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At a Glance

QUARTER 2 – April 2010
AXA Real Estate’s European Quarterly Overview

Editorial p.3

Macro economic overview p.5

Office occupational markets p.9

Retail occupational markets p.11

Industrial occupational markets p.13

Investment markets p.15

At a Glance
QUARTER 2 - APRIL 2010
AXA Real Estate’s European Quarterly Overview

At a Glance

This quarterly publication provides our clients with an overview
and analysis of recent activity and changes in the European
economies and in the occupational and investment property
markets

The eurozone (EA16) comprises Belgium, Germany,
Ireland, Greece, Spain, France, Italy, Cyprus,
Luxembourg, Malta, the Netherlands, Austria,
Portugal, Slovenia, Slovakia and Finland.
The EU27 encompasses Belgium, Bulgaria, the Czech
Republic, Denmark, Germany, Estonia, Ireland,
Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania,
Luxembourg, Hungary, Malta, the Netherlands,
Austria, Poland, Portugal, Romania, Slovenia,
Slovakia, Finland, Sweden and the United Kingdom.

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Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. All rights reserved. These pages are not
intended as an offer or solicitation, or as the basis for any contract, for the purchase or sale for any fund or instrument. The information
contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into
a transaction or for any investment decision. The analysis and recommendations express the views of AXA Real Estate Investment
Managers. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. The past
performance of securities or other instruments does not guarantee or predict future performance. The information contained on this
page may not be reproduced or circulated without our written authority.

The risks at this end primarily relate to rising inflation and increases in central banks’ interest rates. to 2010. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. for the purchase or sale for any fund or instrument. the car ‘scrappage’ scheme). The past performance of securities or other instruments does not guarantee or predict future performance. it knows it when it sees it. the markets’ expectations of the start of interest rate rises has shifted from 2009. Hence the rises in official interest rates of 2007 were met with a massive withdrawal of investor demand. All rights reserved. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. There has been criticism that such schemes merely brought forward purchases that would have occurred in due course anyway. In the event. The analysis and recommendations express the views of AXA Real Estate Investment Managers. These pages are not intended as an offer or solicitation. But that rather misses the point – they were a significant contributor to avoid the recessions turning into something worse. At a Glance QUARTER 2 . The gradual withdrawal of the various stimuli packages in the current economic environment and their consequent fiscal costs is having a polarising effect on the European real estate markets.axa-realestate.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. The information contained on this page may not be reproduced or circulated without our written authority. -3- www. As time passes. but it only peaked because western governments took costly. action by financing economic stimuli packages. . as it was euphemistically dubbed in an attempt to give it greener credentials. or as the basis for any contract. One of the most common was the new car subsidy (or. That risk peaked in late 2008. but decisive. At one end of the yield spectrum – the low yield end – the risks are reducing.APRIL 2010 AXA Real Estate’s European Quarterly Overview Editorial Even if the real estate market is not very efficient at quantifying risk. what started as a perceived risk to capital values from an increase in the cost of debt finance ended as an increased risk from higher of equity finance costs – altogether more difficult to anticipate. and now into 2011.

That is a problem that was all too evident in the Examiner’s report on Lehmans – and one that market players will need to address soon. 31 March 2010.axa-realestate. still see interest rates rising this year -- down from about 40%. perhaps to an historic high. there are valid reasons for questioning 1 whether there will be a need for higher rates for many years. is that it is not very good at quantifying risk so that it finds it difficult to assess the fair value of such assets. At a Glance QUARTER 2 . The problem it has. The secondary property risk premium had already been rising to reflect the fact that a post-boom expansion was necessary in the yield spread between prime and secondary property. or as the basis for any contract.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. to accurately price in the exceptionally slow rate of this economic recovery. But. 22 of 82. those assets with short unexpired leases. . Source: Forexyard. or 29 of 71 previously. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision.APRIL 2010 AXA Real Estate’s European Quarterly Overview With higher taxes doing that job of fighting inflation that interest rates had almost exclusively done in the last decade. While the markets need to be circumspect about this – volatility in growth is an inevitable factor of a recovery and does not necessarily portend a double-dip recession – it does increase the risk premium for this type of property. poor locations. however. the real estate market acknowledges that a further price correction is necessary. -4- www. at the other end of the yield spectrum. By refusing to transact on the current offerings at the secondary end of the market. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. but that gap now needs to widen by an exceptional amount. 1 In a Reuters poll of early March 2010. growth appears to be faltering. voids. all require economic growth to return so as to breathe life into tenant demand. etc. All rights reserved. with short-term expectations becoming more pessimistic. The information contained on this page may not be reproduced or circulated without our written authority. These pages are not intended as an offer or solicitation. for the purchase or sale for any fund or instrument. Instead.. The analysis and recommendations express the views of AXA Real Estate Investment Managers. The past performance of securities or other instruments does not guarantee or predict future performance. only about of a quarter of the economists polled.com.

for the purchase or sale for any fund or instrument. We believe that either of those scenarios. The information contained on this page may not be reproduced or circulated without our written authority. is unlikely. at their current trend rate of growth (2% per quarter). The past performance of securities or other instruments does not guarantee or predict future performance. This has raised concerns that the recovery may be stalling Source : Datastream Note: seasonally adjusted. they are likely to require a considerably longer time to recover to that earlier point – particularly as growth over the next few years will typically be below the historic growth rate. in Although it is early days. At a Glance QUARTER 2 . Net Exports Household consumption but without it being replaced by ‘real’ (as opposed to -2 Government expenditure Capital expenditure artificially-induced) growth in consumer spending (which -3 GDP represents 60% to 75% of GDP in most western Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 economies). Its application is adapted to each portfolio in order to optimise the management constraints which are specific. activities In contrast. 2 instead disappointed with a marginal 0. and even if it occasionally lapses into a quarter-on- quarter fall.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. partly because government stimuli programmes are continuing through 2010. even in a recovery phase.1% rise in GDP in 2 1 the EU27 and 0% in the eurozone. All rights reserved.APRIL 2010 AXA Real Estate’s European Quarterly Overview Macro economic overview Exhibit 1 Growth The fourth quarter of 2009. 2 Eurostat. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. second estimate. Compared to even the pre-recession quarters. government spending was 0 exceptionally low (in part. . that it could develop into a ‘double-dip’ recession. Exhibit 2 shows how many quarters of growth have been lost through the recession for a range of countries. which have suffered badly over the recession. should recover to that production or consumption previous level by about Q2 2011. port operations and is helping to support logistic activities. is staging a recovery and that is benefiting. current nature of the recovery For the EU27. such as the car scrappage schemes).axa-realestate. constant prices or. 7 April 2010 3 Datastream -5- www. which was generally expected % QoQ EU-27 quarterly GDP components to show a continuation of growth in the third quarter. worse. the particular. or as the basis for any contract. International trade. These pages are not intended as an offer or solicitation. Quarter-on-quarter volatility in GDP should not surprise. The analysis and recommendations express the views of AXA Real Estate Investment Managers. imports and exports are still both 13% 3 is favouring logistics operations over below their peaks of Q1 2008 but. having fallen badly during the recession. although the EU27 general economies have only shrunk by 5% from their peak in Q1 2008. reflecting the partial phasing out -1 Change in inventories of stimuli packages. and partly because other economic indicators continue to show a trend rate of improvement. while possible.

The analysis and recommendations express the views of AXA Real Estate Investment Managers. 0. while France is looking particularly resilient.25 2009 Q3 2009 Q4 prospects over the next few years.8% Norway Switzerland Sweden Belgium Germany Italy Kingdom EA16 EU27 Denmark Spain France Netherlands** Finland (of GDP) deficit for 2010. But. At a Glance QUARTER 2 . All rights reserved.50 growth. significantly % quarter-on. as Exhibit 2 shows. These pages are not intended as an offer or solicitation.axa-realestate. -0. while initially lagging. ranging from a Italy 2003 consistently strong performance from Switzerland in the Japan 2005 third and fourth quarters of 2009.50 -0. For European countries outside the eurozone. with an apparent UK 2005 deteriorating performance from Sweden. the subject of an IMF bail-out. estimated 18 December 2009 and published 11 February 2010 5 OECD -6- www. at some point they Exhibit 3 need to be stabilised (and. for the purchase or sale for any fund or instrument. but the OECD is already United 4 warning that it might breach this at 4. The past performance of securities or other instruments does not guarantee or predict future performance. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. Spain 2006 where the fourth quarter outcome surprised on the France 2006 downside. however. The first step is to control the budget deficit. US 2007 The UK. the biggest concerns are in respect of Germany. 0 5 10 15 20 25 30 Source: AXA Real Estate Research and Strategy National debt For almost all western economies. The information contained on this page may not be reproduced or circulated without our written authority. high levels of national debt are the result of government stimuli expenditure. has a target 3. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. 5 Its estimated budget deficit is 12. quarter Gross Domestic Product growth and this typically translates into increased taxes and/or 0. and although these are still increasing.00 size of these deficits and the respective countries’ ability to deal with them will be determining factors in growth -0. is now catching up – and possibly overtaking the other major European economies. Source : Datastream the biggest concern is the eurozone country of Greece. reduced).APRIL 2010 AXA Real Estate’s European Quarterly Overview Macro economic overview (ctd.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies.1%. currently. The European average figures do.number of quarters wide variation in the growth rates of the individual European countries. or as the basis for any contract.) with the numbers on the bars indicating the respective Exhibit 2 years to which the sizes of the economies have reverted. and its immediate need for finance to meet bond redemptions (which will need to be refinanced at a 300bp+ premium to the benchmark German bonds) has embroiled it in the Ireland’s rapidly reducing risk is politics of the eurozone. in some cases. .75 Hungary. Of the main Germany 2006 markets. The 0.25 currency devaluation can also take part of the strain.7% for 2010.75 lower government expenditure – and lower economic 0. A full solution is still to be found an emerging opportunity for investors 4 OECD. conceal a Lost GDP output .

5% in February Slovenia produced growth of 3. until it is. and 10 Lucas Papademos.com. As expected.8% and 0.2% over the quarter to January 2010. Czech Republic. Irish bonds outperformed most of the rest of provide an exceptionally long period of historically low Europe’s in the first quarter of 2010. Bulgaria.3%. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. While there are short term risks of yet Germany both produced growth of 0. Statement of Jean-Claude Trichet. The markets’ believe that the low economic growth is conducive to expectations have now shifted to contemplate the higher inflation and. These pages are not intended as an offer or solicitation.7% for 2010. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision.5%. The past performance of securities or other instruments does not guarantee or predict future performance. These would appear (eurozone). The information contained on this page may not be reproduced or circulated without our written authority. down from about 40%. concerns over Greece have even spilled over to Ireland.2% (EU27. and the In contrast. . In contrast . originally. Source: Bloomberg 31 March 2010. price Republic. such as Italy and Spain February was 0. The analysis and recommendations express the views of AXA Real Estate Investment Managers. Ireland (AA-rating . the quarter to December has policy-relevant horizon. believing that much of the rise is 11 retail sectors in these countries.8% for 2010. Vice President of the ECB on 8 April 2010. and Slovakia all 0. after having reached a trough of Latvia. certainly. Sweden and Finland experiencing sales’ growth of 0. the quarter to December has “Taking into account all the information and analyses that have been compared with the quarter to September for the Czech become available since our meeting on 4 March 2010. 31 8 March 2010.25% – unchanged now taking decisive action to bring its deficit under control. annual) and -0. the largest Inflation fall in western Europe.5%. Unfortunately.” been compared with the quarter to September for France and UK -7- www. Interest rates 6 The European Central Bank. or as the basis for any contract. 0. 1. Although the latter was above 7 to be delayed economic responses in central Europe.) and. Nevertheless. 2. still see rates rising this year -- economists. Due the unavailability of data.3%. while the UK’s higher inflation – the monthly rates of inflation for 6 Cut from AA+ in June 2009. 9. at rates. 0.3% over the month alone. and 0.7% (eurozone.7% (EU27) in January 2010 and 1. the Bank of England. 0. annual 10 produced exceptionally large falls – of 2. and Hungary 11 developments are expected to remain moderate over the Due the unavailability of data. while 1.axa-realestate. the risks for In contrast. or 29 of 71. That provides the flexibility to allow a longer period to compared with the previous quarter in both the eurozone reduce its deficit – and to permit higher economic and EU27.1%.6%. 22 of 82. As there will be no rises for another year – which would a result. a devastating effect on the euro and might trigger unforeseen events. The UK’s deficit. Swiss National Bank have respectively maintained their with a budget deficit estimated at 11. Hungary and Iceland have been raising their Ireland are reducing and this is a clear signal for rates – the latest increases were in March. Standard and Poors).1%. Lithuania.3%. the time of writing. has been rising again – to 3. Poland. France and temporary.5%.7%. respectively. for the purchase or sale for any fund or instrument. Source: Forexyard. only about of a quarter of the median forecast of 1.1% in a Bloomberg survey of 36 the economists polled. Retail sales fell by 0. Hungary. Estonia.APRIL 2010 AXA Real Estate’s European Quarterly Overview Macro economic overview (ctd.5% respectively. At a Glance QUARTER 2 . The Nordics produced mixed results. expectations are that including implementing public sector pay controls. 9 for about a year. and 1. with growth in the meantime. deflation) in July 2009.3%.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. it was AAA 7 9 That is the fastest inflation since December 2008 and topped In a Reuters poll of early March 2010. at an estimated 11.5%. 7. while Denmark’s sales fell by 1. other countries. President of the ECB. there is little indication from prospect of a partial default. Increasingly. can Retail sales at least be mitigated by its ability to devalue it currency. although that would have the bond markets that inflation expectations are rising. the ECB appears fairly sanguine about 8 indicate that caution should be exercised in respect of the the elevated rate. is official rates at 1%.0%.75% and investors to reassess the prospects for the country. to 5. and expectations . we do not are increasingly seen as being at risk. All rights reserved. inflation.

other economic indicators suggest that these rates of growth have not been Exhibit 4 maintained in the first quarter of 2010. 0 at 9. The past performance of securities or other instruments does not guarantee or predict future performance. All rights reserved. it is not expected to stabilise until later this -1 year. or as the basis for any contract. Employment fell by 0. decelerating. this is looking initially much more like an office-led recovery than a manufacturing-led recovery. At a Glance QUARTER 2 . The information contained on this page may not be reproduced or circulated without our written authority. Construction) The perception that this is a ‘jobless recovery’ continues to 12 2 be borne out by the figures .) growth was of 0. In employment terms. in 1999 -8- www. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. with the EU27. government policies and employment -2 law in Europe have encouraged ‘hoarding’ of labour (e. % change over Euro 27 . which will have implications for space requirements in those two real estate sectors. It is therefore likely that the numbers of office-based workers will stabilise and start to increase soon.6%. Unemployment in the 13 1 eurozone hit a record 10% in February. While the rate of increase of unemployment is.Employment quarter Employment and unemployment 3 Construction Finance and Real Estate Industry (Excl. .APRIL 2010 AXA Real Estate’s European Quarterly Overview Macro economic overview (ctd. for the purchase or sale for any fund or instrument. which will lag 12 Eurostat. and although the number of workers in these two sectors continued to fall in the fourth quarter. However. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. in contrast to those in the manufacturing sector. Source : Datastream Note: seasonally adjusted As shown in the employment chart of Exhibit 4. -3 the part-time working subsidy in Germany) and this will Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 delay employment growth.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. Even then.g. The analysis and recommendations express the views of AXA Real Estate Investment Managers.2% in the eurozone and by 0. These pages are not intended as an offer or solicitation. the manufacturing and construction sectors have suffered the greatest in the downturn.3% in the EU27 in the fourth quarter compared with the third quarter 2009 13 From the date of the creation of the Euro. 15 March 2010.axa-realestate. stability appears to have just been achieved in the financial and real estate sectors.4%.

Its application is adapted to each portfolio in order to optimise the management constraints which are specific. The analysis and recommendations express the views of AXA Real Estate Investment Managers. . but we believe that they have now generally 2 stabilised. These pages are not intended as an offer or solicitation. Indeed. in peripheral much of the better-quality locations) to consolidate and improve their business space operations. All rights reserved. this is starting to absorb much of the available better-quality space and is limiting tenant choice in London. -20 there is still an almost record number of office -30 developments completing (as can be seen in Exhibit 6). Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Mar-05 Sep-05 Dec-05 Mar-06 Sep-06 Dec-06 Mar-07 Sep-07 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Many of these will be in the ‘wrong’ locations to satisfy Source : DTZ. the obstacle to the letting Source: DTZ progressing is the landlord’s decision to wait in the hope -9- www. AXA Real Estate Research (Austria and Portugal) tenant demand and that will add to the differences between markets and sub-markets. letting negotiations 0 tend to be prolonged – despite the pressure on some Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Q2-2009 Q3-2009 Q4-2009 Q1-2010 landlords to reduce their vacancy rates and improve their income. Both landlords and tenants treat this as a capital payment and. the incentives. IPD.axa-realestate. The information contained on this page may not be reproduced or circulated without our written authority. we would emphasise that this growing restriction in 50 40 CEE Western Europe Nordics supply is limited to only a few markets. with the availability of finance being generally restricted. Occupiers are still. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. for the purchase or sale for any fund or instrument. The rent indices in Exhibit 5 refer to ‘headline’ rents and. Exhibit 6 over the last couple of years. Experian. In some markets. tenant occupiers taking advantage of the availability of demand is starting to absorb modern/new space in core city/CBD locations (or where such large-volume space is not available. on a Pan-European basis. As Exhibit 5 30 Southern Europe UK & Ireland shows. rental values are still falling in all sub-regions. and 20 it is only the index for UK and Ireland (really UK only) that 10 is approaching a point indicating that rental values have 0 -10 stabilised. it is generally valued accordingly. At a Glance QUARTER 2 . 1 Even where there is tenant demand. worryingly.APRIL 2010 AXA Real Estate’s European Quarterly Overview Office occupational markets Demand The most significant letting activity continues to involve In some markets. or rent-free periods. offered on new leases have been rising. In many cases. The past performance of securities or other instruments does not guarantee or predict future performance. price sensitive and depressed rental values (and landlords’ willingness to offer incentives) are still the pre-requisite Exhibit 5 stimulants for tenant relocations. it is difficult to quantify these. Oslo. however. and to an extent in Warsaw. and Copenhagen. With m sq m Office development completions 3 poor transparency in most markets.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. % y-o-y European office rental value growth Again. or as the basis for any contract.

this is attributable in rises in only two countries (excluding Israel) – UK and France. The past performance of securities or other instruments does not guarantee or predict future performance. The pick-up has started in investment banking. Overall in Europe. and a survey at the beginning of April showed signs of improvement that will have to be confirmed that the number of jobs on offer was a third higher than the 17 over the next quarters to really establish that the middle of last year. An example of that is health of many cities. and that explains the knowledge that accepting a lower rent can have large difference in their respective rental value movements. While the former can be attributed in large part to the low level that rents dropped from their peak (-29% to end of Q1 for London City). rises in 5. are showing signs of rising. a report on job vacancies crisis is over in the investment market”.000 vacancies (equating to a demand of 640. and will. . or as the basis for any contract. Although the financial sector represents a minority of generally. and a change in a landlord’s policy can be called into question. In Spain. 7 April 2010. although fund management. it also supports other business and most severe falls are likely to be those that see activities and.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. for the purchase or sale for any fund or instrument. considering that further falls in 120%. their break causes or terminate their leases are offered substantial. data assembled at the end of 2009/beginning of 2010. The report forecasts that the City will create respondents in the first quarter of 2010. those markets that have seen the fastest occupation in most markets. The analysis and recommendations express the views of AXA Real Estate Investment Managers. with the biggest rises in London City (9%) and Lyon (7%). These pages are not intended as an offer or solicitation. All rights reserved. but a A recent report on the Swiss market indicated that the 14 comment in the RICS Global Commercial Property number of job advertisements had been increasing since Survey suggests that it “. 16 one of the worst hit markets was Barcelona. Q1 financial sector jobs’ 17 2010 V1. 16 CB Richard Ellis Source: Swisster. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. EU15 countries Financial Times. In the UK. its varying responsiveness London. it can be a benchmark for the the earliest turning points.APRIL 2010 AXA Real Estate’s European Quarterly Overview The office occupational markets (ctd.1% over the first quarter of 2010. ‘Recruiters see upswing in 15 CB Richard Ellis MarketView EMEA Rents and Yields. quarter of 2010. 13 April ‘City sees job vacancies jump 120%’ . therefore. According to CBRE.is already showing some June 2009. and stability in the 41 majority. where prime rental values in the City market to the recovery in different markets represents a factor that stabilised towards the end of 2009 and.) of a better offer rather than accept the current one.axa-realestate. particularly when there is so much occasionally be observed when announcements are anecdotal evidence suggesting that tenants who exercise made of a sequence of new lettings. differentiate the performance of these markets. falls were recorded in 9... Currently. to 11. The information contained on this page may not be reproduced or circulated without our written authority. ramifications for other properties in the landlord’s the credibility of rental value indices therefore continues to ownership.000 sq ft) 15 this year. the same cannot be argued for Lyon (-2% to end Q1). of the 55 rent points being measured.000 in the first quarter of 2010 compared to a the Spanish market were expected by the survey year ago.10 - www. 14 Q4 2009. ‘discounts’ on the market rental value to entice Rental values them to stay. 53. At a Glance QUARTER 2 . quote attributable to Nicholas Wride MRICS. While there is a significant difference between demand for Very often this turns on a policy decision – in the grade A space and average space. Such scenarios can vary between markets and. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. in the first is. That might in the City of London indicates that they have risen by be slightly premature. prime European rental values and is now spreading to commercial banking and traditional rose by 1.

Portugal (- 13%). The past performance of securities or other instruments does not guarantee or predict future performance. Athens. locations can change Part of the problem is that these indices purport to without apparently affecting measure prime locations. the core markets of France. .axa-realestate. All rights reserved. for the purchase or sale for any fund or instrument. Oporto. Dublin. With one or two locational exceptions. That is very much a cyclical factor.11 - www. we would see that the average of the rental values in those locations has been falling. Thus.APRIL 2010 AXA Real Estate’s European Quarterly Overview Retail occupational markets 18 In contrast to the office markets. Bulgaria (-10%). with a small rise (0. even as the most prime locations stayed relative static. or as the basis for any contract. may only be measuring one or two units in a city. where these retail locations lose their ‘critical mass’.3%) The retail indices are recorded over the 12-month period. CBRE reports that. prime has been a shrinking category – but that is something that is the figures not picked up by the indices which. However. each cycle concentrates retailing locations into fewer centres. It is a characteristic of recessions and their recoveries that retail trade becomes concentrated in the ‘prime’ locations. The analysis and recommendations express the views of AXA Real Estate Investment Managers. Germany and UK are showing no change. which will tend to re-adjust towards the original as growth continues. Bucharest (-19%). generally showing rises until early 2009 and subsequent stability. prime retail rental values were virtually static in the first quarter of 2010. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. Belgrade (Serbia). in the recession. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. These pages are not intended as an offer or solicitation. With agents having previously been much more defensive about retail rental values. But. and City of London (-13%).com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. in effect. Retailers in such locations clearly find that the additional rental values required are more than compensated by the additional turnover. on average in Europe. Q1 2010 V1. Ireland (-13%). we believe that there is now much more realism in the acknowledgement of individual market downward movements – although we also believe that the indices have been lagging reality in The categorisation of prime other markets. impossible. The information contained on this page may not be reproduced or circulated without our written authority. If the indices were to measure a fixed definition of prime. 18 CB Richard Ellis MarketView EMEA Rents and Yields. more likely. The largest quarterly catching up with reality falls were recorded in Sofia. At a Glance QUARTER 2 . EU15 countries. We have excluded non-European countries from our analysis . recovery will prove very difficult and. Greece (-12%).

it appears to have peaked. These pages are not intended as an offer or solicitation. and the food part is often over-sized for the reduced catchment areas that market saturation has produced. for the purchase or sale for any fund or instrument.12 - www. no evidence that rental values have stabilised. In most markets. and the single Spanish cities. The information contained on this page may not be reproduced or circulated without our written authority. . retailers are generally cautious about taking additional space. therefore. Two current examples are (a) the department store format in Germany – as evidenced by the Karstadt 120 unit department store insolvency for which there are a very There is also the issue of limited range of trade buyers and (b) the hypermarket format obsolescence format in France and.axa-realestate. and Barcelona (2. At a Glance QUARTER 2 . The past performance of securities or other instruments does not guarantee or predict future performance. the retailer failures rate is still increasing although. Although some international retailers are taking advantage of stock availability to expand. main shopping streets in the larger German cities Those markets that have experienced net additions to the retail stock in 2009 are likely to be experiencing a short- term over-supply: Lisbon (9. or as the basis for any contract. Although shopping streets in London West there is evidence of falling voids in the prime pitches in End and Paris.4%). albeit at a higher level than in other markets. it not always be financially viable without accept a large write- down on the existing values. there is. While such obsolescence is part of the retail evolution. . All rights reserved. But in more specialist retail unit types.APRIL 2010 AXA Real Estate’s European Quarterly Overview The retail occupational markets (ctd. as yet.6%).) But this means that we need to be cautious about extrapolating the prime retailer demand too widely – it Demand really is focussed really is focussed on the two or three main shopping on two or three main streets in London West End and Paris. such adaptability may not be available. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. have the advantage of adaptability to meet changing customer demands. That is not evident in unit shops.e. in southern Europe – where the non-food part has suffered from competition. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. But there is also the issue of format obsolescence. to a large extent.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. they can be adapted to different occupiers’ requirements and. in the UK. because they usually have ‘universal utility’ – i. Lyon (3. recessions tend to accelerate the process. The analysis and recommendations express the views of AXA Real Estate Investment Managers. Athens (4. and the single main shopping streets in the larger German cities.7%). While adaptation of some of these formats is possible.6%).

com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. Whilst industrial rents have remained relatively resilient to date. 11 February 2010 fund announcement . Despite the (mild) positiveness of the overall figure. CBRE has recorded a fall in European rental values of 4. The past performance of securities or other instruments does not guarantee or predict future performance. the rate Exhibit 7 of fall is indicated to have reduced. we expect to see modest falls continuing across most of the UK and Europe in the first part of 2010”.4%. At its year-end announcement in February . the rate of fall of prime rental values of European industrial (including logistics) property appeared to stabilise. although that contrasts with the fall in Prologis’s open market value per square metre of its like-for-like portfolio of 13.2% over the first quarter of 2010 for prime logistics property. The rental values of average or Europe secondary property is still lagging. although there is some evidence that rental values may be starting to increase.. These pages are not intended as an offer or solicitation. singles out logistics property for a particular -10 warning. AXA Real Estate Research (Austria and Portugal) likely to be some time before we see overall demand for space outstripping supply. 15 Western Europe Nordics Again.APRIL 2010 AXA Real Estate’s European Quarterly Overview Industrial occupational markets Towards the end of last year. tenant demand and short-term the latter commented. but with 28% of its portfolio outside the UK. In the Nordics and the UK. “However. Netherlands (4%). . Mar-09 Dec-09 Mar-10 Dec-07 Mar-08 Dec-08 Dec-05 Mar-06 Dec-06 Mar-07 Jun-09 Jun-06 Jun-07 Jun-08 Sep-08 Sep-09 Sep-06 Sep-07 particularly amongst the larger logistics warehouses. Experian. in its December year-end annual report and accounts.7%. The CBRE estimation of rental value growth in the sector is 0. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. IPD. All rights reserved. At a Glance QUARTER 2 . “. it is Source : DTZ. 5 0 One of the developer/investors in this specialist market is 19 -5 Segro which. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. we remain cautious over rental declines net occupier demand and short-term rental declines”.13 - www. 19% of its portfolio is in logistics property 20 Source: Prologis.with substantial amounts of industrial vacancy. for the purchase or sale for any fund or instrument. or as the basis for any contract. both Prologis is cautious over net as a developer and as an investor through its quoted (but 20 illiquid) fund. it is important to emphasise that this data applies to 10 Southern Europe UK & Ireland prime property. the only market in which positive growth was identified was Rotterdam. The information contained on this page may not be reproduced or circulated without our written authority. Over 2009.. with continental European countries 19 Segro. The analysis and recommendations express the views of AXA Real Estate Investment Managers. European prime industrial rental value growth % y-o-y CEE particularly in the latter market. But the biggest European logistics player is Prologis. a UK-based industrial property company.axa-realestate.

with minimal (but positive) developers’ profits. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision.2% in 2009. this was net of a surprising recovery of 5. but are typically stabilising elsewhere. but it is over-rented to European portfolio yield is 8.) recording market rent valuation decreases of between 12. more correlated to construction costs and (depressed) land values. assuming that it is appropriately located – which usually means being close to consumer markets (where there is a substantial land value component) – is refurbishment or. These pages are not intended as an offer or solicitation. adjusting for 8. The rents for those under construction are. therefore.9%. in some case. Prologis’s portfolio yielded 9.3% We believe that little. Adjusting for-rentedness. All of this is contributing to the voids in logistics property.APRIL 2010 AXA Real Estate’s European Quarterly Overview The industrial occupational markets (ctd. Voids are still trending upwards in France and Spain.9% void is let) at the end of 2009. The solution for vacated stock. The analysis and recommendations express the views of AXA Real Estate Investment Managers. Overall.1% or. To an extent.6%. and Prague (17%). or as the basis for any contract. such as Dublin (21%).5% in the second half of the year. While the UK was down 5. theoretically. The highest vacancies are in the UK – Birmingham (38%) and Manchester (37%). also detract from their capitalisation yields) and will have the effect of increasing obsolescence in the earlier generations’ stock.3%.6% if the Prologis’s (prime) 3. . 0. The information contained on this page may not be reproduced or circulated without our written authority. redevelopment. 21 Source: PMA. for the purchase or sale for any fund or instrument. But voids are also high in other peripheral locations. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. Spring 2010 .5% points higher than CBRE’s figure. At a Glance QUARTER 2 . if any. that will detract from their ‘universality of utility’ (which should.11% (or 9. it is an 21 unweighted rate of 15% . average void rate is 15% Budapest (20%). which are high – for the main European centres. by assuming a reversion to the December rental values produces a gross yield of 9.14 - www. The past performance of securities or other instruments does not guarantee or predict future performance. All rights reserved. over-renting.axa-realestate. which explains why the incentives on offer in the UK are higher The European unweighted than those in continental Europe.3% and 18. 8.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. speculative developments are still completing in this sub-sector and those that being developed are ‘built to order’ for specific tenant requirements.

comprising 4. Given that the building was acquired by HSBC as part of a corporate acquisition. Mar-09 Mar-10 Jun-09 Sep-09 Dec-09 although was really due to Q4 being exceptionally low. a portfolio of Quarterly volatility is inevitable. or as the basis for any contract.9bn in Q1 2010. from Multi Corporation. Although the Corio transaction (described below) skewed the figure for Germany. for EUR400m. subject to the purchaser assuming EUR150m of outstanding debt. and 53% fall in France.15 - www. to some extent. Paris. 0 from EUR0.7%. the 31% fall in UK. there is a shift of interest to other markets from UK and France. five. At a Glance QUARTER 2 . All rights reserved. While volatility in quarterly 20 United Kingdom France numbers is. with breaks at four. for the purchase or sale for any fund or instrument. and a commitment to five German development projects first quarter is indicative of raised (forward sales and joint ventures. Spain and Portugal but we believe that the fall in the for EUR662m. inevitable and not necessarily Germany Rest of Europe 15 Spain significant. was eventually sold by HSBC France (it was originally marketed in April 2009) as a sale-and-leaseback (nine years.axa-realestate. 5 Spain experienced the greatest rise in percentage terms. subject to some investor nervousness rental guarantees) which were stated as having a total development expenditure of approximately EUR660m.  The office building at 103 Champs-Elysees and 15 Rue Vernet. The largest transactions (in capital value terms) over the first quarter included:  Corio acquired. More significant was the 53% rise in transaction volumes Source: DTZ ITD in Germany. a net initial yield of 6. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. Its application is adapted to each portfolio in order to optimise the management constraints which are specific.700 apartments in western Germany was sold by BGP to Swiss-based Corestate Capital for an undisclosed sum. we believe that the 17% fall (quarter on quarter) is at least partially a reflection of raised 10 nervousness in the markets. These pages are not intended as an offer or solicitation. its commitment as a tenant is not obvious .com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. The information contained on this page may not be reproduced or circulated without our written authority.APRIL 2010 AXA Real Estate’s European Quarterly Overview Investment markets Exhibit 8 Transactions The first quarter of 2010 produced a slight set-back in the European quarterly transaction volumes upward trend of transactions volumes from the low point of EURbn the first quarter of 2009.  A residential portfolio. four shopping centres in Germany.3bn in Q4 2009 to EUR0. The analysis and recommendations express the views of AXA Real Estate Investment Managers. The past performance of securities or other instruments does not guarantee or predict future performance. . and six) to French Properties Management (an OPCI vehicle). but we believe is likely to be nil equity.

apparently.APRIL 2010 AXA Real Estate’s European Quarterly Overview Investment markets (ctd. In part. There is effectively. but it is EUR31bn of property has been in various stages of also a reflection of the reality that while purchasers in distress. prime properties. but the location is good. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. but also indicates the carry no risk of voids. limited in size and represents perhaps 5% of the total investment markets. but not yet permanently resolved. by quality of their balance sheets. circulated 1 April 2010 . there acceptable. meaning that they have been characteristics of that type of property to reach a value refinanced or sold. In contrast. the difficulties in quantifying the risks (the risk of is almost equal to the average quarterly European inaccurately assessing the risks) at the other end of the turnover over the last 10 years. domestic players. but is below the long- Of the largest 10 purchasers (representing EUR15bn) 22 term average. EUR2. there is a convergence of views on values of listed property companies and unlisted fund managers. for offices. for potential sellers. but is still above the long-term average. In addition. definition. 22 Data from Real Capital Analytics. there is less need to sell core markets and. many and Paris to cities like Munich and Hamburg. this has spread from London properties by previously-distressed sellers – indeed. The past performance of securities or other instruments does not guarantee or predict future performance. in that there are virtually no properties confirmed by the latest survey of sentiment by PMA. that is a that are in breach of covenant or in default.axa-realestate. . which was just over market imply prices that are. reflection of investors becoming slightly more risk Over the last 12 months. in What still exercises the market’s collective mind is geographic terms. although of the listed property companies are now acquiring rather Berlin has been a particularly active market for than selling markets.16 - www. 37% were German institutions development may appear somewhat inconsistent with a and 24% US fund managers. This sellers. which has obviously facilitated both of which had a need to raise capital to improve the transactions at this end of the markets. Demand for retail properties is.6bn as stock that that is broadly acceptable to the sellers or potential could/will be released into the market at some stage. even if the demand has abated in Demand is still concentrated on the prime end of core recent months. This confirms the more risk-averse attitude. existing holders of other assets to release them on to the Most significantly.4bn is classified as restructured/extended. for the purchase or sale for any fund or instrument. The information contained on this page may not be reproduced or circulated without our written authority. These pages are not intended as an offer or solicitation. That leaves EUR28. is the change in sentiment market to achieve whatever prices the markets find from the second half of 2009 when. All rights reserved. development sentiment rose slightly. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision.)  (and its imposed break clauses is likely to be which dipped slightly from the local peak in autumn 2009 – signalling something). more widely spread across Europe. The analysis and recommendations express the views of AXA Real Estate Investment Managers. For this. large tactical plays by the US fund managers. but early stage developments recorded activity of the former. France stands out as something of an oddity in this This marginal increase in caution by investors is 23 analysis. or as the basis for any contract.4bn has been categorised as core property are able to assess the risk-return having been ‘resolved’. The improving attitude towards in the last 12 months. at that time. categorised as ‘resolved’ but EUR2. In contrast. the market continues to look to the was a belief that investment demand would spread banks and how their policies may change in terms of loans more widely beyond the core markets.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. whether there will be a ‘trigger’ or increasing stresses on and micro-location is more important. At a Glance QUARTER 2 . Of this. to beginning April 2010 23 Q1 2010. more Demand and supply demand than supply. the sellers included a substantial number of Generally. unacceptable EUR30bn. Capital Analytics estimate that averse (as evidenced by rising bond yields). unlike standing investments. however. This market is.

it is expected.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies.9bn).APRIL 2010 AXA Real Estate’s European Quarterly Overview Investment markets (ctd. and the UK (11. as part of that. At a Glance QUARTER 2 .com. Although the timing of that is uncertain. All rights reserved. will need to raise additional capital and. for the purchase or sale for any fund or instrument. The past performance of securities or other instruments does not guarantee or predict future performance. According to a report 26 60% of the loans are non- 60% of Irish bank loans performing. the US. NAMA will dispose of the properties on the open market. These pages are not intended as an offer or solicitation. that reflects a policy decision by the banks not to reflect the value impairment on their balance sheets. The analysis and recommendations express the views of AXA Real Estate Investment Managers. which suggests that a significant number are from private property companies. where the LTV has exceeded 100% and there is little immediate hope of recovery.8bn). the average size of the properties is relatively small. 26 March 2010 . The government has also previously taken a are non-performing majority holding in Allied Irish Bank which.17 - www. In other words. the figures for UK and Germany are both less than an average quarter. The scenario is confirmed by a comment 24 in the RICS Global Commercial Property Survey – "Distress does not exist in the same way in France as in UK or USA.) Presumably. at EUR19m. These figures do not include properties (used as security for loans) in the Irish government’s newly-formed 25 (at the beginning of April) ‘bad bank’ – the National Asset Management Agency (NAMA) – which took over real estate loans from the Irish banks at a 47% discount to their book value of EUR17bn. A further EUR37bn is due to follow soon. as reported in PropertyWeek.6bn). . Its application is adapted to each portfolio in order to optimise the management constraints which are specific. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. Although that would represent Spain. and UK almost two quarters of 10-year average volume of transactions for Spain. In addition." The three countries with the largest amount in ‘current The three countries with the distress’ are Germany (EUR2. Spain (EUR2. and Poland. smaller fund special purpose vehicles. the volume of property that could potential be released by the banks are relatively small from almost all perspectives. The information contained on this page may not be reproduced or circulated without our written authority. It is believed that.axa-realestate. etc. the total amount of Irish Banks’ ‘toxic loans’ represents some 50% of Ireland’s 24 From Paul Betts MRICS 25 Brought into operation at the beginning of April 2010 26 Dublin law firm William Fry estimate. or as the basis for any contract. largest distress are Germany. to sell off assets in the UK. more than EUR3bn of which relate to the UK.

27 RICS Global Distressed Property Monitor. values had fallen by 9. This is compounded by an and the [perceived] volatility of the market.5% to One explanation proffered is that prime values are more 1%. properties onto the market at one point. But. The information contained on this page may not be reproduced or circulated without our written authority. to the performance of real estate over the cycle – and Market practitioners would certainly argue that values they should. indicates the strategy that the fund will employ – sensitive to changing sentiment. whereas the market evidence suggests falls of 30%+. That represents falls of ‘average’ property. At a Glance QUARTER 2 . published February 2010 28 Source: AllBusiness. The past performance of securities or other instruments does not guarantee or predict future performance.4%. it was retail there will be further significant volumes of distressed that drove the growth. however. probably the single-largest European third quarter of 2009 (as a valuation trough) represents a 30 valuer. classified as institutional property. the other main Germany and UK. This. reported 26th March 2010 29 Reported in IPE Real Estate. property. Clearly. March/April 2010 30 31 CB Richard Ellis MarketView European Valuation Monitor. we placed to provide a long-term annuity) to allocate 5% to would suggest. in the other quarters of 2009. At a sector level. a comparison with 28 31 The long-awaited confirmation of the Norwegian prime property suggests that the latter fell by only 1. That. therefore. Based on CBRE’s calculations of a ‘synthetic’ calculation of Q4 2009 EU27 centres’ prime property . estimated difference in 2008 of 1. European quarterly fund valuations. Its application is adapted to each portfolio in order to optimise the management constraints which are specific. 27 change – as.4% over the quarter although. is a very significant under-estimation of the real estate was received in March. and provides a very graphic EUR16. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. or as the basis for any contract. the point would be that average or secondary property lost 29 Preqin estimates that EUR9.APRIL 2010 AXA Real Estate’s European Quarterly Overview Investment markets (ctd. over the year.axa-realestate. All rights reserved. agents were expecting two European countries in particular to have an increased number of It was.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. . with tenant stress still to fully run its course.1bn to be invested over ‘several years’ – illustration of how unrealistic valuations of the latter have reflecting both the size of the allocation to real estate been during the recession.9bn in the fourth quarter alone. Based on its recovery of capital to help rebuild the economy.6% government’s Global fund (in which oil revenues are points less that the fund valuations in 2009. Arguably. which represented a significant property in all markets over the next two years. on that basis. reports that the fourth quarter of 2009 fall of only 21%. so far.18 - www. The analysis and recommendations express the views of AXA Real Estate Investment Managers. it had According to the RICS December survey of distressed underperformed the office sector. but a better translation of market replication with core-type investments. to reduce the overall fund’s tracking error from 1. the numbers Although these valuations are what might broadly be look manageable. on the basis that the European markets all fell. the UK that produced overwhelmingly distressed properties on the market in Q1 2010 – positive growth in the quarter – in contrast. there was little or no comparable evidence to support a even institutional commitments are strongly correlated change. with EUR1. all property values rose by 0. have fallen by much more than the formal fund valuations Values are indicating – taking the end of 2007 to the end of the CB Richard Ellis. for the purchase or sale for any fund or instrument. the banks are not going to release all of the distressed non-UK markets may still be trending downwards.) GDP and the government will be seeking an early represented a market turning point in values. responded by not altering their values on the basis that Although 2009’s raising was the lowest of recent years. These pages are not intended as an offer or solicitation.5bn was raised by funds most of its liquidity during the recession and valuers in 2009. pick up in 2010.9% points – but with together with the decision of the Norwegian parliament prime property underperforming the fund values.

when demand for real estate is almost entirely attributable to the UK.09 -0. These pages are not intended as an offer or solicitation. although the gap will resistance points between 5% and 6%.) Investment yields The gap between prime and secondary yields has been Yields for prime properties are typically either stable or widening.6 -0. other parts of investments was exceeding the stock on offer. CEE 0. the change of Offices the third quarter of 2009 was a fall of 0. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision.00 -0.23 through the progression of time). at best. Second. The information contained on this page may not be reproduced or circulated without our written authority.0 falls in the first quarter of 2110 are marginally greater UK & Ireland -0. by definition.62 -0.1 As the above table shows. First. resulting Europe are experiencing faster yield falls. but one estimate is 4% most secure income.54 -0.01 UK & Ireland -0.06 cumulative tenant risks. partly because of the Nordics 0. obviously depend on the definitions of prime and secondary. At a Glance QUARTER 2 .12 Industrial Southern Europe 0. rental values are continuing to fall.2 than those in the fourth quarter of 2009 and. the how big the yield difference is.16 increased demands on landlords (particularly if they are Source: DTZ.03 -0.2 particular.00 0. Retail Yield shift (% points) Q4 2009 Q1 2010 There are two reasons for this marginal adverse change CEE 0.19 - www.2 0. But the rate of the fall has been points for the UK. Yield shift (% points) Q4 2009 Q1 2010 the UK is contributing most to the slowing rate of falls and. the falls have started feeding through to the Source: DTZ. stabilising.3 Nordics -0. in demand spilling over into the more-average stock and forcing down the yields in that part of the market.05 evolving economic scenario and partly because of Southern Europe -0. AXA Real Estate Research aware that the landlords are in financial trouble).2 -0.18 has become more risk averse.0 -0. and tenants to make Europe (weighted ave) -0. All rights reserved. yields of average or secondary property are more likely to be rising or. In contrast.1 -0. While not shown in the table below.1 Source: DTZ. although that quarters of 2009. We have no reason to believe that it is slowing in different markets as the yields meet much different elsewhere in Europe. there is also a convergence in the Western Europe -0.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies. AXA Real Estate Research Western Europe 0. lease lengths to shorten (even if only UK & Ireland -0.3% points. in turn.04 -0.axa-realestate.22 -0.2 -0.15 rate of falls between the sectors.08 in sentiment for non-prime property. for the purchase or sale for any fund or instrument.15 CEE -0.10 -0. March April 2010 . the market Western Europe -0. These are. Again. . the European office yield Southern Europe 0. Nordics -0. In the industrial sector. The analysis and recommendations express the views of AXA Real Estate Investment Managers. That is a In contrast to the office sector.01 -0. or as the basis for any contract. The past performance of securities or other instruments does not guarantee or predict future performance. the yield falls in the retail marginal negative shift relative to the third and fourth sector are giving the impression of slowing. Its application is adapted to each portfolio in order to optimise the management constraints which are specific.APRIL 2010 AXA Real Estate’s European Quarterly Overview Investment markets (ctd.32 Yield shift (% points) Q4 2009 Q1 2010 Europe (weighted ave) -0. 32 Source: CBRE Investors. in Europe (weighted ave) -0. AXA Real Estate Research Nordics – indicating a widening of investor interest.06 -0. quoted in IPE Real Estate.00 largely because of that. There are the usual difficulties in estimating 32 are falling – because they represent. feeding through to falls in rental income. there is a trend of continuing yield falls.12 -0.

The past performance of securities or other instruments does not guarantee or predict future performance. A reference source.axa-realestate. offering quarterly strategic recommendations and investment themes  Asian Eye and European Eye – two publications of five to seven short research articles on items of topical interest to the industry Occasional notes Contact  Market Edge – dealing with particular market issues in greater depth Alan Patterson Head of Research and Strategy  Market Mechanics – dealing with technical issues of relevance to the Tel: +44 20 7003 1372 property industry e-mail: alan. The information contained in these pages shall not be deemed to constitute advice and should not be relied upon as the basis for a decision to enter into a transaction or for any investment decision. These pages are not intended as an offer or solicitation.APRIL 2010 AXA Real Estate’s European Quarterly Overview Other publications Periodic  At a Glance – a quarterly overview of the European real estate markets in the context of an analysis of the European economy  Country Spotlights – a quarterly in-depth review of 19 European markets. or as the basis for any contract. to be consulted for the latest analysis  Looking Ahead – our quarterly house forecasts. The information contained on this page may not be reproduced or circulated without our written authority. All rights reserved. Its application is adapted to each portfolio in order to optimise the management constraints which are specific.com . for the purchase or sale for any fund or instrument.com Disclaimer: © 2010 AXA Real Estate Investment Managers and its Affiliated Companies.androussevitch@axa- im. The analysis and recommendations express the views of AXA Real Estate Investment Managers. At a Glance QUARTER 2 .patterson@axa-im.20 - www. .com Client mailing list Nathalie Androussevitch Tel: +33 1 44 45 96 41 e-mail: nathalie. covering the European economies and the property markets  Real Directions – building on our analysis and forecasts.