MITSUBISHI ESTATE Annual Report 2014

Real Estate Market in Japan 0400,000200,000600,0001,000,000800,0001,200,0002004200520062007200820092010201120122013Supply of New Office Buildings in the 23 Wards of Tokyom2Source: Sanko Estate Co., Ltd.010,0005,00015,00020,00025,00004268103/053/063/073/083/093/103/113/123/133/14Office Building Market (Vacancy Rates in Five Central Tokyo Metropolitan Wards)Yen / tsubo-month% Average Rent (left scale) Vacancy Rate (right scale)Source: Miki Shoji Co., Ltd.040,00020,00060,00080,000100,000020103040502004200520062007200820092010201120122013Sales of New Condominiums in the Tokyo Area / Condominium PricesUnitMillions of yen Sales of New Condominiums in the Tokyo Area (left scale)Source: Real Estate Economic Institute Co., Ltd. Condominium Prices (right scale)Source: The Association for Real Estate Securitization01,0005001,5002,5003,0002,0003/033/043/053/063/073/083/093/103/113/123/133/14Tokyo Stock Exchange REIT Index March 31, 2003 = 1,000Office building development in Tokyo is ongoing, with 95% of new supply concentrated in the Chuo-ku, Chiyoda-ku, and Minato-ku located in the city center.The completed construction of large-scale office buildings in 2012 resulted in the largest new supply in the past 10 years. As a result, in 2013 the supply amount declined in comparison with the annual average.Amid improving corporate earnings, vacancy rates in the five central Tokyo metropolitan wards are clearly on the decline. Accordingly, since the beginning of 2014, average rents have been slowly rising.In 2013, the supply and prices of condominiums in Tokyo’s 23 wards increased compared with the previous fiscal year due to expectations of economic recovery, higher stock prices, and anticipated interest rate hikes.The Tokyo Stock Exchange REIT Index is trending higher due to the success of government policies aimed at invigorat-ing REIT activities, the expansion of REIT purchases by the Bank of Japan, and expectations that real estate prices will increase. CYM / YM / YCY10MITSUBISHI ESTATE CO., LTD.