Since Q3 2023, the Group started on its two-phase AEI at City Square Mall, which will add about 26,000 sq ft of NLA to the mall via the Community/Sports Facilities Scheme (CSFS). The AEI involves decanting mechanical and electrical facilities and optimising the existing GFA to improve operational efficiency. The first phase is already underway in the basement floors and is scheduled to complete in Q2 2024. The entire AEI is expected to complete by 1H 2025. Upon completion of the AEI, shoppers will be greeted with a diverse mix of new-to-market retailers. These enhanced retail offerings and refreshed shopper touchpoints will provide a better shopping experience. As at 31 December 2023, the space under the first phase was already 95% leased. Singapore continues to be an attractive regional financial hub amidst ongoing geopolitical tension. Property consultants expect core CBD Grade A office rents to post modest rental growth for 2024 amid a higher supply of new office space and cautious business sentiment. Full tourism recovery is expected in 2024, with Singapore's status as a business and transit hub attracting event and concert organisers, leading to a strong pipeline of MICE events and sell-out concerts. However, high inflation and a weak macroeconomic environment could make travellers more prudent with their spending and travel plans. With higher demand and limited retail supply, retail rents are poised to have modest growth in 2024. International China In Shanghai, Hong Leong Plaza Hongqiao and Hong Leong Hongqiao Center are 92% and 65% leased respectively. HLCC’s Grade A office tower is 94% occupied, above market occupancy at the SIP district of 83% as of FY 2023, while HLCC mall is 85% occupied. With increased support from the Chinese government towards the real estate sector, the Group is exploring opportunities in cities like Shanghai, Suzhou and other key cities in the Yangtze River Delta and Greater Bay Area. These regions are becoming focal points for the Group's strategic initiatives, aligning with the broader growth trajectory of the real estate market in China. Thailand The Group’s Jungceylon Shopping Center in Patong, Phuket, has completed its comprehensive asset enhancement works in Q4 2023 and has achieved a 90.0% committed occupancy as at 31 December 2023. In tandem with the gradual re-opening of the mall, the mall’s shopper traffic has gradually increased over the year. However, shopper traffic for FY 2023 was still 67.0% below 2019 pre-pandemic levels. Shopper traffic at the mall during the Lunar New Year period in 2024 was nearly triple that of the same period in 2023. UK In March 2023, the Group acquired the iconic landmark St Katharine Docks in Central London for £395 million (approximately $636 million), increasing the total value of its prime UK commercial assets, which include Aldgate House, 125 Old Broad Street and Development House to over £1 billion, strengthening the Group’s recurring income portfolio. The Group’s Central London office portfolio has seen growing demand for well-located Grade A space in an increasingly constricted market. As at 31 December 2023, the Group’s UK office portfolio reported a committed occupancy of 91.3%, with over 84,000 sq ft of renewals/ lettings or under offers. The growth is supported by enhanced sustainability credentials and AEIs that the Group has done for its portfolio. Jungceylon Shopping Center I Thailand The Group is monitoring market conditions to determine the appropriate time to launch its ultra-luxury 246-unit Newport Residences. This rare freehold project is situated on Anson Road, at the nexus of the CBD and the future Greater Southern Waterfront District. It has no ABSD deadline. Newport Residences is part of the 45-storey Newport Plaza, a mixed-use development that includes offices, serviced apartments and retail. Construction is in progress and expected to complete in 2027. International Australia In Melbourne, The Marker, a 198-unit completed JV project is fully sold, while the 61-unit Fitzroy Fitzroy JV project is 51% sold and expected to complete in Q2 2026. In Brisbane, sales for Brickworks Park (175 units) and JV project Treetops at Kenmore (97 units) have been steady. To cater to the high demand for townhouses, the Group has fine-tuned the unit mix for Stage 3 of its Brickworks Park project, which will now comprise 17 townhouses instead of 57 apartment units, leading to a reduction in the total number of units from 215 to 175. This strategic change is expected to reduce the construction duration, mitigate development risks and improve margins for the overall development. To date, 85% of Brickworks Park and 84% of Treetops at Kenmore have been sold. The two projects are expected to complete in Q4 2025 and Q2 2024 respectively. China In FY 2023, the Group’s wholly-owned subsidiary, CDL China Limited and its JV associates sold 45 residential, office and retail units, with a total sales value of RMB 228.5 million (approximately $42.3 million). The Group has sold most of its residential inventory in China. To date, in Suzhou, Hong Leong City Center (HLCC), a mixed-use development in Suzhou Industrial Park (SIP), has sold 92% of the 1,813 residential and retail units. In Shanghai, Hongqiao Royal Lake, a luxury 85-villa development in the prime residential enclave of Qingpu District, is 91% sold. In Shenzhen, Hong Leong Technology Park Shenzhen has sold 420 units comprising apartments, office and retail units with a sales value of RMB 1.12 billion (approximately $207.4 million) since the Group acquired this project in March 2021. Through its indirect wholly-owned subsidiary, Suzhou Longcheng Development Investment Co., Ltd, the Group acquired a 100% equity stake in Suzhou Gaoxin Properties Co., Ltd, which owns a rare waterfront mixeduse development site in Suzhou’s High-Speed Railway New Town for RMB 350 million (approximately $67.1 million) in 1H 2023. The expansive site will be developed into a landmark project, comprising about 650 premium residences, a Grade A office, retail spaces and a 214room luxury hotel. Early works have commenced with an estimated completion of the residential and commercial components in 2028 and 2029, respectively. UK In Chelsea, London, the Group has sold eight of the nine apartments to date, while 31 & 33 Chesham Street and Teddington Riverside are also attracting healthy enquiries. The Group’s four other development projects in London – the former Stag Brewery site in Mortlake, Ransome’s Wharf, 28 Pavilion Road and Development House – are currently in various stages of planning approval. INVESTMENT PROPERTIES Singapore As at 31 December 2023, the Group’s office portfolio3 committed occupancy stood at 97.1%, higher than the island-wide office occupancy of 90.1%4. Republic Plaza, the Group’s flagship Grade A office building was 97.0% committed and reported a positive rental reversion of 7.3%5 in 2023. Similarly, the Group’s other wholly-owned assets, such as City House and King’s Centre were 99.4% and 100% occupied and achieved rental reversion of 5.1%5 and 13.3%5 respectively for 2023. Singapore’s office market remained resilient in 2023 despite the geopolitical and macroeconomic headwinds. This was mainly due to the tight supply pipeline, given the delay in new supply completion and tenants seeking good quality spaces within the CBD. To unlock value from its portfolio and realise GFA uplift through various Government incentive schemes, the Group has progressed on the redevelopment of its former Fuji Xerox Towers (into Newport Plaza) and the former Central Mall and Central Square properties (into Union Square). When completed, these two mixed-use integrated developments will bolster the Group’s office portfolio and enhance its recurring income. In the same period, the Group’s retail portfolio6 registered a committed occupancy of 97.6%, above the islandwide retail occupancy rate of 93.5%4. City Square Mall, currently undergoing asset enhancement works, was 98.0% committed as at 31 December 2023, achieving a rental reversion of 7.9%5 for 2023, while Palais Renaissance achieved a committed occupancy of 98.0% with a rental reversion of 10.6%5 in 2023. Over the past year, the retail market has improved steadily, driven by a recovering tourism industry. Notes: 3 Includes South Beach (in accordance with CDL’s proportionate ownership). Excludes assets planned for redevelopment. 4 Based on Urban Redevelopment Authority (URA)’s real estate statistic for Q4 2023. 5 Refers to renewed leases. 6 Includes South Beach and Sengkang Grand Mall (in accordance with CDL’s proportionate ownership). Excludes assets planned for redevelopment and City Square Mall units affected by AEI. OPERATIONS AND MARKET REVIEW BUSINESS OVERVIEW ANNUAL REPORT 2023 97 96 BUSINESS OVERVIEW CITY DEVELOPMENTS LIMITED
RkJQdWJsaXNoZXIy ODIwNTc=