Jurong Point Information Memorandum_(280x320mm)_latestV1_final-4 (6 Oct)

THE RETAIL MARKET
Albeit a slowdown in consumer spending, suburban malls continue to be resilient and defy negative predictions that shopping centres
are not holding well against E-commerce and other headwinds. Malls at regional centres with good location attributes and an immediate
catchment population continue to perform with resilience and low vacancy rate.
As at the end of the 2nd quarter of 2016, there was a total supply of 734,000 sq m GFA of retail space from projects in the pipeline and
occupancy rate at 92.2% (URA, 2016).
’000 sq m gross
Retail Space 3
Total
Under Construction
Planned
Written Permission
Provisional Permission
Total
734
626
108
40
68
2016
130
130
-
-
-
2017
197
197
-
-
-
2018
234
229
5
1
4
2019
41
33
8
7
1
2020
96
25
71
8
63
>2020
36
12
24
24
-
Average Monthly Gross Rents of Prime Retail Space (by Micro-market)
SGD per sq ft
45.00
43.00
41.00
39.00
37.00
35.00
33.00
31.00
29.00
27.00
25.00
Q2 2011
Q4 2011
Q2 2012
Q4 2012
Q2 2013
Q4 2013
Q2 2014
Q4 2014
Q2 2015
Q4 2015
Q2 2016
Figure 4 Prime Retail Space Rents (Source: Colliers)
Orchard Road
Regional Centres
Figure 3 Retail Space Supply in the Pipeline (Source: URA)
Despite the slight climb in vacancy rate, largely due to the headwinds faced by prime shopping districts such as Orchard Road, suburban
malls continue to gain popularity, buoyed by factors such as proximity to population catchments and easy accessibility via public transport.
Partly driven by a 1.3% Quarter on Quarter (QoQ) increase in retail space, suburban occupancy saw the largest increase of +1.6 pp to 6.0%
(Credit Suisse, 2016). The retail leasing segment also saw more transactions in Q2 2016. There were a total of 2,382 retail leasing transactions
in Q2 2016, up 35.6% compared to the 1,757 transactions a quarter earlier (URA, 2016). As such, it is believed that the vacancies could narrow
over the next quarters as committed spaces may currently be under fit-out period.
Although the average monthly gross rent for prime ground floor shopping mall space in the Orchard Road micro-market shed 0.5% Quarter
on Quarter (QoQ) to SGD40.21 per sq ft, the average monthly gross rent for similar space in the Regional Centres was more resilient with a
0.3% QoQ slide to SGD33.66 per sq ft, slower than the 0.5% QoQ decline in Q1 2016.
DISCLAIMER AND CONFIDENTIALITY
This information memorandum and all related documents are for the exclusive use of the persons to whom this information memorandum is
addressed and their advisors in connection with the proposed divestment of the Group (as defined in Section [10]) (“Proposed Transaction”),
and are being provided to a limited number of recipients for the sole purpose of providing some preliminary information to assist them in
deciding whether they wish to proceed with a further investigation in respect of the Proposed Transaction.
This information memorandum is produced solely as a general guide only for interested and pre-qualified parties (“Prospective Purchaser(s))”
and is not intended to form the basis of any investment decision. It does not constitute and should not be construed as an offer or invitation
for the sale or purchase of the Group or any company or interest comprised in the Group or as any valuation or any other advice and neither
the information memorandum nor its contents shall form the basis of any contract.
This information memorandum is confidential and is subject to the terms of a confidentiality undertaking which has already been given by
the recipient. Neither this information memorandum nor its contents may be distributed, published, reproduced or disclosed to any other
person or used for any other purpose, except as permitted by the confidentiality undertaking.
In furnishing this information memorandum, no obligation is undertaken to provide any additional information or to update this information
memorandum or to correct any inaccuracies which may become apparent.
37