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City Futures:The New Geography of Real EstateKatie KopecInternational Director

22nd November 2013

A New World Order of Cities Deep Urbanisation and a Changing Hierarchy: 1 million a week move to a city2

3The Choices for People, Capital and CompaniesInvestor Choice: 1990: 30 cities | 2013: 150 CitiesCorporate Choice: 1990: 100 cities | 2013: 600+ Cities

The Rise of Mayoral Power

Kadir Topbas - IstanbulTransformed the Gateway City

Boris Johnson - LondonBoriss Bikes River crossings and airports

Bertrand Delano - Paris Improved quality of life, reduce pollution, cut traffic

Huang Qifan - Chongqing His vision is to make Chongqing a world famous car town and to Create a new silk route to Europe

Antonio Villaraigosa - Los AngelesIntroduced half a penny sales tax exclusively earmarked for transportation:

Michael Bloomberg - New YorkChanged the face of New York

Iaki Azkuna - BilbaoTransformed Bilbao Worlds best mayor2012.

Lisa Scaffidi - PerthInternationally connected, changed perceptions

Dieter Salomon - FreiburgMayor of the greenest city in the world (The Guardian)Source: Jones Lang LaSalle

Luke Ravenstahl - PittsburghYoungest mayor in history of Pittsburgh at 26. Hosted G20 in 2009.

Diced and Spliced the Urban Network When and Where Next? World Winning Cities Programme

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Resurgence of Geography Cities have Nowhere to Hide6

Statistics with Character : The Personality of Change

The Bold Statistic600 cities are on the real estate radar screen of corporates

The Curious Statistic50% of global real estate investment - in only 30 high-order cities

The Unexpected StatisticIn 2020 the US will have 11 out of the 30 largest (GDP) cities in the world

The Anticipated StatisticThe worlds top ten fastest growing cities will be in China

The Heritage StatisticBy 2020 Europe will have only 4 of the top 30 cities in the world

The Bold Statistic

9Over 600 cities on the corporate radarHalf of Global GDPBased on population, GDP, corporate presence, air connectivity, commercial real estate stock and real estate investment volumesSource; Jones Lang LaSalle, 2013 The most populous, productive and connected cities, home to MNCs, Capital and Skills

Gdansks Position on the World Stage10highlowGlobalRankingGlobal Status ScoreGdansk CobwebBased on population, GDP, corporate presence, air connectivity, commercial real estate stock and real estate investment volumes

1010

Moscow has seen sharpest falls over past year down 54%HK and Shanghai have recorded positive CV performance following a sharp turnaround since the middle of the year yield driven

Do Mid-Weight Cities Show More Potential? Capital stays in Capitals but activity seeks Betas and GammasGDP change 2012 - 2020Source: Jones Lang LaSalle, Global Insight, Experian, Deloitte Access Economics, Conference Board of Canada, 3.5 % 3.9 % 3.3 % 3.2 % % change per yearAlpha Cities(Top 30 cities)

Beta Cities(31-100 cities)

Gamma Cities(101-300 cities)

World

1111

Moscow has seen sharpest falls over past year down 54%HK and Shanghai have recorded positive CV performance following a sharp turnaround since the middle of the year yield driven

The Unexpected Statistic

Where is the city growth in advanced economies?

Relates to cities in advance economies (defined by IMF) with a population of more than 1mAustralian cities are based on state level GDP projection Source: Source: IHS Global Insight, Oxford Economics, Conference Board of Canada, Deloitte Access Economics, 2012 GDP Change, 2012-2016 % pa

The Curious Statistic

Investment volumes in US$ billionsSource: Jones Lang LaSalleWhere is the money going? Top 10 US$ billLondon109Tokyo89 New York64Paris44Hong Kong37Singapore 31Seoul30Los Angeles28Washington DC26Toronto23

Top 30 cities for direct commercial real estate investment, 2008Q3 2012EuropeAmericasAsia Pacific

11 20US$ bill11. Shanghai 2212. Beijing2013. Chicago1914. Moscow1815. Stockholm1716. San Francisco1717. Sydney1518. Taipei1519. Boston1420. Munich12

21 30US$ billMelbourne 1222. Berlin1223. Dallas1124. Calgary1125. Houston1126. Frankfurt 1127. Madrid1028. Hamburg1029. Oslo1030. San Diego9

212. Gdansk

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Real Estate Investment IntensityTop 10 markets in CEE and Polish cities16higherlowerInvestment intensityPolish citiesCEE cities

Real estate investment volumes (2008-2012) as proportion of current city GDPSource: Jones Lang LaSalle, 2013

The Heritage Statistic

EMEA: The Future is Innovation Source: Eurostat, OECDR&D Spend as % GDP

Helsinki 3.5%8

Berlin 3.9%7

Paris 3.1%10

Stockholm4.2%4

Stuttgart 5.3%1

Vienna 3.5%9

Munich 4.8%2

Mannheim 3.9%6

Toulouse 4.1%5

Tel Aviv 4.7%3

Real Estate Transparency Index 2012Europe19

Sources: Jones Lang LaSalle, LaSalle Investment ManagementOpaqueLondon, AmsterdamParis, Helsinki, Stockholm, ZurichFrankfurt, Copenhagen, DublinMadrid, Brussels, Oslo, Warsaw, Milan, Vienna, Prague, Budapest, Lisbon, Tri-CityIstanbul, Athens, BratislavaMoscow, St Petersburg, Bucharest Zagreb, Yekaterinburg, SofiaKiev, LjubljanaBelgrade, AlmatyMinsk

HighestHighSemiLowOpaque

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Sources: Jones Lang LaSalle, SiemensHow important is sustainable regeneration for investors?Green City Index v Investment VolumesR/E Investment Volumes 2008-2011 / Total GDPGreen City IndexLondonStockholmAmsterdamHelsinkiLisbonParisRomeAthensOsloBrusselsMadridWarsawDublinBucharestIstanbulZurichBerlinBudapestViennaPragueCopenhagen

The Anticipated Statistic

Worlds Fastest Growing Large Cities: Explaining the Asia Pacific Century

Cities with populations over 3 million. Based on province level forecastsSource: IHS Global Insight% p.a. 2011 - 2013

232323

GANSU

GUIZHOUYUNNAN

HEBEIHENANSHANXIANHUIHUNAN

SHAANXI

HUBEI

Shanghai

Shenzhen

TAIWANHAINANSHANDONG

TaipeiMacauHong Kong

TIBETXINJIANGQINGHAININGXIAJILINHEILONGJIANGLIAONINGHEBEIJIANGSUZHEJIANGFUJIANJIANGXIGUANGDONGGUANGXISICHUANCHONGQINGINNER MONGOLIAChina50 Hierarchy

Indicates levels of economic and property activityTier 1 cities (not part of China50)

Suzhou

Wuhan

Tianjin

Dalian

Nanjing

Shenyang

Chengdu

Chongqing

HangzhouTier 1.5 Transitional: e.g. Chengdu, Chongqing, Tianjin, ShenyangLarge, open diverse economiesStrong presence of MNCs and domestic firms= Potential across all commercial sectors

Wuxi

Jinan

Xiamen

Zhengzhou

Xian

Hefei

Changsha

Qingdao

Dongguan

NingboTier 2 Growth:e.g. Xian, Qingdao, Changsha, ZhengzhouStrong demographics supporting robust retail markets and industrial diversification= Strengths in retail, logistics, business parks

Wenzhou

Changzhou

Yantai

Fuzhou

Harbin

Changchun

Shijiazhuang

Nanchang

Nanning

Kunming

Hohhot

Foshan

NantongTier 3 Emerging:e.g. Kunming, Harbin, Changchun, NanningMoving towards the lift-off phaseAggressively being targeted by retailers / hotel operators= Retail, hotels, pioneering corporates

Tangshan

Luoyang

Quanzhou

Urumqi

Zhongshan

Zhuhai

Jilin

Taiyuan

Xuzhou

Xiangyang

Haikou

Guiyang

Lanzhou

Shantou

Shaoxing

Jinhua

Jiaxing

WeifangTier 3 Early Adopter:e.g. Guiyang, Urumqi, TaiyuanTarget for first-mover advantage= Retail, hotels, pioneering corporatesThe tiers of real estate opportunity

Some of the Rising Urban Stars

WuhanPanama City

Jakarta

AhmedabadAccraLuandaIstanbulLimaSource: Jones Lang LaSalle, World Winning Cities

ChengduMaputoMonterrey

BudapestPragueWarsawBucharestBelgradeBratislavaSofiaSplitZagreb

Tri-CityKrakw

PoznadWrocaw

BrnoSample of BPO & SSC Occupiers in CEEShoring activity intensifying & diversifying

EMEA PREDICTIONSWhat to look out for . Changing fortunes in the Top 30 Alpha citiesMid-sized cities seeking reinventionUS cities retaining considerable economic and real estate weightThe rise of MIST cities European cities success built on being innovative, transparent, regenerativeNew location scorecards reflecting vulnerability, resilience, social media and city perspectives of the young footloose target market

WhatTri-City is doing ?

Selected Infrastructure ImprovementsPomeranian Metropolitan Railway. This railway will revolutionize public transport within Tri-City area connecting Gdansk and Gdynia, via the Gdansk Airport, with western suburbs. Northern Bypass of Tri-City Agglomeration. A double-lane express route, 14 km long, will be the extension of the existent Tri-City bypass.Metropolitan Bypass. A double-lane express route will link Gdynia to Gdansk bypassing the upper districts of the metropolis. Further southward extension of A1 Motorway (the main North-South motorway).Roads & Airports & Railway

Source of information:

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Improvement of the Gdask Airport. Extension of the passenger terminal along with the road system and enlargement of the cargo terminal to be completed by 2016. Improvement of Gdynia Airport. The airport will open to general aviation in IVQ 2013/IQ 2014.Upgrading of the E 65 railway line linking Tri-City and Warsaw. Traveling time should be shorten from 5-6 to 3-3,5 hours. The project is to be completed in 2015. New railway station in Sopot.Construction of double railway track to Port of Gdansk. Investment is to be completed by 2015. Extension of the fast train (SKM) towards City Centre.Selected Infrastructure ImprovementsRoads & Airports & Railway

Source of information:

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Sucharskiego Route connects Port of Gdansk with S7 Expressway and A1 Motorway.Technical road connecting DCT Gdansk with the Pomeranian Logistics Center planned.2-line railway track. Project will be commissioned by 2015.New rail bridge over the Dead Vistula River. The rail will increase daily capacity by over 50%. The project is to be commissioned in 2015. Tunnel under the Dead Vistula. The tunnel will connect Slowackiego with Sucharskiego route linking the inner and the outer port and forming the inner ring of Gdansk. The project is to be commissioned by December 2014.Port of GdaskSelected Infrastructure Improvements

Source of information:

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So What Can Tri-City Do ?

32Lessons from Elsewhere-Success FactorsLand Ownership/ ControlLand in single public ownershipCertainty/ SpeedCPO Public acquisition/ private financeInfrastructure UpfrontTransportPublic realmInfra Cos

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33Lessons From Elsewhere-Success FactorsStrong VisionMasterplan/ planningEconomic rationaleBuild on Strengths/clustersCritical mass/ ThemesCity Marketing/ Civic LeadershipCity Authority commitment

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Civic leadershipAlso, Manchester Sir Howard Bernstein, now 2nd largest regional economyBarcelona Joan Clos continuation of Olympic momentumValencia Barbara Nolla international business meeting 950% growth in 10 years, Americas cup

City identity/ authenticity

Valencia - recent event has to be singled out, it must be the Fifth World Meeting of Families attended by His Holiness Pope Benedict XVI. This brought over one million pilgrims to our streets.

34Lessons From Elsewhere-Success FactorsArchitecture and ArtPlace makingPromotionTourismFunding

34Mixed use development

Sustainability agenda, city living - proximity of live/ work/ play

35Bespoke Delivery StructuresPPPsPublic sector as catalystInfra CosLand assetsTax based

Lessons From Elsewhere-Success Factors

35PPPsEnglish Cities FundPublic sector as catalystHafen Hamburg, Melbourne Docks (Vic Urban), Stratford City/ Kings Cross Central/ Greenwich Peninsula

HafenCity Hamburg GmbH has had the following areas of responsibility: Market and sell municipally owned real estate (approx. 90% of the total area to be developed) Attract investors and buyers, Coordinate all planning and construction projects Plan and implement land development Manage and administer funds (Special Assets 'City and Port') used for the development of HafenCity Cooperate with the relevant Hamburg authorities Location marketing, public relations, and citizen involvement

Land assetsBlueprintBedford by passTax basedChicago TIF for Olympic bidUK Tariff system

36Lessons for Tri-City

Success factors - International best practice Strong vision/ rationaleSingle land ownership/ control- longer leaseInfrastructure investment up frontTransportPlace/ public realmCritical mass - early phase to establish place

Architecture very high quality/ iconicCivic support/ City marketing Robust delivery structure-partnerWaterfront exploited/ promoted

36Clear as to city positioning & economic or

Thank you

Top slice risk

Mezzanine

Institution

Debt Provider

30m

10m

7m

75m

Funding Risk Structure