Table of Contents Executive Summary

Table of Contents

• Executive Summary

• Basic Fundamentals

• Apartment Fundamentals

• Office Fundamentals

• Retail Fundamentals

Executive Summary

• The objective of this presentation is to analyze the various cities in terms of their attractiveness to real estate investment.

• The 3 main real estate product types analyzed are rental apartments, office and retail.

• First the cities are classified based on basic real estate fundamentals like migration, cost of living, employment growth and population growth.

• Then the cities are classified based on specific fundamentals for each of the 3 product types.

• A cross analysis of various factors are used to achieve efficient analysis.

Basic Fundamentals 1) Migration & Cost of Living

• Migration of people in to a city/metro can have stellar impact on the economy of that area. In particular it has a deep impact on real estate.

• Therefore, migration trends of a city/area can be considered as a very important factor in determining the demand trends for various types of real estate space.

• Another factor which is worthy of being included in the analysis is the cost of living, which is one of the major factors influencing people to migrate in to a particular city.

Cities with high incoming migration

Cities with low cost of living

Migration & Cost of Living

Attractiveness matrix

2) Employment & Population growth

• Employment growth in a particular city is a crucial factor in determining the demand for real estate in that city.

• It is crucial for demand creation in all types of real estate products like single family homes, apartments, office & retail.

• Similarly population growth, in a city is also considered as a crucial factor in determining the demand trends for real estate.

• Increase in population leads to increase in demand for housing, and increase in public utilities and it also leads to increase in consumer businesses.

Cities with higher employment growth

Cities with higher population growth

Attractiveness matrix

Apartment fundamentals

• For the creation of new demand for apartments for rent, a very important factor is the percentage of population in the age group (20-34), who are most likely to rent apartments for living, than buy/own a house.

• Also in addition to this factor, another factor that shall be considered is forecasted vacancy rate for the next 5 years (2008-2012).

• Using a cross analysis we can classify cities in to different categories.

Cities with high % of population in 20-34 age group

Cities with low forecasted vacancy rates-apartment

Attractiveness matrix

Office fundamentals

• Two of the most important factors determining the space for office demand in a particular market is the percentage of office using employment in that market and the forecasted annual growth.

• While the existing share of office using employment determines the base for new demand, the growth in office using employment is the factor which determines the growth in demand or new demand.

Office using employment

Office using employment growth

Attractiveness matrix

Retail fundamentals

• Two of the most important factors determining the space for demand is the percentage of population falling in the age category of 35-54, who are usually the prime spending age group.

• In addition to the above factor, the per capita real retail sales figure is also another adjoining factor that plays critical role in determining the demand.

• Therefore, it is useful to do a cross analysis of these 2 factors in determining the attractive markets for retail real estate investment.

Cities with high % of prime spenders

Cities with high per capita retail sales

Attractiveness matrix