THE LONDON MARKETS ANALYSIS IN ASSOCIATION WITH

Transcription

1 THE MARKETS ANALYSIS IN ASSOCIATION WITH

2 INTRODUCTION th February 15 THE MARKETS ANALYSIS The remarkable growth and economic dynamism of London s business districts continues apace. As the Capital progresses, so does the character and commercial life of the urban villages that it encompasses. This report charts that progress by analysis of the property markets across key London locations. By bringing together MSCI s unrivalled IPD London property data set with Levy Real Estate s market experience across the office, retail, industrial and residential sectors, the research details the comparative performance of the Capital s property markets. This year s report also features forecasting input from Real Estate Strategies which adds a new dimension to the research s perspective. Levy is delighted to sponsor this analysis for the second year. We have endeavoured to make the report relevant and succinct, but there is a wealth of further information that underpins it and we would be pleased to answer any questions you have regarding the research findings. We hope you find the 15 London Markets Analysis a valuable guide to one of the world s most dynamic property markets. THE MARKETS ANALYSIS IS SUPPORTED BY: Simon Heilpern LEVY Colm Lauder MSCI LEVY INTELLIGENCE

3 WHAT NEXT FOR? WHAT NEXT FOR? GROWTH AND PERFORMANCE INFRASTRUCTURE ENABLES GROWTH Enhanced transport infrastructure is a key driver of regeneration and economic performance. In this context, London is at an exceptional point in its evolution. It is undergoing a profound change in its transport networks which is triggering high levels of commercial and residential development across the Capital. As London flourishes, it attracts more businesses and more residents. Its current population of around.3m is forecast to grow to 9.m by (ONS May ). In the same period, it is estimated that 5, new jobs will be created and there will be a need for, new homes (GLA). Against this backdrop, transport becomes pivotal in fostering growth. London is meeting this challenge with the following transport infrastructure initiatives: Further important steps to maintaining and enhancing London s world city status include: The expansion of London s airports for which a decision is expected on the preferred solution during 15 Virtual connectivity as essential as physical connectivity. The Mayor of London s Vision seeks to raise London s connectivity to have the fastest connections of any European city Ultra Low Emissions Zone by cycling and walking will continue to gain in conjunction with public transport including 75 of the tube automated and, more buses by The relative economic strength of the submarkets analysed in this report be closely influenced by the infrastructure initiatives, and this will feed directly into the performance of each location s property market. Ongoing Increased capacity on the London Underground The London overground extension linking North and South London Northern Line Extension to Battersea Interchange Crossrail 1 HS Public consultation Crossrail estimated start date 19 PROPERTY MARKET PERFORMANCE Property investors are focused on rents and yields as the primary factors affecting performance across the London markets. The Total Return and Rental Growth forecasts charted by this research seek to identify where future performance may be most positive. The Total Return, Rental and Yield performance documented in this year s report all indicate a market that is in robust health. While this year s UK General Election and the proposed European Referendum in will create some uncertainty, London s ability to adapt and bring forward the initiatives that encourage growth look set to ensure that it continues to move forward. LEVY INTELLIGENCE

4 AT A GLANCE SUMMARY PAGES IN DEPTH SUB MARKET PAGE TOTAL RETURN ALL POWERFUL PERFORMANCE RENTAL VALUE GROWTH ALL RENTAL GROWTH DOUBLES EQUIVALENT YIELD ALL YIELD COMPRESSION CAMDEN () (HOXTON, SPITALFIELDS, WHITECHAPEL) AND (SHOREDITCH, CITY ROAD AND OLD ) 3 3 (CLERKENWELL, SMITHFIELD AND FARRINGDON) APPENDIX REFERENCE TERMS CONTACTS 9 MARKETS DEFINED 5 TFL S RAIL TRANSPORT NETWORK AT 1 51

5 AT A GLANCE TOTAL RETURN POWERFUL PERFORMANCE TOTAL RETURN ( Y/Y) TOTAL RETURN ALL. 1 YEAR > DECEMBER BEST PERFORMER.3 1 YEAR > DECEMBER RANK RETURN RANK RETURN CHANGE ALL.. +. (SHOREDITCH, CITY ROAD AND OLD ) CAMDEN () AND (HOXTON, SPITALFIELDS, WHITECHAPEL) (CLERKENWELL, SMITHFIELD AND FARRINGDON) NB NOT INCLUDED IN 13 DUE TO RESTRICTED SAMPLE LEVY INTELLIGENCE

6 AT A GLANCE RENTAL VALUE GROWTH RENTAL GROWTH DOUBLES RENTAL VALUE GROWTH ( Y/Y) RENTAL VALUE GROWTH ALL 7. 1 YEAR > DECEMBER BIGGEST INWARD YIELD SHIFT YEAR > DECEMBER RANK GROWTH RANK GROWTH CHANGE ALL (SHOREDITCH, CITY ROAD AND OLD ) CAMDEN () (CLERKENWELL, SMITHFIELD AND FARRINGDON) AND (HOXTON, SPITALFIELDS, WHITECHAPEL) NB NOT INCLUDED IN 13 DUE TO RESTRICTED SAMPLE LEVY INTELLIGENCE

7 AT A GLANCE EQUIVALENT YIELD YIELD COMPRESSION EQUIVALENT YIELD () EQUIVALENT YIELD ALL 5. 1 YEAR > DECEMBER BIGGEST INWARD YIELD SHIFT.5 REDUCED FROM.5 ( BPS) IN 13 BASIS POINT RANK RETURN RANK RETURN CHANGE ALL bps bps bps bps.5. OXFORD bps. 5. bps AND bps bps bps bps bps bps bps CAMDEN () bps (HOXTON, bps SPITALFIELDS, WHITECHAPEL) (CLERKENWELL, bps SMITHFIELD AND FARRINGDON) (SHOREDITCH,.. bps CITY ROAD AND OLD ) bps bps NB NOT INCLUDED IN 13 DUE TO RESTRICTED SAMPLE LEVY INTELLIGENCE

8 Junction h Bushey ers atch End ne Lane rrow & ldstone rthwick Kenton embley ge rlesden unction burn Maida Vale Warwick Avenue s Bush Market k ersmith enscourt Mill Edgware Stanmore Burnt Oak Canons Colindale Kenton Queensbury Hendon Preston Kingsbury Brent Cross Gospel CAMDEN Golders AND Green Oak Neasden Heath Wembley Dollis Finchley Willesden Green & Frognal Kentish Belsize Town Kilburn Kensal Brondesbury Rise Chalk Farm Brondesbury Finchley Camden Town Kensal Green Swiss Cottage Queen s Kilburn South Mornington High St. John s Wood Crescent Edgware Paddington Marylebone Great Baker Portland Oak estbourne White City od Lane Latimer (Olympia) Barons Court Brompton Ladbroke Grove Shepherd s Bush Fulham Broadway Parsons Green Putney Bridge Holland BELGRAVIA AND PROVIDE A RETAIL HUB AND A UNIQUE GLOBAL PROFILE THAT ATTRACTS LEADING INVESTORS AND THE HIGHEST VALUE RESIDENTIAL ACCOMMODATION. Earl s Court Bayswater Notting Gate Queensway High Gloucester Hyde Corner Knightsbridge South Imperial Wharf Edgware Lancaster Gate Marble Arch Bond Sloane Pimlico Green St James s Piccadilly minster Canary Wharf 3 mins Charing Heathrow Cross 1 mins Waterloo Lambeth North Camden Embankment SOURCE: TFL CROSSRAIL FROM Southwark King s Cross St Pancras High Barnet Totteridge & Whetstone Woodside Finchley Finchley Finchley Highgate Archway Tufnell Kentish Town Borough Crouch Caledonian Canary Cannon Wharf Mansion mins House Blackfriars Heathrow Temple 31 mins Angel Warren Farringdon Regent s Goodge Russell CONNECTION TIMES VIA CROSSRAIL Barbican (from Knightsbridge) (from Bond ) Court Chancery Lane Oxford Paddington Oxford St Paul s 13 mins Holborn mins Covent Garden Liverpool mins Leicester mins Upper Holloway Holloway Southgate Arnos Grove Bounds Green Wood Green Turnpike Lane Manor House Arsenal Caledonian & Barnsbury Old Liverpool Highbury & Islington Moorgate Circle, District,, National Rail Cockfosters Oakwood Finsbury Canonbury Harringay Green Lanes Seven Sisters Dalston Kingsland Dalston Junction PRIMARY TRANSPORT LINKS Haggerston Hoxton Shoreditch High Hyde Corner Monument Piccadilly Tower Shadwell Fenchurch Tower Knightsbridge Gateway Piccadilly River Thames Rotherhithe Sloane London Circle, Bermondsey District Canada Bridge Water Surrey Quays Hale Bethnal Green South Blackhorse Queen s Homerton Wapping Bow Church Stepney Green ferry Canary Wharf Heron Quays South Quay Crossharbour Mudchute Island Gardens International Wick Mile End Whitechapel Limehouse Epping Theydon Bois.3 Debden Loughton To Shenfield Buckhurst Roding Grange Valley Chigwell Harold Wood Hainault Woodford ALL OF Gidea. South Woodford Fairlop Romford Barkingside Snaresbrook Chadwell Heath Newbury Midland Bow Bromleyby-Bow Devons Langdon All Saints Blackwall Poplar India India Quay Ham Redbridge Plaistow Upton Goodmayes Wanstead Gants Seven Kings Upminster Ilford Upminster Bridge High Manor Hornchurch 3. Forest Gate Elm Wanstead Heathway Becontree Woodgrange Upney High Barking ALL OF Pudding Mill Lane 7. Abbey Ham North TOTAL RETURN RENTAL VALUE GROWTH EQUIVALENT YIELD Star Lane Canning Town.5 Custom House for ExCeL Prince Regent Docks Albert Beckton Cyprus Silvertown Gallions Reach Peninsula Pontoon Dock ALL OF 5. London City Airport King George V Woolwich Arsenal Beckton Abbey Woolwich This market, best known for the salubrious homes of Belgravia and the world leading retail hub of Knightsbridge, has a unique global profile. It is home to the most demanding occupiers and some of world s leading investors. Yields compete closely with Mayfair and St. James s as these markets have a similar mix of stock and tenants. Investment returns for climbed to.3 y/y from. y/y in 13 as the popularity of this market remained solid. Belgravia & Knightsbridge s performance was however relatively modest compared to London as a whole, where it was only the 17th best performing investment location, losing out to emerging and central markets where both capital and rental growth were more dramatic. Capital values grew by 13. y/y in Belgravia & Knightsbridge in, meaning that values are now above their previous peak set in 7. Improving investor sentiment, as reflected in a yield impact of. y/y, was the main source of last year s rise in values, with rental growth at a more modest 3. y/y. But consistent rental value growth over the medium-term, shown by a cumulative increase of since the bottom of the market in 9, is firm evidence of the confidence of occupiers trading here. Equivalent yields in Belgravia & Knightsbridge compressed throughout, closing out the year at.5, down almost bps since the end of 13, as investor demand remained buoyant.

9 MARKET UPDATE FEBRUARY 15 DEVELOPMENT PIPELINE Belgravia / Knightsbridge is in the City of minster and Borough of and Chelsea, broadly bordered by St. James s to the east, Hyde to the north, the River Thames to the south and Gloucester to the west. Postcodes: SW1W, SW1W 9, SW1X, SW1V 7 9, SW3 1, SW7 1 The major landowners are the Cadogan Estate and Grosvenor. Developer Address Commercial / Residential (Private Units) Use Completion Date Mace Sloane 13,7 Office 15 Beaufort Children LLP Wisley Court, 37 Beaufort Gardens 9 Residential LS Investments Ltd 39 Lowndes 7 Residential Maybourne Hotel Group Knightsbridge Residential Thackeray Estates Old Brompton 15 Residential 5 ALL AVERAGE RECENT INVESTMENT TRANSACTIONS Date Address Postcode Tenure Use Price (m) Capital Value Net Initial Yield Q Old Brompton SW7 FH Mixed Use ,317 Q3 5 Knightsbridge SW1 VFH Retail. 7..5,7 Q Atlantic Court, King's SW3 FH Office & Retail. 1, ,395 Q 33 Thurloe SW7 FH Office.75 1,5.,15 Q 33 Grosvenor Place SW1 LLH Office. 1,5.. 19,1 ANNUAL TOTAL RETURN DEC 1 APR AUG DEC APR 3 AUG 3 DEC 3 APR AUG DEC APR 5 AUG 5 DEC 5 APR AUG RETURNS DEC APR 7 AUG 7 DEC 7 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD..5 RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Q1 Montpelier House 1 Brompton Rates Service Charge Bainbridge Capital 5. 11, Q1 11 Grosvenor Place Pillar Holdings Ltd 53.5,5..75 Q1 5 Grosvenor Gardens Premier Oil Holdings Ltd 35.,5.. This graph shows the annual total return series over time for London in red. Belgravia / Knightsbridge in blue and the light blue shaded area shows the range of returns generated by the other markets. PERFORMANCE Total Return.3 Capital Growth 13. Income Return. Equivalent Yield.5 Rental Value Growth 3. TOTAL RETURN PREDICTION Correlates to the LEVY End Total Returns Forecast End Forecast ANNUALISED The box plot represents the positioning of Belgravia / Knightsbridge within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index. INVESTMENT HEADLINE SOURCE: LEVY Prime Office Rent per sq ft 5. Prime Retail Zone A Implied Headline Capital Value per sq ft 1,7 Prime Net Initial Yield.75 RESIDENTIAL SALES VALUE SOURCE: LEVY Headline Range per sq ft 3,, TOP OFFICE RENTS BACK TO 5 PSF RECENT RETAIL TRANSACTIONS Tone Date Address Tenant Zone A Q3 Brompton Bugatti Q 5 7 Brompton Coccinelle 35. Q1 9 Brompton Cool 5. Britannia RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q1 Q1 Q1 39 Lowndes 135 Grosvenor Grosvenor Gardens House Land value per private plot (m) Land Price ( / sq ft) Planning position at point of purchase SW1 LS Investments ,35, Planning consented for 7 private residential units SW1 SW1 River Properties Developments Key Platinum Investments 3.7,9, Planning permission for private residential units 9.,, Planning permission for private residential units plus retail units at ground floor SOURCE: LEVY

10 are Burnt Oak Colindale Hendon Brent Cross Golders Green Finchley Green & Frognal rn Finchley Swiss Cottage arylebone ware caster ate Corner tsbridge Marble Arch St. John s Wood Bond Baker IS CHARACTERISED BY EDUCATIONAL, MEDICAL, HOTELS AND RESIDENTIAL USES, AND IS LY LOCATED. Regent s Green St James s Belsize Great Portland Chalk Farm Mill Gospel Oak Heath Warren Oxford Piccadilly Camden Town Mornington Crescent Charing Cross Kentish Town Goodge Court Holborn Leicester Camden High Barnet Totteridge & Whetstone Woodside Finchley Finchley Finchley Highgate Archway Kentish Town Farringdon Russell Covent Garden King s Cross St Pancras Mansion House Blackfriars Temple Crouch Caledonian Angel Barbican Chancery Lane St Paul s Cannon Holloway CONNECTION Caledonian TIMES VIA CROSSRAIL (from & Canonbury (from Barnsbury Russell ) Court ) Dalston Junction Oxford Liverpool Homerton 9 mins Haggerston mins mins Old Canary Wharf mins Liverpool Heathrow 39 mins Moorgate Monument Southgate Arnos Grove Bounds Green Wood Green Turnpike Lane Manor House Upper Holloway Tufnell Arsenal Highbury & Islington SOURCE: TFL CROSSRAIL FROM Tower Fenchurch River Thames Cockfosters Oakwood Finsbury Harringay Green Lanes Seven Sisters Dalston Kingsland Hale South Blackhorse Queen s Theydon Bois Midland Epping Debden Loughton Buckhurst Woodford South Woodford Snaresbrook International PRIMARY TRANSPORT LINKS Russell Wick Piccadilly Paddington Hoxton mins Northern,, Pudding Mill Lane Shoreditch Overground, National Rail Canary Wharf Bethnal High Green Mile End mins King s Cross Bow St Pancras Heathrow Circle, Hammersmith Bromleyby-Bow & City, 33 mins Bow Church Metropolitan, Northern, Stepney Green Piccadilly, Devons, National Rail, Eurostar Langdon Whitechapel Court All Saints, Northern, ferry Blackwall Crossrail Limehouse Poplar Shadwell India Tower Wapping Gateway Canary India Quay Wharf Rotherhithe Roding Valley Wanstead Chigwell Hainault High Wanstead Fairlop Barkingside Newbury Woodgrange Ham Canning Town Redbridge High Abbey Star Lane Plaistow Grange Gants Manor Forest Gate Docks To Shenfield Harold Wood 11.3 Gidea Romford Chadwell Heath Goodmayes Seven Kings Upminster Ilford Upminster Bridge Barking Ham Upton Upney Hornchurch Becontree Heathway Custom House for ExCeL Prince Regent Elm Albert TOTAL RETURN.1 ALL OF. RENTAL VALUE GROWTH ALL OF 7. EQUIVALENT YIELD 5.3 ALL OF 5. Beckton The Bloomsbury market is amongst the smallest in this analysis with only seven properties in the sample and as a result it was omitted from last year s report but growth in the sample through warranted its re-inclusion. This is a market that is continuing to emerge as a destination for professional investors in commercial properties despite its traditional dominance as a popular bohemian residential location. New developments and growing institutional investment in residential has helped increase the popularity of Bloomsbury for domestic and international investors, with returns exceeding the London average in. In, properties in Bloomsbury provided investors with an average total return of.1 y/y as capital values climbed by almost a quarter with growth of.5 y/y and an income return of. y/y. The rental performance was similarly strong, with growth of 11.3 y/y across this market as its popularity sees supply squeezed. Investor sentiment was positive with a yield impact of.9 y/y helping end year equivalent yields to close down at 5.3 having started out at 5..

11 MARKET UPDATE FEBRUARY 15 Bloomsbury is within the London Borough of Camden broadly bordered by Southampton Row to the east, to the north, New Oxford and High Holborn to the south and Great Portland to the west. Postcodes: WC1A 1, WC1H 9, WC1N 1 3, WC1B 3 5, WC1E 7 ANNUAL TOTAL RETURN DEC 1 APR AUG DEC This graph shows the annual total return series over time for London in red. Bloomsbury in blue and the light blue shaded area shows the range of returns generated by the other markets. APR 3 AUG 3 DEC 3 APR AUG PERFORMANCE DEC APR 5 AUG 5 DEC 5 APR AUG DEC APR 7 AUG 7 DEC 7 Total Return.1 Capital Growth.5 Income Return. Equivalent Yield 5.3 Rental Value Growth 11.3 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG RETURNS DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC.1 The box plot represents the positioning of Bloomsbury within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index. INVESTMENT HEADLINE SOURCE: LEVY Prime Office Rent per sq ft. Implied Headline Capital Value per sq ft.5 TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD 1,5 Prime Net Initial Yield.5. ALL AVERAGE 5.3 DEVELOPMENT PIPELINE Developer Address Commercial / Residential (Private Units) Use Completion Date Exemplar & Bedford Estates 1 Bedford Avenue 5, Mixed Use Blackstone Lacon House, Theobalds, Office RECENT INVESTMENT TRANSACTIONS Date Address Postcode Tenure Use Price (m) Q The University of Law Campus, Store Capital Value Net Initial Yield WC1 FH Office ,1 Q 1 Bloomsbury WC1 FH Office ,3 Q Brunswick Centre WC1 FH Retail ,9 Q1 Fitzroy House, 11 Chenies WC1 LLH Office ,7 RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Rates Service Charge Q Bloomsbury Way Criteo Ltd 9.7,.. Q3 1 Mabledon place The Doctors Laboratory. 7,95 Q3 The Heals Building, Torrington Place Lashmars 5. 5,5. RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q Roger WC1 Chapman Button Land value per private plot ( / Unit) Land Price ( / sq ft) Planning position at point of purchase 3.9 5, Planning permission for private residential units TOTAL RETURN PREDICTION Correlates to the LEVY Midtown Total Returns Forecast Midtown Forecast ANNUALISED 19. RESIDENTIAL SALES VALUE SOURCE: LEVY Headline Range per sq ft 1, 1,.1 TOTAL RETURN DRIVEN BY AND CROSSRAIL SOURCE: LEVY

12 CAMDEN INCLUDING re urnt Oak n Colindale Hendon reen est Finchley rylebone are ster te Brent Cross Golders Green Swiss Cottage Finchley & Frognal St. John s Wood Bond Baker THE CAMDEN MARKET HISTORICALLY WAS RELATIVELY SMALL IN TERMS OF COMMERCIAL PROPERTY INVESTMENT WITH RESIDENTIAL STILL DOMINATING. HOWEVER, HAS REPOSITIONED THIS SECTOR. Regent s Heath Belsize Great Portland Chalk Farm Warren Camden Town Mornington Crescent High Barnet Totteridge & Whetstone Woodside Southgate Mill Finchley Arnos Grove Gospel Oak Kentish Town Goodge Court Farringdon Russell Barbican Chancery Lane St Paul s SOURCE: Liverpool TFL Moorgate Cockfosters Oakwood Bounds Green Finchley Wood Green Finchley Harringay Turnpike Lane Green Lanes Highgate Crouch South Seven Archway CONNECTION Manor House TIMES PRIMARY Blackhorse Sisters (from Camden Town) TRANSPORT LINKS Upper Holloway Tufnell Oxford Arsenal Camden Town Hale Finsbury 7 mins Holloway Northern Kentish Town Queen s Kentish Town Highbury & Caledonian 13 mins Islington Dalston Northern, National Rail Kingsland Camden Canary Wharf Kentish Town Caledonian 7 mins & Canonbury Overground Barnsbury Heathrow Dalston Junction King s Cross St Pancras Homerton King s Cross 1 hour 5 mins Circle, Hammersmith Wick St Pancras Haggerston & City, Metropolitan, Angel Northern, Piccadilly, Hoxton, National Rail, Old Eurostar Shoreditch Bethnal High Green Mile End Bow Church Stepney Green International Theydon Bois Midland Bow Devons Epping Debden Loughton Buckhurst Woodford South Woodford Snaresbrook Pudding Mill Lane Bromleyby-Bow Roding Valley Chigwell Hainault Fairlop Barkingside Newbury Goodmayes 19. To Shenfield Harold Wood ALL Gidea OF Romford Chadwell Heath Wanstead Gants Seven Kings Upminster Ilford Upminster Bridge High Manor Hornchurch 5.7 Forest Gate Elm Wanstead Heathway Becontree Woodgrange Ham Redbridge High Abbey Star Lane Plaistow Grange Barking Ham Upton Upney CAMDEN TOTAL RETURN.3 ALL OF. CAMDEN RENTAL VALUE GROWTH 7. CAMDEN EQUIVALENT YIELD ALL OF 5. Camden remains a relatively small part of the London investment market. Residential still dominates the perspective of investors here, but the area has seen a growth in the demand for office space among smaller firms in the creative industries. Swelling occupier appetite for office space has piqued investor interest, and increasing levels of capital have flowed into this market. Investment performance in recent years has been strong, largely due to rapidly rising rents, with an average annual total return of. y/y recorded for the five years since the bottom of the market in 9. Camden outperformed the rest of London in with a total return of.3 y/y. This represented an. outperformance compared to the London average of. y/y. Camden s strong performance was driven by impressive rental value growth of 19. y/y and a positive yield impact of 7. y/y. These improvements in rents and yields pushed capital values up by 5. y/y the highest annual value growth since the performance of detailed London submarkets began to be recorded in 1. Camden s equivalent yield fell to 5.7 at the end of, down 5 bps from the same point in 13. This is further evidence of the growing popularity of the area for investors, and also the improving quality of tenants now attracted to this fringe London market.

13 MARKET UPDATE FEBRUARY 15 CAMDEN INCLUDING DEVELOPMENT PIPELINE Camden is within the London Borough of Camden broadly bordered by Upper to the east, Highbury Corner to the north, Pentonville to the south and Eversholt to the west. Postcodes: NW1, NW1 7 9, NW5 1 Major landowners are the King s Cross Limited Partnership (Argent, Hermes Real Estate, London & Continental Railways Ltd and DHL Supply chain) and London Borough of Camden. Developer Address Commercial / Residential (Private Units) Use Completion Date Teddy Sagi Camden Lock Redevelopment 5, Mixed Use 15 Teddy Sagi Camden Lock Village, (Hawley Wharf) 17 Mixed Use Galliard Homes Carlow House, Carlow 5 Residential UK Real Estate The Lighthouse 17,9 Mixed Use 15 Argent / LCR 3 Pancras 15, Mixed Use Argent / LCR Pancras 17, Mixed Use 17 ANNUAL TOTAL RETURN DEC 1 APR AUG DEC APR 3 AUG 3 DEC 3 APR AUG DEC APR 5 AUG 5 CAMDEN DEC 5 RETURNS APR AUG DEC APR 7 AUG 7 DEC 7 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC.3 5. TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD.3 CAMDEN ALL AVERAGE 5.7 RECENT INVESTMENT TRANSACTIONS Date Address Postcode Tenure Use Price (m) Capital Value Q3 Elephant Yard, Kentish Town Net Initial Yield NW1 FH Office ,731 Q1 Oval NW1 FH Office ,95 Q1 Camden Stables NW1 FH Mixed. Market Used Q1 North Gower NW1 FH Office ,9 RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Rates Service Charge Q Pancras Google.5 359,. Q3 3 Pancras Havas. 3,. Q Pancras Auto Trader 5. 15,7.. This graph shows the annual total return series over time for London in red. Camden in blue and the light blue shaded area shows the range of returns generated by the other markets. PERFORMANCE Total Return.3 Capital Growth 5. Income Return.3 Equivalent Yield 5.7 Rental Value Growth 19. TOTAL RETURN PREDICTION CAMDEN Correlates to the LEVY End Total Returns Forecast End Forecast ANNUALISED The box plot represents the positioning of Camden within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index. INVESTMENT HEADLINE SOURCE: LEVY Prime Office Rent per sq ft 5. Implied Headline Capital 1, Value per sq ft Prime Net Initial Yield 5. RESIDENTIAL SALES VALUE SOURCE: LEVY Headline Range per sq ft 9 1,5 REALISATION OF DRIVES SECOND SUCCESSIVE YEAR OF OUTSTANDING PERFORMANCE RECENT RETAIL TRANSACTIONS Date Address Tenant Zone A Q Unit 1, One Pancras, King's Cross Vinotecha 5. (psf) Q Unit 1A, Arthouse, King's Cross Greek Larder. (psf) Q1 Stanley Buildings, King's Cross (Restaurant) Granger & Co. 7. (psf) RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q Camden Lock Village (Hawley Wharf) NW1 Teddy Sagi Q Kidderpore Avenue NW3 Mount Anvil Q Kidderpore Avenue NW3 Barratt Homes Q3 Carlow House, Carlow NW1 Galliard Homes Land value per private plot ( / Unit) Land Price ( / sq ft) Planning position at point of purchase, Planning consented for 17 residential units (15 private) plus,733 sq ft of commercial floorspace Confidential Former Kings College buildings, majority Grade II listed 19m 75, Planning permission for 53 residential units ( private) 7. 5, Planning consented for 5 residential units. Planning subsequently consented for 5 residential units SOURCE: LEVY

14 stead ath k lk Farm den Town rnington Crescent ston eet ing ss Mill Gospel Oak Kentish Town Goodge Court Holborn Leicester Camden BEING THE FINANCIAL CENTRE OF THE EUROPEAN UNION MEANS THAT OFFICE VALUES IN THE CITY CLOSELY TRACK GLOBAL ECONOMIC PERFORMANCE. High Barnet Totteridge & Whetstone Woodside Finchley Southgate Arnos Grove River Thames Cockfosters Oakwood Bounds Green Finchley Wood Green Finchley Harringay Turnpike Lane Green Lanes Highgate Crouch South Seven Archway Manor House Blackhorse Sisters Upper Holloway Tufnell Arsenal Hale Finsbury Holloway Kentish Town Queen s Highbury & Caledonian Islington Dalston Kingsland Caledonian & Canonbury Barnsbury Farringdon Russell Covent Garden Embankment King s Cross St Pancras Mansion House Blackfriars Temple Angel Barbican Chancery Lane St Paul s Cannon Old Liverpool Moorgate Monument London Bridge Tower Fenchurch Dalston Junction Bermondsey Haggerston Hoxton Shoreditch High Shadwell Tower Gateway Rotherhithe Canada Water Surrey Quays Homerton Bethnal Green Mile End Oxford 7 mins Canary Wharf Bow Church 3 mins Stepney Green Heathrow 1 hour mins Whitechapel Wapping ferry Heron Quays South Quay Crossharbour International Wick CONNECTION TIMES (from ) Limehouse Canary Wharf SOURCE: TFL CROSSRAIL FROM Theydon Bois Midland Epping Debden Loughton Buckhurst Woodford South Woodford Snaresbrook Roding Valley Wanstead Chigwell Hainault High Wanstead Grange Fairlop Barkingside Newbury Redbridge Gants Woodgrange VIA CROSSRAIL High (from Pudding Liverpool ) Mill Lane Abbey Manor Forest Gate Goodmayes Romford Chadwell Heath Seven Kings Upminster Ilford Upminster Bridge Upney PRIMARY Barking TRANSPORT Ham LINKS To Shenfield Gidea Harold Wood Upton Liverpool Bow Court Plaistow, Circle, 5 mins Hammersmith & City, Bromleyby-Bow Metropolitan, Crossrail, Ham Canary Wharf National Rail Devons 7 mins Star Lane Langdon Moorgate Paddington Northern, Canning All Saints 9 mins Town National Rail Blackwall Heathrow / Monument Custom House for ExCeL Poplar 3 mins, Circle, India Prince Regent District, Docks Northern, Albert India Quay Waterloo & City, DLR Beckton Tower Cyprus Circle, District, DLR North Silvertown Gallions Reach Peninsula Pontoon Dock Beckton London City Airport King George V Hornchurch Becontree Heathway Elm TOTAL RETURN. ALL OF. RENTAL VALUE GROWTH.9 ALL OF 7. EQUIVALENT YIELD 5. ALL OF 5. As a result of its position as the leading financial centre in Europe, offices in the City closely track broader global economic performance, and sometimes produce volatile returns in the course of the economic cycle, a pattern clearly witnessed in recent years. When the broader economy is going well, the City tends to outperform the End, but conversely it does not enjoy the same safe-haven status as its western neighbour during times of uncertainty. This is reflected by the yield spread between End office locations such as Mayfair compared to the City, which has averaged bps for equivalent yield between 9 and. In, the City market recorded a total return of. y/y as capital values strengthened by 13.9 y/y. Nonetheless, the City underperformed the End and Midtown, due to a more modest level of rental value growth at.9 y/y. Rental value growth over the last five years has averaged.9 y/y, well below the Midtown average of. y/y. This has been due to the cautious state of financial markets and a generous supply pipeline of office space in the area over recent years. Last year s performance did however represent a marked improvement, but still remained subdued compared to the rest of the capital. From an investor perspective, there was a sharp improvement in confidence over the course of. A positive yield impact of.3 y/y, again below the London average but stronger than in 13, contributed to capital value growth though further yield compression. End year equivalent yield stood at 5. for the City market as a whole, with the dominant office market yielding 5.7.

15 MARKET UPDATE FEBRUARY 15 City is in the City of London, broadly bordered by Farringdon to the west cutting along Holborn and Cheapside and then north on Moorgate, Sun and Appold, the River Thames to the south and Middlesex and Mansell to the east. Postcodes: EC3 5, EC3M 1, EC3N 1, EC3R 5, EC3V 1, EC3V 9, ECM 5 9, ECN 1, EC, ECR 3ECR 9, ECV Major landowners include The City Corporation and the Livery Companies. ANNUAL TOTAL RETURN DEC 1 APR AUG DEC This graph shows the annual total return series over time for London in red. (City) in blue and the light blue shaded area shows the range of returns generated by the other markets. APR 3 AUG 3 DEC 3 APR AUG PERFORMANCE DEC APR 5 AUG 5 DEC 5 APR CITY RETURNS AUG DEC APR 7 AUG 7 DEC 7 Total Return. Capital Growth 13.9 Income Return. Equivalent Yield 5. Rental Value Growth.9 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC.3 The box plot represents the positioning of (City) within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index. INVESTMENT HEADLINE SOURCE: LEVY Prime Office Rent per sq ft 5. Prime Retail Zone A 5 Implied Headline Capital Value per sq ft 5. TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD 1,5 Prime Net Initial Yield.5.3 CAMDEN ALL AVERAGE 5.7 DEVELOPMENT PIPELINE Developer Address Commercial / Residential (Private Units) Skanska Project Development Limited Brookfield Properties and Great Portland Estates Use Completion Date Monument, Office 15 & Retail Bishopsgate 75, Office 15 British Land/Blackstone 5 Broadgate 7, Office 15 Land Securities 1 & New Ludgate, Old Bailey 3, Office 15 Stanhope / Bloomberg Bloomberg Place, Bucklersbury 3, Office & Retail RECENT INVESTMENT TRANSACTIONS Date Address Postcode Tenure Use Price (m) Capital Value Net Initial Yield Q1 15 Leadenhall EC3 FH Office , Q Gherkin, St Mary Axe EC3 FH Office 7. 1, , Q Moorgate Exchange, EC FH Office ,993 Fore Q King Edward EC1 FH Office ,991 Q One Crown Court, EC FH Office ,19 Cheapside Q3 Woolgate Exchange, EC FH Office ,3 5 Basinghall Q3 Plantation Place South, EC FH Office ,999 Fenchurch Q Cornhill EC3 FH Office. 7.., & Retail Q 111 Old Broad EC FH Office , Q Creechurch Place EC3 FH Office & Retail ,99 RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Q Cannon Place, 7 Cannon Threadneedle Asset Management Q One New Change, 1 New Change Chicago Mercantile Exchange Rates Service Charge 3.5 5, , Q Gracechurch Verisk Analytics Ltd 55., RECENT RETAIL TRANSACTIONS Prime Retail Zone A 5. Date Address Tenant Zone A Q 7 Cannon Argos. Q 1 Cannon Scarpetta 1. TOTAL RETURN PREDICTION Correlates to the LEVY City Total Returns Forecast City Forecast ANNUALISED RESIDENTIAL SALES VALUE SOURCE: LEVY Headline Range per sq ft 1, 1, SOLID PERFORMANCE CONSTRAINED BY ATTRACTION OF AREAS RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q Q3 Broken Wharf House, Broken Wharf, High Timber Sugar Quays, Lower Thames EC EC3 Hermes (currently marketing) CPC & Barratt London Land value per private plot ( / Unit) Land Price ( / sq ft) Planning position at point of purchase , Planning permission for 3 private residential units Confidential Planning permission for 5 private residential units and new retail units SOURCE: LEVY

16 dgware Burnt Oak Colindale Hendon Brent Cross Pimlico Golders Green THE MARKET IS ONE OF THE KEY FOCUS AREAS FOR TOURISM IN, ENCOMPASSING SOME OF THE TOP PERFORMING RETAIL PITCHES AND MOST POPULAR OFFICE LOCATIONS. Finchley den Green & Frognal ilburn Finchley Swiss Cottage th tead St. John s Wood r et n ial Marylebone Edgware Lancaster Gate yde Corner r way ightsbridge uth ington Marble Arch Bond Sloane Baker Regent s Green St James s Heath Gospel Oak Kentish Town Belsize Great Portland Chalk Farm Warren Oxford Piccadilly minster Camden Town Mornington Crescent Charing Cross Waterloo Mill Upper Holloway Tufnell Arsenal Camden King s Cross St Pancras High Barnet Totteridge & Whetstone Woodside Finchley Finchley Finchley Highgate Archway Holloway Kentish Town Caledonian Farringdon Angel Crouch Caledonian & Barnsbury Southgate Arnos Grove Bounds Green Wood Green Turnpike Lane Manor House Highbury & Islington Old CONNECTION TIMES (from Covent Liverpool Garden) Cockfosters Oakwood Finsbury Canonbury Harringay Green Lanes Seven Sisters Dalston Kingsland Dalston Junction Haggerston Hale South Blackhorse Queen s Homerton International Wick Theydon Bois Midland Epping Debden Loughton Buckhurst Woodford South Woodford Snaresbrook Hoxton Pudding Mill Lane Shoreditch VIA Bethnal High CROSSRAIL (from Green Mile End PRIMARY Court ) TRANSPORT LINKS Bow Goodge Russell Barbican Oxford Liverpool Covent Garden Bromley- Bow Church by-bow Court 7 mins mins Piccadilly Chancery Lane Moorgate Stepney Green Devons Paddington Court St Paul s Holborn 11 mins mins, Langdon Northern, Whitechapel Covent Garden Crossrail Canary Wharf Canary Wharf All Saints Leicester 1 mins mins ferry Holborn Blackwall Cannon, Piccadilly Heathrow Heathrow Limehouse Poplar Monument Tower Shadwell Mansion House 51 mins 33 mins Leicester India Fenchurch Tower Wapping Blackfriars Gateway Northern, Canary India Piccadilly Quay River Thames Temple Wharf Rotherhithe Charing Cross Bakerloo, Northern, Embankment London Bermondsey Canada National Rail North SOURCE: Bridge TFL Water Heron Quays CROSSRAIL FROM Surrey Quays South Quay Crossharbour Southwark Mudchute Peninsula Roding Valley Wanstead Chigwell Hainault High Wanstead Fairlop Barkingside Newbury Woodgrange Ham Canning Town Redbridge High Abbey Star Lane Plaistow Grange Docks Silvertown Barking Ham Upton Pontoon Dock London City Airport King George V Goodmayes 5.5 To Shenfield Romford Chadwell Heath Gidea Gants Seven Kings Upminster Ilford 11. Upminster Bridge Manor Hornchurch Forest Gate Elm Heathway Upney Becontree TOTAL RETURN ALL OF Harold Wood. RENTAL VALUE GROWTH ALL OF 7. EQUIVALENT YIELD. Custom House for ExCeL Prince Regent Albert Beckton ALL Cyprus OF 5. Gallions Reach Beckton Covent Garden is one of the most popular areas for investment in London. The market encompasses some of London s top retail pitches and most popular office locations. Long-term investor returns have shown this to be one of the consistently top performing locations in the capital, both for office and retail properties. On average, commercial property in Covent Garden has returned. y/y over the last decade. For the last five years, annualised returns have risen to. y/y as the market has recovered from the /9 crash. In, Covent Garden returned 5.5 y/y to investors, above the London average. This reflects acceleration compared to the 13 performance, when the market returned 17.5 y/y. Capital values surged last year by 1. y/y, and after five years of continuous growth, they are now 7 above their 7 peak. Offices in Covent Garden provided investors with a return of. y/y as capital values grew by 19.9 y/y and rents by 9.9 y/y. The retail sector was stronger, returning.7 y/y thanks to impressive capital growth at.9 y/y with rental growth at 13.5 y/y. The strong rental performance for both offices and retail reflected healthy occupier demand for space in this prime part of London. Pricing hardened through as investor interest remained keen, leading to significant competition for securing assets. Equivalent yields compressed further to reach seven year lows of. for offices and. for retail.

17 MARKET UPDATE FEBRUARY 15 DEVELOPMENT PIPELINE Covent Garden is in the City of minster and London Borough of Camden, broadly bordered by Kingsway to the east, Theobalds and New Oxford to the north, the River Thames to the south and Charing Cross and St. James s to the west. Postcodes: WC B, WC E, WC H, WC N, WC R Major landowners include Capital & Counties Properties PLC, Shaftesbury PLC, The Mercers Company and Legal and General. Developer Address Commercial / Residential (Private Units) Use Completion Date Blackstone 1 11 John Adam, The Adelphi, Office 15 Almacantar Centre Point, 1 3 New Oxford Residential Exemplar / Ashby Capital One Bedford Avenue 115, Office & Retail St. Edward Homes 19 Strand Residential 17 Northwood Investors 9 Long Acre,15 / 9 Mixed Use ANNUAL TOTAL RETURN 5 - DEC 1 APR AUG DEC APR 3 AUG 3 DEC 3 APR AUG DEC APR 5 AUG 5 DEC 5 APR AUG DEC APR 7 AUG 7 DEC 7 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC ALL AVERAGE RECENT INVESTMENT TRANSACTIONS Date Address Postcode Tenure Use Price (m) Capital Value Q New Brook Buildings, Great Queen Q Aviation House, 5 Kingsway Net Initial Yield WC FH Office ,7..75,31 WC FH Office & Retail ,1 Q 7 St Martin s Place WC FH Office 5. 1, , & Retail Q 55 Strand WC FH Office 37. 1,5.., Q3 Strand WC LLH Office , Q3 Seven Dials Warehouse WC FH Office. 1, , This graph shows the annual total return series over time for London in red. Covent Garden in blue and the light blue shaded area shows the range of returns generated by the other markets. RETURNS TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD The box plot represents the positioning of Covent Garden within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Q Orion House, 5 Upper St Martins Lane Black River Asset Management Rates Service Charge.5 5, 7..5 Q Tower House, Southampton World Nuclear Association 7. 5, Q1 Bow Rocket Fuel Ltd 55. 1,11.. PERFORMANCE INVESTMENT HEADLINE SOURCE: LEVY RECENT RETAIL TRANSACTIONS Total Return 5.5 Capital Growth 1. Income Return 3.7 Equivalent Yield. Rental Value Growth 11. TOTAL RETURN PREDICTION Correlates to the LEVY End Total Returns Forecast End Forecast ANNUALISED Prime Office Rent per sq ft 75. Prime Retail Zone A 1, Implied Headline Capital Value per sq ft 1,55 Prime Net Initial Yield.5 RESIDENTIAL SALES VALUE SOURCE: LEVY Headline Range per sq ft 1,,5 CONTINUED ROBUST PERFORMANCE ACROSS ALL SECTORS Prime Retail Zone A. 1,. Date Address Tenant Zone A Q Charing Cross Caffe Nero. Q3 119 Long Acre Ben Sherman 7.5 RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q er House WC Being Marketed Q Tower WC English Rose Land value per private plot ( / Unit) Land Price ( / sq ft) Planning position at point of purchase. 7, Planning Permission for 3 residential units ( private) 19., Planning permission residential units ( private) SOURCE: LEVY

18 tone Southgate THE CORE MARKET IS DOMINATED Theydon Bois BY CANARY WHARF WITH MAJOR INTERNATIONAL Debden OCCUPIERS, PARTICULARLY FROM THE FINANCIAL Loughton SECTOR, LARGE LOT SIZES AND TROPHY BUILDINGS. Cockfosters Oakwood New Cross Gate Mudchute Island Gardens Deptford Bridge Epping Buckhurst Woolwich Arsenal To Shenfield Roding Grange Arnos Grove Valley Bounds Green Chigwell Harold Wood Hainault Wood Green Woodford Gidea Fairlop Harringay Romford Turnpike Lane South Woodford Green Lanes h Barkingside ill South Snaresbrook Chadwell Heath Seven Newbury Manor House Blackhorse Sisters Redbridge Upper Holloway Goodmayes Seven Kings Arsenal Hale Wanstead Gants Finsbury Upminster Ilford loway Upminster Bridge Queen s Midland High Manor Highbury & Hornchurch oad Islington Dalston Kingsland Forest Gate International Elm Caledonian Wanstead & Canonbury Barnsbury Dalston Junction Heathway Homerton Wick Becontree Woodgrange Haggerston Upney High Barking Hoxton Pudding Old Mill Lane Abbey Ham Shoreditch Bethnal High Green Mile End Liverpool Upton Bow Plaistow Bow Church Bromleyby-Bow Ham Moorgate Stepney Green Devons Star Lane Langdon Whitechapel CONNECTION Canning TIMES VIA CROSSRAIL PRIMARY All Saints Town (from Canary Wharf) (from Canary Wharf) TRANSPORT LINKS ferry Blackwall Custom House for ExCeL Poplar Oxford Liverpool Canada Water Monument Tower Shadwell Limehouse Prince Regent India 19 mins mins Jubilee, Overground Fenchurch Tower Docks Wapping Gateway Albert Canary India Quay Canary Wharf River Thames Wharf Beckton mins Court Jubilee, Crossrail, DLR Rotherhithe 11 mins Cyprus Heathrow Heron Quays London Silvertown Bermondsey Canada North Gallions Reach Bridge Water Heron Quays 1 hour 17 mins Paddington DLR Peninsula Pontoon Dock mins Beckton London Surrey Quays South Quay Limehouse City Airport Heathrow DLR, Overground Crossharbour King George 5 mins V Queens Peckham Rye Brockley New Cross Cutty Sark for Maritime SOURCE: TFL CROSSRAIL FROM North Jubilee, Skyline Woolwich Poplar DLR Abbey Wood Shadwell DLR, Overground TOTAL RETURN. ALL OF. RENTAL VALUE GROWTH 3. ALL OF 7. EQUIVALENT YIELD.5 ALL OF 5. The core Docklands market, particularly around Canary Wharf, is dominated by major international occupiers, particularly from the financial sector, in large floor spaces and trophy buildings. As a result this market is confined to the largest investors, due to the large lot sizes of the assets. However, the IPD Docklands sample extends beyond Canary Wharf itself to encompass a broad mix of former industrial units along the river, residential investments and secondary properties. The performance results therefore deviate somewhat from those for core Canary Wharf offices. As a result of the broad Docklands sample, total returns tend to be lower than for central locations but in line with other fringe markets. In, this market provided investors with a total return of. y/y, more than doubling the return of.3 y/y in 13 as market conditions improved. Recent performance has made Docklands one of the top performing investment locations in London, outperforming the average by bps. However, over the last five years, returns have averaged only. y/y, making it one of the weaker performing areas of London, with the recovery having taken hold more slowly post-9. The impressive performance was driven by capital value growth of.7 y/y, the sixth strongest in London, and an income return of.3 y/y. Rents grew by 3. y/y, underperforming the London average considerably, implying that improving investor sentiment was the key driver of performance. This was reflected by a significant positive yield impact of.5, the strongest recorded in London during. Equivalent yields moved down to.5 by the end of the year, a shift of bps over months.

19 MARKET UPDATE FEBRUARY 15 DEVELOPMENT PIPELINE Docklands is a substantial district of London, which lies on the north bank of the River Thames within the London Boroughs of Tower Hamlets and Newham. Postcodes: E and E Major land owners are Canary Wharf Group PLC, Ballymore Properties and Galliard Homes and Land Securities Group PLC. Developer Address Commercial / Residential (Private Units) Use Completion Date Commercial Estates Group Columbus Tower, Hertsmere 1,5, Mixed Use Galliard / O Shea / LBS Properties Baltimore Tower, 3 Limeharbour Residential JP Morgan Riverside South, Mixed Use Eco World / Ballymore Arrowhead Quay 5, Mixed Use Galliard Millharbour 75, Residential Mount Anvil Dollar Bay 111 Residential Chalegrove Properties City Pride Mixed Use RECENT INVESTMENT TRANSACTIONS ANNUAL TOTAL RETURN DEC 1 APR AUG DEC This graph shows the annual total return series over time for London in red. Docklands in blue and the light blue shaded area shows the range of returns generated by the other markets. APR 3 AUG 3 DEC 3 PERFORMANCE Total Return. Capital Growth.7 Income Return.3 Equivalent Yield.5 Rental Value Growth 3. TOTAL RETURN PREDICTION APR Correlates to the LEVY City Total Returns Forecast City Forecast AUG DEC APR 5 AUG 5 DEC 5 RETURNS APR AUG ANNUALISED DEC APR 7 AUG 7 DEC 7 APR AUG DEC APR 9 AUG 9 DEC 9 APR AUG DEC APR 11 AUG 11 DEC 11 APR AUG DEC APR 13 AUG 13 DEC 13 APR AUG DEC. The box plot represents the positioning of Docklands within the range of London s markets, represented in the form of boxes. The blue line is the average of the market index..7 INVESTMENT HEADLINE SOURCE: LEVY Prime Office Rent per sq ft 5. Prime Retail Zone A Implied Headline Capital Value per sq ft 9 Prime Net Initial Yield.75 RESIDENTIAL SALES VALUE SOURCE: LEVY ALL AVERAGE.3.5 TOTAL RETURN CAPITAL GROWTH INCOME RETURN EQUIVALENT YIELD Headline Range per sq ft 9 1, SIGNIFICANTLY IMPROVED RETURNS PRINCIPALLY DRIVEN BY YIELD COMPRESSION Date Address Postcode Tenure Use Price (m) Capital Value Net Initial Yield Q Canada E FH Office 1,175. 1,. 1,99,973 Q3 Exchange Tower, E FH Office ,95 1& Harbour Exchange Q3 5 North Colonnade E FH Office ,7 Q3 5 E FH Office , Q Upper E FH Office ,97 RECENT OFFICE TRANSACTIONS Date Address Tenant Rent Rates Service Charge Q3 Citi Tower, 5 Canada GFK NOP U.K Holding Limited 39.5,..5 Q 1 Canada European ing Authority.5, Q ferry House, 11 ferry Ministry of Justice.5 33, RECENT RETAIL TRANSACTIONS Prime Retail Zone A Date Address Tenant Zone A Q3 Jubilee Place Blow Ltd. Q Jubilee Place Sandro. RECENT RESIDENTIAL LAND TRANSACTIONS Date Address Postcode Developer Land Price (m) Q Q1 Q 13 Millharbour Village, Millharbour Wharf, North Woolwich Gateway (Caxton Works) E E E Galliard Homes Oxley Holdings & Ballymore Galliard Homes Land value per private plot ( / Unit) Land Price ( / sq ft) Planning position at point of purchase 5. 93, Planning permission for 99 residential units (99 private) plus retail and commercial space. 71, Planning consent for 3,35 residential units (9 private).5 9, Planning consent for 33 private residential units with parking spaces SOURCE: LEVY

20 INCLUDING HOXTON, SPITALFIELDS, WHITECHAPEL l ospel Oak Kentish wn n odge reet ttenham urt Holborn icester Camden High Barnet THE MARKET ENCOMPASSES LOCATIONS AND SOUTH OF THE RIVER, BUT WITH THE MAJORITY OF INVESTMENT PROPERTIES LOCATED AROUND WHITECHAPEL AND COMMERCIAL ROAD. Totteridge & Whetstone Woodside Finchley Southgate Arnos Grove River Thames Cockfosters Oakwood Bounds Green Finchley Wood Green Finchley Harringay Turnpike Lane Green Lanes Highgate Crouch South Seven Archway Manor House Blackhorse Sisters Upper Holloway Tufnell Arsenal Hale Finsbury Holloway Kentish Town Queen s Highbury & Caledonian Islington Dalston Kingsland International Caledonian & Canonbury Barnsbury Dalston Junction Homerton Farringdon Russell Covent Garden Embankment Southwark King s Cross St Pancras Mansion House Blackfriars Temple Angel Barbican Chancery Lane St Paul s Cannon Old Liverpool Moorgate Monument London Bridge Tower Fenchurch Bermondsey Haggerston Hoxton Shoreditch High Shadwell Tower Gateway Rotherhithe Canada Water Surrey Quays Midland North Heron SOURCE: Quays TFL CROSSRAIL FROM South Quay Crossharbour Mudchute Epping Theydon Bois Debden Loughton Buckhurst Woodford South Woodford Snaresbrook Peninsula Chigwell Hainault High Wanstead Fairlop Barkingside Newbury Woodgrange Manor Forest Gate Goodmayes Romford Chadwell Heath Seven Kings Upminster Ilford Upminster Bridge Barking Pudding CONNECTION TIMES Mill Lane VIA CROSSRAIL Abbey PRIMARY Ham Bethnal(from Green Mile Tower End ) (from Liverpool ) TRANSPORT LINKS Upton Bow Oxford Plaistow Liverpool mins Court, Circle, Bromleyby-Bow 5 mins Hammersmith & City, Ham Bow Church Stepney Green Devons Metropolitan, Crossrail, 5 mins Canary Wharf Star Lane National Rail Langdon 7 mins Whitechapel Canary Wharf Canning mins All Saints Paddington Town Circle, Metropolitan ferry Blackwall 9 mins Heathrow Custom House for ExCeL 1 Limehouse hour minspoplar Heathrow India District, Hammersmith Prince Regent 3 mins Docks Wapping & City Albert India Quay Canary Wharf Wick Roding Valley Wanstead Redbridge High Grange Gants Upney Hornchurch Becontree Heathway Elm To Shenfield Gidea Harold Wood Shoreditch High Beckton Overground Cyprus Silvertown Tower Gallions Reach Pontoon Circle, Dock District, DLR Beckton London City Fenchurch Airport National Rail King George V TOTAL RETURN.3 ALL OF. RENTAL VALUE GROWTH.3 ALL OF 7. EQUIVALENT YIELD 5.9 ALL OF 5. The ern Fringe submarket is a broad area encompassing locations north and south of the river, but with the majority of investment properties located around Whitechapel and Commercial. This market is still very much a secondary and tertiary investment location with a significantly lower quality of stock than the more established neighbouring markets like the City. Recent investment trends have seen returns improve as more investors venture eastwards in the search for competitive yields. Average returns for commercial property in the ern Fringe over the last five years were.3 y/y, below the average return of. for London as a whole. In, this market provided a total return to investors of.3 y/y, breaking the mould of underperforming the rest of London and exceeding the average by more than. Capital values rose by. y/y and rents by.3 y/y. Rental growth was stronger here than in neighbouring markets, but this was to be expected given that rental values started from a much lower base. Nonetheless, both capital values and rents in the ern Fringe now exceed their 7 peak levels. The improving investor landscape saw a positive yield impact of 11. y/y for the ern Fringe in, reflecting further yield compression. However, the area continues to offer high entry yields to investors with an average equivalent yield of 5.9 at the end of, reflecting a spread of 7 bps over the average London yield. Crucially, prospects for future rental growth, combined with the possibility of further yield compression as the market matures, are now likely to attract investors looking beyond the core London markets.