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Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH, Frankfurt/M.
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Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Mar 31, 2015

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Page 1: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Part ofAberdeen Property Investors

Real Estate Investment Market Russia – Experiences and ExpectationsCannes, 11 March 2009

Dr Thomas Beyerle DEGI mbH, Frankfurt/M.

Page 2: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Macroeconomic data

Page 3: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Russia – economical overview

-3-2-10123456789

1011121314151617181920212223

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GD

P, C

ons

spen

d, C

PI,

empl

oym

ent

0

2

4

6

8

10

12

Une

mpl

oym

ent r

ate,

%

GDP (%) Consumer Spending (%)

CPI (%) Employment (%)

Unemployment (%)

Source: RESEARCH, 2009

Page 4: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Macroeconomic data – comments

General view for Russia: • high GDP growth over the last 10 years • a sharp slowdown in 2009, due to:

– the large drop in the oil prices – the significant tightening of credit conditions which has resulted in a falling rouble and rising

interest rates.

Medium-term view:• a strong rebound in Asian economies by 2010/2011 would lead to another period of

rising oil/commodity prices, which will benefit Russia

Page 5: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Property Market

Page 6: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Russia – largest country of the world (space)

Page 7: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Main investment universe

St. Petersburg

Moscow

Aberdeen Property Investors15 Ulitsa Chapaeva197101 St. Petersburg

Page 8: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Newspaper headlines

Moscow is developing to a tenant dominated market

THOMAS DAILY, 30 January 2009

Building freeze for Europe‘s highest office tower in Moscow

FAZ, 23 November 2008

Government aid for real estate market – new projected cities

Handelsblatt, 17 October 2008

Partner of ECE puts shopping center projects on hold THOMAS

DAILY, 19 November 2008

30 %-decrease in residential use

THOMAS DAILY, 19 November 200/8

Hotel market transferred from luxury class to middle class in Moscow

Allgemeine Hotel- und Gastronomiezeitung, 22 November 2008

Page 9: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Market Entry Model – Russia in global comparison

High risk market entry conditions

Page 10: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Degree of maturity – Europe

Proceeding degree of maturity

Source: RESEARCH, 2009

Page 11: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Vacancy peaking

Further fall in rents

Decrease in construction activity

time

Ren

tal

lev

el

Growth phaseCorrection phase Downturn phaseRecovery Phase

Decreasing vacancy

Rental growth picking up

Construction activity picking up

Supply shortage

Strong rental growth

Increasing construction activity

Increasing vacancy

Falling rent levels

Construction activity high but falling

Atlanta, Brussels, LA, Moscow, New York, Oslo, ParisAmsterdam, Barcelona,

Boston, Chicago, Madrid, Warsaw

London: City

Budapest, Sydney

AthensBucharest,

Calgary,Cologne,

Copenhagen, Düsseldorf, Frankfurt, Hamburg,Helsinki,

Melbourne,Munich,

Rome

Berlin, Stuttgart, Vienna

Prague, Milan

Jakarta

Philadelphia, SeoulBeijing

Osaka

Shanghai

Hong Kong

SingaporeMumbai

Tokyo

Detroit

Istanbul

Luxembourg,Sofia,

St. Petersburg,Stockholm,Washington

Las Vegas

Dallas

Global office market cycle

11Source: RESEARCH, 2009

Page 12: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Rents Europe (prime) – annual change

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

yoy in % Europe office Europe retail Europe Industrial

12Source: RESEARCH, 2009

* Forecast

Page 13: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Rents (prime) – Moscow, St. Petersburg

0

200

400

600

800

1000

1200

1400

1600

2004 2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

in USD/m² Moscow St. Petersburg

13Source: RESEARCH, 2009

* Forecast

High rental increase Decrease until 2010

Page 14: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Increasing NIY (Q2 2007 - Q4 2008)

0

50

100

150

200

250

Paris Frankfurt Munich Amsterdam Milan Madrid Stockholm London Moscow

Incr

ea

se in

pri

me

yie

lds

sin

ce Q

2 2

00

7 (

% p

oin

ts)

Quelle: RESEARCH, 2009 14

Page 15: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Office Yields (prime) – Europe

0

2

4

6

8

10

12

2005 2006 2007 2008* 2009* 2010* 2011* 2012* 2013*

yoy in % Europe office Europe retail Europe Industrial

Source: RESEARCH, 2009 15

* Forecast

Page 16: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Office Yields (prime) – Europe, Moscow, St. Petersburg

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

in % Europe office Moscow St. Petersburg

Russia high yield level: increase until 2010

Source: RESEARCH, 2009 16

* Forecast

Page 17: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Investment market structure – Russia

Page 18: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Development of commercial property sales – Moscow

18

5400

5600

5800

6000

6200

6400

6600

6800

2007 2008

in million USD

0

10

20

30

40

50

60number

Investment Volume(right) Deals (left)

Source: Real Capital Analytics

-24 % Deals

-12 % Volume

Page 19: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Commercial Property Sales by user types 2008 – Moscow

5,2%

30,1%

24,2%

5,7%

34,5%

0,3%

Apartment Industrial Office Retail Hotel Dev. Site

19Source: Real Capital Analytics

Total: 5,805 in million USD

Page 20: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Commercial real estate capital market – Russia

63%5%

30%

1%

1%

Commercial banks & other lending institutions Property company corporate bonds

Quoted property companies Private property companies and individuals

Private property vehicles

20Source: DTZ, Money into Property 2008, figures 2007

Total: 31.63 in billion EUR

Page 21: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

To sum up: Crisis? What Crisis?

Page 22: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Back-up

Page 23: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Strengths

• most important economical centre of Russia • GDP growth• increasing income - low taxes        • high returns in European comparison• high rent level in office and retail sector• since 2001 purchase of land by foreigners possible

Weaknesses

• relatively small office space inventory (lack of liquidity)• lacking product availability of office and retail space of international standard

(Class A and B, shopping centres)• low transparency and lack of data availability• strong corruption; value of 2,5 (0 = very strong; 10 = none) on the CPI-Index 2006

(Germany: 8,0)

Opportunities

• further maturation of the markets• positive economical development • retail-relevant pent-up demand of the Russian people• building of offices and shopping centres of international standard• diversification potential for investors

Threats

• legal and fiscal conditions: e. g. letting of building sites• legal certainty for foreigners• more legal restrictions of the City of Moskow• decreasing level of rents• lacking market maturity of Emerging Markets

SWOT analysis Moscow from investor's view

Page 24: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

GDP (real) – annual change

-4

-2

0

2

4

6

8

10

2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

in % Asia Pacific Emerging Europe Eurozone Germany Japan USA Russia

Source: RESEARCH, 2009 24

Russia – above average

Page 25: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

CPI Inflation – annual change

-2

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

in % Asia Pacific Emerging Europe Eurozone Germany Japan USA Russia

25Source: RESEARCH, 2009

Russia – high CPI

Page 26: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

Consumer Spending – annual change

-4

-2

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*

yoy in %Asia Pacific Emerging Europe Euroarea Germany Japan USA Russia

26Source: RESEARCH, 2009

Russia – above average

Page 27: Part of Aberdeen Property Investors Real Estate Investment Market Russia – Experiences and Expectations Cannes, 11 March 2009 Dr Thomas Beyerle DEGI mbH,

DEGI Deutsche Gesellschaft für Immobilienfonds mbH

Total Expense Ratio (TER)The Total Expense Ratio (TER) expresses the sum total of costs and charges as a percentage of the average value of the fund within a financial year and thus includes all charges and costs incurred in connection with the fund investment, except for transaction costs and front-end load, if any.Prospectuses and Annual Reports are available free of charge from DEGI and the marketing companies. You will find the daily fund prices in supraregional newspapers and on the Internet at www.degi.com.

Forward-looking statement disclaimer – Forecasts are to be understood as examples which are based on certain assumptions that are considered realistic. We cannot guarantee that the underlying assumptions will actually occur nor can we accept responsibility for deviations due to changes in the legal bases and in economic developments.

phone: 0049 (69)-768072-0

E-Mail: [email protected]

Internet: www.degi.com Part of

Aberdeen Property Investors