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UK and Global Real Estate Trends – Opportunities for 2011/2012 20 September 2011, London UK and Global Real Estate Trends – Opportunities for 2011/2012 20 September 2011, London Copyright © 2011 by K&L Gates LLP. All rights reserved.

European Real Estate Outlook Peter Damesick EMEA Chief Economist, CBRE 20 September 2011 European Real Estate Outlook Peter Damesick EMEA Chief Economist, CBRE 20 September 2011

Agenda • Global context • Economic background • Occupier market trends • Capital flows Agenda • Global context • Economic background • Occupier market trends • Capital flows in European real estate • Performance and pricing • Prospects CB Richard Ellis | Page 2

A world of differences GDP person, % change Q 2 2007 to Q 2 A world of differences GDP person, % change Q 2 2007 to Q 2 2011 Source: Macrobond CB Richard Ellis | Page 3

CBRE Global Office Capital Value Index Asian values almost at previous peak, EMEA lagging CBRE Global Office Capital Value Index Asian values almost at previous peak, EMEA lagging Source: CBRE Research as of Q 2 2011 CB Richard Ellis | Page 4

Economic Divergence in Europe GDP, Q 1 2008 = 100 Source: , Eurostat CB Economic Divergence in Europe GDP, Q 1 2008 = 100 Source: , Eurostat CB Richard Ellis | Page 5

Government debt to GDP ratio % of GDP Source: IMF CB Richard Ellis | Government debt to GDP ratio % of GDP Source: IMF CB Richard Ellis | Page 6

Trends in Unit Labour Costs Uncompetitive economies in European periphery a key structural issue Trends in Unit Labour Costs Uncompetitive economies in European periphery a key structural issue Index (Q 1 2000 = 100) Source: Macrobond, OECD CB Richard Ellis | Page 7

CBRE Global Office Rent Index (Q 1 2001 = 100) Source: CBRE Research as CBRE Global Office Rent Index (Q 1 2001 = 100) Source: CBRE Research as of Q 2 2011. CB Richard Ellis | Page 8

European Office Take-Up 28 Western European markets, 10 CEE markets 6 Month Rolling Totals European Office Take-Up 28 Western European markets, 10 CEE markets 6 Month Rolling Totals (000’s Sq M) Source: CB Richard Ellis | Page 9 % of Stock

CBRE EU-27 Prime Office Rent Index Change per Annum (%) Source: CB Richard Ellis CBRE EU-27 Prime Office Rent Index Change per Annum (%) Source: CB Richard Ellis | Page 10 Index

Prime Office Rents: Recovery Progress Changes in rents: peak-to-trough and trough to Q 2 Prime Office Rents: Recovery Progress Changes in rents: peak-to-trough and trough to Q 2 2011 Change in Prime Rent (%) Source: CB Richard Ellis | Page 11

Office Development Completions as % Total Stock Western Europe vs. CEE % of Total Office Development Completions as % Total Stock Western Europe vs. CEE % of Total Stock Source CB Richard Ellis | Page 12

Office Supply Pipeline Vacant office space plus developments scheduled for completion by end of Office Supply Pipeline Vacant office space plus developments scheduled for completion by end of 2013 % of Total Stock Source: CB Richard Ellis | Page 13

Shopping centre development pipeline, Q 1 2011 Schemes of 20, 000 sq m or Shopping centre development pipeline, Q 1 2011 Schemes of 20, 000 sq m or more Sq m per 1, 000 population * Data is for Moscow and St. Petersburg only Source: CB Richard Ellis | Page 14

European retailer expansion plans Proportion of sampled (203) retailers targeting country Source: CB Richard European retailer expansion plans Proportion of sampled (203) retailers targeting country Source: CB Richard Ellis | Page 15

CB Richard Ellis EU-27 Prime Retail Rent Index Change per Annum (%) Source: CB CB Richard Ellis EU-27 Prime Retail Rent Index Change per Annum (%) Source: CB Richard Ellis | Page 16 Index

Global Real Estate Investment Sales * *Commercial real estate only Billion US$ Source: Real Global Real Estate Investment Sales * *Commercial real estate only Billion US$ Source: Real Capital Analytics CB Richard Ellis | Page 17

Real estate investment in Europe Million € Source: CB Richard Ellis, Property Data, KTI Real estate investment in Europe Million € Source: CB Richard Ellis, Property Data, KTI CB Richard Ellis | Page 18

Cross-region capital flows into Europe, 2010 -H 1 11 Non-European buyers invested € 24 Cross-region capital flows into Europe, 2010 -H 1 11 Non-European buyers invested € 24 billion in Europe in 2010 -H 1 2011 North America € 13. 1 bn London Paris Berlin Moscow Frankfurt € 9. 4 bn € 1. 9 bn € 0. 8 bn € 0. 7 bn Asia Middle East € 5. 0 bn € 4. 2 bn Australia € 0. 9 bn Source: CB Richard Ellis, Property. Data, KTI CB Richard Ellis | Page 19

Investment volumes by country Growth in German and CEE in H 1 2011 Billion Investment volumes by country Growth in German and CEE in H 1 2011 Billion € Source: CB Richard Ellis, Property Data, KTI CB Richard Ellis | Page 20

Retail property investment in Europe Billion € Source: CB Richard Ellis | Page 21 Retail property investment in Europe Billion € Source: CB Richard Ellis | Page 21 %

Retail investment by country/region Billion € Source: CB Richard Ellis, Property Data, KTI CB Retail investment by country/region Billion € Source: CB Richard Ellis, Property Data, KTI CB Richard Ellis | Page 22

CB Richard Ellis EU-15 prime yield index Weighted average prime yield Source: CB Richard CB Richard Ellis EU-15 prime yield index Weighted average prime yield Source: CB Richard Ellis | Page 23

European Property Value Indices Q 4 2007 = 100 Source: CB Richard Ellis, European European Property Value Indices Q 4 2007 = 100 Source: CB Richard Ellis, European Valuation Monitor CB Richard Ellis | Page 24

European Property Value Indices Q 4 2007 = 100 Source: CB Richard Ellis. European European Property Value Indices Q 4 2007 = 100 Source: CB Richard Ellis. European Valuation Monitor CB Richard Ellis | Page 25

‘Prime’ versus ‘Average’ Office Capital Values Average values taken from European Valuation Monitor Index ‘Prime’ versus ‘Average’ Office Capital Values Average values taken from European Valuation Monitor Index June 2009 = 100 Source: CB Richard Ellis | Page 26

Yield gap evolution Average prime property yield minus 10 -year govt bond Percentage points Yield gap evolution Average prime property yield minus 10 -year govt bond Percentage points Source: CB Richard Ellis, Macrobond CB Richard Ellis | Page 27

Renewed Anxieties • Downgrade of growth expectations • Eurozone debt threatening banking stability • Renewed Anxieties • Downgrade of growth expectations • Eurozone debt threatening banking stability • Loss of faith in policy-makers • Capacity for action – what tools left? • Political divisions and obstacles • Fall in business and consumer confidence • Rise in investment risk aversion CB Richard Ellis | Page 28

Eurozone GDP Growth Alternative forecasts Real GDP Growth (%) Forecasts Source: Oxford Economics CB Eurozone GDP Growth Alternative forecasts Real GDP Growth (%) Forecasts Source: Oxford Economics CB Richard Ellis | Page 29

“Muddling through” • Euro debt crisis contained, but with recurrent stress points • Fiscal “Muddling through” • Euro debt crisis contained, but with recurrent stress points • Fiscal austerity curbs growth • Monetary policy stimulus maintained • Deleveraging continues • Consumers under pressure • Gradual pick-up in business investment • Overall slow growth wide divergences in country performance CB Richard Ellis | Page 30

European Real Estate: Outlook Summary • Slow growth environment • Subdued occupier demand – European Real Estate: Outlook Summary • Slow growth environment • Subdued occupier demand – cost-sensitive • Rental growth limited - mainly prime space where in short supply • Development restrained • Debt market constraints • Major refinancing needs • Banks more active in managing loans • Limited new lending – low risk • Investor bias to larger, liquid markets • Continued polarisation between prime and secondary • Prime properties stable/improving with competition for core stock • Good secondary in stronger markets - opportunity • Concern for poorer secondary/tertiary stock – yields to soften further CB Richard Ellis | Page 31

CB Richard Ellis | Page 32 CB Richard Ellis | Page 32

China Matters: What are the real estate opportunities? Real Estate Breakfast Seminar London, September China Matters: What are the real estate opportunities? Real Estate Breakfast Seminar London, September 2011 Amy L. Sommers, Partner K&L Gates - Shanghai Copyright © 2011 by K&L Gates LLP. All rights reserved.

Topics: ü 2025: Planning for China’s built environment üUrban planning 2001 to 2011: Xintiandi Topics: ü 2025: Planning for China’s built environment üUrban planning 2001 to 2011: Xintiandi as a case study üGov’t policy aims and concerns: where the next opportunities may lie 34

First, some context… 35 First, some context… 35

China by 2025… 350 million 5 billion SQM 170 40 billion SQM 50, 000 China by 2025… 350 million 5 billion SQM 170 40 billion SQM 50, 000 Number of people added to China’s urban population – 5+x Great Britain’s current popul. Area of roads that will be paved Number of mass-transit systems that could be build Amount of floor space that will be built Number of these buildings that could be skyscrapers – akin to building 10 cities the size of New York City 36

Real Estate Development in China Past Decade: ØUrban re-development has been a key driver Real Estate Development in China Past Decade: ØUrban re-development has been a key driver ØImproving housing stock ØUpgrading lifestyle from socialist, planned housing to market-driven, investedoriented housing Next Decade: ØWidening to Tier 2 and 3 cities ØLinking cities/regions through infrastructure (transport/energy) ØDemographically-driven opportunities 37

Red China …or Grey? “China’s demographic challenges are captured neatly in the popular saying Red China …or Grey? “China’s demographic challenges are captured neatly in the popular saying that the country “will grow old before it grows rich. ” China will start going grey some time this decade, and the process will accelerate after 2020. “ By 2030, China is projected to have more than 300 million citizens beyond retirement age. This will present what the Chinese call a “ 4 -2 -1” problem: a single child with two parents and four grandparents to care for. “Given the significant burdens this will impose, the government is already looking at ways to better fund healthcare. Beijing allocated $124 billion last year for healthcare reform, aiming for basic universal health coverage in the coming years. ” Source: http: //docs. eurasiagroup. net/chinaoutlook. pdf 38

Past Decade - Urban Redevelopment: Re-imagining Old Shanghai - Xintiandi 39 Past Decade - Urban Redevelopment: Re-imagining Old Shanghai - Xintiandi 39

Xintiandi - completed 2001 v. Lifestyle project in central Shanghai v Based on re-imagined Xintiandi - completed 2001 v. Lifestyle project in central Shanghai v Based on re-imagined use of vernacular structures 40

Xintiandi site in 1998 v At the time many considered China too poor/unsophisticated project Xintiandi site in 1998 v At the time many considered China too poor/unsophisticated project was doomed to fail or to attract only expatriates 41

Xintiandi - 10 th Anniversary Huge success - in 5 yrs will double to Xintiandi - 10 th Anniversary Huge success - in 5 yrs will double to 1. 2 M SQM Lesson: Predicting what will be popular in China is a mystery… 42

Demographics & policy: key drivers in China’s real estate sector 43 Demographics & policy: key drivers in China’s real estate sector 43

China’s Healthcare Aims - an example of how policy can drive development… Ø Improvement China’s Healthcare Aims - an example of how policy can drive development… Ø Improvement of services at grass-roots level: including support for the development of 2000 county-level hospitals; construction or expansion of 3700 urban community health care centers and 11, 000 community heath care stations within three years. 44

Opportunities & Pressures § Obviously, these forecasts for urbanization spell potential opportunities for all Opportunities & Pressures § Obviously, these forecasts for urbanization spell potential opportunities for all sorts of stakeholders, such as: § makers of transit system equipment § architects/designers/engineering services, building/construction material providers § suppliers of energy and energy infrastructure § health care/aged care 45

China’s 12 th Five-Year Plan l Proposed by the Chinese Communist Party’s Central Committee China’s 12 th Five-Year Plan l Proposed by the Chinese Communist Party’s Central Committee in 10/10, adopted by National People’s Congress in 3/11 l 7 “Strategic Emerging Industries” have been identified and are focused on health care, energy, technology sectors l. Focus is on ‘inclusive growth’ of the economy, which will take the form of social benefits (health care), improved living standards (environmental concerns such as clean energy), and value-added industries (growth in R&D facilities) 46

Implications for the built environment Implementation of the aims articulated in the 12 th Implications for the built environment Implementation of the aims articulated in the 12 th FYP will involve development of China’s built environment, e. g. : Ø construction of hospital facilities Ø Water treatment facilities, power transmission systems, development of energy-efficient buildings Ø R&D activities in IT and other areas will require suitable facilities and these users will require housing/amenities for associated workers Source: http: //apcoworldwideinc. com/Content/PDFs/Chinas_12 th_Five. Year_Plan. pdf 47

Opportunities & Pressures § What about pressures? § Power generation: 700 - 900 gigawatts Opportunities & Pressures § What about pressures? § Power generation: 700 - 900 gigawatts of new coal-fired power capacity will be constructed from 2005 -2025 § Arable land supply is diminishing – worst case, 20% decline § Inadequate supplies of potable water – today, 59% of China’s river water is below international standards for potability Concerns re overheating of real property sector mean that whether foreign-invested real estate projects will obtain needed approvals will be driven in part by whether their organization’s projects/services will (a) help address or redress these pressures or (b) to achieve FYP goals 48

Opportunities & Pressures (cont) Contradictions betw/ national & local govts abound: § Nat’l govt Opportunities & Pressures (cont) Contradictions betw/ national & local govts abound: § Nat’l govt banned construction of new golf courses in ‘ 04 § June 20: People’s Daily reported over 400 golf courses have been constructed since 2004 § How? Often by registration as sports parks, recreational parks and forestation areas "Some local governments have undertaken such programs in an effort to to boost their economies. So they register the clubs under different classifications, and the local government turns a blind eye on farmland forest acquisition. ”* *Yan Jinming, vice-president of the School for Public Administration at Renmin University 49

Overview of Legal Restrictions for Investing in China Real Property 50 Overview of Legal Restrictions for Investing in China Real Property 50

Foreign Investment in Real Property China restricts foreign investment in RE; essentially at least Foreign Investment in Real Property China restricts foreign investment in RE; essentially at least one of these conditions must exist: § if one is a PRC-registered business, one can develop or purchase property for one's own use § one can purchase equity (stock) in a company that hold/develops/rents RE § one can form a company to acquire land rights from the government & develop a project for rent/sale to third parties 51

Challenges/restrictions: § Can't buy property w/out forming a company in the PRC – and Challenges/restrictions: § Can't buy property w/out forming a company in the PRC – and PRC companies can’t be easily dissolved/wound up - so this significant § Special capitalization and approval requirements before making an investment § Requires converting foreign currency and the gov’t is increasingly concerned about pressure on the RMB to rise – possible to get other approvals, but not be allowed to convert capital to fund the project 52

53 53

Sectors/areas where foreign projects more likely to be welcome? § Niche projects - eg, Sectors/areas where foreign projects more likely to be welcome? § Niche projects - eg, health care/bio tech § Projects filling policy aims - eg, develop the West – getting approvals in Chongqing and Chengdu is probably like Shanghai 15 years ago § Senior living, affordable housing, energyefficient/’green’ projects (again, ties back to policy aims) 54

Real Estate in Russia: Recent Developments and New Opportunities William Reichert K&L Gates LLP Real Estate in Russia: Recent Developments and New Opportunities William Reichert K&L Gates LLP 4 th Lesnoy Pereulok 4, 5 th Fl. Moscow, Russia +7 (495) 643 -1700 william. [email protected] com Copyright © 2011 by K&L Gates LLP. All rights reserved.

I. Current Russian Real Estate Market II. Legislative Developments Affecting Real Estate III. Major I. Current Russian Real Estate Market II. Legislative Developments Affecting Real Estate III. Major Projects and Opportunities for Investment 56

I. Current Russian Real Estate Market 57 I. Current Russian Real Estate Market 57

Commercial Real Estate Industry Overview § Return of confidence to the Russian real estate Commercial Real Estate Industry Overview § Return of confidence to the Russian real estate investment market in Q 2 2011 § Moscow is currently one of the hottest investment markets in Europe § Q 2 2011 saw the largest ever quarterly investment volume in Russia § Overall investment volume provides for the potential for 2011 to match the record levels of 2007 and 2008 58

Commercial Real Estate Industry Overview Investment Volumes by quarter, 2005 - 2011 Information from Commercial Real Estate Industry Overview Investment Volumes by quarter, 2005 - 2011 Information from CBRE 59

Real Estate Investment: H 1 2011 - Deals § Total volume of deals – Real Estate Investment: H 1 2011 - Deals § Total volume of deals – Euro 1. 77 billion (13 deals) including Euro 1. 6 billion in Q 2 2011 (11 deals) § Largest Deal: purchase of Ritz-Carlton Hotel in central Moscow by Verny Capital from Capital Partners for Euro 424 million § 47% of White Square business center (110, 750 m²), purchased by consortium of VTB and TPG from Coalco § 50% of White Gardens business center (95, 000 m², under construction, due in 2012), purchased by consortium of VTB and TPG from Coalco § Alfa Arbat business center (47, 200 m²), purchased by Promsvyaznedvizhimost from TNK-BP § 90% of Berlin House/Geneva House (7, 400 m² / 9, 875 m²) purchased by Lenhart Global from Eastern Property Holdings 60

Real Estate Investment: H 1 2011 - Deals § Kaluzhsky shopping center (57, 000 Real Estate Investment: H 1 2011 - Deals § Kaluzhsky shopping center (57, 000 m²), purchased by Binbank from ZBuild § Filion shopping center (128, 000 m²), purchased by Kompleksnie Investicii from Rubin Development § Gorbushkin Dvor shopping center (60, 000 m²), purchased by Kompleksnie Investicii from Rubin Development § FM Logistics Industrial Park in Khimki (north of Moscow) (75, 000 m²), purchased by Hines Global REIT (USA) from AIG Global Real Estate § Metropolis II business center (22, 300 m²), purchased by Heitman from Capital Partners § Proposed sale of CJSC “Inteco”, one of the largest developers in Moscow, to a Binbank shareholder and OJSC “Sberbank Investment” for an estimated US$ 1. 2 billion I 61

Real Estate Investment: H 1 2011 – Refinancing § Hermitage Plaza business center (Raiffeisen) Real Estate Investment: H 1 2011 – Refinancing § Hermitage Plaza business center (Raiffeisen) § Romanov Dvor business center (Nordea) § Gogolevsky 11 business center (Raiffeisen) § Metropolis business center (Nordea) § Ducat III business center (Uni. Credit) § Four Winds business center (Nordea) § Immofinanz retail portfolio (Rosbank) § White Square business center (VTB, closing in process) 62

Moscow Office Market: H 1 2011 § Demand up by 30 -40% compared to Moscow Office Market: H 1 2011 § Demand up by 30 -40% compared to 2010 § Aggregate supply - 11 m m²; new supply - 200 -250 k m² § New supply will be very low in 2011 (890 k m², the lowest during 20082010) § New supply will shift away from the city center due to a ban on construction in central Moscow (announced by Mayor Sobyanin): § Suspension of some issued permits and audit of previously issued documents § Limitation and prohibition of virtually all new construction § Likely not to include reconstruction and capital improvements § Possible outcome: fewer offices to rent, return to “seller’s market”, more new offices outside the city center 63

Moscow Office Market: H 1 2011 § Signs of return of confidence to the Moscow Office Market: H 1 2011 § Signs of return of confidence to the market: § Stable take-up: volume of deals (leases) in Q 2 – 296, 000 m² (41% quarterly increase) § Overall vacancy decreased to 12. 5% (18% in Class A, 12% in Class B) § Prime rents continue to rise § Tenants attracted primarily by quality § Average rental rate for fitted-out prime offices – US$1, 050 per m² per year § 97, 500 m² of office space delivered to the Moscow market in Q 2 2011, a 64% decrease compared to Q 1 2011 64

Russian Warehousing Market: H 1 2011 § Current State: § § Demand up by Russian Warehousing Market: H 1 2011 § Current State: § § Demand up by 20% compared to 2010 Share of foreign companies as tenants – 10% Increasing size of transactions Rent up by 5 -7%; purchase prices stable § Trends: § Increase in demand § Increase in rent and purchase price expected to be at least 10% 65

II. Legislative Developments Affecting Real Estate 66 II. Legislative Developments Affecting Real Estate 66

Applicable law § Civil Code of the Russian Federation § Land Code of the Applicable law § Civil Code of the Russian Federation § Land Code of the Russian Federation § Town-Planning Code of the Russian Federation § Federal law on state registration of rights to immovable property and related transactions (Registration Law) § Regional laws and regulations 67

Proposed Amendments: Civil Code Project § To avoid potential disputes with regard to title Proposed Amendments: Civil Code Project § To avoid potential disputes with regard to title registration, the following new registration principles have been proposed: § Verification of basis for original registration of title § Establishment of a true and accurate public register § Introduction of notarization requirement for all transactions creating, changing or terminating rights that are subject to state registration § Property = land plot + building § A land plot and an object on the land plot (building, construction) owned by the same person are considered a sole real estate object § Currently, there is no such concept in Russian law (however, there is a concept of “common fate” of land plots and objects, i. e. all objects closely bound with land plots follow the fate of land plots) 68

Proposed Supreme Commercial Court Plenum Resolution* § Seller’s lack of title to real estate Proposed Supreme Commercial Court Plenum Resolution* § Seller’s lack of title to real estate upon signing a contract will not in itself lead to the contract’s invalidity, but title will be required for state registration § Better identification of future real estate objects in contracts (important for preliminary agreements and agreements concerning future real estate): § location, size, other characteristics, defined in accordance with the construction plan § identification is adequate if the total floor area to be conveyed and the price per square meter can be established § such data can be contained in transfer-delivery certificates *Plenum Resolutions are obligatory for commercial courts in Russia 69

III. Major Projects and Opportunities for Investment 70 III. Major Projects and Opportunities for Investment 70

Skolkovo Research Center § “Russian Silicon Valley” § Center for research, development and commercialization Skolkovo Research Center § “Russian Silicon Valley” § Center for research, development and commercialization of: § § § energy efficiency and savings nuclear technologies space technologies medical technologies strategic computer technologies and software § Construction expected to take from three to seven years § Largest experimental center for new economic policy § Located 2 km to the west of Moscow 71

Skolkovo Research Center § Unprecedented legal regime for Skolkovo participants: § Will be exempt Skolkovo Research Center § Unprecedented legal regime for Skolkovo participants: § Will be exempt from VAT and profits tax for 10 years § Will deal with customs authorities only through the Skolkovo management company, which will be responsible for dealing with customs officials § Land plots and buildings in Skolkovo will be owned by the Skolkovo management company § No quotas will be needed from migration authorities to employ a foreigner; Skolkovo management company will be responsible for paperwork required § Participants must be Russian legal entities, created specifically for research activities, and physically located in Skolkovo (starting from January 1, 2014, prior to then they can be elsewhere in Russia) 72

Moscow: extension of territory § Aimed at creation of a metropolitan federal district § Moscow: extension of territory § Aimed at creation of a metropolitan federal district § Ease the concentration of traffic and business, and possibly form an administrative and financial center outside the city center § Planned to be finalized by the second half of 2012 § The new territory is close to Rublevskoye highway, the most expensive and prestigious location in the Moscow Region (with official residences of the President, Prime Minister, oligarchs) § Moscow is to be extended by an additional 160 k ha (currently the territory is 109 k ha) § The extension is likely to result in a rise in price of land plots and buildings on the territory Image from www. mos. ru 73

Kaluga Region: Industrial Park Development § Total area for industrial construction – 2. 3 Kaluga Region: Industrial Park Development § Total area for industrial construction – 2. 3 ha § Over US$ 3 billion of foreign capital invested since 2007, to exceed US$ 5 billion by 2012 § Large multinational residents include Samsung, GE, Volvo, Renault, VW, Nestle, L’Oreal, Peugeot/Citroën, Mitsubishi Motors, John Deere § Direct access to federal highways, railway lines and local population centers § Overall infrastructure is already in place and wellfunded § Regional government engaged and committed to project’s success Information from CBRE 74

Olympic Games Sochi 2014 § Government allocated US$ 12 bln to 2014 Olympics and Olympic Games Sochi 2014 § Government allocated US$ 12 bln to 2014 Olympics and Paralympics § Approximately US$ 17. 8 bln of private investment expected (more than 200 investment projects) § Construction: § Coastal cluster § Approximately 50% sports related, 50% infrastructure related § Central focus - Olympic Park, connecting all competition venues, parking zone and infrastructure to accommodate 75, 000 visitors § Other infrastructure: including airport, three railway lines, recycling facilities, hotels § Mountain cluster § Biathlon and ski complexes, a bobsled track, a snowboard park, etc. § Satellite construction: service, tourism, infrastructure 75

Football World Cup 2018 § Cities: Kazan, Kaliningrad, Krasnodar, Moscow, Nizhniy Novgorod, Rostov-on-Don, Samara, Football World Cup 2018 § Cities: Kazan, Kaliningrad, Krasnodar, Moscow, Nizhniy Novgorod, Rostov-on-Don, Samara, St. Petersburg, Saransk, Sochi, Volgograd, Yaroslavl, Yekaterinburg § Total amount of expenditure - approximately US$ 22 bln, including: § approximately US$ 8. 6 bln for construction and renovation of roads § approximately US$ 4. 4 bln for construction and renovation of arenas § Approximately US$ 33. 3 bln for construction of high speed railroad network Image from russiatrek. org 76

Titanium Valley § Special economic zone located in the Urals* § Aimed at developing Titanium Valley § Special economic zone located in the Urals* § Aimed at developing titanium production for aviation, medicine and aero-construction components § More than US$ 1. 8 bln to be invested § Will initially cover 300 ha, to be expanded to 1, 800 ha § Boeing, Rolls Royce, Spirit, Goodrich, MHI, Alenia are expected to become initial members of the project § Airbus, Snecma, Embraer, Turbomeca may also join § Incentives include no property tax, land tax, transport tax, reduced income tax *A major factor in establishing the special economic zone is the proximity of OJSC VSMPO-AVISMA Corporation, the world’s largest manufacturer of titanium. 77

Caucasus Silicon Enterprise § Private-public partnership with equal investment volume § Amount of investment Caucasus Silicon Enterprise § Private-public partnership with equal investment volume § Amount of investment approximately US$ 1. 14 bln § Amount of annual production approximately US$ 1. 4 bln § Cluster for silicon production for helioenergetics (solar energy) Image from www. themoscowtimes. com 78

Green Building § Supporting legislation: § Federal law on saving energy and increasing energy Green Building § Supporting legislation: § Federal law on saving energy and increasing energy efficiency § Federal law – technical regulations on the safety of building and facilities § Federal law on heating supply § Few buildings certified under green standards in Russia, around 20 projects registered for LEED or BREEAM certification § No unified Russian standard currently exists; buildings are being certified under LEED, BREEAM or corporate standards (i. e. Olympstroy standard) § Olympstroy, the state corporation tasked with building sites for the Olympics, is working on its own corporate Green Standard for Olympic construction: § 10 venues to be certified under BREEAM and LEED § 150 venues to be certified under Olympstroy’s Green Standard § Buildings in Skolkovo are master planned to be LEED certified 79

Green Building § The Center for Ecological Certification “Green Standards” (CECGS) has prepared a Green Building § The Center for Ecological Certification “Green Standards” (CECGS) has prepared a draft of a national standard to be discussed and reviewed § A consortium consisting of CECGS, the Russian Green Building Council (Ru. GBC)* and Olympstroy agreed that the amended Russian Green Standard would include the Olympstroy Green Standard § On June 21, 2011 President Medvedev issued orders to the Government and the State Duma to prepare and adopt draft laws for economic stimulation of activities aimed at reducing negative effects on the environment § In late September 2011 a Ru. GBC working group will announce recommendations in line with the President’s orders § Growing market for consultancy and architectural services *Ru. GBC is a newly formed non-profit organization dedicated to the development and adoption of green building practices (170 members in 2 years) 80

UK and Global Real Estate Trends – Opportunities for 2011/2012 20 September 2011, London UK and Global Real Estate Trends – Opportunities for 2011/2012 20 September 2011, London Copyright © 2011 by K&L Gates LLP. All rights reserved.