Singapore is CICT’s key market. How is it bucking the trend in the commercial space segment? In most markets globally, we noted there is reduced demand for office space due to flexible work arrangements and weakened demand for retail space as e-commerce becomes prevalent. However, this is not the case in Singapore, which accounts for 93.7% of our portfolio by property value. CICT remains a proxy for Singapore commercial market. Meanwhile, Australia accounts for 3.6%, while Germany, 2.7% of our portfolio's property value. Singapore’s commercial market has been resilient, given stable political and economic conditions as well as low unemployment rate. Policies that encourage investment and spur economic activity have also bolstered the real estate market. In Singapore, demand for agile office space continues to grow to cater to flexible working arrangements. We also see healthy leasing demand from industries such as financial services, legal, manufacturing and distribution. On the retail front in Singapore, we observe robust spending patterns evidenced by total retail sales, excluding motor vehicles, reaching Q Q A A S$42.7 billion in FY 2023. Singapore tourist arrivals continued to rise, reaching 13.6 million and increased local consumption supported shopper traffic at our malls, which grew 8.6% YoY. Limited supply of office and retail space averaging 0.8 million sq ft and 0.4 million sq ft respectively over the medium term continues to support the market rents. CICT achieved positive rent reversions across the office and retail portfolios in FY 2023 and expects this trend to continue into FY 2024. How will CICT grow its Distribution Per Unit for unitholders? Multiple levers are used to drive growth for CICT. To drive revenue growth, CICT proactively manages its leases by optimising rents, ramping up occupancy rate across the portfolio and engaging our tenants ahead of their lease expiries to understand their needs and work on forward renewals. In FY 2023, our retail and office portfolios committed new and renewed leases with positive rental reversions that will contribute to income growth in FY 2024. Some of the challenges we are faced with are rising operating expenses and high interest rates. To contain rising costs, we have secured fixed utility rates until the end of FY 2024 and have gradually increased service charges across the Singapore office portfolio since October 2022. For the retail portfolio in Singapore, rent adjustments to take into account the increase in service charge will take a period of two to three years with new and renewal leases, as we adhere to the Code of Conduct for Leasing of Retail Premises in Singapore. To better manage interest expense in a high interest rate environment, we have locked in 78% of total borrowings on fixed interest rates and secured optimal interest rates with longer debt tenure. This ensures certainty of interest expense while allowing the flexibility to manage the floating rate loans. ANNUAL REPORT 2023 31 Overview Leadership Performance Framework Other Information CONVERSATION WITH CEO
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