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On the pulse of the property world The real size of the Dutch real estate investment market An estimate of the total professionally managed real estate market Bert Teuben Rob Courtens Eindhoven, June 16 2011

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IPD 2011ipd.com 2 Agenda Introduction Literature review Real estate market size estimate Top down Bottum-up Theoretical estimates Based on transactions Debt and equity Market structure

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IPD 2011ipd.com 3 Introduction Importance of estimate market size for total sector: More information on the different type of investors and their influence on the real estate market and the economy; For foreign investor the market size gives more information on the (potential) liquidity and attractiveness of a country; More transparency on equity and debt in the market is essential. Additional IPD goals: Market coverage for IPD indexes; Weighting of countries in pan-European and global indexes; Indentifying missing investors in IPD- indices.

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IPD 2011ipd.com 4 Top down approach from different sources, mainly government data (Callender e.a., 1996) Based on a relation to the GDP in a country (Ling, e.a. 1999) Difference between investible and invested Previous literature

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IPD 2011ipd.com 5 Theoretical framework Real estate market Listed End investor Non-ListedDirect Corio, Wereldhave, Unibail, Vastned, Nieuwe steen etc. Eurindustrial, ING funds, Achmea funds, Altera, Q-park, Bouwfonds, Ping properties, Bouwinvest Institutional: Spoorweg, MN services Private: Kroonenberg, Mayfield Banks Fund of funds RE Derivatives Capital market RE market Assets RE DebtRE Equity

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IPD 2011ipd.com 6 Agenda Introduction Literature review Real estate market size estimate Top down Bottum-up Theoretical estimates Based on transactions Debt and equity Market structure

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IPD 2011ipd.com 7 Top down Total stock 2.081 billion Residential 1.653 billion Non-residential 428 billion Statistics Netherlands (CBS) not market value, but includes social housing and owner occupied; invested = 110 billion (market value) includes owner occupied, agricultural land and buildings, government assets, factories

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IPD 2011ipd.com 8 Bottom up Dutch and non-domestic investors: 60 pension funds and insurance companies with direct investments 32 listed funds 348 non-listed funds 89 private investors with portfolios of over 100 million Total 118 billion, but not completely sure on covering all real estate owners

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IPD 2011ipd.com 9 Theoretical estimate Investible 45% of GDP (Hordijk) 45% of 592 billion is 266 billion Invested 36% of investible 36% of 266 billion is 96 billion

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IPD 2011ipd.com 10 Based on transactions Only for commercial real estate (offices, retail and industrial) transaction are recorded over long time-periods (average annual figure 5.8 billion); Average holding period of sold assets during the period 1995-2010 was 15 years for commercial real estate (source IPD/ROZ real estate index) 15 x 5.8 billion = 87 billion Source: Jones Lang LaSalle

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IPD 2011ipd.com 11 Summary real estate market estimate ApproachEstimateMissing Top-down Residential 110 billion Offices 53 billion Retail, industrial and other Bottom-upProfessional managed 118 billionSmall private investors GDP 96 billion TransactionsCommercial real estate 87 billionResidential Total market size is 197 billion ( 87 billion commercial plus 110 billion residential) of which 118 is professional managed DTZ (2011) mentions a total market size of 196 billion

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IPD 2011ipd.com 12 Agenda Introduction Literature review Real estate market size estimates Top down Bottum-up Theoretical estimates Based on transactions Debt and equity Market structure

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IPD 2011ipd.com 13 Equity top down Real estate equity investments by Dutch institutional investors also non-domestic investments Source: Statistics Netherlands

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IPD 2011ipd.com 14 Equity top down Real estate investments by Dutch institutional investors also non- domestic investments Source: Statistics Netherlands

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IPD 2011ipd.com 15 Equity bottum up Equity in real estate investments in the Netherlands in billion InvestorType of investmentEstimate of equity Pension funds and insurance companies Listed funds 3 billion Non-listed funds 20 billion Direct holdings 18 billion Private investorsNon-listed funds 4 billion Direct holdings (only > 100 million) 15 billion Direct holdings (only < 100 million)Unknown Non-domestic investors Listed, non-listed and direct investments 12 billion Total Equity 72 billion

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IPD 2011ipd.com 16 Debt top down Debt determined by annual reports banks - 55 billion Dutch banks > only Dutch real estate and no development exposure - 9 billion non-domestic banks - 1 billion corporate bonds - 4 billion direct CMBS/RMBS transaction no securitisation Total debt 69 billions

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IPD 2011ipd.com 17 Debt bottom up Debt in real estate investments in the Netherlands in billion InvestorType of investment Estimate of debt Pension funds and insurance companies Listed funds 3 billion Non-listed funds 7 billion Direct holdings 0 billion Private investorsNon-listed funds 10 billion Direct holdings (only > 100 million) 17 billion Direct holdings (only < 100 million)Unknown Non-domestic investorsListed, non-listed and direct investments 9 billion Total Debt 45 billion

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IPD 2011ipd.com 18 Agenda Introduction Literature review Real estate market size estimates Top down Bottum-up Theoretical estimates Based on transactions Debt and equity Market structure

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IPD 2011ipd.com 19 Market structure Debt and equity in real estate investments in the Netherlands in billion InvestorType of investmentEstimate of equity Estimate of debt Total Pension funds and insurance companies Listed funds 3 6 Non-listed funds 19 7 26 Direct holdings 18 0 18 Private investorsNon-listed funds 4 10 14 Direct holdings (large > 100 million) 15 17 32 Non-domestic investors Listed, non-listed and direct investments 12 9 22 Total market professional managed real estate investments 72 45 118 Top down approach (total real estate investments) 128 69 197 Small private direct investors (< 100 million) 55 24 79

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IPD 2011ipd.com 20 Market structure Market structure of professional managed real estate in the Netherlands (excluding private investors < 100 million) amounts in billion Debt (Dutch banks) Equity (Dutch) Debt (non- domestic banks) Equity (non-domestic) Dutch real estateNon-domestic real estate 9 37 35 72 96 118 12 59 38 Conclusions LTV 40% is low compared to European average of 60% Size of 118 billion is larger than earlier estimates Low Dutch exposure by non-domestic investors (18%) Large non-domestic exposure by Dutch investors (43% of total exposure)

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IPD 2011ipd.com 21 Further research Carry out more research on market sizes in other countries Carry out market sizes per sector within a country (offices, retail, industrial and residential) Estimate isnt stable over time so yearly updates would be preferred Probably not all private investors and separate accounts are included in the figures Market size of owner occupied market for commercial real estate is unknown (retail, offices and industrial)

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IPD 2011ipd.com 22 IPD Nederland Busplein 30 1315 KV Almere Nederland Tel: +31 88 328 2200 Fax:+31 88 328 2201 www.ipd.com/netherlands Intellectual Property Rights and use of IPD statistics as benchmarks Whether in the public domain or otherwise, IPD's statistics are the intellectual property of Investment Property Databank Limited. It is not permissible to use data drawn from this presentation as benchmarks. Investment Property Databank Limited (IPD) 2011. Database Right, Investment Property Databank Limited (IPD) 2011. All rights conferred by law of copyright and by virtue of international conventions are reserved by IPD