Cushman & Wakefield's Annual London Markets Conference 2013 Occupier dynamics are shifting, the demand from new sectors, such as Media & Technology is outpacing demand from London’s traditionally dominant Financial sector. How will London’s commercial real estate industry adapt? What can developers and landlords do to stay ahead of the competition? As global economic uncertainty continues, London remains a safe haven for investors as equity continues to pour in from overseas. Will this trend continue and will the new investment hotspots bring real returns to investors? Presentations: London: City Of Reinvention? Professor Neil Gibson Special Advisor To Oxford Economics London: A Melting Pot For Global Capital Andrew Thomas Partner, London Investment Cushman & Wakefield

2. LONDON: CITY OF REINVENTION?
PROFESSOR NEIL GIBSON
SPECIAL ADVISOR TO OXFORD ECONOMICS

3. UNDERWAY – BUT FAR FROM RAPID
WORLD TRADE % GROWTH (YEAR ON YEAR), 1990 - 2022 UK GDP % GROWTH (YEAR ON YEAR), 1990 - 2022
15 6
Forecast
Forecast 4
10
2
5
(%)
(%)
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
-2
-5
-4
-10
-6
GDP
-0.3% IN Q4 2012
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 2

4. LITTLE IMPETUS HEADING INTO 2013
UK: CONTRIBUTIONS TO GDP GROWTH
%pts
Consumer spending Investment
4.0
Govt. consumption Inventories
3.5
Net trade
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
1997- 2010 2011 2012 2013 2014
2007
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 3

5. BUT LABOUR MARKET RECOVERING WELL
TOTAL EMPLOYMENT, UK, 1998 - 2022 TOTAL GVA, UK, 1998 - 2022
34000 1700000
Forecast
1600000 Forecast
33000
1500000
32000
1400000
(£m 2009 prices)
(000s)
31000 1300000
Loss of 698 000 jobs
1200000
30000 Loss of £62bn
1100000
29000
1000000
28000 900000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2 MILLION ADDITIONAL JOBS FORECAST £396BN ADDITIONAL GVA FORECAST
BETWEEN 2012 - 2022 BETWEEN 2012 - 2022
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 4

6. EXPLAINING THE JOBS NO GROWTH PUZZLE
UK: GDP & EMPLOYMENT GROWTH (5YR MA) UK: OUTPUT PER WORKER
GDP growth, % year Employment growth, % year 2009=100
5 2.75 120
Employment growth Pre-recession
(RHS) 115 trend
4
110 14%
3 0.75 105
100
2 Actual
95
1 GDP growth -1.25 90
(LHS) 85
0
80
-1 -3.25 75
1975 1980 1985 1990 1995 2000 2005 2010 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source : Haver Analytics / Oxford Economics Source : Haver Analytics
EXPLAINING THE PARADOX
• Recession not as severe as recorded? • Possibly financial sector effects
• Cash rich corporates hoarding labour • Earnings growth low – making labour ‘cheaper’
• Greater part time working / temporary contracts • Low interest rates have made money cheaper
• Increased self employment levels (though not for all)
LONDON MARKETS CUSHMAN & WAKEFIELD 5

7. INFLATION REMAINED STUBBORNLY HIGH IN
2012H2
UK: CONTRIBUTIONS TO CPI INFLATION
% year
6
Transport
5
Housing
4 costs
Other
3 `
2
1
Food
0
2005 2006 2007 2008 2009 2010 2011 2012
SOURCE: OXFORD ECONOMICS / HAVER ANALYTICS
NOTE. OTHER IS MADE UP OF: ALCOHOLIC BEVERAGES, TOBACCO & NARCOTICS, CLOTHING AND
FOOTWEAR, FURNITURE, HOUSEHOLD EQUIPMENT , HEALTH, COMMUNICATION, RECREATION AND
CULTURE, EDUCATION, HOTELS, CAFES & RESTAURANTS, MISCELLANEOUS GOODS AND SERVICES LONDON MARKETS CUSHMAN & WAKEFIELD 6

8. BUT SET TO MODERATE AND REAL INCOMES
SHOULD START TO RISE
UK: EARNINGS & INFLATION
% year
7
Average earnings Forecast
6
5
4
3
2
1 CPI inflation
0
-1
-2
-3
-4
-5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 7

9. THE LONDON OUTLOOK

10. LONDON LEADING THE UK
AVERAGE % GVA GROWTH, UK REGIONS, 2013 - 2018
London is
3.0
GVA expected to
account for
Employment
2.5
21.8%
2.0
(%)
1.5
1.0 of total UK
0.5 GDP in 2013
0.0
Wales
Greater London
UK
South West
North West
North East
Scotland
Eastern
West Midlands
Yorkshire &
East Midlands
Northern Ireland
South East
Humber
Source: Oxford Economics
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 9

11. LONDON JOBS OUTLOOK VERY PROMISING
TOTAL EMPLOYMENT, LONDON, 1998 - 2022 EMPLOYMENT GROWTH, UK REGIONS, 2003 - 2018
2003 - 2008 2008 - 2013 2013 - 2018
(000s) % (000s) % (000s) %
5750
South East 150 3.5 154 3.5 235 5.1
Forecast
Greater London 293 6.3 150 3.0 329 6.5
5500 Eastern 162 5.9 -17 -0.6 142 5.0
South West 145 5.6 -25 -0.9 95 3.5
West Midlands 51 1.9 -34 -1.3 75 2.8
5250 East Midlands 128 6.2 27 1.2 68 3.1
Yorkshire & Humber 102 4.1 -35 -1.4 70 2.8
North West 81 2.4 -74 -2.2 105 3.1
5000
North East 63 5.7 -72 -6.1 15 1.4
(000s)
Wales 61 4.6 -11 -0.8 22 1.6
4750
Scotland 153 5.9 -104 -3.8 66 2.5
Northern Ireland 63 7.8 -65 -7.5 15 1.9
Loss of 115 000 jobs UK 1450 4.7 -106 -0.3 1237 3.9
4500
4250
4000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
329 000 ADDITIONAL JOBS FORECAST IN LONDON LONDON IS EXPECTED TO ACCOUNT FOR 16% OF
BETWEEN 2013 - 2018 TOTAL UK EMPLOYMENT IN 2013
SOURCE: OXFORD ECONOMICS
NOTE: TOP 2 REGIONS SHADED IN YELLOW AND BOTTOM 2 REGIONS SHADED IN PINK LONDON MARKETS CUSHMAN & WAKEFIELD 10

12. BUT UNEMPLOYMENT SET TO FALL VERY SLOWLY
UNEMPLOYMENT, LONDON, 1998 - 2022 UNEMPLOYMENT, UK REGIONS, 2003 - 2018
2003 - 2008 2008 - 2013 2013 - 2018
(000s) pp change (000s) pp change (000s) pp change
240
South East 1 0.0 70 1.4 -19 -0.5
Greater London -33 -0.8 87 1.5 -28 -0.7
Eastern 6 0.1 55 1.8 -13 -0.6
220
South West -1 -0.1 42 1.5 1 -0.1
West Midlands 11 0.3 59 2.0 -14 -0.6
200 East Midlands 3 0.0 49 2.0 -10 -0.5
Forecast Yorkshire & Humber 4 0.0 77 2.8 -7 -0.4
North West 8 0.1 82 2.3 -22 -0.7
180 North East 1 -0.2 40 3.5 -4 -0.4
(000s)
Wales 1 -0.1 35 2.3 -6 -0.5
Scotland -21 -0.9 62 2.3 -15 -0.6
160 Northern Ireland -7 -1.0 37 4.4 -2 -0.3
UK -27 -0.2 694 2.0 -140 -0.6
140
Unemployed increased by
120 90 000 people
100
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
UNEMPLOYMENT WILL FALL BY 27 800 BETWEEN 2013 - LONDON IS EXPECTED TO ACCOUNT FOR 14% OF TOTAL
2018 UK UNEMPLOYMENT IN 2013
SOURCE: OXFORD ECONOMICS
NOTE: TOP 2 REGIONS SHADED IN YELLOW AND BOTTOM 2 REGIONS SHADED IN PINK LONDON MARKETS CUSHMAN & WAKEFIELD 11

13. CLOSE TO A HALF A MILLION MORE RESIDENTS
PROJECTED
POPULATION, UK REGIONS, 2013 - 2018 NATURAL INCREASE AND MIGRATION, LONDON, 1998 - 2022
2013 - 2018 100
Natural Increase
000s % 90
Migration
Forecast
South East 298 3.4 80
Greater London 470 5.6 70
Eastern 261 4.4 60
South West 151 2.8 50
West Midlands 148 2.6
(000s)
40
East Midlands 156 3.4
30
Yorkshire & Humber 163 3.0
20
North West 149 2.1
North East 43 1.7 10
Wales 61 2.0 0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Scotland 92 1.7 -10
Northern Ireland 55 3.0 -20
UK 2047 3.2
SOURCE: OXFORD ECONOMICS
NOTE: TOP 2 REGIONS SHADED IN YELLOW AND BOTTOM 2 REGIONS SHADED IN PINK LONDON MARKETS CUSHMAN & WAKEFIELD 12

14. JOB GROWTH ACROSS LONDON – BUT PACE
VARIES
% AVG. EMPLOYMENT GROWTH, LONDON LAs, 2013 - 2018
Croydon
Waltham Forest
Lewisham
Harrow
Brent
Redbridge
Barking and Dagenham
Havering
Enfield
Haringey
Sutton
Bexley
Bromley
Ealing
Greenwich
Kensington and Chelsea
Lambeth
Newham
Kingston upon Thames
Barnet
Hillingdon
Wandsworth
Hackney
London Total
Richmond upon Thames
Merton
Camden
Hammersmith and Fulham
Westminster
Hounslow
City of London
Islington
Southwark
Tower Hamlets
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
% avg growth
SOURCE: OXFORD ECONOMICS LONDON MARKETS CUSHMAN & WAKEFIELD 13

15. RUNNING A SURPLUS (UNLIKE THE REST OF THE
UK)
FISCAL BALANCE, LONDON AND REST OF UK, 2000 - 2018
50
London
30 Rest of UK
10
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
-10
-30
£bn
-50 Forecast
-70
-90
-110
-130
-150
SOURCE: OXFORD ECONOMICS
NOTE: ESTIMATES ARE A MIDPOINT MEASURE OF RESIDENT AND WORKPLACE GVA LONDON MARKETS CUSHMAN & WAKEFIELD 14

16. WINNERS AND LOSERS – THE SECTORAL PICTURE

17. SERVICE SECTOR DOMINATING THE JOB MARKET
SECTORAL EMPLOYMENT GROWTH, LONDON, 2003 - 2018
(000s)
2003 - 2008 2008 - 2013 2013 - 2018
Agriculture, forestry and fishing 0 -1 0
Mining and quarrying 0 -1 -1
Manufacturing -39 -22 -9
Electricity, gas, steam 0 0 -1
Water supply; sewerage 2 4 -1
Construction 53 -4 28
Wholesale and retail -12 -41 47 A FORECAST RISK?
Transportation and storage 12 -12 21
Accommodation and food 15 35 34
Information and comms 29 33 32
Financial and insurance activ. 9 4 2 SCOPE FOR BETTER?
Real estate activ. 22 4 13
Professional, scientific and technical 105 53 90
Admin and support 41 27 71
Public admin and defence -12 -13 -26
Education 21 34 -12 A MARKED SHIFT
Human health and social work 23 36 -5
Arts, entertainment and rec. 19 5 25
Other service activ. 4 9 19
Total 293 150 329
SOURCE: OXFORD ECONOMICS
NOTE: INCLUDES SELF EMPLOYMENT, TOP 2 PERFORMING SECTORS SHADED IN YELLOW
AND LOWEST PERFORMING SECTORS SHADED IN PINK LONDON MARKETS CUSHMAN & WAKEFIELD 16

18. LAST TEN YEARS HAS EVIDENCED LONDON’S
DYNAMISM
TOP 10 2 DIGIT GROWTH SECTORS, LONDON, 2002 - 2012 TOP 10 2 DIGIT SIC SPECIALISMS, LONDON, 2012
Employment growth LQs
000s % Programming and broadcasting 4.1
Food and beverage 57 23.5 Motion picture, video and tv 3.7
Human health 55 22.8 Air transport 3.2
Head offices 54 55.9 Advertising and market research 2.4
Head offices of auxiliary finance services 53 49.0
Publishing 2.4
Computer programming 47 44.6
Head offices of auxiliary finance services 2.4
Social work 30 29.3
Real estate 26 39.3 Creative, arts and entertainment 2.3
Legal and accounting 25 13.8 Financial services 2.1
Security and investigation 19 47.1 Information services 2.0
Advertising and market research 19 29.8 Remediation activities 1.8
SOURCE: OXFORD ECONOMICS SOURCE: OXFORD ECONOMICS
NOTE: GREEN SHADING DENOTES THOSE SECTORS IN THE PUBLIC SECTOR NOTE: LQ ANALYSIS ONLY ACCOUNTS FOR SECTORS WITH A MINIMUM
OF 1000 EMPLOYEES
LONDON MARKETS CUSHMAN & WAKEFIELD 17

19. A KEY DESTINATION FOR A DIVERSE GRADUATE
POOL
% OF GRADUATES FOR WHOM ‘FIRST EMPLOYMENT DESTINATION’ IS LONDON, 2007 - 2009
Russell
Other
Group
Medicine & dentistry 15.3 11.6
Subjects allied to medicine 11.3 11.6
Biological sciences 10.3 10.5
Agri & related subjects 6.5 3.3
Physical sciences 11.1 5.3
Mathematical sciences 18.9 14.1
Computer science 18.5 14.0
Engineering & technology 13.0 8.0
Architecture, building & planning 21.4 14.9
Social studies 21.1 14.3
Law 12.0 11.4
Business & admin studies 20.9 16.4
Languages 17.2 12.4
Historical & philosophical studies 15.1 12.0
Education 5.5 13.7
Combined 10.7 8.0
% total working in London 14.4 12.6
SOURCE: HESA
NOTE. HESA FIRST DESTINATIONS SHOWING PROPORTION WHO HAVE TAKEN THEIR FIRST JOB IN LONDON WITHIN 6 MONTHS OF GRADUATING. THIS DATA DOES NOT
INCLUDE THOSE UNEMPLOYED, TRAVELLING OR EMBARKING ON FURTHER STUDY. TOP 2 KEY SUBJECTS ARE SHADED IN YELLOW AND BOTTOM 2 KEY SUBJECTS ARE SHADED
IN PINK LONDON MARKETS CUSHMAN & WAKEFIELD 18

20. TMT SECTOR PROJECTED TO CONTINUE RECENT
GROWTH
The TMT sector has become an TMT SECTOR & TOTAL EMPLOYMENT, LONDON, 1998 - 2022
important part of the London 500 7000
economy. TMT (LHS) Forecast
London total employment (RHS) 6500
The sector accounts for more than 450
384,000 jobs across London, 6000
more people are employed in the 400
5500
sector today than at the height of
(000s)
(000s)
the dot-com boom. 350
5000
4500
TMT is a larger employer in the 300
capital than financial services or 4000
hotels & catering, and is one of the
250 3500
few sectors to have achieved strong
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
growth since London’s economy
emerged from the 2009 recession.
SOURCE: OXFORD ECONOMICS
NOTE. TMT SECTOR: PUBLISHING, MOTION PICTURE, VIDEO / TV, PROGRAMMING,
BROADCASTING, TELECOMMS, COMPUTER PROGRAMMING, INFORMATION SERVICES LONDON MARKETS CUSHMAN & WAKEFIELD 19

21. DRIVERS AND RISKS – IDENTIFYING THE CRITICAL FACTORS

22. KEY DRIVERS OF SUCCESS
• World trade remains crucial – outlook strong, but not without risks
• Skills and attractiveness – remaining a draw for people (not just the ‘suits’)
• More capacity coming on-stream will be critical as will improved access and travel times
• Dynamism is key – changing what the economy does. People key to this – but regulation /
planning all play a part
• Image and reputation – still matters and remains strong
• Security – of place / technology / legal protection
LONDON MARKETS CUSHMAN & WAKEFIELD 21

23. KEY RISKS
• Competition from new global centres
• Connectivity, esp. to new markets (air access)
• Rising cost base creating social disharmony and diverting inward investment of people
and capital
• Out-workings of the global financial crisis may yet take a larger toll
• Regulation and uncertainty over European relationship
• Olympic legacy – ensuring the story continues and does not become a story of missed
opportunity (no sign as yet of this)
LONDON MARKETS CUSHMAN & WAKEFIELD 22

24. SUMMARY
• The London economy has proven itself time and time again as being dynamic, decisive
and successful
• It continues to do so with the labour market back above pre recession peaks and
new specialisms and sectors emerging
• Key to success are the organisations and, crucially, the people
• Its draw as a global city to visit, work in, trade with, have a base in remains strong
• But it is not infallible – complacency is a risk. Policy and legal environment must remain
supportive of dynamism. Access and congestion remain important factors and cognisance
of competition important to trumpet London's’ key strengths and identify comparative
(and potential) weaknesses
LONDON MARKETS CUSHMAN & WAKEFIELD 23

25. LONDON: A MELTING POT FOR GLOBAL CAPITAL
ANDREW THOMAS
PARTNER, LONDON INVESTMENT
CUSHMAN & WAKEFIELD

26. TOP 10 CITIES FOR TOTAL INVESTMENT IN 2012
(EX. DEV.)
NYC
London
LA
Tokyo
San Fransisco
Hong Kong
Paris
Washington
Chicago
Seattle
$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00
US $ Billion
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 25

27. TOP 10 CITIES FOR FOREIGN INVESMENT IN 2012
(EX. DEV.)
London Metro
Paris
NYC Metro
Tokyo
Sydney
SF Metro
Berlin
Frankfurt
Hong Kong
Warsaw
$0.00 $5.00 $10.00 $15.00 $20.00 $25.00
US $ Billion
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 26

28. CROSS-BORDER INVESTMENT VOLUMES
(ALL SECTORS)
$30.00
London
$25.00
Paris
$20.00
US $ Billion
New York $15.00
$10.00
Tokyo
$5.00
Sydney
$0.00
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 27

29. YIELD LEVELS
7.0
Swap - 10 year
6.0
5.0
3 month
Month End Rate
interbank
4.0
West End Office 3.0
2.0
City office
1.0
0.0
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 28

30. REQUIRED RETURNS BY OFFICE MARKET
TOP GLOBAL OFFICE MARKETS
6%
Required Return
5%
Net yield
Total Return Required by Year
4%
3%
2%
1%
0%
Hong Kong Munich Singapore London Zurich New York Tokyo Stockholm Toronto Paris
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 29

31. EXCHANGE RATE MOVEMENTS
CURRENCY - RATES PER POUND
240
USD 2.0
220
Euro 1.8
200
Yen per GBP
USD/Euro per GBP
Yen 1.6 180
160
1.4
140
1.2
120
1.0 100
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 30

32. PRIME OFFICE RENTAL GROWTH IN LONDON
PRIME HEADLINE RENTS - £/SQFT/YR
$140
City
$120
West End $100
$80
$60
$40
$20
$0
SOURCE: RCA/CUSHMAN & WAKEFIELD LONDON MARKETS CUSHMAN & WAKEFIELD 31

33. SOVEREIGN WEALTH FUNDS
TOP 20 GLOBAL SOVEREIGN WEALTH FUNDS
Norway - Government Pension Fund
Abu Dhabi - Abu Dhabi Investment Authority
China - SAFE Investment Company
Saudi Arabia - SAMA Foreign Holdings
China - China Investment Corporation
China - Hong Kong Monetary Authority
Kuwait - Kuwait Investment Authority
Singapore - Government of Singapore Investment…
Singapore - Temasek Holdings
Russia - National Welfare Fund
China - National Social Security Fund
Qatar - Qatar Investment Authority
Australia - Australian Future Fund
Dubai - Investment Corporation of Dubai
Abu Dhabi - International Petroleum Investment…
Libya - Libyan Investment Authority
Kazakhstan - Kazakhstan National Fund
Algeria - Revenue Regulation Fund
South Korea - Korea Investment Corporation
Abu Dhabi - Mubadala Development Company
$0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00
Total assets US $ Billion, January 2013
SOURCE: SOVEREIGN WEALTH FUND INSTITUTE LONDON MARKETS CUSHMAN & WAKEFIELD 32

34. THE NEW WORLD PERSPECTIVE
LONDON MARKETS CUSHMAN & WAKEFIELD 33

35. THE ‘NEW’ LONDON
GREENWICH PENINSULA EARLS COURT
NINE ELMS
LONDON MARKETS CUSHMAN & WAKEFIELD 34

36. SOME FINAL THOUGHTS...
“ London has the trick of making its past, its long indelible past, always a
“
part of its present. And for that reason it will always have meaning for
the future.
Anna Quindlen, American Journalist
“ “
I want you to know that I have nothing against Orlando, though you
are, of course, far more likely to get shot or robbed there than in
London.
Boris Johnson, Mayor of London
LONDON MARKETS CUSHMAN & WAKEFIELD 35