RAE Systems Purchases Property for New Worldwide Corporate Headquarters

SUNNYVALE, Calif. December 14, 2004 RAE Systems Inc. (AMEX: RAE), a leading global developer and manufacturer of rapidly-deployable, multi-sensor chemical and radiation detection monitors and networks for homeland security and industrial applications, today announced that it has completed the purchase of the property located at 3775 North First Street in San Jose, CA from CarrAmerica Realty Operating Partnership, L.P. for a purchase price of $5,000,000 in cash.

The 67,000-square-foot building occupies a 4.6 acre parcel and will serve as the new worldwide headquarters for RAE Systems. The facility will house the companys administrative, sales and marketing, technical support, and research and development functions. Approximately 150 employees will work at the new site, and the company expects to occupy the building near the end of the first quarter of 2005.

RAE Systems has achieved many milestones over the past 14 years in our home in Sunnyvale, but weve reached a point in our companys development where we need more space to accommodate our growth, said Robert I. Chen, chief executive officer of RAE Systems. Our new facility in San Jose is located just a few miles from our current site, so the relocation will be a minimal distraction as we continue to focus on cutting-edge wireless sensing solutions for our customers around the world.

About RAE Systems
RAE Systems is a leading global developer and manufacturer of rapidly deployable, multi-sensor chemical detection monitors and networks for homeland security and industrial applications. In addition, RAE Systems offers a full line of portable single-sensor chemical and radiation detection products. RAE Systems products enable the military and first responders such as firefighters, law enforcement and other emergency management personnel to detect and provide early warning of weapons of mass destruction and other hazardous materials. Industrial applications include the detection of toxic industrial chemicals, volatile organic compounds and petrochemicals. RAE Systems products are used by many U.S. government agencies, including the Department of Homeland Security, the Department of Justice, and the Department of State, as well as all branches of the U.S. military, and by numerous city and state agencies. Our end users also include many of the worlds leading corporations in the airline, automotive, computer and oil industries. Our products are used in civilian and government atmospheric monitoring programs in over 50 countries. For more information about RAE Systems, please visit www.RAESystems.com

Safe Harbor Statement
This press release contains “forward-looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE and its products. In addition, our forward-looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and Form 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.