CapitaLand Integrated Commercial Trust - Annual Report 2021

Rental Values Sydney CBD prime and secondary net face rents (NFR) 22 held steady since the onset of the pandemic, with prime NFR currently at A$1,272 psm/annum and secondary NFR at A$931 psm/annum. However, net effective rental 23 has continued to fall throughout the year, primarily driven by incentives remaining at historically high levels above 30%+ for prime and secondary offices. SYDNEY CBD OFFICE LEASING ENQUIRY BY SIZE GROUP over the next three years to 2023 and over half of the respondents expect to increase the use of collaborative space including meeting rooms and communal space to facilitate the larger volume of team and event- based work taking place in the future of office. CBRE believes that the rising demand for more collaboration will result in an increasing demand for more space, supporting the strong leasing momentum into 2022. SYDNEY CBD OFFICE ENQUIRY VOLUMES SYDNEY CBD OFFICE LEASING ENQUIRY BY INDUSTRY (2021) (%) Business Services 29% Banking & Finance 19% Tech & IT 16% Media & Telco 7% Life Sciences 5% Government 5% Education 3% Recreation Services 2% Others 14% With market sentiment continuing to improve, supported by underlying indicative data such as record-high enquiry level and improving office fundamentals, the growth rate of incentives has slowed and incentives level is expected to hold steady over the next 12 months before trending downwards as vacancy improves. CBRE forecasts that the adverse effects of the increase in incentives on effective rents will bottom out in 2022. 22 Base rent paid by a tenant excluding (or net of) outgoings 23 Base rent that would be achieved, less the incentives paid by the owner. The average net effective rent for a market is the market net face rent less incentives which are amortised over the term of the lease. 2021 2019 2017 600 500 400 300 200 100 0 600 500 400 300 200 100 0 2020 2018 Enquiry Volumes (‘000 sq m) No. of Briefs Source: CBRE Australia Office Leasing, CBRE Australia Research, 4Q 2021 Source: CBRE Australia Office Leasing, CBRE Australia Research, 4Q 2021 Source: CBRE Australia Office Leasing, CBRE Australia Research, 4Q 2021 Enquiry Volume No. of Briefs 0-500 sq m 501-1000 sq m 1001-3000 sq m 3000+ sq m 600 500 400 300 200 100 0 No. of Briefs 2021 2019 2017 2020 2018 CapitaLand Integrated Commercial Trust 118 Independent Market Review