The Emergence of Asian

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First page of new section: Heading 02 starts here THE EMERGENCE OF ASIAN CBRE GLOBAL CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text RESEARCH AND CONSULTING starts here SUPERTALLS LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN

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Text boxes have NO Internal Margins (Format shape/Text Box) 7 The emergence of Asia as a hub for tall office buildings ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text 9 Key drivers of leasing office space in supertalls in Asia TWO LINE SPACES after Body Text and start of Heading 02 12 Do supertall office buildings command a rental premium?

13 The tenant mix of supertall office buildings

ALL GRAPHS to keep to same height and width. W6.11 x H2.26” 16 The future supply of tall and supertall office buildings in Asia (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom 19 Conclusion Chart Title: Futura Md BT Bold, 10pts, Black Chart Text: Futura Lt BT, 7pts 20 Appendix Chart Lines: ¼ pts, 50% Black

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Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Executive summary

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The development of tall office buildings in Asia began relatively recently at the end of the 20th century. CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text However, the pace of construction has been so rapid that by June 2014, the region was home to 55% starts here of the total number of tall office buildings globally. LIME CBRE ENERGISING GREEN GREEN Cover Title: Last line ALWAYS anchor on this margin Within Asia, a high density of tall buildings is viewed as being synonymous with being a successful GREEN financial hub. It is widely believed that constructing supertall office buildings can enhance the Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green competiveness of a city’s business environment. Authorities in a number of markets have pursued this R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) strategy as a means to establish their city as a financial centre or to reposition their economies. This B 40 B 77 B 87 always be 1pt more than the font size “build and they will come” approach has been adopted in several emerging financial markets across 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green the region. Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING In Asia, occupiers are opting to lease space in supertall office buildings primarily because of the GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN benefits afforded by their positive image and branding, building quality and prime location. These key Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, differentiators enable supertall office buildings to command a rental premium over other Grade A office G 166 G 75 buildings in the same submarket/market after the first rent review cycle. This rental premium can be as B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 much as 10 - 40% above the average Grade A rent in the same submarket. Rents in supertall office Text boxes have NO Internal Margins (Format shape/Text Box) buildings also vary significantly between the upper and lower zones. ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text Occupiers in the financial services sector are the key tenants in supertall office buildings across the TWO LINE SPACES after Body Text and start of Heading 02 region, accounting for around 55% of total occupied space. Business services and legal firms are the other major users, accounting for 16% of total occupied space.

The development pipeline of tall office buildings in emerging markets in Asia is significant. Several tier II cities in China account for almost 47% of the total new supply of tall office buildings set to be ALL GRAPHS to keep to same height and width. W6.11 x H2.26” completed worldwide within the next five years. This is leading to growing concern of oversupply in a (Plot Area no more than 2” height (same as this text box), Width to page margin) number of markets. Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black The “build and they will come” strategy adopted by many emerging financial centres in Asia in recent Chart Text: Futura Lt BT, 7pts years has been largely unsuccessful. The reality is that there are far more important success factors Chart Lines: ¼ pts, 50% Black required than the mere construction of supertall office buildings for a city to successfully establish itself

Pls use CBRE colour palette as a regional or global financial centre. These factors include the business environment, legal and tax systems, market transparency, political stability, government efficiency, transport and Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] telecommunications infrastructure, capital flows, human capital and reputational factors such as innovation.

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© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 3 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here

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Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] Within Asia, a high density of tall buildings is viewed as being synonymous with being a successful financial hub

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4 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Introduction

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The creation of financial centres has traditionally underpinned the development of tall buildings in CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text major cities worldwide. Prior to the advent of computers and the adoption of the internet, there was a starts here strong need for accounting, auditing, consultancy and law firms to be in close proximity to each other in order to service key clients such as large financial institutions and major corporations in other LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin industries. As the financial sector expanded, the size of supporting industries increased in proportion. GREEN GREEN GREEN

Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green This led to rapid growth in demand for office space and stimulated the expansion of Central Business R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) Districts (CBDs), vertically and/or horizontally. The adoption of the safety elevator and advent of steel B 40 B 77 B 87 always be 1pt more than the font size frame construction facilitated the vertical development of office space to accommodate growing 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green demand. Examples of vertical expansion include New York, which is home to the largest number of tall Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green office buildings in the world. Examples of horizontal expansion include London, which has very few tall REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING office buildings but large CBDs spread across the city. GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Futura Lt BT, 10pts, line spacing 13pts Increasing demand for CBD space combined with the gradual rise in construction costs resulted in R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 higher rents, which only predominantly financial sector tenants were able to afford. This meant that B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 supporting industries had to move out and locate themselves some distance from the clients they Text boxes have NO Internal Margins (Format shape/Text Box) served. Financial sector occupiers therefore came to dominate CBDs and financial hubs began to ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, emerge. between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02 The pattern of vertical development is best illustrated by the Manhattan borough of New York City which has been the leading global financial centre since the 1920s. Over the past century, the skyline of the Midtown and Downtown areas has evolved with the completion of numerous tall office buildings (see appendix for definition of tall and supertall buildings) housing large financial institutions and major corporations. New York City continues to have the highest number of tall office buildings in the world ALL GRAPHS to keep to same height and width. W6.11 x H2.26” followed by Shanghai, Tokyo, Hong Kong and Chicago. With the exception of Shanghai, all of these (Plot Area no more than 2” height (same as this text box), Width to page margin) cities are traditional financial centres. Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black Chart 1: Cities with the largest number of tall office buildings (+150 meters)

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152

96 75 69 62

Source: CBRE Research, Council on Tall Buildings and Urban Habitat (CTBUH), June 2014. Body text on each page ends here

© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 5 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here New York, London, Hong Kong, Singapore and Tokyo all rank highly on the Global Financial Centres Index (GFCI)1, a ranking of the competitiveness of global financial centres. Three out of the top six cities are in Asia, and all these cities have a large number of tall office buildings. The high profile of these cities has created the perception within the region that mature global financial centres are First page of new section: Heading 02 starts here comprised of tall building clusters. Within Asia, a high density of tall buildings is viewed as being synonymous with being a successful financial hub. Authorities in a number of cities across the region are attempting to play catch-up and are seeking to mimic the success of the likes of New York, Hong CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text Kong and Singapore by adopting a “build and they will come” strategy of constructing tall office starts here buildings with high specifications to attract financial sector companies as a means to establish their city LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin as a regional financial centre. GREEN GREEN GREEN

Chart 2: Global financial centres and their number of tall office buildings Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 160 New York always be 1pt more than the font size 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green 140 REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING GREEN GREEN

Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, 120

Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 100 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts Shanghai 00A657 004B35

office office buildings Text boxes have NO Internal Margins (Format shape/Text Box) 80 ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, Tokyo between charts and Body Text Hong Kong Chicago 60 TWO LINE SPACES after Body Text and start of Heading 02 Shenzhen

Dubai Singapore 40 Existing Existing number tall of Kuala Lumpur Seoul Melbourne Osaka 20 Jakarta Beijing Sydney London ALL GRAPHS to keep to same height and width. W6.11 x H2.26” Boston Mexico City Moscow Istanbul Abu Dhabi Toronto (Plot Area no more than 2” height (same as this text box), Width to page margin) Frankfurt Mumbai Taipei Busan Paris San Francisco Legend: at the bottom 0 Chart Title: Futura Md BT Bold, 10pts, Black 550 600 650 700 750 800

Chart Text: Futura Lt BT, 7pts Global Financial Centre Index Chart Lines: ¼ pts, 50% Black Source: CBRE Research, CTBUH, Z/Yen Group, June 2014.

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Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] Within Asia, a high density of tall buildings is viewed as being synonymous with being a successful financial hub.

1The Global Financial Centres Index is a ranking of the competiveness of 83 financial centres based on over 25,000 financial centre assessments from an online Body text on each page ends here questionnaire together with a total of 103 instrumental factors from organizations such as the World Bank, Economist Intelligence Unit and the United Nations. Ratings in the

GFCI 15 range from 423 (Athens) to 786 (New York).

6 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here The emergence of Asia as a

First page of new section: Heading 02 starts here hub for tall office buildings

The development of tall office buildings in Asia began relatively recently at the end of the 20th century. CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text Construction accelerated dramatically in the early 2000s, with completions growing at an average of starts here 40 new tall office buildings per year. In comparison, the United States currently sees the completion of LIME CBRE ENERGISING an average of six new tall office buildings per year. The current rate of growth in Asia is faster than it Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN was in the United States in the early 1990s, when a construction boom resulted in the completion of an average of 20 new tall office buildings per year. As of June 2014, Asia is home to 55% of the total Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 number of tall office buildings globally. G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 The number, height and pace of construction of skyscrapers is often regarded as a barometer of Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green business and economic prosperity. Indeed, Asia, particularly China, has driven world economic growth Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black over the past ten years. On a country level, China accounts for around one-third of existing tall office ENTERPRISING GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, buildings worldwide. GREEN

Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, Chart 3: History of the construction of tall buildings G 166 G 75 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 No. of buildings Text boxes have NO Internal Margins (Format shape/Text Box) 1,800 ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, ASIA THE AMERICAS 1,600 MIDDLE EAST EUROPE between charts and Body Text PACIFIC AFRICA TWO LINE SPACES after Body Text and start of Heading 02 1,400 1,200

1,000

800

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(Plot Area no more than 2” height (same as this text box), Width to page margin) 400 Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black 200 Chart Text: Futura Lt BT, 7pts 0 Chart Lines: ¼ pts, 50% Black 1909 1930 1953 1965 1975 1985 1995 2005 Source: CBRE Research, CTBUH, June 2014. Pls use CBRE colour palette

Chart 4: Global distribution of tall office buildings by region and country Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ]

No. of buildings 1,000 21% 400m+ 300-399m 200-299m 150-199m 900

800 34%

700 3%

600 3%

500 4%

400 7% 300

200 28% 100 China USA 0 Japan United Arab Emirates ASIA THE MIDDLE EAST EUROPE PACIFIC Body text on each page ends here AMERICAS Australia Singapore Others Source: CBRE Research, CTBUH, June 2014.

© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 7 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here In recent years, governments in number of countries in Asia have thrown their weight behind the construction of supertall office buildings, defined as a building with a height of over 300 meters. Supertall office buildings are viewed by authorities as a means to enhance the competiveness of their business environment so their city can establish itself as a financial centre. Shanghai World Finance First page of new section: Heading 02 starts here Centre and Guangzhou IFC were all constructed in accordance with this strategy.

In other countries, the impact of globalisation and the relocation of manufacturing operations to CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text cheaper markets have prompted authorities to reposition their economies and develop the financial starts here sector. The construction of supertall office buildings has been a key component of this strategy. For LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin example, Taipei 101 was constructed as part of a move to grow the financial industry in Taiwan. In GREEN GREEN GREEN Kuala Lumpur, the Petronas Tower was built in accordance with the government’s wish to reduce Malaysia’s dependence on the oil and gas industry and develop its financial sector. Elsewhere, the Burj Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 Khalifa – the tallest building in the world –was built as part of a United Arab Emirates’ government plan G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size to gain more international recognition for Dubai and help support the growth of the country’s services 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green sector and reduce its reliance on the oil industry. Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING Chart 5: Cities with the largest number of supertall office buildings (+300 meters) GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Text boxes have NO Internal Margins (Format shape/Text Box) ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02 6 5 5 4 4 ALL GRAPHS to keep to same height and width. W6.11 x H2.26” (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom

Chart Title: Futura Md BT Bold, 10pts, Black Source: CBRE Research, CTBUH, June 2014. Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black Steps to success: Leverage strong relationships Pls use CBRE colour palette Supertall office buildings in Asia tend to be constructed when local governments in emerging Asian Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] markets adopt a strategy of establishing their city as a financial centre. Developers that win the land tenders for these buildings are invariably either affiliated with local authorities or have a close pre- existing relationship. Guangzhou IFC was primarily developed by Yue Xiu Properties, a company which was established by the Guangzhou government to pursue economic and trade development opportunities in Hong Kong. Shenzhen KK 100 was constructed by Kingkey Real Estate Development Company Limited. Kingkey is a private company but its founder is a high profile member of various civil service organisations such as the Chinese People’s Political Consultative Conference (CPPCC) and the Guangdong Political Consultative Conference.

That said, the challenges and complexity involved in constructing a supertall office building often necessitate the participation of a more experienced partner from overseas. China World Tower 3 in Beijing was constructed by a joint venture formed by the Chinese Ministry of Foreign Trade & Economic Cooperation (MoFTEC) and Hong Kong based Kerry Properties Limited, founded by Malaysian Robert Kuok. Shanghai World Financial Center was developed by Japanese based Mori Building Company and constructed by the Shanghai State Construction Group, which is currently Body text on each page ends here developing the Shanghai Tower, a new supertall office building in the same city.

8 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Key drivers of leasing office

First page of new section: Heading 02 starts here space in supertalls in Asia

CBRE Research recently conducted a survey of CBRE office leasing agents in key markets around the CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text region asking them to rank the various criteria influencing a company’s decision to lease space in a starts here supertall office building. LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin Chart 6: Factors influencing tenant selection of space in supertall office buildings GREEN GREEN GREEN

4.5 Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 4 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 3.5 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green 3 REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING 2.5 GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Futura Lt BT, 10pts, line spacing 13pts 2 R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 1.5 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 1 Text boxes have NO Internal Margins (Format shape/Text Box) ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02

Note: 14 of 29 supertall office buildings in Asia were included in the survey Based on the opinion of CBRE office brokers directly involved in the leasing of space in supertall office buildings Each factor is independent and maximum score for each factor is 5

Source: CBRE Research, CTBUH, June 2014. ALL GRAPHS to keep to same height and width. W6.11 x H2.26” (Plot Area no more than 2” height (same as this text box), Width to page margin) The positive image and branding associated with supertall office buildings is often cited by tenants as a Legend: at the bottom key reason behind their leasing decision. The high profile, prestige and visibility of supertall office Chart Title: Futura Md BT Bold, 10pts, Black buildings means occupiers frequently use them as a marketing tool to boost their corporate image and Chart Text: Futura Lt BT, 7pts branding. Chart Lines: ¼ pts, 50% Black The building quality of supertall office buildings is very high. Planning, designing, constructing and Pls use CBRE colour palette operating a supertall office building is very demanding and must overcome numerous challenges

including wind and earthquake resistance, fire separation and elevator connectivity. The standard and Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] quality of power back-up, air-conditioning and water supply systems are generally of a much higher standard than in other Grade A office buildings.

Most supertall office buildings are very well located in prime districts or newly developed CBDs. These locations boast high standards of infrastructure and connectivity to transportation networks and other major downtown areas. This is particularly true in a number of major cities in China where local authorities are supporting the creation of new CBDs as means of city redevelopment and infrastructure investment.

Large floorplates are another feature of supertall office buildings. Multinational tenants – particularly those in the financial sector – generally prefer large floorplates.

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© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 9 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Chart 7: Distribution of supertall office buildings in Asia

15% First page of new section: Heading 02 starts here

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Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green CBD New CBD Alternatives REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING Source: CBRE Research, CTBUH, June 2014. GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN Futura Lt BT, 10pts, line spacing 13pts Many supertall office buildings are mixed-use and include other components in addition to office R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 space. This creates an efficient and integrated vertical community. Tenants of supertall buildings can B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 utilise retail, hospitality and other services within the same building. For example, the Shanghai World Text boxes have NO Internal Margins (Format shape/Text Box) Finance Center includes office facilities, the fifteen-floor Park Hyatt hotel, 25 restaurants and three ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, floors of shopping facilities. For occupiers, the ability to offer a range of facilities to their clients and between charts and Body Text staff is a major draw. TWO LINE SPACES after Body Text and start of Heading 02

Why do tenants occupy space in supertall office buildings?

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Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ]

Taipei 101 Shanghai World Kingkey 100 Financial Center

Supertall office buildings Supertall office The property can improve tenants’ buildings provide tenants management of supertall recruitment and retention of with spectacular views of office buildings is staff. Potential employees surrounding areas such as performed to a very high believe it will be a mountains, harbours and standard, particularly comfortable and prestigious cityscapes maintenance, security and working location upgrading

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10 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Steps to success: Enriching the occupier experience

In recent years developers have sought to create vertical communities in supertall office buildings. First page of new section: Heading 02 starts here They have done this by integrating work areas with retail, hospitality, residential and leisure facilities in order to enrich the experience of occupiers and other users, with the ultimate aim of enhancing the image and prestige of the building. CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text starts here These components can include: LIME CBRE ENERGISING

Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN Luxury hotels – Guangzhou IFC, Shanghai World Financial Center and KK 100 all have five-star hotels on their top floors. Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) Executive Clubs – Occupiers can use executive clubs to host/entertain senor staff and clients. B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857

Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Observation floors –HK ICC, KK100 and Taipei 101 all have observation decks on high floors with Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black public access. Guangzhou IFC has an observation wheel installed on the top floor. ENTERPRISING GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN Fireworks, lights and music shows – Taipei 101, HK ICC and KK100 let off firework displays and Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, light and music shows, particularly during major festivals. G 166 G 75 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 Filming locations – The high profile and iconic look of supertall office buildings means they are Text boxes have NO Internal Margins (Format shape/Text Box) often featured in major movies. ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02

Pls use CBRE colour palette

Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ]

Body text on each page ends here

© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 11 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Do supertall office buildings

First page of new section: Heading 02 starts here command a rental premium?

The completion of supertall office buildings sometimes initially results in a slight market supply CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text imbalance. However, the key differentiators identified above enable supertall office buildings to starts here command a rental premium over other Grade A office buildings in the same submarket/market after the first rent review cycle. This rental premium is between 10 - 40% above the average Grade A rent in LIME CBRE ENERGISING GREEN Cover Title: Last line ALWAYS anchor on this margin the same submarket. However, the key differentiators of supertall office buildings vary by market, GREEN GREEN meaning that the rental premium can also vary. For example, rents in Taipei 101 are only 5-10% Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green higher than in other Grade A buildings in the Xinyi CBD in Taipei. In Shanghai, however, the Shanghai R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) World Finance Centre commands an average rental premium of over 30% compared to other Grade A B 40 B 77 B 87 always be 1pt more than the font size office buildings in the Pudong submarket where it is located. 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green Rents in supertall office buildings also vary significantly between the upper and lower zones. CBRE REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING Research data indicates that this rental differential is usually between 50-100%. This is partly explained GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN by the fact that large occupiers or anchor tenants are frequently offered reduced rents to fill in vacant Futura Lt BT, 10pts, line spacing 13pts space on lower floors during the pre-leasing stage, whilst upper floors are reserved for tenants willing to R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 pay higher rents for the most prestigious space in the building. B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35

Text boxes have NO Internal Margins (Format shape/Text Box) ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, Chart 8: Rental differential between supertall office buildings and their submarkets between charts and Body Text Height of buildings (meters) Rent (USD / sq. ft. / annum) TWO LINE SPACES after Body Text and start of Heading 02 Hong Kong China Taipei Tokyo Seoul Singapore 600 240

500 200

400 160 ALL GRAPHS to keep to same height and width. W6.11 x H2.26”

(Plot Area no more than 2” height (same as this text box), Width to page margin) 300 120 Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black 200 80 Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black 100 40

Pls use CBRE colour palette 0 -

Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ]

Three IFC

Taipei101

Central Plaza

Shanghai WFC

Jin MaoJin Tower

Midtown Tower

Guangzhou IFC

Shenzhen KK100

Office Tower II

Beijing ChinaWorld Tower

Marina Bay Financial Centre

One One Raffles Quay North Tower

International Commerce Centre Two International Finance Centre

Metres (LHS) Building Rent (USD/sq ft/ annum) (RHS) Submarket Average Rent (USD/sq ft/ annum) (RHS)

Source: CBRE Research, June 2014.

Body text on each page ends here

12 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here The tenant mix of supertall

First page of new section: Heading 02 starts here office buildings

As mentioned previously, authorities in number of cities in Asia are supporting the construction of CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text supertall office buildings as they believe it will help them establish their market as a financial centre. starts here One straightforward way to assess whether this objective has been achieved is to look at the tenant mix of supertall office buildings. LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN The Downtown district of Manhattan - home to Wall Street – is regarded as one of the world’s leading Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green financial centres. In this market, tenants in the financial services, business services and legal sectors R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) occupy the bulk of space, accounting for 58% of total tenants. Occupiers in the real estate and B 40 B 77 B 87 always be 1pt more than the font size Technology, Media and Telecommunications (TMT) sectors are also increasing their footprint in the 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green area. Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING Chart 9: Tenant mix of office buildings in Downtown Manhattan, New York GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 3% 3% Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, 3% G 166 G 75 4% B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35

Text boxes have NO Internal Margins (Format shape/Text Box) 6% ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, 9% between charts and Body Text 43% TWO LINE SPACES after Body Text and start of Heading 02

13%

15% ALL GRAPHS to keep to same height and width. W6.11 x H2.26” (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom Financial Services Business Services Government Other Non-Profit Chart Title: Futura Md BT Bold, 10pts, Black Technology Real Estate Education Arts & Recreation Chart Text: Futura Lt BT, 7pts Source: CBRE Research, CTBUH, June 2014. Chart Lines: ¼ pts, 50% Black

Pls use CBRE colour palette CBRE Research analysis reveals that, perhaps unsurprisingly, the tenant mix in supertall office buildings Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] in Asia is similar to that in the Downtown district of Manhattan. The banking and financial services sector accounts for around 55% of the total occupied space in supertall office buildings across the region. Occupiers in this sector lease space in supertall office buildings because of the key differentiators outlined above and also because many of them receive incentives from authorities keen to expedite the development of their markets or specific district into a financial centre.

Business services and legal firms are another key occupier of supertall office buildings in the region, accounting for 16% of total occupied space. As mentioned previously, supporting business units such as accounting, consulting and legal firms need to be in close proximity to the companies they serve in the banking and financial services sector.

The technology and telecommunications (TMT)sector is an up-and-coming user of supertall office buildings and now accounts for 11% of total occupied space in such buildings in the region. Occupiers in this sector have been increasingly active in leasing prime space in recent years and are upgrading from decentralised areas offering cheaper rents. Body text on each page ends here

© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 13 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Chart 10: Tenant mix of supertall office buildings in Asia

60%

First page of new section: Heading 02 starts here 50%

CBRE COLOUR PALETTE 40% First page of new section: Heading 03 and Body text starts here 30% LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN

20% Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) 10% B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green 0% Finacial Services Business Tech & Telecoms Real Estate Government Energy Health Care Others REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING & Insurance Services* GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Futura Lt BT, 10pts, line spacing 13pts R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 * Business Services includes Accounting, Consulting and Legal. Text boxes have NO Internal Margins (Format shape/Text Box) Source: CBRE Research, June 2014. ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02 Within Asia, certain cities and certain buildings have been more successful in attracting financial sector tenants. Supertall office buildings such as Two International Finance Centre and the International Commerce Centre in Hong Kong – an established financial hub – understandably have a high proportion of financial sector tenants. However, a look at the tenant mix of individual buildings in emerging financial hubs in the region presents a different picture. One success is the Shanghai World ALL GRAPHS to keep to same height and width. W6.11 x H2.26” Finance Centre in the Pudong submarket. More than half of the space in the building is occupied by (Plot Area no more than 2” height (same as this text box), Width to page margin) tenants from the financial services sector. The Shanghai government has provided attractive tax Legend: at the bottom incentives to banking and financial services firms for them to take up space. Chart Title: Futura Md BT Bold, 10pts, Black Chart Text: Futura Lt BT, 7pts The performance of other supertall office buildings in emerging financial centres in Asia has been Chart Lines: ¼ pts, 50% Black mixed. The likes of KK100 in Shenzhen, Guangzhou IFC in Guangzhou, China World Tower 3 in Beijing and Taipei 101 in Taipei all have a relatively lower proportion of financial sector tenants. Pls use CBRE colour palette Nevertheless, although the Caiwuwei submarket of Shenzhen caters mostly to the technology and

telecommunications sector, KK100 has still managed to attract a higher proportion of finance sector Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] tenants compared to other Grade A buildings in the district.

In other cities, the industry specification of the local market has impacted the tenant mix of supertall office buildings. This partly underlines why the “build and they will come” strategy is often not as successful as expected. It takes time for the local market to refocus and adapt. For example, a number of major real estate companies are headquartered in Guangzhou. Several of these firms have taken space in Guangzhou IFC for self-use and the proportion of space occupied by tenants in this sector is therefore similar to the proportion of space occupied by financial services firms. Another example is Beijing, where oil and energy companies are one of the major drivers of office demand. Many large oil and energy companies have leased space in China World Tower 3 as their headquarters.

In Seoul, the local government planned the creation of the Yeuiudo Business District (YBD) submarket as a new financial hub. The area is home to a number of tall and supertall office buildings but has so far failed to attract a critical mass of financial and related sector tenants.

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14 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here These examples underline the fact that attempts to develop cities into a national or international financial centre by constructing supertall office buildings to attract the finance sector have been largely unsuccessful. The “build and they will come” strategy adopted by emerging financial centres in Asia has not worked. Whilst Shanghai has attracted a steady flow of financial sector occupiers and is making First page of new section: Heading 02 starts here gradual progress towards establishing itself as a financial hub, other cities have been unable to attract the same calibre and volume of tenants, despite constructing high quality supertall office buildings. CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text This reflects the reality that there are far more important success factors required than the mere starts here construction of supertall office buildings for a city to establish itself as a regional or global financial LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin centre. These factors include the business environment, legal and tax systems, market transparency, GREEN GREEN GREEN political stability, government efficiency, transport and telecommunications infrastructure, capital flows, human capital and reputational factors such as innovation. Cities such as Zurich, Geneva, Luxembourg Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 and Washington DC are all ranked in the top 20 of the Global Financial Centre Index but do not have G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size any office buildings taller than 150 meters. 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green Chart 11: Tenant mix of major supertall office buildings in Asia REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING GREEN GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, 100% Futura Lt BT, 10pts, line spacing 13pts Others R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 Transportation 75% B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35 Energy Tech & Telecom Text boxes have NO Internal Margins (Format shape/Text Box) 50% ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, Real Estate between charts and Body Text Legal 25% TWO LINE SPACES after Body Text and start of Heading 02 Insurance

Business Services 0% Financial Services Taipei - Taipei Shanghai - Hong Kong - Hong Kong - Shenzhen - Guangzhou - Beijing - CWTC 101 SWFC ICC Two IFC KK100 GZ IFC 3

ALL GRAPHS to keep to same height and width. W6.11 x H2.26” Source: CBRE Research, June 2014. (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black

Pls use CBRE colour palette The “build and they will come” Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] strategy adopted by emerging financial centres in Asia has been largely unsuccessful.

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© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 15 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here The future supply of tall and

First page of new section: Heading 02 starts here supertall office buildings in

CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text Asia starts here Most attempts by emerging cities to establish themselves as financial centres via the construction of LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin supertall office buildings in order to attract financial sector tenants have so far been unsuccessful. GREEN GREEN GREEN However, the development pipeline of tall office buildings in emerging markets such as China, Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green Indonesia, Malaysia and India remains significant. R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size Chart 12: Global financial centres and the new supply of tall office buildings 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green 20 Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green Emerging markets Shenzhen (43) REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black 18 ENTERPRISING Jakarta Shanghai GREEN GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, 16 Futura Lt BT, 10pts, line spacing 13pts Beijing 14 Dubai R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, Istanbul G 166 G 75 12 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts New York 00A657 004B35 Moscow Kuala Lumpur 10 London Text boxes have NO Internal Margins (Format shape/Text Box) 8 ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, Sydney Toronto 6 Mumbai between charts and Body Text Abu Dhabi Chicago Seoul TWO LINE SPACES after Body Text and start of Heading 02 4 Mexico City Taipei Tokyo Singapore Frankfurt Melbourne Busan

Number of tall buildings Number of tall buildings in next 5 years 2 San Francisco Hong Kong Paris Boston 0 Mature markets 550 600 650 700 750 800 Global Financial Centre Index

ALL GRAPHS to keep to same height and width. W6.11 x H2.26” Source: CBRE Research, CTBUH, Z/Yen Group, June 2014. (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom Chart Title: Futura Md BT Bold, 10pts, Black Markets in China account for almost 60% of the total new supply of tall office buildings set to be Chart Text: Futura Lt BT, 7pts completed worldwide within the next five years. Several tier II cities in China aspire to establish Chart Lines: ¼ pts, 50% Black themselves as a national or international financial centre. This has resulted in government master planning to allocate and encourage developers to build tall office buildings in new and existing CBDs. Pls use CBRE colour palette Tier II cities comprise around 80% of the total supply of tall office buildings in China scheduled to be completed within the next five years, or roughly 47% of total new supply of tall office buildings globally. Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] Chart 13: Distribution of tall office buildings by 2018

No. of buildings 600 400m+ 300-399m 200-299m 150-199m

500

400

300

200

100

0 ASIA EUROPE THE AMERICAS MIDDLE EAST PACIFIC Body text on each page ends here Source: CBRE Research, CTBUH, June 2014.

16 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here China also dominates the development pipeline in the supertall building category over the next five years. The country accounts for 71% of the total future supply of supertall office buildings to be completed during the period, with tier II cities accounting for 51%.

First page of new section: Heading 02 starts here Whilst new supply of supertall office buildings continues to increase, the recent slowdown in the Chinese economy combined with tighter controls on the shadow banking industry has resulted in weaker demand from the financial sector. This has led to growing concerns of oversupply in a number CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text of markets. Some observers argue that oversupply is not an issue in the long-term as they expect starts here demand to gradually catch up with supply in tier II locations as these cities mature, pointing to the LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin pattern of office development witnessed in Beijing and Shanghai in recent years. Although office GREEN GREEN GREEN demand in China will continue to rise in the long term as the country continues to transition to a tertiary industry-driven economy, the level of demand in tier II cities will remain relatively weak compared to Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 Beijing and Shanghai as these two markets are already firmly established as the country’s political, G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size economic and financial hubs. 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green CBRE Research believes that the existence and future completion of a large number of supertall office REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black buildings in tier II cities such as Shenyang, Chongqing and Tianjin undoubtedly creates a risk of ENTERPRISING GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, oversupply, as discussed in the recent CBRE China Research special report, China Offices: Reality GREEN

Futura Lt BT, 10pts, line spacing 13pts Check. These cities are merely regional hubs within China - not national or international financial R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, centres – and lack the means to attract a significant volume of financial sector occupiers to their G 166 G 75 B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts market. Local governments should therefore be more realistic when forecasting office demand and 00A657 004B35 planning land supply in order to ensure their city’s stable economic development. Text boxes have NO Internal Margins (Format shape/Text Box)

ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, between charts and Body Text Chart 14: Markets with the largest pipeline of supertall office buildings worldwide TWO LINE SPACES after Body Text and start of Heading 02 No. of completed supertall office buildings

20 18 16 ALL GRAPHS to keep to same height and width. W6.11 x H2.26” 14 (Plot Area no more than 2” height (same as this text box), Width to page margin) 12 Legend: at the bottom 10 Chart Title: Futura Md BT Bold, 10pts, Black 8 Chart Text: Futura Lt BT, 7pts 6 Chart Lines: ¼ pts, 50% Black 4 2 Pls use CBRE colour palette 0 Shenzhen Shenyang Chongqing Tianjin Nanning Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] Source: CBRE Research, CTBUH, June 2014.

Steps to success: Begin pre-leasing early

Most development in Asia is speculative, meaning that landlords often find their building becomes exposed to the risk of low occupancy during a market downturn. Major new office projects typically begin pre-leasing one year ahead of completion. Supertall office buildings usually begin pre-leasing two years ahead of completion as they have such a large volume of space to fill.

Beginning pre-leasing early is a crucial part of the process in establishing a supertall office building’s credentials as a viable business location. A sizeable early letting to a reputable anchor tenant can also stimulate interest from other occupiers. The likes of Shanghai World Financial Center, Ping An Financial Center in Shenzhen and Guangzhou IFC all began pre-leasing two years ahead of completion. Body text on each page ends here

© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 17 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Conclusion

First page of new section: Heading 02 starts here

Over the next five years the number of supertall office buildings in China (Shenzhen, Shenyang, CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text Chongqing, Tianjin and Nanning) and South Korea (Seoul and Busan) will surge whilst Indonesia starts here (Jakarta) will see the completion of its first supertall office building in 2015. Financial sector demand will be insufficient to fill the large volume of new supply but this could provide opportunities for LIME CBRE ENERGISING GREEN GREEN Cover Title: Last line ALWAYS anchor on this margin multinational occupiers in other sectors to secure high quality and prestigious office space in good GREEN locations for relatively cheap rents. Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) CBRE Research’s Asia Pacific Office Market Outlook 2014 published in February 2014 identified all B 40 B 77 B 87 always be 1pt more than the font size these markets as having a high risk of oversupply in the short term. This pressure is unlikely to diminish 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green in the medium term and rental growth in these cities is likely to lag behind other Asia Pacific markets. Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING Tall and supertall office buildings nevertheless provide a number of significant benefits for landlords GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN and occupiers. Landlords of tall and supertall office buildings can command a rental premium; gain Futura Lt BT, 10pts, line spacing 13pts international recognition from their high profile projects and raise industry standards and expectations R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, G 166 G 75 related to construction and property management. B 87 B 53 Futura Lt BT, 10pts, line spacing 13pts 00A657 004B35

Text boxes have NO Internal Margins (Format shape/Text Box) Occupiers can benefit from the positive image and branding associated with being a tenant in a tall or ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, supertall office building. They also gain from being located in close proximity to supporting industries or between charts and Body Text services; being situated in a prime district or newly developed CBD and the flexibility and convenience TWO LINE SPACES after Body Text and start of Heading 02 afforded by large floorplates. Other benefits include enhanced staff recruitment and retention, high standards of property management, spectacular views, sustainability and access to services such as retail and hospitality in the same buildings.

Attempts by cities to establish themselves as financial centres via the construction of supertall office ALL GRAPHS to keep to same height and width. W6.11 x H2.26” buildings in order to attract financial sector tenants have largely been unsuccessful to date. For such an (Plot Area no more than 2” height (same as this text box), Width to page margin) approach to succeed it must be implemented in tandem with various other measures such as creating a Legend: at the bottom healthy business environment, ensuring political stability, establishing effective legal and tax systems Chart Title: Futura Md BT Bold, 10pts, Black and investing in hardware and software infrastructure. Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black

Pls use CBRE colour palette

Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] The “build and they will come” approach should be implemented alongside various other measures such as creating a healthy business environment, maintaining political stability and investing in hardware and software infrastructure.

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18 CBRE GLOBAL RESEARCH AND CONSULTING © CBRE Ltd. 2014 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS slide masters. Trimmed size is A4 Left: 1.2” THE EMERGENCE OF ASIAN SUPERTALLS Right: 1.2” Top: 1.1” Bottom: 1.28” First page of new section: Section Head starts here Second page of new section: Body text starts here Appendix

First page of new section: Heading 02 starts here Definition of tall buildings CBRE COLOUR PALETTE First page of new section: Heading 03 and Body text starts here For this study CBRE Research adopted the definition of tall buildings issued by the Council on Tall LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin Buildings and Urban Habitat (CTBUH), one of the key authorities on the subject. GREEN GREEN GREEN

Any building with a height of more than 150 meters and usable floor area of at least 50% meets the tall Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green R 105 R 0 R 191 building classification. G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Within the tall buildings classification there are two sub-types of tall buildings: supertall buildings and Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green mega tall buildings. These are defined as buildings that are over 300 and over 600 meters in height REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black respectively. ENTERPRISING GREEN GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, Futura Lt BT, 10pts, line spacing 13pts Height is measured starting from the level of the lowest, significant, open air, pedestrian entrance to the R 0 R 0 Body Text, Level 3: Dash- Black, Indentation- Before text- 0.2”, Hanging- 0.1”, highest point. The recognition of the highest point is further divided to three categories. G 166 G 75 Futura Lt BT, 10pts, line spacing 13pts B 87 B 53 00A657 004B35 a. Height to architectural top: the architectural top includes spires but does not include antennae, Text boxes have NO Internal Margins (Format shape/Text Box) signage, flag poles or other functional-technical equipment. This is the typical measure CTBUH ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, uses; between charts and Body Text TWO LINE SPACES after Body Text and start of Heading 02 b. The highest occupied floor within a building; c. Height to tip irrespective of material or function of the highest elements, i.e. including antennae, signage, flag poles or other functional-technical equipment.

The primary usage of a tall building may be as an office, residence and hotel or it could be mixed-use ALL GRAPHS to keep to same height and width. W6.11 x H2.26” comprising office, retail, residential and hotel components. (Plot Area no more than 2” height (same as this text box), Width to page margin) Legend: at the bottom The focus of this report is on tall and supertall buildings with office components, regardless of single Chart Title: Futura Md BT Bold, 10pts, Black usage or mixed use. The height measurement is based on the architectural top. Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black

Pls use CBRE colour palette

Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ]

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© CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 19 Be aware of Left and right hand page layout Crop Marks in the slide master. If need professional printing… copy and paste to left & right hand page PAGE MARGINS Left: 1.2” slide masters. Trimmed size is A4 Right: 1.2” Top: 1.1” Futura Md BT, 12pts, For more information about this regional SPECIAL report, please contact: Bottom: 1.28” First page of new section: Section Head starts here Energising Green Second page of new section: Body text starts here LANDLORD OFFICE AGENCY ASSET SERVICES Name: Futura HV BT, Nigel Smith Sam Cuccurullo Andy To 14pts, line spacing- Managing Director Executive Managing Director Executive Director single, White Landlord Office Agency, Asia Asset Services, Asia Pacific Asset Services, China Title, address, contacts: First page of new section: Heading 02 starts here +852 2820 2848 +852 2989 5199 +86 21 5047 1171 Futura, BK Bt, 14pts, [email protected] [email protected] [email protected] CBRE COLOURline spacing PALETTE- single,

First page of new section: Heading 03 and Body text White starts here RESEARCH LIME CBRE ENERGISING Cover Title: Last line ALWAYS anchor on this margin GREEN GREEN GREEN Henry Chin, Ph.D. Jonathan Hsu Cynthia Chan Head of Asia Pacific Research Director, Asia Pacific Senior Analyst, Asia Pacific Heading 01: Futura Md BT Bold, 30pts, line spacing 31pts, CBRE Green +852 2820 8160 +852 2820 2957 +852 2820 2839 R 105 R 0 R 191 [email protected] [email protected] G 190 G 106 G 216 (You can make this smaller if heading is too long, but line spacing should) [email protected] B 40 B 77 B 87 always be 1pt more than the font size 69BE28 006A4D BFD857 Heading 02: Futura Md BT Bold, 16pts, line spacing 18pts, Lime Green Heading 02: Futura Md BT Bold, 13pts, line spacing 15pts, Refreshing Green REFRESHING Body Text: Futura Lt BT, 10pts, line spacing 13pts, Black ENTERPRISING GREEN Body Text, Level 2: Bullets- Black, Indentation- Before text- 0.1”, Hanging- 0.1”, GREEN

Text boxes have NO Internal Margins (Format shape/Text Box) ONE LINE SPACE between paragraphs, Heading 02 and start of Body Text, For more information regarding Global Research and Consulting activity, please contact: between charts and Body Text Nick Axford, Ph.D. Henry Chin, Ph.D TWO LINE SPACES after Body Text and start of Heading 02 Global Head of Research Head of Research, Asia Pacific +852 2820 8198 +852 2820 8160 [email protected] [email protected] Follow Nick on Twitter: @NickAxford1

Raymond Wong Neil Blake, Ph.D. ALL GRAPHS to keep to same height and width. W6.11 x H2.26” Managing Director, Americas Research Head of Research, UK and EMEA (Plot Area no more than 2” height (same as this text box), Width to page margin) +1 416 815 2353 +44 20 7182 2133 Legend: at the bottom [email protected] [email protected] Chart Title: Futura Md BT Bold, 10pts, Black Follow Neil on Twitter: @neilblake123 Chart Text: Futura Lt BT, 7pts Chart Lines: ¼ pts, 50% Black

Pls use CBRE colour palette Follow CBRE Source: Futura Lt BT, Italic, 9pts [ Source: Name, Q#, 2014. ] For GLOBAL Special Reports Change hyperlinks for: TWITTER: https://twitter.com/cbreasia

LINKEDIN: CBRE GLOBAL RESEARCH AND CONSULTING This report was prepared by CBRE Asia Pacific Research Team, which forms part of CBRE Global Research and Consulting—a network of preeminent researchers and consultants who http://www.linkedin.com/company/cbre-asia- collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. pacific

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