Europe's Real Estate Industry Must Adapt to Tougher Regulations, Tighter Credit: Emerging Trends in Real Estate(R): Europe 2011

LONDON, February 4, 2011 - Tougher regulations, Austerity Europe, the sovereign debt crisis, and a
still-tight lending market will challenge Europe's real estate industry in
2011, according to Emerging Trends in Real Estate(R) 2011, published by PwC
and the Urban Land Institute (ULI).

(Logo: photos.prnewswire.com/prnh/20100310/ULILOGO)

The highly regarded commercial real estate forecast, based on the
opinions of 600 industry experts, predicts that 2011 will not be the
turnaround year that the European real estate industry had hoped for, with a
"two-speed" market likely to emerge that reflects a widening gap between
investment hotspots and second-tier property markets. Respondents expect more
industry downsizing across the continent.

John Forbes, partner with PwC and one of the report's authors, said:

"In future years we may look back on 2011 as a transformational year for
the property industry. Real estate professionals face a challenging time.
Traditional sources of debt, for refinancing properties with vacancies or in
need of refurbishment, will not be available, although new sources of lending
are expected in the shape of sovereign wealth funds and insurance companies.
A big theme will be the continued downsizing of the industry and the winners
will be those who are best able to manage their assets, rather than those who
make clever stock selections."

Patrick L. Phillips, chief executive officer of ULI, said:

"Some of the trends we saw last year continue, such as a flight to
quality and a bifurcated market, with strong interest in the best assets in
the global gateway cities and little interest elsewhere. The real difference
in this year's report appears to be the perceived weakness in the
government's ability to spark demand or ameliorate the pain in the industry.
Equally clear is the emphasis on the hard work of managing assets:
repositioning properties to better meet market demand, creative approaches to
maintaining and adding value, and effective and efficient property
management."

Last year, the industry was concerned that the large amount of debt
maturing across Europe over the next five years would prevent banks from
undertaking new lending, but the new questions for 2011 are how much impact
Basel III will have on the appetite of banks to lend to property and, when
they do, how expensive this debt will be.

Respondents expressed serious concerns about areas outside prime regions,
even within the same country. With capital so risk-averse, winning cities
like Munich, London and Paris will continue to absorb investment as the only
places where tenant demand will be robust. Other investor favourites are
likely to be Istanbul, Stockholm, Berlin and Hamburg. Investors are expected
to avoid Dublin, Athens, Lisbon and Budapest.

Even within the most favoured markets, investment will be drawn mainly to
the prime buildings, the report predicts. The result is that values for
secondary properties will remain at distressed levels and decline further in
the months ahead.

The good news, the report says, is that improvements in the availability
of real estate equity are anticipated this year. This is expected to come
from an increasing number of investors from Asia Pacific and institutions
such as insurance companies and private equity funds. But the consensus view
is that even if new players do emerge, they will take a long while to do so
and will only partially relieve congestion.

John Forbes said:

"As is the case with so many positive trends today, they do not
constitute unqualified good news. Equity, which is now choosier and more risk
averse, will be funnelled towards a smaller slice of the industry, ensuring
that the capital-raising environment is set to be tough for a good while
yet."

While all property sectors show improved investment prospects in the
quantitative part of the survey, central city offices, street retail and
shopping centres were most frequently cited as offering the most promising
prospects.

Interviewees anticipate that well-established firms with defensive
strategies will fare best in the months ahead, while prospects are less
bright for niche or new players. As firms prioritise resources in 2011, there
will be those in the industry who find their skills in demand. The expected
downsizing will reflect the dropping out of those who find themselves totally
unequipped for the new climate.

Notes

1. You can now book down the line TV interviews from the PwC fixed camera
in London through Globelynx (www.globelynx.com)

2. The 8th PwC and ULI Emerging Trends Real Estate(R) Europe survey is
based on research involving 600 responses to interviews and surveys conducted
in November and December 2010.

About PwC

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in firms across the PwC network share their thinking, experience and
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exercise of their professional judgment or bind them in any way.

To download the report, go to:
www.uli.org/~/media/Documents/ResearchAndPublications/EmergingTrends/Europe/2011/2011EmergingTrendsEurope.ashx

About the Urban Land Institute

The Urban Land Institute (www.uli.org) is a global nonprofit education
and research institute supported by its members. Its mission is to provide
leadership in the responsible use of land and in creating and sustaining
thriving communities worldwide. Established in 1936, the Institute has nearly
30,000 members representing all aspects of land use and development
disciplines.

Caroline Underwood, Media Relations, PwC, +44-207-212-3097, +07841-783907, caroline.underwood at uk.pwc.com, or Trisha Riggs, Communications, ULI, +1-202-624-7086, priggs at uli.org