CapitaLand Integrated Commercial Trust - Annual Report 2021

PROJECTED CBD CORE MONTHLY RENTAL Integrated Development Market Overview In recent years, there has been a demand shift towards a live-work-play environment. This has spurred strong demand for integrated developments that are well-connected to transportation nodes and feature high-quality, green and open spaces for the public. Creating a sustainable and vibrant ecosystem, integrated developments are well supported by a working population and an immediate residential catchment. While mixed-use developments typically comprise a residential component in addition to a commercial component, integrated developments are often seen as superior to other mixed-use developments, as they: • typically feature a mix of different, yet synergistic uses such as retail, office, residential and hospitality, managed under one management; • offer a mix of uses which provides a “campus-like” or “precinct-type” environment; • in most instances, possess excellent connectivity to transportation nodes; • have high-quality green features and open spaces for the community; and • offer value-added services for tenants and other stakeholders 21 . Integrated developments are becoming more popular, evident from the recent completion of CapitaSpring, and the multiple pipeline projects such as Guoco Midtown, One Holland Village, Rochester Commons, and the redevelopment of Liang Court. While landlords are increasingly turning to integrated developments to stay relevant in the dynamic urban landscape, the key driver remains the government. Through the Government Land Sales (GLS) Programme, CBDI Scheme and SDI Scheme, the Urban Redevelopment Authority (URA) has introduced more mixed-use precincts and integrated developments. In 1H 2022, the GLS Programme released two potential integrated development sites comprising two sizable “white sites” at Woodlands Avenue 2 and Kampung Bugis on the Reserve List. The CBDI and SDI schemes were introduced to incentivise developers with bonus GFA, to undertake redevelopment of ageing buildings to more productive integrated developments. Advantages and Observations of Integrated Developments There are notable advantages of integrated developments. Within decentralised locations, the office component benefits from being a part of an integrated development, particularly where quality stock is limited. An enhanced accessibility to amenities and connectivity to transport nodes contribute to the premium observed by integrated developments, 21 Includes integrated services across different parts of the integrated development, tenant offers and events, access to certain privileges such as discounts and updates, and the use of other facilities and amenities within the larger integrated development. Source: CBRE Singapore, 4Q 2021 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Capital Value (S$ psf) Grade A CBD Core Monthly Rental Values Grade B CBD Core Monthly Rental Values 2020 2021 2022F 2023F 2018 2016 2019 2017 $9.10 $7.35 $10.80 $8.30 $10.40 $7.90 $10.80 $7.90 $9.40 $7.45 $11.55 $8.70 $11.55 $8.10 $12.20 $8.25 Annual Report 2021 111 Independent Market Review