CBRE Q2 2011Earnings Commentary

The continued improvement in market fundamentals has been reflected in steady revenue growth for CB Richard Ellis in the Asia Pacific region. Revenues in Asia Pacific rose 19% for the second quarter and first half of 2011 over the previous corresponding period. This revenue growth was underpinned by an increased number of investment transactions, robust demand for office and industrial space, continued high levels of residential sales activity, and further adoption of commercial real estate outsourcing. Across the Pacific region, Q2 revenues were also 19% ahead of Q2 2010.

Noteworthy in Pacific has been the increase in transactional activity in the commercial sector, after a very slow start to the year. Our data, which takes into account all investment sales over AU$20 million, shows that commercial property transactions in Australia totaled AU$2.7 billion in Q2 - a significant increase over the AU$638 million turnover in Q1.

Institutional investment sales and office leasing have been strongest in the resource/mining driven centres of Queensland and Western Australia where we have negotiated some significant sales transactions and leased significant amounts of office space. In Perth, we arranged the lease of 8,300sqm of office space in the City Square project to PricewaterhouseCoopers and in Brisbane we acted for Credit Suisse Asset Management on the largest Pacific sales transaction so far this year, involving the $AU169.5 million acquisition of the new Australian Taxation Office tower at 55 Elizabeth Street.

We have also seen some signs of encouraging activity in the New Zealand office leasing market. Year-to-date we have leased circa 45,000sqm of space (including 24,000sqm of deals in Auckland, 6,000sqm in Wellington and 10,000sqm in Christchurch). One of the standout transactions was an 11,000sqm lease negotiated on behalf of Brookfield at 8 Hereford Street in Ponsonby, Auckland. The deal involved Auckland Council and came as a result of the amalgamation of the seven councils of greater Auckland into one.

The growth in our overall residential offering also contributed to our revenue growth in Q2, with strong performances from both our Residential Projects and Residential Valuations teams. During the quarter, we purchased the Megaw & Hogg National Valuers business from RP Data Ltd. The acquisition almost doubled the size of our existing residential valuations team and solidified our position as the largest wholly owned residential valuations practice in Australia. To give you an idea of the scale of this business, we now undertake over 200,000 residential valuations a year which equates to two valuations every minute of an average working day. Our Residential Projects arm has also been increasingly active, particularly in Sydney where the team exchanged contracts on more than 1,000 apartments with a sales value in excess of AU$750 million in the first half of 2011.

Another Q2 milestone was last month’s announcement that we had achieved carbon neutrality for our 2010 global operations. In Australia, we are the only commercial real estate services firm to be certified under the Australian Government’s carbon neutral initiative. Sustainability is now fundamental to our service offering and there is growing demand from our clients to assist them with introducing sustainability initiatives in their own portfolios.

ENDS

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