1Q 015г +58% +9% 10% 5% Q 015 real estate investment $554, mln. $64,8 mln. Real estate investment dynamics compared to 1Q % +53% 85% Q 015 land investment. $339,5 mln. $6, mln. Land investment dynamics compared to 1Q 015. Key deals +103% +1% BIN Group purchased PNK- Chekhov industrial park for $307 mln. VTB purchased a land plot im region totaling 8 thousand Hectares for $88 mln. Lider Group purchased the project of Balkany Cinema territory construction for $38 mln. Major purchased an Autocentre located at Ispolkomovskaya Street for $4 mln. Total real estate investment for the first half of 015 amounted to $1.1 bln., decreasing to 45% compared to the same period of 014. The current volume of investment in and is formed of key deals (65-67% of total investment). Land investment in and keeps to its high results (about 40% of total investment). Office investment in and fell dramatically (to 50%-70%). Other regions Apartment 6% 0% Industrial and storage 56% 0% Retail 14% 79% Office 4% 1% 0% 50% 100% 1

13 Quarter 015 Q 015 RETAIL MARKET OUTLOOK (MOSCOW AND SAINT PETERSBURG)

14 Quarter 015 RETAIL KEY MARKET INDICATORS Q 015 total supply, GLA Supply dynamics compared to 1Q ,8% 0% Q 015 new deliveries, GLA New deliveries dynamics compared to 1Q % -100% Q 015 vacancy 6,5% 6,7% Vacancy dynamics compared to 1Q 015 Q 015 Rental rates for anchor tenants (excl. VAT and operational expenses) Rental rates dynamics (for anchor tenants) compared to 1Q ,1% (0,9 b.p.) + 8% (0,5 b.p.) $/sq.m annually Rur./sq.m annually -4% 0% % 8% 7% 6% 5% 4% 3% % 1% 0% New deliveries, GLA Vacancy ,9 0 5,6 10,3 0 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 7,80% 7,0% 6,0% 6,70% 5,50% 5,60% 4,51% 4,58% 5,0% 4,80% 5,60% 6,50% 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 The financial crisis has not affected the volume of new deliveries in (the number of the premises put into operation in the first half of the year has risen to 30% compared to the same period in 014), but it has in Saint Petersburg as new deliveries fell to 35%. 14

15 Thousand Quarter 015 RETAIL KEY MARKET INDICATORS Total supply, GLA Q 015 Rental rates for common tenants (excl. VAT and operational expenses) Rental rates dynamics (for common tenants) compared to 1Q $/sq.m annually Rur./sq.m annually $ 0% -5% Q 015 Q 015 Availability (GLA) for people Availability dynamics compared to 1Q ,8% 0% Common tenants in saw the continuing trend of rental rates reduction, while the rates remained stable at the level of 1Q 15 for the anchor ones. A completely opposite situation took place on the retail market of : the rates have been reduced for anchor tenants and stayed the same for common. Vacancy in the trade centers of and is still growing. Vacant premises are now available in the best and most iconic objects. Currency rate on 06/30/015 1 USD=55,5 RUB 15

16 Quarter 015 Q 015 OFFICE MARKET OUTLOOK (MOSCOW AND SAINT PETERSBURG)

17 Quarter 015 OFFICE KEY MARKET INDICATORS А В+ В С А В+ В С Q 015 total supply, GLA New deliveries dynamics compared to 1Q ,7% +0,1% Total area, class split, GLA % 30% 5% 0% 15% 10% 5% 0% Vacancy. 7,9% 9,% 9,4% 16,7% 18,7% 18,9% 11,6% 9,5% 13,1% 14,4% 1,% 1,7% 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 Q 015 new deliveries, GLA А class В/В+ class Q 015 new deliveries according to its class, GLA New deliveries dynamics compared to 1Q % -97% 0% 0% -100% 0% -5% 0% 0 5% 0% 15% 18,% 16,4% 16,4% 18,8% 0,6% 17,8% Q 015 vacancy 9,4% 15,6% 9,9% 8,4% 17,8% 9,3% 9,9% 8,6% 10% Vacancy dynamics compared to 1Q ,8% +11% -3,7% -6,4% -13,6% +4% +10% +6,7% 5% 0% 8,1% 7,9% 8,1% 7,8% 9,0% 9,6% 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 The pace of putting office premises into operation has shown a huge downturn in the first half of 015. It has declined to 50% compared to the same period in

18 Quarter 015 OFFICE KEY MARKET INDICATORS Q 015 rental rates (excl. VAT and operational expenses) Rental rates dynamics compared to 1Q 015 Availability, GLA (for 1000 people). Availability according to its class, GLA (for 1000 people). Availability dynamics compared to 1Q RUB /month 609 USD /year RUB /month 370 USD /year 1 33 RUB /month 69 USD /year 944 RUB /month 06 USD /year RUB /month 33 USD /year RUB /month 48 USD /year 970 RUB /month 1 USD /year 810 RUB /month 177 USD /year -% +1% -3% +% -0,3% -0,4% 0% +1,3% 36 Sq.m. 576 Sq.m Sq.m. 10 Sq.m. 157 Sq.m. А В+ В С А В+ В С 141 Sq.m. 168 Sq.m. +0,7% +,5% 0% 0% 0% 0% +0,6% 0% 34 Sq.m. Due to the demand recovery in, the vacancy rate of A class objects has stabled at the level of 1Q 15. A slight vacancy decrease took place on the market of В and С office premises, while vacancy has increased in В+ class, but the number of vacant premises is lower than the figures of the end of 014 in general. Summing up, the rental rates remain at the level of 1Q 15. Currency rate on 06/30/015 1 USD=55,5 RUB 18

19 Quarter 015 Q 015 WAREHOUSE MARKET OUTLOOK (MOSCOW AND SAINT PETERSBURG)

20 Quarter 015 WAREHOUSE KEY MARKET INDICATORS А В А В Q 015 warehouse totaling, GLA Supply dynamics compared to 1Q 015 Total area according to its class, GLA ,6% +0% Total supply, GLA (thousand ) Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 Q 015 new deliveries, GLA New deliveries according to its class, GLA New deliveries dynamics compared to 1Q % 0% 0% 0% Following the results of Q 15 it should be considered that the number of new deliveries is much higher than the figures of the same period in 014. The most of the warehouses put into operation are parts of large logistics parks. The new deliveries slowdown is expected in the second half of the year, it is going to reduce the current vacancy New deliveries, GLA (thousand ) Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 0

21 Quarter 015 WAREHOUSE KEY MARKET INDICATORS Q 015 vacancy 10,%,7% 10,4% 5,4% Vacancy dynamics compared to 1Q % (1b.p.) +3% (0,5 b.p.) А В А В +6% (0,6 b.p.) -3% (-0,b.p.) 1% 10% 8% 6% 4% % 0% vacancy 9,1% 10,% 7,9% 3,3% 4,3% 3,4% 5,3%,%,7% 4,9%,8% 3,1% 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 Q 015 rental rates (excl. VAT and operational expenses) Rental rates dynamics compared to 1Q 015 Q 015 availability (for 1000 people) RUB /year 88 USD /year 4 13 RUB /year 77 USD /year RUB /year 97 USD /year 4 45 RUB /year 81USD /year -13,% -7,1% -3% 0% The demand for the premises of B class in in remains stable, on the other hand the vacancy of А class facilities has risen to 0%-30% since January. This situation is caused by the tenants intention to optimize their expenses by reduction the rented area and finding lower rental rates. Mostly, rental rates stay at the same level of 1Q 15. But the owners of A class facilities in had to reduce the rental rates due to fluctuations in currency exchange and the intention to attract tenants. 1% 10% 8% 6% 4% % 0% 5,% А class 8,5% 7,4% В class 8,7% 9,8% 10,4% 1,% 1,9% 5,0% 5,1% 5,6% 5,4% 1Q 014 Q 014 3Q 014 4Q 014 1Q 015 Q 015 1

22 Quarter 015 Q 015 APARTMENT MARKET OUTLOOK (MOSCOW AND SAINT PETERSBURG)

23 Quarter 015 APARTMENTS KEY MARKET INDICATORS Q 015 total supply (objects/apartments.) 69 / /1 40 Supply structure according to its class Supply dynamics compared to1q 015 (objects/apartments.) +4,8% / -17,3% +1,5% / -13,8% 30% 15% Q 015 new deliveries (objects/apartments.) 10/ 1 67 / % New deliveries dynamics compared to 1Q 015 (objects/apartments.) Q 015 demand (total number of sold apartments) +150% / -7,6% 0% / +9,6% Elite class Business class Comfort class Demand dynamics compared to 1Q % +8% 15% The new legislation on conversion apartments into residential facilities is being actively discussed in 015. The prime example of such project is Litsa (developed by Capital Group ). Several apartment buildings are expected to be converted into residential ones within a short time. 34% 51% 3

24 Quarter 015 APARTMENTS KEY MARKET INDICATORS Q 015 average price for a (Comfort-class apartments) RUB/ RUB/ Total supply, units Price dynamics compared to 1Q 015 (comfort-class apartments) Q 015 average price for a (Business-class apartments) Price dynamics compared to 1Q 015 (Business-class apartments) Q 015 average price for a (Elite-class apartments) +0% -,7% RUB/ RUB/ +9,7% +4,1% RUB/ RUB/ Q Q 014 4Q 014 1Q 015 Q 015 Price dynamics compared to 1Q 015 (Elite-class apartments) +1,5% +51% The quarter is followed by a boom of developers activity (the number of new deliveries in Q 15 is comparable to the figures of both 1-Q 14). A slight decline of apartment prices took place making the customers show their increasing interest. shows an increasing demand for apartments in Q 15, along with a big number of apartment objects, put into operation in the second quarter along with a declining to,7% price for the apartments of comfort-class, caused by the launch of Vivat complex with the average price about rubles per square meter. On the other hand the price for apartments of business-class increased to 4,1%, due to the lack of new deliveries and a higher level of readiness of the existing ones. 4

25 Should you have any questions, please contact: Olga Sharygina Director Marketing and consulting department About us: NAI Becar is the Russian representative of NAI Global, one of the world's largest commercial real estate firms with front offices in and St. Petersburg. NAI Becar has a 0 years-history of success on the Russian real estate market. Among our Clients there are the largest Russian and foreign companies and government agencies. NAI Becar is a member of all major professional communities in Russia and abroad. Elena Ravilova Analyst Marketing and consulting department e.ravilova@naibecar.com Our services: - Property management - Facility management - Investment - Infrastructure objects Contact details: BC Becar 61 B. Sampsonievsky pr, , Tel.: +7 (81) Foreign investment - Consulting - Market research - Valuation 9 B. Kislovsky per.,15009 Tel.: +7 (495) Project management - Brokerage - Sales - Promotion