CapitaLand Integrated Commercial Trust - Annual Report 2021

PROJECTED ISLANDWIDE MONTHLY RENTAL Retail Market Outlook Moving forward, as the economy opens further with relaxationof borders and safemanagementmeasures, CBRE expects islandwide retail and Orchard Road rents to further stabilise and flatten out in 1H 2022, and thereafter, we could see some meaningful rental growth in 2H 2022. However, this is dependent on the ability to address the emergence of the Omicron variant and the potential influence on quarantine- free travel. In addition, the announcement by the Government in December 2021 of a potential hike in Goods and Services Tax (GST) for Budget 2022 could potentially have an impact on the level of domestic discretionary spending of large ticket items. The Suburban micro-market on the other hand is expected to remain resilient in 2022 and beyond. As the retail landscape accustoms to a COVID endemic environment coupled with the gradual easing of safe management measures by the government, medium- term recovery in footfall could be expected in 2H 2022. Despite uncertainties which continue to loom across industries, tenants could potentially hold onto or renew their leases with the hope of the impending recovery of the economy in 2H 2022. 12 The CBD Core area comprises the four micro-markets: Raffles Place, Shenton Way, Marina Bay and Marina Bay Centre. 13 A revision of CBRE’s basket was conducted in 1Q 2019 with figures from 1Q 2019 onwards reflecting the revision of numbers. Historical figures are unchanged. 14 The net lettable area and TOP dates are preliminary estimates and are subject to change. 15 The CBD Fringe area includes Tanjong Pagar, Beach Road/City Hall as well as Orchard Road. 16 The Decentralised markets are anchored mainly by clusters of offices in Alexandra/HarbourFront, Western Suburban area and Eastern Suburban area. Revision of CBRE’s basket was conducted in 1Q 2021 with figures from 2021 onwards reflecting the revision of numbers. Historical figures are unchanged. Source: CBRE Singapore, 4Q 2021 $24.75 $25.05 $25.05 $22.90 $24.74 $25.09 $26.10 2020 2022F 2023F 2018 2016 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2019 2017 Rental Values (S$ psf) Office Market Overview Existing Supply Total islandwide office stock stood at 62.2 million sq ft in 4Q 2021. The Central Business District (CBD) Core 12 accounted for 32.0 million sq ft (or 51.5%) of islandwide office stock, of which 14.8 million sq ft was Grade A CBD Core 13 office space. The CBD Fringe and Decentralised Area accounted for the remaining 15.7 million sq ft (or 25.3%) and 14.5 million sq ft (or 23.3%) of office stock respectively. In 2021, approximately 0.9 million sq ft of office stock was completed. Major developments completed included Afro-Asia (140,000 sq ft) and the office component of CapitaSpring (635,000 sq ft) in the CBD Core, as well as St James Power Station (118,200 sq ft) and the office component of Razer SEA Headquarters (30,000 sq ft) in the Decentralised Area. Future Supply Islandwide new office supply between 2022 and 2024 is projected at 3.8 million sq ft 14 . The CBD Core market accounts for 33.5% of the upcoming pipeline, while the CBD Fringe 15 and Decentralised 16 markets account for the remaining 36.3% and 30.2% respectively. The average annual office supply from 2022 to 2024 is approximately 1.3 million sq ft, which is slightly lower than the last five-year historical average annual supply of 1.4 million sq ft. There has been a delay in the completion of office development projects, affecting the supply pipeline as a result of disruptions to construction activities in light of the pandemic. In 2022, office completions coming into the market include SJ Campus (211,600 sq ft, expected completion delayed from 2021), Guoco Midtown (667,100 sq ft) and the redevelopment of Hub Synergy Point (131,200 sq ft) in the CBD Fringe, CapitaLand Integrated Commercial Trust 106 Independent Market Review