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  1. 1. NMA Conference Real Estate Opportunities Presenter: Chris Laxton 13-14 th January 2011 This document is for investment professionals only. The content is not approved for use with retail investors or pension scheme members.
  2. 2. Where are the opportunities? Over Neutral Under
  3. 3. But…..important to remember Stock selection remains key There are multiple ways to access each market The market characteristics differ a lot On-the-ground presence is critical Gable Lodge, 30 The Bishops Avenue, N2 Gracechurch Street, London EC3 Croft Industrial Estate Bentall Centre, Kingston
  4. 4. UK
  5. 5. The party’s over… The recovery in perspective The opportunities ahead The future performance prospects
  6. 6. The recovery in perspective -44% +16% Source: IPD UK Monthly Index as at August 2010 Past performance is not a guide to the future
  7. 7. Opportunities – Central London Exchequer Court, St Mary Axe, London Gracechurch Street, London Aviva Life and Pensions UK Limited Aviva Linked Property Fund
  8. 8. Our view of the next five years All Property 7.4%pa Source: Aviva Investors November 2010 Past performance is not a guide to the future.
  9. 9. Table 1: England’s performance away and subsequent three year total return Past performance is not a guide to the futue.
  10. 10. Continental Europe
  11. 11. Case for continental European RE; select carefully Relatively low vacancy and future completion data for selected markets Source: Property Market Analysis (Q2 2010 *Q1 2010) Past performance is not a guide to the future.
  12. 12. Case for continental European RE; select carefully Jones Lang LaSalle Transparency Index 2010 PMA Liquidity Index 2009 (London City = 100) Transparency and attractiveness for international investors Source: Jones Lang LaSalle, LaSalle Investment Management, as at 30 June 2010 Source: Property Market Analysis 2009 Rank Market Score Tier 1 Australia 1.22 1 3 United Kingdom 1.24 1 4 Sweden 1.25 1 8 France 1.28 1 10 Germany 1.38 1 11 Belgium 1.46 1 14 Spain 1.58 2 21 Italy 1.89 2 22 Poland 1.99 2 29 Greece 2.6 3
  13. 13. Case for continental European RE; select carefully Sample opportunities and recent market transactions* * Indicative recent transactions and current market opportunities. Rue la Perouse, Paris CBD Paris 16eme Offices: 3,300 sqm Fully let Price: c. €32m Yield: 6.25% Hoechst Pedestrian Zone, Frankfurt Fachmarktzentrum Retail: 6,490 sqm Fully let and recently completed Price: c. €21m Yield: c. 6.2% Paradiset 29, Stockholm Date: H1 2010 Retail 13,000 sqm and offices 10,000 sqm Price: c. €85m Yield: c. 6%
  14. 14. Case for continental European RE; select carefully Focus on core continental European sectors shows better and consistent total return prospects Source: Aviva Investors/PMA, August 2010. Past performance is not a guide to the future.
  15. 15. North America
  16. 16. Real estate – reason for improving optimism Source: Moodys/Real CPPI, April 2010 Pas performance is not a guide to the future. Source: NCREIF, Q1 2010
  17. 17. Asia Pacific Japan South Korea Taiwan Philippines Australia New Zealand Indonesia Singapore Malaysia Vietnam Hong Kong Thailand China India
  18. 18. Big region but focus on core markets Tokyo
  19. 19. Growth coming through on the ground Asia’s emerging wealthy go shopping
  20. 20. Growth coming through on the ground 70% of China population – “Middle-class” in 10 years *Source: UN World Population Prospects 2008
  21. 21. Growth coming through on the ground Singapore – the world’s second busiest port* *Source: Lloyds List as at August 2010
  22. 22. Growth coming through on the ground Source: PREI Australia providing resources for Asia’s urbanisation
  23. 23. Growth coming through on the ground Source: Z/Yen biannual Index of 75 international financial centres as of Sept 2010 Asia Pacific’s emerging financial centres…. moving towards a service economy 2010 Global rank Financial centres 1 London 2 New York 3 Hong Kong 4 Singapore 5 Tokyo 6 Shanghai 7 Chicago 8 Zurich 9 Geneva 10 Sydney
  24. 24. Extent of market falls and recoveries Source: Property Market Analysis, October 2010 Past performance is not a guide to the future
  25. 25. Why is Australia attractive? 12-14 Esplanade, Perth (Aviva Investors International Property Fund) Proxy for China growth story
  26. 26. Why is Australia attractive? Castlereagh Street, Sydney, Australia (Aviva Investors International Property Fund ) Diverse economy; quality retail & logistics
  27. 27. Why Japan remains relevant Large and liquid office market
  28. 28. Emerging values in Japan Location: Tokyo, Central 5 wards Occupancy rate: 100% NOI cap rate: 6.0% Seller type: Lender foreclosure Location: Tokyo, Central 5 wards Occupancy rate: 100% NOI cap rate: 6.0% Seller type: Fund exit Attractive yields available at present
  29. 29. Singapore quick rebound Office In the heart of Singapore CBD Aviva Investors International Property Fund and Asia Pacific Property Fund hold adjoining assets Commerce Point, No. 3 Philip Street, Singapore (currently Aviva Investors International Property Fund) No. 1 Philip Street, Singapore (Asia Pacific Property Fund) Market improvements + active asset management * Weighted average of 1 Phillip Street and Commerce Point Office market has rebounded strongly Occupancy rate (%) as of June 2009 c.78%* Occupancy rate (%) as of October 2010 100%
  30. 30. China and India _________ ……. But not yet!
  31. 31. Risks
  32. 32. Team Fund Management Strategy Asset Management REMM Listed Securities Business Development Significant team based in Singapore 9 languages and 6 dialects spoken More than half a century of accumulated real estate experience
  33. 33. Investment options Direct Listed (REITs) Multi-manager
  34. 34. Summary - opportunities Stock selection is key Early stages of recovery Core markets attractive Most attractive real estate market globally
  35. 35. Important information Except where stated as otherwise, the source of all information is Aviva Investors as at 30 September 2010. Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Where a Fund is invested in overseas markets or holds currencies other than sterling, then currency exchange rate movements may cause the value of your investment to fall as well as rise. The value of an investment in the fund and any income from it may go down as well as up, and the investor may not get back the original amount invested. Past performance is not a guide to the future. Funds that invest in property related securities (equities) can provide high returns over the medium to long-term, but such returns will be subject to greater rises and falls than investing in lower-risk assets. Where funds are invested in real estate, investors may not be able to switch or cash in your investment when they want because real estate in the fund may not always be readily saleable. If this is the case we may defer a request to switch or cash in units. It should also be borne in mind that the valuation of real estate is generally a matter of valuers’ opinion rather than fact. Aviva Investors is a business name of Aviva Investors UK Funds Services Limited, Registered in England No. 1973412. Authorised and regulated by the Financial Services Authority. FSA Registered No. 119310. Registered address: No. 1 Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.co.uk CI061503 01/2011