CapitaLand Integrated Commercial Trust - Annual Report 2023

Source: CBRE, 4Q 2023 ORCHARD ROAD CAPITAL VALUE AND NET YIELD Market Outlook In 4Q 2022, the Singapore Retailer Association and Enterprise Singapore rolled out transformative road maps to support retailers in creating personalised retail experiences and positioning retail as an attractive industry by 2025, aswell as encouragingnewexperiential concepts and grooming local talent. In addition to the road maps, the government has announced schemes to revitalise the heartlands, such as increased funding for retailers’ upgrading cost. Workforce Singapore has worked with government agencies and the industry to develop Job Transformation Maps (JTMs) to redesign jobs for the food services and retail sectors were also launched recently, which will help to alleviate manpower shortages. On 3 August 2023, the bill to mandate compliance with the Code of Conduct for Leasing of Retail Premises in Singapore was passed. The Code of Conduct sets out guidelines for fair and balanced lease negotiations between landlords and tenants of retail premises, which will imbue retailers with more confidence in signing lease agreements. With full tourism recovery expected by end of 2024, tourist-dependent submarkets such as Orchard Road are likely to post higher rental growth on the back of increased tourism supported by increasing flight connectivity and capacity, coupled with the strong pipeline of MICE events and sell-out concerts. Furthermore, with the continued return-to-office trend, malls in Downtown Core will likely benefit from the increased footfall. Meanwhile, the resilient suburban market will sustain modest rental increases in comparison to other submarkets. Overall, retailers may continue to face challenges such as e-commerce, manpower shortage, high operating costs, a weak economic environment and higher GST rates. However, with improvedmobility, tourismrecovery and a below-historical annual average pipeline supply in the next few years, retail rents and occupancy rates are likely to increase in 2024. Going forward, CBRE expects capital values to remain resilient. In 2H 2023, interest rates have stabilised as compared to earlier in the year. Moving into 2024, although the median target interest rate is expected to remain high with a few rate cuts, capital values are expected to hold firm due to strong holding power and resilient underlying fundamentals. CBRE expects strategic assets with strong performances backed by solid underlying fundamentals and demand drivers to remain attractive to prospective investors in the longer-term. Source: CBRE Singapore Note: As of 4Q 2023 AVERAGE PRIME ISLANDWIDE MONTHLY RENTAL 8,251 7,300 27.70 25.30 24.75 25.15 26.20 27.07 27.68 Orchard Road Capital Value (LHS) Orchard Road Net Yield (RHS) 8,400 8,200 8,000 7,800 7,600 7,400 7,200 7,000 6,800 6,600 5.10 5.05 5.00 4.95 4.90 4.85 4.80 4.75 4.70 4.65 4.60 Capital Value (S$/sq ft) Net Yield (%) 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 30 25 20 15 10 5 0 Rental Value (S$/sq ft/month) 2022 2023 2024F 2025F 2021 2019 2020 7,519 7,300 7,350 Overview Leadership Performance Framework Other Information ANNUAL REPORT 2023 99

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