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Irish Economic &
Property Market Update
July 2011
agenda
 The economy
 The investment market
 The occupier market
 Summary
the economy
Irish Economic Growth 2006 – 2012(f)
GDP growth
GNP growth
10
%
6
2
-2
-6
Source: CSO, Central Bank of Ireland
2012f
2011f
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
-10
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
%
Irish Unemployment
15
Unemployment
Source: CSO
Long-Term UE
12
9
6
3
0
Irish Retail Sales Volumes
All Retail Y/Y
Retail Excl. Motors Y/Y
15%
YoY Change (Volume)
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
Source: Central Statistics Office
2011M01
2010M07
2010M01
2009M07
2009M01
2008M07
2008M01
2007M07
2007M01
2006M07
2006M01
-30%
Government Debt to GDP Ratio
160
140
% of GDP
120
100
80
60
40
20
0
Greece
Ireland
United
States
2008
Source: IMF
2009
Portugal
2010
France
2011f
2012f
United
Kingdom
Germany
Spain
the economy
NEGATIVES
 National debt & fiscal deficit a
huge concern
POSITIVES
 Export performance holding up
very well
 Personal indebtedness pressures  New coalition Government in
mounting - will be compounded
place since March
by further interest rate hikes
 12.5% corporation tax supporting
 IMF/EU/ECB bailout has created
multinational investment &
very negative sentiment about
expansion
Ireland internationally
 Huge improvement in
 Virtually no liquidity in the Irish
competitiveness
banking system
the investment market
irish commercial investment in europe
UK
France
Germany
Benelux
CEE
Ireland
Other
12,000
8,000
6,000
4,000
2,000
Source: CB Richard Ellis
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
0
20
01
€ Millions
10,000
irish investment 2003 – 2011 Q1
€241.7 million in 29 deals in 2010
Only 3 transactions signed in Ireland in H1 2011 - €149.25 million
3,500
99
deals
€ Millions
3,000
2,500
79
deals
119
deals
2,000
1,500
73
deals
1,000
500
80
deals
29
deals
13
deals
29
deals
2 deals
1 deal
0
2003
2004
2005
Source: CB Richard Ellis Research
2006
2007
2008
2009
2010
Q1
2011
Q2
2011
irish capital value index
Average peak-to-trough decline of 60% to date
700
Retail
Office
Industrial
600
400
300
65% fall
in Retail
200
59% fall
in Office
100
56% fall
in Industrial
Source: IPD
Dec-10
Dec-08
Dec-06
Dec-04
Dec-02
Dec-00
Dec-98
Dec-96
Dec-94
Dec-92
Dec-90
Dec-88
Dec-86
0
Dec-84
1994 = 100
500
irish returns
Values continued to decline, primarily as a result of rental pressures
Pace of decline has eased considerably
5
Total Return
Capital Growth
0
-5
-10
-15
Source: IPD
1
ar
-1
M
ec
-1
0
D
Ju
n10
Se
p10
0
ar
-1
M
ec
-0
9
D
Ju
n09
Se
p09
9
ar
-0
M
Ju
n08
Se
p08
D
ec
-0
8
M
ar
-0
8
-20
irish investment transactions
BOOLE HOUSE, CLONSKEAGH
AIB, GRAFTON ST
GASWORKS/GORDON HOUSE, D4
BOODLES, GRAFTON ST
prime office yields
Yields expected to remain relatively stable in 2011
Clear divergence between Dublin & London
8
London City
London West End
Prime Dublin CBD
7.5
7
Yield %
6.5
6
5.5
5
4.5
4
3.5
3
Q1
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Source: CB Richard Ellis Research
Q1
2005
Q1
2006
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
office equivalent yields 1984 – Q1 2011
Office Equivalent Yields
9.0
8.1%
8.0
7.6%
6.0
6.1%
5.0
4.0
Office
Pre-Euro Average
Post-Euro Average
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Dec-92
Dec-88
3.0
Dec-84
%
7.0
retail equivalent yields 1984 – Q1 2011
Retail Equivalent Yields
10.0
9.0
8.0%
7.8%
8.0
%
7.0
6.0
5.0
5.2%
4.0
Retail
Pre-Euro Average
Post-Euro Average
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Dec-92
Dec-88
Dec-84
3.0
yield forecasts
Peak
July 2011
Trending
Yield %
Yield %
2.50
3.50
3.25
6.50
8.00
8.00
Weaker
Weaker
Weaker
3.50
4.25
8.50
10.00
Weaker
Weaker
4.25
5.00
8.75
11.00
Weaker
Weaker
3.75
4.25
5.00
7.50
9.00
9.50
Weaker
Weaker
Weaker
5.75
10.00
Weaker
4.75
4.75
5.75
9.50
11.00
12.00
Weaker
Weaker
Weaker
RETAIL
SHOPS
Prime High Street
Good Secondary High Street
Prime Provincial High Street
SHOPPING CENTRES
Prime
Secondary
RETAIL WAREHOUSES
Prime
Secondary
OFFICES
Prime City Centre Dublin
Secondary City Centre Dublin
Suburban Dublin
Prime Provincial
INDUSTRIAL
Prime Dublin
Secondary Dublin
Prime Provincial

Prime Yields refer to an equivalent yield for a prime (well specified, well-located and rack-rented) property let to a strong tenant(s), on a lease with
10 years unexpired and open market rent reviews (upwards or downwards)

Prime Provincial refers to Cork, Galway, Limerick and Waterford only.
the investment market
NEGATIVES
POSITIVES
 Lack of clarity on Government
 Significant decline in values
rent review proposals is halting
encouraging a lot of international
investment activity & could impact
appetite for prime assets
further on values
 No distress selling of assets to
 Scarcity of prime retail and office
date
investment opportunities being
 Prime rents & yields were
offered for sale
showing signs of stabilising but
 Demand purely focussed on
now questionable
prime assets with secondary
values remaining under pressure
 Virtually no bank funding
the occupier markets
irish office transactions
irish industrial transactions
irish retail transactions
dublin annual office take-up vs. vacancy
Over 80,000 square metres let in Dublin in first six months of 2011
Vacancy remaining stubbornly high at 23%
300,000
30%
Take-Up
Vacancy
20%
Average Annual Takeup: 161,000 sq m
Source: CB Richard Ellis Research
2011(f)
2010
2009
2008
2007
0%
2006
0
2005
5%
2004
50,000
2003
10%
2002
100,000
2001
15%
2000
150,000
Vacancy %
200,000
25%
1999
2
Take-up (m )
250,000
2010 dublin take-up vs. competing cities*
Dublin significantly out-performing other competing locations
140
120
80
60
40
20
Source: CB Richard Ellis Research
* based on average in competing cities
el
fa
st
B
m
A
m
st
er
da
la
sg
ow
G
in
gh
am
irm
B
an
c
M
Ed
in
bu
rg
h
he
st
er
ub
lin
0
D
Sq M ('000's)
100
vacant office accommodation by district
Grade A
300
Secondary
Needs Significant Refurbishment
47
7
Georgian
Overall Vacancy Rate
= 23%
Vacancy Rate Dublin 2/4
= 17.4%
Suburban Vacancy Rate
= 22.9%
South Suburbs
= 14.7%
65
Thousands Sq M
9
200
154
143
5
45
64
24
68
100
106
101
60
116
16
38
0
Dublin 2/4
Dublin
1/3/7
South
Suburbs
Source: CB Richard Ellis Research
26
West
Suburbs
North
Suburbs
38
30
29
Dublin 6/8
IFSC
annual supply dublin offices
Development pipeline curtailed
250
Sq M ('000's)
200
150
100
50
0
)
97 998 999 000 001 002 003 004 005 006 007 008 009 010 011 2(f
9
1
1
1
2
2
2
2
2
2
2
2
2
2
2
2 01
2
Source: CB Richard Ellis Research
prime dublin office rents
52% decline from peak levels
Prime rents stabilising somewhat but secondary & provincial still under pressure
Peak
€673
700
650
600
550
500
450
Now
€323
400
350
Source: CB Richard Ellis Research
Q1 2011
Q3 2010
Q1 2010
Q3 2009
Q1 2009
Q3 2008
Q1 2008
Q3 2007
Q1 2007
Q3 2006
Q1 2006
Q3 2005
Q1 2005
Q3 2004
Q1 2004
Q3 2003
Q1 2003
Q3 2002
Q1 2002
Q3 2001
Q1 2001
Q3 2000
Q1 2000
300
rent forecasts
Peak
Prime Rent
€ per sq m
June 2011
Prime Rent
€ per sq m
Trending
10,000
7,500
4,500
5,000
4,250
3,500
Weaker
Weaker
Weaker
3,900
2,800
3,250
2,000
Weaker
Weaker
360
320
242
215
Weaker
Weaker
673
377
296
270
323
196
172
135
Weaker
Weaker
Weaker
Weaker
130
100
90
65
54
43
Weaker
Weaker
Weaker
RETAIL
SHOPS
Prime High Street Zone A
Good Secondary High Street Zone A
Prime Provincial High Street
SHOPPING CENTRES
Prime Zone A
Secondary Zone A
RETAIL WAREHOUSES
Prime
Secondary
OFFICES
Prime City Centre Dublin
Secondary City Centre Dublin
Suburban Dublin
Prime Provincial
INDUSTRIAL
Prime Dublin
Secondary Dublin
Prime Provincial

Prime rent refer to a headline rent for a prime (well specified, well-located) property let to a strong tenant(s), on a lease
of 10 years unexpired and open market rent reviews (upwards or downwards)

Prime Provincial refers to Cork, Galway, Limerick and Waterford only.
Sq. M : Sq. Ft: = 1 : 10.76
office rents in competing locations
Significant improvement in competitiveness
1200
€ per m2 per annum
1000
800
600
400
200
Source: CB Richard Ellis Research
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in a nutshell
 Economic & banking situation impacting on property market performance
 Irish commercial property values have to date declined by more than 60%
from peak levels in 2007
 Irish residential property values have to date declined by as much as
55% from peak levels
 Commercial prime rents have declined by approximately 50% from peak
 Liquidity has effectively dried up and as a result transaction volumes
have fallen considerably
 To date, there has been limited distress selling but pressure is building
 The scale of the disposal challenge is huge
 However……the occupier markets are performing well with occupiers
taking advantage of attractive deals in the current climate