By Colliers' Head of Research, Asia, Andrew Haskins #INOUTALT #ColliersSG #ColliersExpertise

1. PROPERTY MARKETS IN AN
UNNATURAL WORLD

2. AGENDA
Global: Macro background
Europe: A growing dichotomy
Asia: Higher growth, but higher valuation
Strategies for success in investment and development
USA: Near the top of the cycle?
Global: Where property is being invested
Australia: Best of both worlds?

3. GLOBAL MACRO BACKGROUND
Global growth outlook has
improved slightly so far in 2019
Colliers expects a US soft landing,
forecasts for China have
been raised, European
employment
has recovered
US and Japan look set to keep interest
rates steady for
2019 at least
So “unnatural” low or
negative real interest
rates will persist
But upcycles cannot last for ever…
…Valuations are high across all financial asset classes…
…“Unnatural” politics is also a risk: a couple of tweets can change everything!

4. HOW TWEETS CAN SPOIL THE PARTY
Global real interest rates (last 10 years) Impact on China’s CSI 300 stock market of President Trump’s tweets on 6 May
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Japan Hong Kong Australia US Canada UK Germany
• Real interest rates of under 1% in many developed
economies signify very loose monetary conditions
Source: Oxford Economics
• China’s CSI 300 stock index fell 6% on 6 May for
the biggest fall in three years
Source: Bloomberg

5. PROPERTY INVESTMENT VOLUMES: GLOBAL
0.6
0.4
0.7
0.8
0.9
1.2 1.3
1.4 1.3
1.6
1.5
0.3
0.5
0.7
0.9
1.1
1.3
1.5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Colliers/RCA
“All property types” refers to office, retail, industrial, hotel, apartment and land site.
Americas All Property Types Volume
($)
EMEA All Property
Types Volume ($)
Asia Pacific All Property Types Volume
($)
0
250
500
750
1,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global Investment Volumes (USD trillion) Global Investment Volumes: by Global Region (USD billion)

6. ASIA PROPERTY CAPITAL FLOWS
Source: Colliers International, RCA
1 All property refers to office, retail, industrial, hotel, apartment properties and land development sites.
2 Investment property refers to completed office, retail, industrial, hotel, and apartment properties.
*Preliminary figure for 2019 Q1
Asia-to-global, global-to-Asia and intra-Asia capital flows 2010–2018 (USD billions)
10 14
21
37
44
68 66
73
51
6
11 10 10 12
18 17 18 17
24
5
35 38 35
57
41
45
74
89
98
14
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Q1*
USDbillions
Asia to Global Global to Asia Intra Asia
• Total investment by Asian investors in real estate outside Asia fell 31% in 2018, to USD50.5bn.
We assume a 21% rebound in 2019, to USD61.0bn
• Including strong intra-Asian investment, Asian capital made up about 36% of
aggregate global real estate cross-border investment last year

7. ASIAN INVESTMENT: SOURCES AND TARGETS
Source: Colliers International, RCA
Asia-to-global capital flows by source country (2018)
Singapore
36% (3% yoy)
China
23% (-58% yoy)
South Korea
15% (-5% yoy)
Hong Kong
12% (-45% yoy)
Japan
3%
Malaysia
3%
Others
8%
Asia-to-global capital flows by destination country (2018)
United States
34% (-12% yoy)
United Kingdom
23% (-47% yoy)
Australia
15% (-6% yoy)
Germany
10% (-36% yoy)
Poland
3%
France
3%
Netherlands
3%
Others
9%
• Singapore capital took over from China as the top source of investment in global property markets in 2018

8. 10 year expansion set to continue
Colliers’ base case is a soft landing, with recession averted for now
But the long expansion has been anaemic
3% fewer jobs and 13% less GDP added than in average expansion
Property sales transactions surged 15% in 2018, due mainly to M&A
This is a classic end-of-cycle sign: when high prices render asset purchases
hard to justify, investors look for underpriced firms and REITs
The US attracted the top share of global property investment in 2018
But US investors were net sellers for the fifth straight year…
U.S. NEAR THE TOP OF THE CYCLE? (1)
See “US Research Report: 2018 Capital Flows Year-End Review and Outlook” by Andrew Nelson of Colliers
International (25 March, 2019)

9. 1
3
4
7
5
6
8 9 10
2
U.S. NEAR THE TOP OF THE CYCLE? (2)
… and 51%
of foreign investment
came from Canada
Rank Country Volume (USD bn) Share
1 Canada 47.5 50.8%
2 France 8.9 9.5%
3 Singapore 7.0 7.5%
4 Germany 6.1 6.5%
5 China 6.0 6.4%
6 Switzerland 2.9 3.1%
7 Hong Kong 1.7 1.8%
8 Israel 1.4 1.5%
9 South Korea 1.4 1.5%
10 Japan 1.3 1.4%
Other 9.3 9.9%
Total 93.6 100.0%
Source: Real Capital Analytics, Colliers International
Canada
France
Singapore
Israel China
Hong Kong
Switzerland
South Korea
Japan
Germany

10. EUROPE: A GROWING DICHOTOMY
Firm job creation and tight labour markets are driving demand
• Current Eurozone unemployment of 7.9% is lowest since GFC
• In many European cities, supply shortages have held down
office take-up, and vacancy is very low
• High-growth (19-12%) rent cities in 2018: Porto, Oslo, Kiev, Barcelona, Berlin
• Demand from tech and e-commerce is driving demand for logistics space in
markets as varied as the UK’s East Midlands and Madrid
But the gap between services and weak manufacturing is growing
• German sentiment has been hit by the auto sector’s downturn; Brexit a risk
See “EMEA City Offices: Q4 2018” and “EMEA Industrial and Logistics Hubs: Q4 2018” by Colliers International

11. EUROPE: LONG-RUN GROWTH OUTLOOK REMAINS MUTED
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Italy Japan Germany Eurozone France Belgium Canada UK Spain Sweden US China India
Source: Colliers, Oxford Economics
Economic growth forecasts: real GDP growth average % p.a. 2018 to 2022

12. Asia is still the world’s fastest-growing major region
ASIA: HIGHER GROWTH, BUT HIGH VALUATION
• China will add the equivalent of Switzerland to the global economy in 2019
• India will add the equivalent of the Czech Republic to the global economy in 2019
• Out of the 10 largest cities by population in 2035, 7 will be in Asia
• Out of the 10 largest cities by GDP in 2035, 5 will be in Asia…
• …though current advanced market cities
will still hold the top 4 spots

13. 1
3
4
7
5
6
8
9
10
2
LARGEST 10 CITIES BY POPULATION, 2035
Source: Oxford Economics (November 2018), with adjustments by Colliers Intl.
Rank
2035
City
Absolute chg
from 2017 2017 (mn) 2035 (mn)
1 Jakarta 32.1 38.0
2 Tokyo 37.7 37.8
3 Chongqing 30.7 32.2
4 Dhaka 18.2 31.2
5 Shanghai 24.6 25.3
6 Karachi 16.5 24.8
7 Kinshasa 11.6 24.7
8 Lagos 14.1 24.2
9 Mexico City 20.3 23.5
10 Mumbai 20.2 23.1
Jakarta
TokyoChongqing
Dhaka
Shanghai
Karachi
Kinshasa
Lagos
Mexico City
Mumbai

14. 1
4
7
5
6
8
910
2
3
LARGEST 10 CITIES BY GDP, 2035
Source: Oxford Economics (Nov 2018), with adjustments by Colliers Intl
Rank
2018
Rank
2035
City
Chg in rank
vs 2017
GDP (USD tr),
constant 2018 prices
1 1 New York 2.5
2 2 Tokyo 1.9
3 3 Los Angeles 1.5
4 4 London 1.3
9 5 Shanghai 1.3
15 6 Beijing 1.1
5 7 Paris 1.1
6 8 Chicago 1.0
22 9 Shenzhen 0.9
19 10 Guangzhou 0.9
Los Angeles
New York Tokyo
London
Shanghai
BeijingParis
Chicago
Shenzhen
Guangzhou

15. 3.7
4.3
1.8
4.6
4.2
2.3
2.7
2.3
3.4
1.8
0.3
7.2
8.0
6.6
5.7
4.6
4.8
5.6
4.4
3.6
4.2
1.6
1.8
5.4
5.5
4.1
4.9
4.4
3.4
3.9
3.5
3.5
2.4
0.9
1.0
Germany
Sweden
France
Japan
UK
Spain
US
Canada
Australia
South Korea
Singapore
Hong Kong
Min spread Max spread Average spread for all sectors
NORTH AMERICA AND EUROPE OFFER BETTER VALUE…
Source: Colliers International, RCA, Bloomberg
All sector yield spreads in 2018 by global location (percentage points)
Japan
offers good value within Asia

16. …AND EUROPEAN OFFICE AND LOGISTICS IN PARTICULAR
16
100
113
60
110
181
-5
286
185 182
136 140
318
168
219
247
227
180
457
Asia Office US Office European Office Asia Retail US Retail European Retail Asia Logistics US Logistics European Logistics
2017 2018
Source: Colliers / RCA / Morgan Stanley / Bloomberg / PMA / NCREIF / MSREI. As of 12 March 2019
Global yield spreads (bps), by sector

17. AUSTRALIA: BEST OF BOTH WORLDS?
Australia has enjoyed unprecedented growth for a developed market…
…with 27 years of economic expansion up to 2018
Record demand for white collar jobs persists…
…and job growth is spreading beyond the core states of NSW and VIC
Colliers sees continued firm tenant demand in Sydney and Melbourne,
and improving fundamentals in Perth, Adelaide and Brisbane
So rental growth should be the driver for office capital value growth
across most markets in 2019
See “2019 Capital Markets Australian & New Zealand Investment Review by Colliers International

18. DIVERSIFICATION BEYOND CORE MARKETS
Colliers Europe:
Activity by Asian capital is
expanding from traditional
markets like London, Paris and
German cities into new
locations like Amsterdam,
Madrid, Lisbon,
Helsinki and Warsaw
Colliers USA:
Investors, notably foreigners,
continue to shift capital from
primary into secondary markets
(despite a greater focus on
CBDs than suburban markets
than before)
Office and retail property
still dominate global cross-
border investment activity,
but Colliers’ global analysis
shows strong momentum
behind residential property,
logistics, hotels and land
development sites

19. GLOBAL INVESTORS: SECTOR MOMENTUM
Source: Colliers/RCA
Select global investor activity 2010 vs 2018 | Holdings
EUR mn

20. 33.1%
22.2%
12.6%
67.9%
Hong Kong
(wild card)
Shanghai
Mumbai
Manila
Beijing
Guangzhou
Delhi NCR
Jakarta
Chengdu
Taipei
Tokyo
Seoul
Hyderabad
Bangalore
1
Singapore 2
3 Shenzhen
Socio-economic Property Human
35.6%
13.6%
13.4%
62.6%
29.2%
21.6%
10.1%
60.9%
TOP LOCATIONS IN ASIA | TECHNOLOGY
FOCUS ON PREFERRED OCCUPIER LOCATIONS (1)

21. FOCUS ON PREFERRED OCCUPIER LOCATIONS (2)
Bangalore Offices
Investors can expect rent growth of 4-
5% p.a. over 5-10 years, with similar
capital growth. Net yield of 8.9% is
highest among Asian office markets
Firm demand for office space from
finance, tech, flexible workspace,
professional services. Rent growth from
offices should average about 5% over
2018–2022, driving solid capital growth
Singapore Offices
GDP growth
9.6%
Talent Office stock EmploymentTalent Life quality
Tokyo Offices
Employment growth and low net supply
are driving rents, with prices rising by
3% p.a. Centre offers the best
investment potential. Yield spread over
bonds is Asia’s highest at 3.5-4.0pp
Equity Mkt
38.5mn
Population Regulation

22. ADAPT TO CHANGING OCCUPIER PROFILES (1)
HONGKONGISLAND
SINGAPORE
TOKYO
BANGALORE
SHANGHAI
BEIJING
TMT and flexible workspace are rising in importance as occupier sectors.
Finance is flat or declining in relation to the whole
Note. Figures for Tokyo are for the five central wards, figures for Bangalore are for prime office areas, other figures are for CBD areas. Source: Colliers International
% SHARE OF GRADE A OCCUPIER OFFICE SPACE | 2017 vs 2018
35%
45%
28%
10%
42% 40%
31%
45%
27%
12%
41% 40%
7% 9%
16%
63%
13% 15%
8% 13%
19%
63%
14% 16%
2017
Flexible Workspace + TMT
Finance
2018

23. Commercial property owners should be willing to:
• Accept shorter lease lengths
• Invest more in space fit-out
• Accept longer rent-free periods
In certain markets, owners are becoming expected to offer greater amenities,
increasing the cost of project development
Such investment should pay off, since greater attention to ambient environment
should encourage occupiers and their staff to stay
ADAPT TO CHANGING OCCUPIER PROFILES (2)

24. FOCUS ON NEW MARKET SEGMENTS
Business and Industrial Park Assets in Singapore, Shanghai, Beijing
Logistics/Industrial Sector in China, South Korea, Hong Kong
Supportive government policy to
drive tenant demand for space
Tech demand to drive rent growth
of 4% p.a. over 2018-22
Singapore: Industry 4.0 Shanghai: Pushing into High-Tech
AI hub and #4 location in Asia for Tech
groups. Business park assets yield 4-5%
Beijing: Leading AI Centre
Trends in China very firm, look to
Tier 2 cities for tradable assets
South Korea logistics assets yield 6-7%;
areas south-west of Seoul have promise
China: Warehouses South Korea: Warehouses
Redevelopment potential should
fuel 8.4% price growth in 2019
Hong Kong: Conversion

25. SUMMARY
Modest growth and
low interest rates
ought to be positive
for property
• Risks include US-
China trade
tension and
further political
shocks
Global property
investment volumes
remain high
• Asian outbound
capital is still
going strong, and
spreading more
widely
Strategies for
staying ahead
• Diversify beyond core
markets
• Focus on top occupier
locations
• Adapt to changing
tenancy profiles
• Identify new sectors
US property looks
near cycle end;
growth outlook in
Europe is muted. But
good value may be
found
• Asian property
offers higher
growth, but at
higher valuations

26. About Colliers International Group Inc.
Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000
enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For
more than 20 years, our experienced leadership team, owning more than 40% of our equity, have delivered industry-leading investment returns for shareholders. In
2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management.
For the latest news from Colliers, visit our website or follow us on
Copyright © 2019 Colliers International
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot
guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material
contained in this report.
Primary Authors:
Andrew Haskins
Executive Director | Research | Asia
+(852) 2822 0511
Andrew.Haskins@colliers.com
Stephanie Sun
Director | Research | Asia
+(65) 6531 8635
Stephanie.Sun@colliers.com
Terry Suen
Associate Director | Research | Asia
+(852) 2822 0579
Terry.Suen@colliers.com
Contributors:
Sam Harvey-Jones
Managing Director | Occupier Services | Asia
+(852) 2822 0509
Sam.Harvey-Jones@colliers.com
Jonathan Wright MRICS
Director | Flexible Workspace Services | Asia
+(852) 9020 9200
Jonathan.Wright@colliers.com